Alrighty. Thank you, everybody, for joining. For those of you who do not know me, my name's Dave Risinger, and I'm very much pleased to welcome a number of members of the Novavax Senior Leadership Team to be with us here today. Thank you for making the trip to Miami.
Our pleasure.
Much appreciated. To my immediate left is John Jacobs, Company's CEO, Ruxandra Draghia, who is, I guess your formal title is Head of R&D, but maybe it is more scientific or technical than that. Did I get that correct?
Yes. I had the pleasure of joining Novavax to head the R&D activities.
Excellent. Excellent. Obviously Jim Kelly, who is the company's CFO. Thank you for joining us. I thought it would be great to have you kick off, John, with your vision for the company and where you're taking Novavax.
Look, we envision a future Novavax where our technology is amplified to impact billions around the world and really transform healthcare through our vaccine technology platform, David. The last two years have been focused on really cleaning up our P&L, building a good cash runway, and beginning to really frame the monetization of our technology and the broadening of its utility throughout the industry. It is very exciting. We have achieved that so far. We enter 2025 in a new chapter for the company's history under a new strategy for growth. Rather than trying to market one product that we made from our technology platform against world leaders with a lot of leverage and muscle in the marketplace, we have outlicensed that to a Sanofi, a leader in global vaccine commercialization and development.
We are focusing back to what we are best at, what we like to do as a company, and back to our roots. That is R&D, innovation, and partnering in more business development. Through those two vehicles, we intend to drive future value for the company. Very exciting time in the company's history.
Excellent. Yeah, it's great to have you, particularly after you set the stage with your recent disclosures. With respect to what you had touched on in terms of NUVAXOVID and Sanofi leading the commercialization efforts, I know that there are limited things that you can say because Sanofi has to make its own statements and its own disclosures. Obviously you're deferring to Sanofi as is appropriate. How would you characterize what they've said and how are you positioning it for Novavax investors?
Thank you for that setup. Obviously, as you noted, we won't and can't speak for them as good partners, but we're very excited that they have our technology in their hands. Sanofi brings a global infrastructure that's been proven to succeed in commercialization. They're the leader in the 65 plus arena with their Fluzone High- Dose in the flu marketplace. We're so excited that they're combining our COVID vaccine with two of their flu vaccines that they announced at the end of last year and that this year is the first year. They've called it a learning year, David, in their disclosures. 2025, as we still await full licensure from FDA, our pending PDUFA is in April of this year. Should that be successful, then our new vaccine, our COVID vaccine, will be under full licensure this year.
It's Sanofi's first year taking on a COVID vaccine, our vaccine, to market alongside their flu. They've couched it as a learning year in 2025. Most importantly, they're taking that technology and combining it with our world leading flu vaccine, the Fluzone High- Dose, as well as their other flu vaccine that targets the 50- 64 age group to make an attempt at two combination products with our COVID vaccine. Should they succeed and then bring those forward and market them in the future, that could be, along with our new vaccine, three products that we would be generating royalties from with a world leader in vaccine commercialization. We're very excited that they have the product and we're glad to have them as a partner.
Excellent. Is there anything more that you can say about that PDUFA in April? Obviously, it's a bit of a whirlwind in D.C., but then again, NUVAXOVID is a well-proven product.
That is true. All I can say about that is that we think that and believe that we are on track for that. We have seen consistent interaction from FDA with nothing has changed in their rigor and their communications with us beyond what we would expect as a normal process. We look forward to see what the outcome is in April.
Excellent. That's great. It would be great to hear more about the late- stage combo program. I would appreciate your perspectives.
There's two aspects to that, David, I think they're important to share with our audience today. One is the business side, and then I can hand it over to Ruxandra and Jim for further commentary on clinical and if you'd like to add anything, Jim.
Certainly.
To that. From a business perspective, David, we've said publicly that it's our intention to outlicense that asset or both of those assets to a partner. We have an active Phase 3 program right now. We initiated with a 2,000 patient cohort, which is not a complete Phase 3, but it's an initial cohort of roughly 2,000 patients to generate additional safety and immunogenicity data that would help inform a final Phase 3 approach for potential licensure of the asset. That will end our commitment to investment in the product as this 2,000 patient cohort or so wraps up and we wrap up our dialogue with regulatory agencies on the best pathway forward. That data should further inform a potential partner, should we identify a partner and get that done, to form an appropriate Phase 3 approach toward an intended licensure of the product and then commercialization.
