Q4 2024 Novavax Inc Earnings Call
Speaker Change: Please note this event is being recorded.
Speaker Change: I would not like to try to conference call over to Olivia Tonight, Vice President Investor Relations. Please go ahead.
Speaker Change: Good morning, and thank you all for joining us today to discuss our fourth quarter and full year 2024 financial results.
Speaker Change: Press release announcing our results is currently available on our website at Novavax Dot Com and an audio archive of this conference call will be available on our website later today.
Speaker Change: Please turn to slide two.
Speaker Change: 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 as corporate strategy and operating plans its strategic priorities, it's partnerships and expectations with respect to potential royalties.
Speaker Change: Oh stones and cost reimbursements, its expectations regarding manufacturing capacity timing production and delivery for its COVID-19 vaccine.
Speaker Change: The development of Nos access clinical and preclinical product candidates full year 2025 financial guidance and revenue framework.
Speaker Change: Novavax is future financial or business performance.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: And our website Novavax dot com.
Speaker Change: 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.
Speaker Change: Turn to slide three.
Speaker Change: This presentation also includes references to non-GAAP financial measure, which is forward looking information for adjusted licensing royalties and other revenue.
Speaker Change: Please turn to slide four.
Speaker Change: 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. Sandra: Additionally, Dr. Sandra drag your head of R&D, who will discuss our R&D strategy and clinical development.
Dr. Sandra: John <unk>, our President and Chief operating Officer will provide an update on our Sanofi partnership and finally, Jim Kelly, Chief Financial Officer, and Treasurer, who will provide an overview of our financial results and 2025 financial guidance and revenue framework.
John Jacobs: I would now like to hand over the call to John Jacobs.
Dr. Sandra: Thank you Louis.
John Jacobs: I'm pleased to be here with you today, along with members of our executive team to discuss our financial results and highlight our progress on our corporate growth strategy.
John Jacobs: 'twenty 'twenty four it was a year of significant accomplishments for Novavax we.
John Jacobs: We developed and embarked upon a new and ambitious corporate growth strategy, which is designed to maximize the impact of our cutting edge technology through R&D innovation.
John Jacobs: The expansion of our organic portfolio and through building, new and diversified partnerships with other companies via the out licensing of our tech platform and vaccine assets.
John Jacobs: Consistent with that new strategy, we announced our wide ranging partnership agreement with Sanofi, which I will discuss in a few moments and made important additional progress on our portfolio and another areas. During what was a transformational 'twenty 'twenty four which saw.
John Jacobs: The acceptance of our COVID-19, BLA by the U S. FDA for which we have an action date in April of this year.
John Jacobs: Launch of our 'twenty four 'twenty five season updated COVID-19 vaccine in August.
John Jacobs: Novavax successfully operationalized, our partnership with Santa Fe, which enable them last month to assume lead commercial responsibilities for our COVID-19 vaccine beginning with a 25 26 vaccination season.
John Jacobs: The initiation of an initial cohort of our COVID-19, influenza combination vaccine and Standalone influenza vaccine phase III trial.
John Jacobs: The addition of a new head of R&D and the identification of four new early stage assets for our emerging organic portfolio.
John Jacobs: Including programs focused on C diff.
John Jacobs: We're a seller zoster virus pandemic flu and the Triple RSV combination.
John Jacobs: And finally, we made continued and significant progress in improving Novavax has financial strength.
John Jacobs: Examples include the sale of our Czech Republic manufacturing facility for $200 million.
John Jacobs: And in the process, reducing our go forward annual operating costs by approximately $80 million.
John Jacobs: Significantly decreasing our current liabilities by $1.3 billion over the last two years and significantly reducing our combined R&D and SG&A expenses. So that we are well positioned to achieve our goal of decreasing our expenses by approximately 85% by <unk>.
John Jacobs: 1027, as compared to our 2020 to baseline.
John Jacobs: With this significant progress we have positioned <unk> well to execute on our corporate growth strategy and with this new strategy in place we have reshaped our company mission to be in line with its future direction.
John Jacobs: It states by leveraging our science, our technology and our people, we will innovate and collaborate to tackle the world's most significant health challenges.
John Jacobs: We have also aligned our company vision, which reinforces our belief in the impact of our technology can and should have.
John Jacobs: We envision a world where our technology is amplified to touch the lives of billions, sparking transformation and global health.
John Jacobs: Together, our management team and employees are United in our commitment to this strategy.
John Jacobs: And in our belief that expanding access to and the utility of our proven tech platform via R&D innovation organic portfolio expansion and enhanced partnering and collaborations with other companies.
John Jacobs: Truly help us to fulfill our mission and ultimately our vision for what Novavax can achieve and become as a company.
John Jacobs: And with our new growth strategy renewed mission and vision, we have developed a clear pathway to how we will strive to positively impact global health and achieve value for all of our stakeholders in 2025 and beyond.
John Jacobs: We believe that our new strategy has the potential to drive novavax to profitability as early as 2027 <unk>.
John Jacobs: Assuming execution of our plans and timely execution by our partners, particularly Santa fee.
Speaker Change: Jim Kelly will touch on this more during his portion of our prepared remarks.
Speaker Change: Upon reaching our planned steady state operating model, we expect to continue funding our R&D pipeline through organic cash flows from executed transactions. So that's produce additional early stage assets for out licensing and partnering to further increase profitability and cash flow.
Speaker Change: Between now and then there are several near term catalysts, you can look for to signal progress.
Speaker Change: The April <unk> date for our BLA and assuming BLA approval the associated MAA transfer for our COVID-19 vaccine to sign a fee generating $225 million in milestone payments combined.
Speaker Change: Advancement of Santa fees on Covid influenza combination vaccine candidates.
Speaker Change: Which include <unk>, Covid, 19 vaccine, thereby setting up opportunities for additional milestone and royalty payments.
Speaker Change: Data readout from the initial cohort of our phase III kick and Standalone flu trial by mid year.
Speaker Change: Preclinical data from our early stage pipeline programs in the second half of this year.
