Are we ready to go? Are we live? Oh, hello, everyone. Hi, I'm John Jacobs, CEO of Novavax, and I'm joined here today by Jim Kelly, our CFO, and Dr. Ruxandra Draghia, who heads up our R&D. I want to thank everyone who's here today to join us and listening in to our presentation at the Goldman Sachs 46th Annual Global Healthcare Conference. Today's June 11, 2025. I'll advance the slide to our cautionary note regarding forward-looking statements. If I took the time to read all of this, we would use our full-time allotment, so I'd ask that you please review this statement and all of our risk factors in our SEC filings, as well as on our corporate website, before making any decisions about investment in our company.
I'll move on to an opening slide, and we have this slide here for those of you who are more new to the Novavax story in the last few years. We've evolved our business model from one that was a vertically integrated commercial company to a model that focuses more on R&D and diversified partnerships. On the top right of the slide, you can see from 2020 to 2022, the company was a vertically integrated commercial organization with a singular focus on its first product launch, a COVID-19 vaccine called Nuvaxovid, and the vast majority of company resources, expense, personnel, effort, and energy were spent bringing that vaccine forward and introducing it to the world.
In early 2023, I had the good fortune to have the opportunity to join Novavax as a new CEO in January of 2023 with the mission to change the focus of the organization for long-term growth and change the strategy. The reason I came to Novavax was how excited I was about our proven technology platform, which we'll touch base on a little bit later in the presentation. I truly believe that that time, and even more so today, after two and a half years with the company, in the potential value of this technology and what it can do not only for the value of our corporation, but for global human health. During 2023, in my first year, we launched our second product, which is a malaria vaccine that was developed in a collaboration with Oxford University and the Serum Institute of India.
Of course, our signature deal with Sanofi announced in May of 2024, which is a collaboration and licensing agreement that has multiple potential revenue streams, which I'll touch base on in a few moments. Very importantly, post that deal announcement, we formed our new corporate growth strategy. We unveiled that late in 2024, and 2025 is the first year that we're now a full year into this strategy and very excited about what it bodes for our future. Moving on to the next slide. What is that strategy? Very simply, this strategy is designed to deliver value through two areas: R&D, in-house R&D, early stage right now, building out a pipeline of high-value assets, and secondly, partnerships to drive value creation. From our R&D asset platform, we have two late-stage assets, which Ruxandra will talk about later, as well as our early-stage platform that Dr.
Draghia has put into motion as of Q1, and our well-known Matrix-M adjuvant. In line with that strategy and that two-pronged approach to long-term value growth, we have three strategic priorities for 2025. The first is to optimize our Sanofi partnership. The second is to leverage our technology platform and pipeline to forge additional partnerships beyond the Sanofi deal. Third, to advance our technology platform and our early-stage pipeline. What do we mean by advance the platform? It's our intention to expand the utility of Matrix-M, and Dr. Draghia will talk a little bit later about some of the things she's been working on, including potentially new formulations of Matrix-M, to broaden the utility of this important asset. Very importantly, supporting this new growth strategy and our priorities is a lean and focused R&D and business development operating model.
Now, in fact, over the last two and a half years since I've joined, we have removed over $2 billion of liabilities from our balance sheet. We have eliminated over $1 billion in annual SG&A and R&D expenses for the organization. It is our plan that by 2027, we will have reduced the headcount in this company by approximately 80% since I've joined. We have done that without sacrificing our capabilities to support our partners and/or to drive this strategy. It is very important. A couple of other points on this: when it comes to partnerships, we announced in Q1 that we had an MTA signed with a top 10 pharmaceutical company by market cap definition to explore our Matrix-M with assets in their pipeline.
We also announced that an organization that had signed prior with us an MTA to explore bacterial antigens expanded that to now explore viral antigens as well. That occurred in Q1. Finally, we signed an agreement with an organization that has an oncology asset to experiment that asset with Matrix-M in the lab. Those are three additional moves toward future partnerships along the lines of this strategy on the BD side. On the early-stage R&D pipeline, Ruxandra announced four new early-stage programs in our pipeline that we launched in Q1. Just so far, the first half of this year, you see four new programs on the R&D side. You've got multiple irons going into the fire for potential partnerships above and beyond Sanofi.
Our focus is obviously on optimizing that relationship with our outstanding partner, Sanofi, leveraging our tech, advancing our tech platform as we continue to reduce our costs and have a strong financial base for the future. I mentioned earlier that what excited me most about Novavax when I joined the company back in 2023 was the tech platform that really fuels innovation. It's the foundation for why we can do a strategy like this and believe we can grow value and have a strong impact on global public health. It's comprised of two key components: our recombinant protein-based nanoparticle technology platform, which is highly immunogenic and efficacious. As you can see on the left side, clinically proven and has multiple positive factors when it comes to development of combination vaccines, tolerability, refrigerator stable, et cetera. Our Matrix-M adjuvant, this is our proprietary adjuvant.