It is our goal to partner that out, reducing our expenses, our infrastructure, and our cost basis to be much more in line with our R&D focus and our partnering focus and allow a partner to bring those assets forward. Should we get a partner aligned for it? That is our intent. Anything to add, Rux or Jim, to that?
We focused on this 2,000 individuals cohort to begin with, as John has mentioned, to add to the safety database for this particular category of individuals of older than 65 with a combination vaccine and then generate immunogenicity data that will help our partners design a better Phase 3. For instance, in the statistical methodology based on the data that is generated in this first cohort, one can model better how many individuals can be enrolled in a phase three. That is a, for example. We are very excited. Data should come by mid-year and we will surely share it with everyone when it becomes available.
Got it. Can you just provide a little more color? You said you have an intention to outlicense both assets.
Correct.
Just explain on that more. Meaning you have the combo, but are you continuing when you said both assets, you're talking about that single combo or an additional combo?
Thank you for that. Let me clarify, David. We have two actual assets in the one program that we're assessing.
I see.
The first is what we call our CIC or Combination Influenza COVID vaccine. Then secondly, we also have a stand-alone flu vaccine that's being assessed in that program. It would be our intention to outlicense both if possible.
Yeah. Got it. Okay. Excellent.
I would say, David, that the combination CIC market and also flu and COVID is a really good example of how we're seeking to leverage our technology across multiple players. We don't have to be the only one to develop a product to win in a category. To take a look at the size of this market and how we're approaching it, global COVID is $9 billion, right? Global flu is $8 billion. A large portion of each of the individuals are going to combine into this combination market. Sanofi sees it. That's why they're developing not one, but two products in the area. We've got a third. The way we see it is we've got a technology that can play a role across multiple manufacturers. We'll be agnostic. We'll continue to partner across innovators and just have our technology help others win and we'll benefit.
Take that logic and apply it across the entire $75 billion vaccine market. That's what we're doing.
That's well said, Jim. What do we have to partner with, David, right? If we're taking a two-pronged approach to driving value for the future Novavax, one through R&D with Ruxandra's leadership, generating new assets out of our pipeline, early proof of concept with the intention of outlicensing those to partners and creating collaborations with partners who can help to fund and bring those to full commercialization. Secondly, we have our proven Matrix-M adjuvant platform. Matrix-M, we believe, has applicability across multiple vaccine platforms.
You can either add Matrix-M to existing vaccines, and we believe mRNA, polysaccharide-based, protein-based, other types of platforms that may exist already in the market and potentially make those vaccines more immunogenic without adding to the side effects profile and potentially less expensive to manufacture, reducing COGS because you require less antigen to get a similar or greater effect using Matrix-M. That could be beneficial to companies who are looking to defend a current franchise from competition, to strengthen a current offering that they have right now, or to take on competitors as they are seeking to build out a pipeline. If you have missed in development and you are a company who wants to add some new vaccines to your pipeline, Matrix-M may be in some instances there a solution to help bring something forward where you could not have done so before.
We can help other companies to expand their portfolios in the development phase. We can help them to protect existing vaccines through life cycle management by adding and mixing Matrix-M to what they have. In our Sanofi deal, we did not give Matrix-M to Sanofi exclusively. We maintained exclusivity for Novavax. They have unfettered access to Matrix-M as part of that deal with Sanofi last year with the exception of their flu vaccine. They cannot add it to that, but anything else, every new asset they create with Matrix-M, we are eligible for up to $200 million in sales milestones as well as single- digit royalties for two decades after launch. That is in addition to any royalties we would generate from their sales of our COVID vaccine or if they succeed, sales of either of their combination vaccines with our COVID.
That deal has opportunity for us in the near term, the midterm, and the long term as well as Sanofi for a win-win. Yet we retain the IP, we retain the exclusivity and the ability to outlicense that very same tech platform to anyone else we want to in the industry so they can help advance their own portfolios, even if it means competition for ourselves and for Sanofi. Final point there, if you had three combination vaccines or four in the market, let's say Moderna's is out there, let's say Sanofi gets both out there somehow and then we find a partner and execute that, in that scenario, you would have four combination vaccines, three of which would be generating royalty revenues for Novavax.