Speaker Change: We plan on hosting an investor day in the second half of 2025.
Speaker Change: And announcements of additional partnerships and collaborations while we can't give specific projections around timing or the nature of any new potential deals or partnerships.
Speaker Change: Our team is actively working to seek new partners and to expand the level of interest in our technology platform.
Speaker Change: And also and finally look for further cost reduction efforts and initiatives from our team.
Speaker Change: Please turn to slide six.
Speaker Change: As we continue with our commitment to positively impact global health.
Speaker Change: While delivering value for our shareholders, we have set three strategic priorities for the year.
Speaker Change: As an evolution of our previous value drivers. These will guide our work through 2025.
Speaker Change: Our first priority is to be a partner of choice.
Speaker Change: And then the process increase access to our existing COVID-19 vaccine as well as our matrix M adjuvant and our emerging pipeline assets with the goal of growing revenue and continuing to improve the long term financial strength of novavax through royalties and milestones.
Speaker Change: We intend to optimize our existing partnerships with a focus on mutual value creation.
Speaker Change: Our license and collaboration agreement with Sanofi set a new bar for what is possible with our strategy and further solidified the credibility of our proven tech platform.
Speaker Change: The partnership combines <unk> proprietary protein and nanoparticle technologies matrice matrix adjuvant, and our R&D expertise with <unk> World class leadership, and launching and commercializing innovative vaccines.
Speaker Change: As a reminder, in 2024, we received an initial cash payment of $500 million upfront and then approximately $70 million equity investment in Novavax.
Speaker Change: <unk> is taking the lead commercialization role for our COVID-19 vaccine starting this year, enabling us to monetize our existing vaccine program through potential milestones and royalties and to significantly reduce our operating expenses that were related to leaving prior commercial efforts.
Speaker Change: In addition to the royalties in remaining milestones related to our COVID-19 vaccine. We believe that <unk> has a strong desire to leverage the power of our proven technology.
Speaker Change: And we are eligible to receive additional milestone payments as well as additional revenue streams from royalties related to other vaccines developed by Sanofi in combination with our existing COVID-19 product.
Speaker Change: In fact, <unk> has initiated two separate phase one two trials, combining our COVID-19 vaccine with their market, leading a flu product fluzone high dose and flu block.
Speaker Change: And both combination products were granted fast track designation by the U S FDA.
Speaker Change: Finally, a key part of the agreement includes access to our proven matrix M adjuvant.
Speaker Change: <unk> has broad nonexclusive access to matrix M and Novavax is eligible to receive up to $200 million in launch and sales milestones and mid single digit sales royalties for 20 years for each new product Sanofi may choose to develop using our matrix M adjuvant.
Speaker Change: Above and beyond anything they may do with our COVID-19 vaccine as noted earlier.
Speaker Change: <unk> strong global presence and proven track record of developing and commercializing vaccines.
Speaker Change: Combined with Novavax as R&D expertise has created the potential for this partnership to drive significant value for years to come.
Speaker Change: Both for our shareholders.
Speaker Change: And the people, who would who would have broadened access to our vaccine technology and the protection that can provide.
Speaker Change: As part of our new strategy, we intend to enter additional new partnerships with the goal of further increasing access to our tech and benefiting global health, which is in line with our new mission and vision for Novavax.
Speaker Change: Therefore, our second strategic priority is to leverage our technology platform and pipeline to forge additional partnerships.
Speaker Change: Our proven protein based nanoparticle technology, and our matrix M adjuvant and have the potential to facilitate the development of new best in class vaccines or to improve existing vaccines with.
Speaker Change: With a potential for enhanced durability of protection greater immune response <unk> reduced cogs.
Speaker Change: In addition, our new early stage pipeline is intended to create additional assets that we intend to partner and out license at early proof of concept stages, optimizing our R&D investment and creating additional opportunities for new collaborations and partnerships. In addition to what our tech platform alone could provide.
Speaker Change: Our existing collaboration with Sanofi in preclinical evaluation agreements with other organizations highlight a significant interest in matrix M.
Speaker Change: We intend to continue to seek opportunities to leverage matrix M via partnerships and collaborations.
Speaker Change: Our late stage programs include a COVID-19 influenza combination vaccine candidate as well as a standalone influenza vaccine candidate both targeted for adults 65 years of age and older.
Speaker Change: We know that significant market demand exists for our combination vaccine with greater than 60% of consumers, stating a preference for an all in one option.
Speaker Change: We expect data by mid year from the initial cohort of our phase III trial, which began in December consistent with our new corporate strategy. We plan to stage gate additional investment in this program beyond the completion of this initial cohort and ongoing regulatory interactions until a partner is in place.
Speaker Change: The expectation that the partner will fully fund any additional clinical investments in these programs.
Speaker Change: Finally, our third strategic priority is to advance our technology platform and early stage pipeline with a focus on the lean capital efficient approach and with the intent to partner early stage assets at proof of concept, allowing our partners to carry those assets forward through full clinical development and commercialization.
Speaker Change: We are actively advancing our pipeline of early stage programs focusing on high value assets in areas of significant unmet medical need compelling scientific rationale and strong commercial potential.
Speaker Change: With that in mind, we are continuing to expand our pipeline with the addition of four new early stage programs that Rick Sandra will touch on in a moment.
Speaker Change: As we laid out last quarter, we intend to take a disciplined and capital efficient approach it as we make smart investments and expand our pipeline.
Speaker Change: In summary, our.
Speaker Change: Our corporate growth strategy allows novavax to focus on what we do best.
Speaker Change: Leveraging our scientific expertise and our proven technology platform to drive value through R&D and through partnerships.
Speaker Change: <unk> is well positioned to expand access to our technology deliver transformative advancements for global health and deliver value for all stakeholders.
Dr. Sandra: I'd now like to turn the call to Rux, Sandra to discuss our research and development updates rock Sandra.
Thank you John Please turn to slide seven.