It can be added to vaccines to help induce a stronger, more potent, and longer-lasting immune response. May also help reduce the cost of production by using less antigen in a product, potentially enable new vaccines to be developed for certain poorly immunogenic pathogens. Let's spend a few moments on strategic priority one, our partnership with Sanofi, and then I'll hand the mic over to Ruxandra to talk about strategic priorities two and three. Jim Kelly, our CFO, will close the presentation out from there. Taking a moment on Sanofi partnership, as we said earlier, the Sanofi partnership has the potential to drive growth through multiple revenue streams. Moving to the left side, upper left of the slide, it includes a license to co-commercialize Novavax's current standalone COVID-19 vaccine worldwide.
The second component, license to Novavax's adjuvanted COVID-19 vaccine for use in combination with Sanofi's flu and other vaccines. Both of those verticals, the license to commercialize our vaccine as a standalone and the license to combine our COVID vaccine with their flu and/or other vaccines, are associated with hundreds of millions of dollars in potential milestones and royalties for years to come. The third lever in the contract, there's a non-exclusive license to use our MatrixM adjuvant in new vaccine products should Sanofi choose to develop new products with our adjuvant. Each one of those eligible for hundreds of millions of dollars in milestones and mid-single-digit royalties for up to two decades post-launch. Finally, Sanofi took a minority, less than 5% equity investment in Novavax when we consummated the deal last year. We don't intend to stop there.
In fact, we believe that future partnerships will further validate our tech platform and have the potential to provide significant opportunity to drive value creation, increase access to our technology, and benefit global health. We continue to pursue additional partnerships today and look forward to sharing any of those as they may materialize in the future. Moving on to slide eight, I won't go through the table here with you today, but it's there for your reference. It outlines that Sanofi partnership has potential to provide durable cash flows over time, cash flows that were immediate upon the consummation of the deal last year, near-term, mid-term, and potentially long-term. You can see that here on the chart. Fourth column over shows milestones and what they're associated with.
The next couple of rows show the royalties associated with different aspects of the deal we just walked through, as well as the cost reimbursement platform that comes with the deal. Moving on to slide nine, since a lot of the near-term value from that arrangement comes from our first vaccine that the company produced, our COVID vaccine, just want to highlight the unmet medical need here. COVID continues to cause severe illness. It does not seem to be going away. In fact, more recent data indicates that up to four times higher, four times more people are admitted into the hospital with COVID than with flu. Yet the graphic on the right of the slide indicates that COVID vaccine coverage rates are less than half of those of flu. What does this mean?
One might draw the conclusion, well, the bar is smaller on the right than the left, therefore COVID's a smaller market than flu. Another conclusion is the market is moving toward combination vaccines. The majority of consumers indicate a preference for combination vaccines. Several companies, including Moderna, Sanofi, and we, plus others in other arenas beyond COVID and flu, are making or designing COVID vaccines and executing clinical trials in that arena. As combination vaccines come to market, it is our belief based on data and our partners' belief that they've shared based on data, that that should have the opportunity to grow the market. What we see here is an opportunity to address a medical need where four times the number of people around the world are getting hospitalized due to COVID than flu, to get that vaccine in one convenient shot along with their annual flu vaccine.
That makes us excited about the future of this market potential. Slide 10 talks about, so how do we begin to differentiate ourself from mRNA and other vaccine platforms? Let's start with Nuvaxovid tolerability. Real-world evidence here that was presented by Ruxandra recently at the World Vaccine Congress shows a consistent clear differentiator versus mRNA is the tolerability of our product. In fact, approximately 39% fewer symptoms were seen in participants in this study. You look at local pain, tenderness, arrhythmia, swelling, systemic fever, fatigue, muscle pain, malaise. Time and time again, Novavax delivers a nice option for consumers that has consistently better and clearly differentiated tolerability, which matters to consumers. It also matters in combination vaccines.
What we've shown is that our Matrix-M, quite possibly uniquely, enables the development of combination vaccines where you can load in less antigen, multiple antigens, but less volume of these, get the immune response you're looking for without paying the price on tolerability necessarily. That is a big advantage that we see to our Matrix-M adjuvant. We see it beginning to play out here just with our platform that includes Matrix on our COVID vaccine. Thank you for your time on strategic priority number one. I'd like to hand it over to Ruxandra Draghia, our Head of R&D, to cover strategic priorities two and three. Ruxandra.
Thank you very much, John. Moving to priority two, and that relates to the value generation through partnerships.