I think that another element to remember is that the consumers as well as the healthcare providers are highly preferring combination vaccines. Consumers, the latest study to somewhere between 60% and 70%, healthcare providers is more than 80%. Adding Matrix to these different combinations will allow a lesser antigen dose, for instance, or a higher immunogenicity with an adjuvant that has a very favorable safety tolerability profile. Again, it's a win-win no matter what combination you are going to put together if we are adding Matrix on the top of it. The fact that we are currently generating data Matrix plus different vaccine platforms will help us in building those relationships that John is talking about.
Well said, Rux. Matrix-M can actually help to facilitate the development of combination vaccines.
Exactly.
Because by its nature, it allows you to reduce antigen load. Therefore, you can put more antigens in, take on more diseases with one shot in its most simple form without adding too much to the tolerability profile in a negative way. That's what's possible with Matrix-M. Certainly, no one technology is a solution for everything. It won't work for everything, but that's the potential of this tech platform.
Excellent. That's a great rundown. Thank you. With respect to following on, last week you announced a material transfer agreement for Matrix-M. Could you just provide some additional color on that?
I'd like to provide a lot more. I can't do that yet, but what I can say is, look, beyond Sanofi, two top 10 pharmaceutical companies defined by revenue, global revenue, have signed MTA agreements with Novavax to experiment with Matrix-M in their portfolios. As we said earlier, we believe Matrix-M has applicability to be added on to existing vaccines and/or help other companies bring vaccines forward or enhance that development in their pipeline. With Sanofi and two additional top 10 companies now experimenting with Matrix, we're excited about what that might mean. What it could mean theoretically is should those companies have success in their early experiments in the lab, they may want to come into a license deal with Novavax, for instance, to go into full clinical development on an asset or more. We'll have to see how that plays out.
It has to work. It has to fit strategically with what they want. That MTA is an important first step and formal step to getting access to our adjuvant and actually working with it in their laboratories to see what utility it may have.
Maybe you could just talk a little bit more about that. Just so we have a sense, and not that I'm going to really expect you to put odds on it, how do you think about the likelihood that they could have success in their labs? With early stage deals, a lot of times the investment community thinks, well, maybe there's 3% odds of success of an early stage type of exploratory assessment, right, for early stage biotech. Obviously this is something completely different.
That's a proven platform.
Yes. Not that I'm asking you to put the odds on it, but could you just contextualize how validated Matrix-M is and how one should think about the optionality that an arrangement like that creates for the company?
I'll just say one thing that we've already shared in the public domain as a potential proof point or at least to give a bit of confidence that there's a reasonable chance for success depending on the type of antigen or product selected to mix Matrix-M with and that we took a vaccine that was publicly available last year, added Matrix-M to it, and in one of our earnings calls in the second half of last year, shared top-line data from that initial experiment showing that we were able to increase immunogenicity with that marketed product and therefore potentially also reduce the cost of goods for a product like that, making it perhaps more attractive, more defensible against competition, more aggressive versus competition, et cetera, in its product profile.
That's just one example where we've already seen early laboratory success in that type of experiment with a currently marketed product, though we didn't disclose which one. We did say it was a pneumococcal vaccine. It's very interesting. Just one of many examples.
Rux, anything to add on that Matrix-M?
Another good example would be the malaria vaccine, R21. Yeah. We have seen that that vaccine has the potential to complement whatever is available out there for the prevention of malaria. It's a vaccine that is given to pediatric population. I think that is a win-win in both sides. You're protecting from malaria, but the data, the safety data that is generated from those vaccinations is very impressive because we are talking about pediatric populations. They are as young as five months of age and it still works. While obviously, as John was mentioning, we cannot extrapolate to every pathogen, to every antigen, to every platform, the data that we have seen both internally and in testing these other different platforms is very encouraging.
Yeah. We've said that publicly that we're active under Ruxandra's leadership and testing in the lab our Matrix-M with available vaccines and with different vaccine platforms, mRNA, polysaccharide, protein-based vaccine platforms to show potential platform utility as well. As our business development team or strategic team is meeting with other pharmas, we assemble the data that we've been able to generate that may be enticing to them to start to consider and prove it out for themselves. There's no guarantees in science, right? We'd never make any promises and get over our skis on this. When you have the data, you have the data. We feel excited and relatively confident that there's a good opportunity and good chance that in certain circumstances, Matrix-M could really make a difference.