Speaker Change: Good morning, I'm, a extended dry yeah novel vaccines, new head of R&D and I'm very excited to be participating in my first earnings call as a member of our executive team.
Speaker Change: I made the decision to join the company in November 2024, because I see so much potential in our technology is I'd be elaborating further in my remarks.
Speaker Change: As John said earlier, we are at the defining moment in the company's history.
Speaker Change: Shaping our strategic plan to focus on driving value through innovation and building out a new robust R&D portfolio.
Speaker Change: In via partnerships and collaborations with other organizations.
Speaker Change: Regarding R&D and our new focus in this area, we just announced last months under my leadership. The addition of four new early stage programs.
Speaker Change: We have also initiated development work on novel matrix formulation, we have potential to further differentiate and take us into new therapeutic areas and potentially improve next generation vaccine.
Speaker Change: Our focus on R&D cost effective innovation early partnering and leveraging our technology with a goal of positively impacting the health and well being of people around the globe is what brought me to novel box.
Speaker Change: And now I would like to share some specifics on where we are and where we're going.
Speaker Change: Please turn to slide eight.
Speaker Change: Yeah.
Speaker Change: H five N. One avian influenza continues to command attention from public health officials, the greater medical community and the public at large.
Speaker Change: He went to human transmission has not been documented to date from the strains currently circulating in animal population infections and illness in humans have resulted from exposure to infected birds and dairy cows with recent reports of transmission to domestic.
Speaker Change: During this current outbreak H five N. One virus has infected more than 70 persons in the United States, and Canada and accounted for one death.
Speaker Change: We have developed a protein nanoparticle and matrix M vaccine against highly pathogenic H five N. One virus that is currently undergoing pre clinical evaluation.
Speaker Change: Non human Primate studies have shown our candidate pandemic vaccine can produce protective levels of immunity after a single dose.
Speaker Change: Other vaccine platforms may require more than one dose to achieve protective levels equally prime population in.
Speaker Change: The pandemic with a dangerous pathogen that factor alone may make our protein based matrix M adjuvant vaccine unimportant option.
Speaker Change: The preclinical data supporting advancing our H five N one vaccine into the clinic I currently in review of our major scientific Journal.
Speaker Change: Using the same technology platform, we are assessing our vaccine effectiveness against other influenza strains in an effort to establish the capacity to quickly pivot to creating vaccines against new strains as a marriage.
Speaker Change: We stand ready to join pandemic preparedness efforts and are currently pursuing funding and partnership opportunities.
Speaker Change: Yeah.
Speaker Change: Our early stage pipeline also includes development of an RSV combination vaccine candidate that will build on the Companys extensive history in this area.
Speaker Change: This is learned regarding superior protein antigen design.
Speaker Change: Together with new computational artificial intelligence machine learning capabilities should allow us to enhance structural stability and immunogenicity and combine multiple different respiratory virus antigens with matrix M into the program.
Speaker Change: Creating a competitive meaningful and differentiated offering is a key area.
Speaker Change: One of our goals is to advance the science of respiratory virus vaccines by providing modesty valent durable protection trades at melius wieck serious severe respiratory illness.
Speaker Change: The year.
Speaker Change: Our other infectious disease vaccine targets, our shingles and Cds.
Speaker Change: For shingles prevention, we believe our technology has the potential to improve on the current standard of care by enabling a more vulnerable less reactogenic equally efficacious vaccine.
Speaker Change: Many of the risk adults are declining shingles protection or them complete their vaccination theory because of this year of side effect by.
Speaker Change: By providing them more attractive options, which we believe our technology has the potential to do we intend to change this dynamic and address.
Speaker Change: The public health need.
Speaker Change: We believe our technology may lead to better vaccine candidate for the prevention of C difficile morbidity and mortality.
Speaker Change: There is no approved vaccine for Cds, yet the medical need is large we see these related illness, including recurrent infection.
Speaker Change: Hunting for approximately five to 6 billion in annual U S health care costs.
Speaker Change: Our technology has the potential to facilitate the development of a multivalent I debated vaccine with enhance activity.
Speaker Change: The potential to deliver a differentiated impact in an underserved patient population.
Speaker Change: For each of the early pipeline vaccine candidates I've discussed we expect to share initial data and early learnings in the second half of the year.
Speaker Change: I would like to discuss our ongoing exploratory science with respect to our matrix M adjuvant.
Speaker Change: We believe that matrix M can play an even greater role in the future and we are seeking to explore how newer formulation different regimens and dose schedules and other he has meant can lead to improved vaccines.
Speaker Change: To date approaches and advancement in therapeutic areas beyond infectious diseases.
Speaker Change: We are currently developing research partnerships and collaborations in immuno oncology a field that is rapidly progressive and one where we envision exciting potential opportunities for our technology.
Speaker Change: By taking targeted steps to employ validated translational models and to leverage AI and machine learning approach is where it makes sense, we hope to identify specific areas where matrix M. As currently formulated or is the next generation.
Speaker Change: <unk> formulation could improve rates and duration of antitumor responses.
Speaker Change: We look forward to sharing preliminary data with you later this year.
Speaker Change: Turning now to our late stage pipeline comprised of our Covid influence a combination like geek.
Speaker Change: <unk> and seasonal influenza vaccine program, we issued a press release in December and now he said dosing over an initial cohort of approximately 2000 participants had begun in our phase III safety and Immunogenicity trial.
Enrollment of this initial cohort in this study is complete and topline data are expected mid year.
Speaker Change: Intent is to partner that program and we believe that additional positive comparative immunogenicity results, if achieved and expanded safety database contributed by each cohort sheets facilitates those interactions.
Speaker Change: In summary, my first priority when I joined the company with three identify the most exciting potential candidates.
Speaker Change: <unk> brings them forward into the pipeline, which we've done now.
Speaker Change: Now with an intense focus on science and readiness for partnering we intend to advance and optimize our programs and generate initial proof of concept in preclinical evaluation.
Speaker Change: I couldnt be more excited about the work ahead the opportunity to keep you abreast of our developments and our plans to share with you. Some of our first data readouts in the second half of this year.
John Jacobs: Thank you and I'll turn now over to John <unk> for an operating update.
Speaker Change: Thank you Rick Sandra Please turn to slide nine.
Speaker Change: We are pleased with all the progress we've made in our COVID-19 vaccine program. During the 2020 for 2025 season and are excited about our partnership with Santa Fe is they assume lead commercial responsibility beginning with the 'twenty five 'twenty six vaccination season.
Speaker Change: We continue to work closely with them on a seamless transition to their leadership of our co commercialization activities for new Baxter and believe that we have laid a solid foundation for our partners to increase access to the vaccine in seasons to come.
Speaker Change: This in turn allows us to focus on winding down our commercial infrastructure and reduce expenses to align with our corporate strategy.
Speaker Change: We could not have asked for a better partner with <unk> vast resources and deep knowledge in developing and commercializing vaccines for this year <unk> has stated they will use 2025 as a learning year to understand COVID-19 market behaviors.
Speaker Change: And they believe there is further opportunity for new vaccinated with the COVID-19 market given its tolerability profile.
Speaker Change: Looking to the future Santa Fe has initiated two separate phase one two trials for their combination of vaccine candidates combining <unk> with its market, leading influenza vaccines fluzone high dose and flu block.
Speaker Change: Furthermore, these vaccine candidates were granted fast track designation by the U S FDA.
Speaker Change: If successful these assets have the potential for future milestone payments and royalties to novavax.
Speaker Change: As we move into 2025 are in near term potential milestone payments include our COVID-19, BLA approval, which has a <unk> date in April and transfer of COVID-19 market authorizations for the U S and EU later in 2025.
Speaker Change: These milestones account for a combined total of $225 million in potential payments.
Speaker Change: In summary, we believe there remains a continued demand for COVID-19 vaccines and are excited about our partnership with <unk>, We believe that Santa Fe, a market leader with its large commercial infrastructure and expertise, we will be able to drive additional market share in 2025 and beyond.
Speaker Change: <unk>.
Speaker Change: With that I'd like to hand, the call to Jim to discuss our financial results for the quarter.
Jim Kelly: Alright. Thank you John Please turn to slide 10.
Speaker Change: This morning, we announced our financial results for the fourth quarter and full year 2024 DT.
Speaker Change: Details of our results can be found in our press release issued today and in our Form 10-K filing.
Speaker Change: Please turn to slide 11.
Speaker Change: Before reviewing our financial results I would like to first discuss Novavax this path to significant value creation and profitability.
Speaker Change: Our business plan is designed to deliver profitability supported by a potential Sanofi kick launch as early as 2027.
Speaker Change: Our plan includes revenue supported by the existing Sanofi agreement execution, including the commercialization of the Sanofi program, plus new BD business development deals and partnerships to drive cash flow.
Speaker Change: On the expense side, we plan to further reduce R&D plus SG&A expenses down to a lean core spend profile of $250 million by 2027, and we expect this will position us well to enable efficient value creation and capital independents.
Speaker Change: We are acting with urgency to drive value from our innovative technology platform and fully described for investors the shape of our business over the coming years.
Speaker Change: Keys to the timing on our path to profitability are the successful development and regulatory approval of the Sanofi kick program and successful commercial execution by Sanofi when both the Covid and programs.
Speaker Change: Okay.
Speaker Change: We define profitability as GAAP operating profit less noncash items, such as stock based compensation and depreciation.
Speaker Change: Our expected breakeven revenue for 2027 is approximately $225 million.
Speaker Change: We estimate this breakeven amount by starting with our target of approximately $250 million for R&D plus SG&A spend in 2027, and then adjust to remove $25 million in expected noncash items.
Speaker Change: As a reminder, the kick launch milestone is $225 million and its achievement would allow us to realize this goal.
Speaker Change: Breakeven sales from Sanofi on Covid and kick of over $1 billion and $2 5 billion, respectively were combination of each could achieve the same result via royalties to novavax.
Speaker Change: As noted.
Speaker Change: The achievement and timing of each are the key to enable our path to profitability.
Speaker Change: This could be further supported by our expectation that we will add additional cash flow from new business development agreements.
Speaker Change: A few guiding principles related to our $250 million of core spend profile include the expectation that we would only invest beyond this amount. If we are being reimbursed by others or established a cash runway to enable efficient value creation and had exceptional day.
Speaker Change: For a program that supported greater investment.
Speaker Change: We expect to achieve significant revenues and cash flows from our Sanofi agreement. However.
Speaker Change: However, since we are reliant on Sanofi is forecast, we're unable to provide guidance for 2025 related to Sanofi as COVID-19 royalties and kicked milestones.
Speaker Change: And these would be additive to our 2025 revenue framework, we're sharing today.
Speaker Change: Please turn to slide 12.
Speaker Change: Yeah.
Speaker Change: A few comments about 2025 and its importance as a transition year for Novavax.
Speaker Change: From a financial statement perspective, you'll see our revenue line change as we increased emphasis on licensing and royalty revenue from partners and pursue potential grant revenue opportunities as we decreased emphasis on product sales.
Speaker Change: Our operating expenses are expected to decrease significantly as we eliminate the cost and complexity associated with global commercialization activities and focus on key value producing R&D programs.
Speaker Change: For 2025. These R&D activities primarily include the completion of our kick flu investment towards partnering.
Speaker Change: And support for Sanofi as clinical and commercial activities.
Speaker Change: In addition, we will begin targeted investments in our early stage programs.
Speaker Change: During 2025 look for a number of important updates and catalyst that track our progress.
Speaker Change: From Sanofi. These include preparations for commercializing they've exited the U S BLA action and advancement of the two Sanofi kick development programs.
Speaker Change: We expect to share the status towards achievement of $225 million and anticipated milestones under the Sanofi agreement.
Speaker Change: From the Novavax kick flu program, we expect initial study cohort results by mid year.