Let's say that that is the case. Let's say that that collaborating company comes back to you in 2026 and says, "We're really excited about what Matrix-M can do. We want to pay you a 3% royalty." If it's important to them for a blockbuster franchise that has very little SG&A in most cases, why wouldn't Novavax say, "That's wonderful. We're glad that we were able to tease your interest and now you're excited, but we think 12% is more appropriate"? I guess what I'm trying to say is for potentially very large revenue products, it would seem that you would have leverage if the validation is there for maybe higher royalties than, I don't know, I'm making it up, whatever you might just put on a piece of paper to start a thought process about what royalties you should be asking for.
Any thoughts on that?
I have a ton of thoughts on that, but what I can share with you on that is, look, take a look at the Sanofi deal. I would ask our audience and our investors to take a look at the parameters of that deal with $1.2 billion in an upfront and potential near-term milestones. It was $570 million upfront roughly between the upfront cash payment and the investment in our equity as a company and then $700 million in near-term milestones related to roughly half of that related to the transfer of NUVAXOVID, our COVID vaccine, to Sanofi into the marketplace, including a BLA approval should that happen. The other half tied to their advancement of their own combination programs, of which, as we said earlier, they started two, both of which were fast-tracked by FDA, by the way, last year. Interesting.
There were also different tiers of royalties, Jim, right, associated with different elements of that contract. When you look at the overall value of that Sanofi contract and the different tiers of royalties from mid-single digit up to the low 20s, depending on where you are with which asset and how that plays out in sales tiers and things, that's the range that we were able to negotiate with Sanofi, a very sophisticated vaccine company that develops and commercializes successfully. They saw what we have and they moved in that direction.
I would not say that is your guidepost, but it is at least a floor that you would consider looking at and saying, "Novavax ought to be able to negotiate something reasonable for this technology." The last point is, without promising any percentages or any outcome in a negotiation, we are in a much stronger position, David, now than we were the last two years, right? We now have a much healthier balance sheet that Jim can help to clarify for investors here today if you have questions about that, roughly $1 billion in cash on hand and a good runway ahead of us and proof points from Sanofi to our own COVID vaccine to the R21 vaccine that Ruxandra alluded to earlier for malaria that is out in the marketplace.
A proven platform, strong partner, world leader in Sanofi is a great partner and a validated proof points on our tech moving forward that we think give us leverage in negotiations.
Excellent. That's great. I do want to come back to the financials towards the end, but I'd love to also have you touch on how you've selected some of your early stage programs and what we should be watching next on that front.
The choice was through a very systematic exercise where we started with the BD implications, the unmet medical need, and where we thought that our platform actually can create a difference. In the four areas where we selected to play, the reasoning was a little bit different for each and every one of them. Of course, if we are starting with a history of the company focused on respiratory pathogen, H5N1 was a normal follow-up. Yeah. It is a program that we hope that would be adequate for a partnership with a government. That is not something that one would develop in any of the companies by themselves. Going a step forward, the RSV combination, there is definite unmet medical need when it comes to combinations. As I've mentioned a few minutes ago, it is very interesting to consider that we are not talking about RSV.
There are plenty of RSV-only vaccines there, but really looking at combinations, combinations that might be given at the same timing regimen as RSV, simplifying the administration and covering a larger number of pathogens. The next choice was VZV. There, the choice was really linked to can we create a difference using Matrix and design a vaccine that would have the same efficacy as the currently available vaccine, but really tackle the tolerability issue. We know that maybe 20%-40% of individuals who are vaccinated with the first dose are not going for the obligatory second dose because of the adverse effect profile. Many individuals are choosing not to get vaccinated. We think that we have a billion or more market out there where a lot of the individuals that would be actually targeted for that vaccination are not. Finally, we have chosen C. diff.
That's a very different, again, evaluation. We are talking about a disease where there isn't an approved vaccine, yeah, and where we think that with our new computational biology, AI, machine learning, and then learning also from the failures in the past from this competitive landscape, we can design a better vaccine. We have some preliminary data that is encouraging, has been published some years ago, but we took back and we've looked at how that can be improved and tackle that unsolved, actually, medical issue.
Thank you, Rux. We have our technology platform itself, David, including our Matrix-M adjuvant, which is really the core and the heart of value in that tech that we can outlicense to other parties to help make their vaccines either better from a development perspective, more higher odds of success, and/or help existing products they may have. What Ruxandra is describing is our new preclinical assets for them. These are very early stage. We're working on early proof of concept steps to bring them towards IND. Hopefully, as soon as next year, we could have one or more of those IND ready, but we have to prove that out first with the data.
The theory is that with the bird flu or pandemic flu, H5N1 vaccine, we might be able to, and we're hopeful that we can deliver a vaccine in that scenario in partnership with government that might be one shot versus two, that maybe the natural immunity people have plus regular flu vaccine could serve already as the precursor, and this would almost be a boost, whereas other technologies might not be able to deliver that. Imagine if you could have a non-mRNA protein-based option as an alternative that might, if we succeed in what we're targeting, we have to prove it out with the data and see how that plays out, but potentially offer that in one dose versus two. In a pandemic where you might have a dangerous level of lethality to that pathogen, it would be nice to impart immunity faster if possible from that regard.
That's the potential, and that's what we're seeking to try to prove out. C. diff, no one's been able to do that yet in the form of a vaccine, though outstanding companies are trying in that direction. We think our tech affords some advantages that could give us a chance to succeed there where others have not been able to. There's a wealth of learning from past failures of other companies and our own experiments that we can build upon to give us better odds for potential success. The value proposition there would be we might be able to be the first to pull it off. Let's see what happens.
With shingles vaccine or VZV, as Rux was saying, we would hope to develop a product profile that would have similar efficacy, at least competitive efficacy with the gold standard now, which is a very effective vaccine, but offer that with a much better tolerability profile. Perhaps if it works out, even one shot without the need for a booster. Yet to be proven, again, preclinical, but that's the profile we'd be seeking. RSV would be a triple combination and a vaccine that wouldn't interfere with the schedule of other vaccines, right?
It is very difficult to combine an RSV with a flu, for instance, or a COVID, not technically, but certainly from a scheduling perspective where you may have once every few years that combo and then back to the individual shots in between and then again versus one that is always on a regular routine schedule with a triple. That is the value proposition we are looking to prove with data. Until we have the data, we do not have it, but these are low-cost investments at this very early stage right now. We believe in our platform, and we are excited, and we are very selective to target markets that have billion-dollar-plus opportunity should you succeed with those types of profiles.
Asking different questions for each and every one of these early programs. Again, with this view of partnering, developing different opportunities for partners to come in.
What partnering would enable should we succeed with the data and then attract partners to these? That was also one of our filters, was how attractive would this be, right, to partners when we made the decision to pursue it. It would be we could theoretically, should we find partners early on for these things, monetize these assets sooner than if we held onto them ourselves all the way through Phase 3, right, to a commercialization and then have to maintain all that infrastructure and expense, which is not where we're expert, right? Where we're expert is on the tech side. We have a great proven platform and at partnering and working in collaboration with others to achieve the outcome we desire on it.
Excellent. That's a very helpful perspective. Thank you.
Thank you.
Oh, I think we are out of time, but why don't we just touch on, I guess the financials will refer, if you don't mind, to your last disclosures. I just would like you to touch on quickly, Washington, just quick thoughts, just any potential implications for the vaccine space. Lots of noise currently, but would love your thoughts.
Certainly lots of noise. It has not dampened our enthusiasm for our mission, our vision, and our technology and the potential, nor has it in potential partners as just over the past weekend, right, that we announced a large pharma signed an MTA to experiment with Matrix-M. It does not seem to be slowing down those of us who understand the value of vaccines and how they have really helped to change global health in a massive positive trajectory over the last 150+ years since we have been helping humankind with this type of technology go forward. We are not discouraged at all. We share with the current administration the desire to improve the health of all Americans and, frankly, people around the world. We think in partnership with them, there is a lot of common ground there to work from. For Novavax, David, you asked earlier about our BLA.
We haven't seen a change in the pace of FDA and the types of questions we're getting. We're not making any promises about what's happening on the government side, but all we can do is reflect our opinion of what we're seeing, and the energy towards us has remained very consistent and the same. We remain optimistic. Let's see how much of a distraction this may be currently versus an impact over time, but we still believe in vaccines. We're optimistic and look forward to partnering with the administration to improve health.
Wonderful. That's a great way to wrap it up. Thank you so much.
Thank you very much, Dave.
Appreciate you having us here today. Thank you.
Thank you.