Speaker Change: We will also keep you abreast of the latest business development activities as we continue to create value from our technology.
Speaker Change: As demonstrated in 2024. These BD related announcements can come at any time and we are engaged with the key industry vaccine players on this front.
Speaker Change: And finally, we are planning for an Investor day in the second half of 2025 to share important updates from our early stage programs.
Speaker Change: Please turn to slide 13.
Speaker Change: Yes.
Speaker Change: I will begin with key highlights from our full year 2024 financial results.
Speaker Change: <unk> reported total revenue of $682 million of this U S and European sales were the primary contributors to our $190 million of product sales and.
Speaker Change: In addition, we recorded $492 million from licensing royalties and other revenue.
Speaker Change: During 2024, as we continue to transform <unk> into a more lean organization, we both strengthened our balance sheet by reducing our current liabilities by approximately $500 million and improved our cost structure by reducing full year 2020 for R&D plus <unk>.
Speaker Change: G&A cost by 40% compared to full year 2023.
Speaker Change: For 2025, we're targeting to further reduce R&D and SG&A expenses by another 30% at the midpoint and are guiding to spend of between $475 million to $525 million.
Importantly.
Speaker Change: We have successfully executed on actions that will reduce our go forward operating expenses by over $250 million compared to 2024 related to both the transition of commercial lead responsibilities to Sanofi beginning in January 2025, and the sale of our Czech Republic.
Speaker Change: Like manufacturing facility at the end of 2024.
We ended 2024 with over $1 billion in cash and receivables that benefited from the 200 million sale of the Czech Republic facility to Novo Nordisk.
Speaker Change: In addition, and in the fourth quarter, we earned a 15 million milestone under the Sanofi agreement that we expect to receive in the first quarter of 2025.
Speaker Change: Please turn to slide 14 for a more detailed review of our fourth quarter and full year financial results.
Speaker Change: For the fourth quarter of 2024, we recorded total revenue of $88 million compared to $291 million in the same period in 2023 and these total revenue results were in line with our expectations.
Speaker Change: Product sales for the fourth quarter of 2024 were $50 million with the majority coming from the U S market.
Speaker Change: Fourth quarter 2020 for combined R&D, and SG&A expenses were $183 million and reflect a 43% reduction from the same period in 2023.
These reductions are accelerating and based on this we believe we are on track to further reduce our cost structure in 2025 and beyond.
Speaker Change: A key addition to our fourth quarter results was the $52 million gain related to the sale of our Czech Republic manufacturing facility that closed in December.
Speaker Change: As a result.
Fourth quarter loss of 81 million reflects an almost $100 million improvement compared to the prior year.
Speaker Change: Please turn to slide 15.
Speaker Change: Yeah.
Speaker Change: We are committed to streamlining our operating expenses to enable value creation.
Speaker Change: We are targeting a $1 5 billion and an 85% reduction to R&D plus SG&A expenses by 2027, when compared to 2022.
Speaker Change: With the achievement of $1 billion of this reduction through 2024, we are well on our way to achieving this goal.
Speaker Change: For 2025, we expect our R&D plus SG&A to be between 475, and $525 million and intend to invest approximately 70% of this spend in R&D to drive shareholder value as we allocate our resources against the highest return activities.
Speaker Change: The majority of our 2025 R&D expense relates to the completion of our investment and the kick in flu program towards partnering and supporting the Sanofi agreement.
Speaker Change: A smaller portion of the spend is presently directed towards our early stage preclinical programs.
Speaker Change: Compared to 2024 and beginning in 2025, we anticipate a greater than $250 million improvement in our operating cost structure, resulting from over $170 million in savings from the transition of lead commercial activities to Sanofi and approximately $80 million in savings.
Speaker Change: From the sale of our Czech Republic manufacturing facilities.
Speaker Change: Please turn to slide 16.
Speaker Change: Since 2022, we've made significant progress towards reducing novavax as current liabilities by $1 3 billion and over 50% in 2024 alone we decreased current liabilities by $481 million.
Speaker Change: We are highlighting the status of our current liabilities, excluding deferred revenue as this results in a balance of less than 500 million at year end 2024, a decrease of over $900 million.
Speaker Change: We share the sensitivity analysis as the vast majority of deferred revenue is limited cash flow implications and further reinforces the significant improvements achieved over the past 24 months that has us well positioned as we enter 2025.
Speaker Change: Please turn to slide 17.
Speaker Change: Now turning to our 2025 renminbi revenue framework.
Speaker Change: By reinforcing that our 2025 revenue framework currently excludes Sanofi royalties Sanofi kick and matrix M related milestones and <unk> product sales at this time.
Speaker Change: This means there may be revenues in 2025 that are additive to our expectations for adjusted licensing royalties and other revenue.
Speaker Change: We expect our adjusted full year 2025 licensing royalties and other revenue to be between 300 and $350 million.
Speaker Change: This includes the following components and contributions.
Speaker Change: $175 million milestone to be earned upon the approval of the COVID-19, BLA, which has a <unk> date in April.
Speaker Change: Two separate 25 million milestones to be earned upon the transfer of the marketing authorizations for the U S and EU markets.
Speaker Change: $15 million in revenue recognition related to the earned COVID-19, pediatric database lock milestone achieved in the fourth quarter of 2024.
Speaker Change: $35 million in revenue recognition related to the Sanofi agreement upfront payment received in 2024.
Speaker Change: $25 million to $50 million and cost reimbursement from Sanofi related to select R&D and technology transfer activities, and finally zero to $25 million in other partner revenue royalties and adjuvant reimbursement associated with our collaborations with the chairman.
Speaker Change: Stay tuned on our 'twenty, one and our collaboration partners for COVID-19 vaccine, including the chairman's to SK bio and Takeda.
Speaker Change: As the year progresses, we will evaluate our ability to update and add more revenue components to the 2025 revenue framework.
Speaker Change: Please turn to slide 18.
Speaker Change: As noted we expect to create significant value from all the Sanofi related revenue components.
Speaker Change: I will take a few moments to share more details on three components currently excluded from our 2025 revenue framework. These are Sanofi royalties.
Speaker Change: To Sanofi kick and matrix M related milestones and three <unk> product sales.
Speaker Change: First for Sanofi royalties.
Speaker Change: Sanofi will initiate lead commercial responsibility for the 2025 2026 vaccination season in select markets, including the U S.
Speaker Change: On a recent earnings call Sanofi communicated that the upcoming 2025 2006 season will be a learning year wed.
Speaker Change: We look forward to supporting Sanofi is 2025 launch and long term commitment to commercializing our COVID-19 vaccine as a reminder, <unk> is eligible to receive royalties in the high teens to low 20% on Sanofi sales.
Speaker Change: And Sanofi kick and matrix related milestones.
Speaker Change: <unk> is eligible to receive up to $350 million in phase III development and commercial launch milestone payments associated with the Sanofi influenza COVID-19 combination products and.
Speaker Change: In addition, each new vaccine using matrix M.
Speaker Change: <unk> is eligible to receive up to $200 million and launch and sales milestones and a mid single digit sales royalty for 20 years.
Speaker Change: Finally for the <unk> product sales.
Speaker Change: During the first half of 2025, <unk> will continue to sell <unk> in the U S. As he transitions to market to Sanofi beginning with the $2025 26 vaccination season. These.
Speaker Change: These sales are expected.
Speaker Change: <unk> to be immaterial.
Speaker Change: New <unk> will sell <unk> commercial supply to Sanofi for the 2025 and 2026 seasons and the reimbursement of this supply will be recorded as product sales.
Speaker Change: Regarding our EPA agreements.
Speaker Change: <unk> is working to amicably negotiate and deliver doses or when appropriate exit agreements with the goal of these activities to be cash flow neutral or favorable on a go forward basis.
Speaker Change: Okay.
Speaker Change: Returning to our discussion of cash and cash flow.
Speaker Change: Based on our current operating plan, including the multiyear expense targets.
Speaker Change: We have highlighted a path to our goal of maintaining at least a year and a half to two years of cash on hand at all times and.
Speaker Change: In addition, today, we have mapped out for investors our view on the path to profitability and value creation for Novavax.
Speaker Change: We look forward to sharing additional updates as we seek to improve <unk> financial performance cost structure and strength to deliver shareholder value.
John Jacobs: With that said I'd like to turn the call back over to John for some closing remarks.
Speaker Change: Thank you Jim Please turn to slide 19.
Speaker Change: In 2025, we intend to build on our accomplishments from 2024 and drive value through our new corporate growth strategy by focusing on our three strategic priorities number one executing on our <unk> partnership and then doing so successfully demonstrate that we are a partner of choice.
Speaker Change: We're ready to leveraging our technology platform and pipeline to forge additional partnerships.
Speaker Change: <unk> three advancing our technology platform and early stage pipeline to help foster additional partnering and growth opportunities in.
Speaker Change: In closing 2025 will be our first year operating under our new growth strategy.
Speaker Change: Our significant year of transition for Novavax, where we will continue to lower our operating expenses with the goal of making our organization more lean while executing against our new strategy to drive near and long term value through existing and potentially new partnerships with other companies through our proven technology platform and through our emerging new early stage pipe.
Speaker Change: Fine.
Speaker Change: This means that we will be generating revenue from milestones and working to build momentum on potential future royalties versus booking sales of our own in the cobot market.
Speaker Change: The shape of our company will change further the way we will earn revenue is changing from past years and the way we intend to grow our business in the future will now be based on R&D innovation and partnering for selling one asset in a competitive marketplace.
Speaker Change: Back to our roots back to what we believe we are good at and back to doing what are people love to due.
Speaker Change: To innovate and help to take on some of the world's biggest health challenges.
Speaker Change: Thank you all for joining us today and thank you to all of our employees for their continued efforts in advancing our business.
Speaker Change: How'd of our accomplishments to date and excited about the opportunity to drive future value for our strategy in 2025 and beyond.
Speaker Change: I'd now like to turn the call over to our operator for Q&A operator.
Speaker Change: Thank you we will now begin the question and answer session to ask a question you May Press Star then one on you touched on phone.
They are using a speaker phone please pick up your handset B Corp question Vickie.
Speaker Change: So if I draw your question please.
Speaker Change: Please press Star then two.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Roger Song: Our first question is from Roger song from Jefferies. Your line is now open.
Roger Song: Great. Thanks team for that.
Speaker Change: Date, and then take your whole question or two from us.
Speaker Change: One is for the 2025 2026 Colby C them.
Speaker Change: Partnership with Sanofi, how much prep work had been are in progress.
Speaker Change: The new administration and <unk>.
Speaker Change: J, J, Keith, particularly any potential pros and cons.
Speaker Change: At <unk>.
Speaker Change: And they'll see the Cola vaccine.
Speaker Change: Is the only protein based Colgate vaccine. So that's number one number two is for the upcoming phase III initial.
Speaker Change: Kick in the floor cohort read out in mid year, what will be consider as a part in the bowl.
Speaker Change: We'll file at USG can partner after the data. Thank you.
Speaker Change: Roger Let me take your first question and I'll ask for a clarification on the second just to track with you and thank you for your questions. Good to hear from you Roger.
Speaker Change: So first of all we see our vaccine and I think the public does as well as an important differentiated option.
Speaker Change: So we're excited to be able to offer a protein based option to U S. Consumers and look forward to continued partnership with Sanofi, which has been strong and going very very well and now also with.
Speaker Change: With the New administration, I think we share the mutual goal of improving the health of all Americans and we look forward to the coming season in that regard Roger would you mind just clarifying your second part of the question for US. Please.
Speaker Change: Yeah. So the first question is for the phase III the kitchen floor initial cohort data readout midyear, what would be considered as a partner or bowl.
Speaker Change: Profile and seeking a partner after the data.
Speaker Change: Alright, let me hand that over to Roxanne drug drug out our new head of R&D Rec Sandra.
Speaker Change: Thank you Roger for that question.
Speaker Change: So the first cohort Oh that was enrolled in the phase three we've provided additional immunogenicity and safety data.
Speaker Change: Would complement the data that we already have available we do believe that that additional data can be used for a better design of.
Speaker Change: The phase three trial and obviously it will contribute to the safety database.
Speaker Change: That particular profile would be of interest for a potential partner.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Thank you.
my Yang: Our next question is from my Yang from Tony <unk> from B Riley Securities. Your line is now open.
Speaker Change: Good morning team, thanks for taking our questions and congrats on the progress.
Speaker Change: Are you able to comment on any recent BLA label interactions with FDA.
Speaker Change: And two maybe.
Speaker Change: Question any any subsequent steps being blond for CDC ACI.
Speaker Change: As you think about the <unk>.
Speaker Change: Jane update that would be needed.
Speaker Change: On the 26th season, and what sort of visibility you have on dynamic preparedness fee associated with access to the low end of the new administration in light of that.
Speaker Change: H five N one funding newsy.
Speaker Change: And the last 24 hours.
Speaker Change: I have a follow up.
Speaker Change: Thank you Mike So three questions. There first progress on DLA, So I'll, let John <unk> handle that one I believe your second question was on recent news around ACI piece. So on that one it's really wait and see that meeting was postponed so where we're not going to overreact to that at all let's see what that means in that these are important meetings an important advisor.
Speaker Change: <unk> committees to companies in the U S. G and we'll look forward to participating in that robustly when the news news comes forward that it's back on.
John Jacobs: John did you want to handle the BLA question for Mike, Yes, sure. Thanks, John Hey, Mike.
John Jacobs: While we can't comment on specific FDA interactions. What we can say is that we are actively in conversation is very positive and very productive and we're moving towards the Purdue date in.
John Jacobs: In April and are looking forward to making it through that process. So.
John Jacobs: I'll leave it there and say that.
John Jacobs: Those FDA interactions are all have been very positive and supportive.
John Jacobs: And Mike You said you had a follow up question as well.
Speaker Change: Can you give me a comment on the last part of my question on edge plug N. One funding.
Dave: And any anything Dave I know you are looking at a obligation I think it makes sense.
New data and some very helpful.
Dave: And taking that forward any thoughts there.
Dr. Sandra: Yeah, I'll, let direct Sandra comment or et cetera.
Dr. Sandra: So our study in nonhuman primate was positive we do have immunogenicity data that is supportive to actually a one dose vaccine on our protein based platform with the matrix adjuvant that is there.
Dr. Sandra: Very important we know that other platforms may require multiple administrations all the vaccine in order to provide protection.
Dr. Sandra: And then equally prime population in a context of a pandemic.
Dr. Sandra: We do believe that <unk> data that was generated in animals could be replicated in humans that could have a very very positive.
Dr. Sandra: Outcome. It is too early to say, obviously, but we are working diligently on that particular program.
Speaker Change: Mike were working to seek government funding towards that and as an alternative is the only protein based alternative there at least currently.
Speaker Change: That's an important choice for consumers. So we continue to work with U S. G to seek funding for that asset.
Speaker Change: Very helpful and then second kind.
Speaker Change: Implied team here is looking solid.
Speaker Change: Indeed, they update second half of this year.
Speaker Change: Could you just maybe give us a little bit of a preview on that.
Speaker Change: <unk> programs.
Speaker Change: You may get the most updated data.
Speaker Change: Some of those on the list that you highlighted earlier and.
Speaker Change: Specifically, obviously interested in some of the recent developments we've seen so example, ecolab vaccine.
Speaker Change: Not not being positive and how youre thinking.
Speaker Change: <unk> addressed some of the unmet needs both in respiratory and also non dress the dougherty side of things. Thanks again for taking our questions.
Speaker Change: Right now we're in the experimental phase on these products pre IMD preclinical. So I think it's important that we hold our powder or just a little bit on that and give rock Sandra and our team some time to generate that exciting data, we hope to bring forth as much data as possible and are working to bring a fulsome update on progress across all four programs.
Speaker Change: We've shared with you in the second half of this year. So as that develops we will let you know more we do appreciate your interest and excitement are I have to tell you our team internally our scientists our entire company is very excited about what we're what we're starting to work on here in the new portfolio. Thank you.
Speaker Change: Yeah.
Speaker Change: Thank you. Our next question is from Chris Avianca from JD Cowen. Your line is now open.
Speaker Change: Oh. Thank you two questions first in what ways could the official FDA label to get over that.
Speaker Change: That's C difficile Mckinnon ebay search that you expect to have a wonderful pericarditis myocarditis any official label in.
Speaker Change: Second has San Jose provided Novavax with Santa Fe is initial in total estimated hotel with 19 vaccine sales in 2025.
Speaker Change: Thank you.
Speaker Change: So Chris I'll take the second question and then give John <unk>. Your first question.
Speaker Change: If he is not projecting sales right now and so.
Speaker Change: If we did have information on that internally, we won't share that theyre not projecting that publicly but we're excited to have an incentive fees hands, they're a global leader in vaccine commercialization and were very excited to see what they can do with our product. This season and forward. John did you want to take Christmas. Other question, Yes, again, we can't talk about specific interact.
Speaker Change: With FDA.
Speaker Change: But certainly we can talk about what is going to be on or not on the label.
Speaker Change: As we're still in conversations with FDA about the BLA and then also remember that we have to go through a strange strange process and we are dependent upon the <unk> meeting to occur in a timely fashion to give us some guidance there.
Speaker Change: We're under.
Speaker Change: Active surveillance circulating strains.
Speaker Change: But there is yet some decision making to be done so not anticipating anything significant changing to the label.
Speaker Change: Other than whatever the decisions are made regarding strain for the 'twenty five 'twenty six season.
Speaker Change: Okay.
Speaker Change: Operator next question.
Speaker Change: Your next question is from Alex <unk> from Bank of America. Your line is now open.
Alex: Hey, guys. Thanks for taking our questions just two from us first.
Speaker Change: <unk> plans to partner the kick and flew for future development just to clarify that the expectation here now as an additional phase III will be required in that you'd partner ahead of ahead of that study and any color on flexibility here on partnerships. That's it says that the COVID-19 component with Sanofi.
Alex: And then just maybe.
Alex: Maybe one for Roxanne draw on the new early pipeline assets I'm curious if you could elaborate on the new RSV program as it maybe.
Alex: Maybe based on your prior RSV asset or is it maybe.
Alex: Maybe leveraging a different approach given given more recent learnings.
Alex: The field, maybe you could just expand on that a little bit. Thank you.
Alex: Hi, Alex. Thank you for the question regarding kick I think is rock Sandra was saying you know we're looking forward to the data readout on our initial cohort, which will help further inform next steps from a clinical development perspective, and then we're seeking a partner to take on that that funding and development all through to full commercialization, which is in line with our new corporate.
Speaker Change: Strategy to out license assets technology create new partnerships and collaborations to drive value Rux, Andrew I'll, let you comment on our RSP combination.
Speaker Change: So as far as our RSV combination we are leveraging both the lessons learned from the past and the new AI and machine learning computation on resources.
Speaker Change: That will allow us to enhance the structural stability.
Speaker Change: To better look at Immunogenicity and to combine multiple versions of the different pathogens in order to actually come up with a combination that is meaningful for the patients and to tackle the unmet medical need so it isn't.
Speaker Change: Just a plug and play with what was done in the past, but it's really taking all of those lessons.
Speaker Change: And coming up with a much better product.
Sandra: Thank you Sandra and John Trevino as some additional commentary, yes, just to add a little bit right rux.
Speaker Change: Being new to the organization and assessing all of our pipeline activities to Youre absolutely right right. This is just not a redo of something in the past.
Speaker Change: You might be making reference to kind of our.
Speaker Change: RSV programs.
Speaker Change: Changes to the antigen construct are embedded in this new program.
Speaker Change: The addition of matrix to the program and as Russ said all of the lessons learned from the Covid program during the pandemic.
Speaker Change: <unk> put us on a significantly better and improved path with RSV. In addition to the fact that it's now would be a combo.
Speaker Change: Which is another differentiating and significantly important to the commercial market and unmet medical need.
Speaker Change: Thank you I appreciate the question.
Eric Joseph: Thank you. Our next question is from Eric Joseph from Jpmorgan. Your line is now open.
Eric Joseph: Thanks. Good morning, just a follow up question on the kick program can you talk about what your <unk>.
Eric Joseph: <unk>.
Eric Joseph: Outlook is with respect to.
Regulatory requirements or what needs to be satisfied for the purposes of approval.
Eric Joseph: Approval, even though would be in the hands of a potential partner is the expectation that immunogenicity would be satisfactory for approval or do you anticipate efficacy.
Eric Joseph: Being a requirement here.
Eric Joseph: To what extent is the.
Eric Joseph: The initial cohort or the readout from the initial cohort midyear.
Eric Joseph: Sure.
Eric Joseph: It means to us for additional regulatory interaction and getting.
Eric Joseph: Feedback on that point thank you.
Eric Joseph: Thank you good to hear from you Erick and now obviously, we're still working with the regulatory authorities on the pathway forward to your point that data will be informative into that into that process and as we continue to work through with them to a final conclusion, we'll communicate that appropriately.
Speaker Change: Okay, great. Thanks for taking the question.
Eric Joseph: Okay.
Speaker Change: Thank you and your last question is from Vernon Bernardino from H C. Wainwright. Your line is now open.
Vernon Bernardino: Hi, and good morning, everyone. Thanks for taking my question and congratulations on progress with operational efficiency.
Vernon Bernardino: Regarding the strategy change in composition of the seasonal flu vaccines, whether in 2025 2026th season.
Vernon Bernardino: Those of you that the flu vaccine for the 2020 for 2025 season wasn't particularly effective.
Vernon Bernardino: Kevin.
Speaker Change: What we've seen so far.
Speaker Change: Can you comment on perhaps what you think if there is any changes in.
Speaker Change: Perhaps strategies on the composition of the seasonal flu vaccine for the.
Speaker Change: 2025.
Speaker Change: Susan.
Speaker Change: The phase.
Phase III part of the care program. Thank you.
Speaker Change: Bob Rux, Andrew would you like to take that one from Vernon.
Speaker Change: Okay.
Andrew: Thanks, John.
Speaker Change: We.
Speaker Change: We.
Speaker Change: No.
Speaker Change: Current plans to extend the phase III beyond.
The initial cohort that you heard about already.
Speaker Change: So influenza strains for the upcoming season.
Speaker Change: We're obviously tracking that.
Speaker Change: And.
Speaker Change: If and when we identify a partner that may become more relevant.
Speaker Change: Of course, we will will align with the public health authorities, whether those be U S. W. H O et cetera in terms of strain selection.
Speaker Change: Okay.
Speaker Change: Great and how lake.
Speaker Change: Follow up do you think.
Speaker Change: Manufacturers can wait for the strengths of vaccine before.
Perhaps manufacturing for vaccine at risk.
Speaker Change: Need to occur.
Speaker Change: Okay.
Vernon Bernardino: Thank you for the question Vernon, we're not going to speculate on that at this time and obviously, we don't have a commercialized flu vaccine either so better not to speculate let's wait and see how things play out here go forward.
Speaker Change: Okay. Thanks, and congrats everyone. Thanks for taking my question.
Vernon Bernardino: Thank you good to hear from you Vernon.
Vernon Bernardino: Same here.
Speaker Change: Thank you that concludes our question and answer session for today I will now turn the call back to management for closing remarks.
Speaker Change: Thank you for joining our call today, everyone have a great close to the week.
Speaker Change: Okay.
Speaker Change: Thank you <unk>.
Speaker Change: Orion has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
Speaker Change: Yeah.