Our partnership with the University of Oxford and with Serum Institute resulted in the R21 malaria vaccine, which is recommended in children as young as five months of age. It is one of two vaccines recommended to prevent malaria in malaria endemic areas. It is very consequential, and this data comes from Gavi, so from the Global Alliance for Vaccines and Immunization, that malaria vaccine will save 180,000 children's lives by 2030. We are proud to be part of offering one of these solutions. As part of our Sanofi partnerships, we welcome the news that Sanofi is developing two combination products using Nuvaxovid with both Flublok and Fluzone H igh-D ose. These are currently in phase I/II studies. It is also very encouraging to see that both vaccine candidates were granted fast-track designation by the FDA.
Lastly, as John mentioned, Sanofi licensed the rights to develop combination vaccines using our, aside from using the COVID-19 vaccine, actually to develop other vaccines using Matrix adjuvant. We are looking forward to hearing what those new programs would be. Aside from that, in addition to our current partnership, there is significant and growing interest in Matrix-M. We have signed multiple MTAs, as John has mentioned in his presentation, including with two top 10 pharmas to explore Matrix-M in their own laboratories and a preclinical collaboration to explore Matrix-M in a partnered cancer vaccine. Other MTAs in collaboration with academic investigators are exploring novel approaches with multiple vaccine candidates. Furthermore, other partnerships include a vaccine design in the context of preparedness against H5N1 avian influenza. We are looking forward to developing these potential partnerships in the future.
The versatility of Matrix-M was demonstrated through its successful application as an adjuvant co-administered with a broad array of vaccine types and targeted diseases, including, as you can see in this current slide, recombinant protein vaccines, nanoparticles, virus-like particles, and other preclinical studies have been undertaken with purified recombinant protein vaccines and even an adenoviral vector vaccine. In all these studies, we have seen an enhanced immune response, a broadening of the immune response while keeping that favorable reactogenicity profile that John has mentioned. We are not stopping here. Current and future opportunities in our own laboratories or together with collaborators will focus on combination vaccine, assessing combinations of mRNA vaccines, and in oncology and other applications. Indeed, we are also working on the Matrix formulation itself, in particular in the context of the oncology, and hoping to advance that particular field and generate exciting data.
We have talked about combination vaccines. John highlighted the desire both of medical professionals and of the general public to actually receive these combination vaccines. It is very interesting to see that this market research suggests 83% of those who receive both influenza and COVID vaccines and 69% of those who receive one would adopt a combo bearing no material impact to reactogenicity and efficacy. Because of this type of finding, we have actually designed a study that would address exactly that. Our CIC and stand-alone flu vaccine candidates enter an initial cohort of a phase III trial, which we have announced and we start enrolling in December 2024. The objective of this descriptive trial was to assess the safety, reactogenicity, and immunogenicity of our CIC and stand-alone flu vaccine candidates compared to Fluzone High- Dose and Nuvaxovid, respectively.
This particular study enrolled approximately 2,000 adults over the age of 65, with participants randomized to one of the four arms shown in the slide. The doses of each of the components are highlighted in the slide. I'm not going to actually read all of that. As mentioned, this cohort was designed to provide descriptive data on three flu strains, so H1N1, H3N2b, and the SARS-CoV-2 component with a goal to inform a future registrational phase III program. As we've communicated before, we intend to partner both vaccine candidates to further advance development. Now moving to the data and to the study results. Results from this observational initial cohort showed that both CIC and stand-alone flu vaccine candidates induced robust immune responses and were well tolerated. Nearly all, so more than 98% of solicited adverse events were mild or moderate in severity.
Both vaccine candidates showed immune responses to the vaccine strains with GMFRs ranges from 2.4 to 5.7. Moving to the next strategic priorities, strategic priority three, we are here talking about advances to our technology platform and early stage pipeline. As we have announced previously, aside from the priorities that we have described in priority number two, we have announced four preclinical programs which are currently developing in our own labs. Those are an RSV combination, the H5N1 avian pandemic influenza vaccine, Varicella-zoster virus vaccine, and the C. difficile vaccine. The details of each and every one of these vaccines and why we are pursuing it are captured into this particular slide. I would like to say that we are actually using a lot of information derived from AI and machine learning on the design of the antigens, on the study design, on the models.
Our decision-making, both in the selection of the programs and how we are moving these programs forward, is actually informed both from internal and external sources. Moving to the actual programs, the H5N1 avian flu program is actually addressing an unmet medical need as are all the others, but each and every one a different unmet need. Here we are talking about the vaccine that could potentially produce protective levels of immunity after a single dose in primed animals. This particular study will be soon published in a top-tier journal. We are standing ready to join pandemic preparedness efforts, and we are currently pursuing funding and partnership opportunities for this program. Furthermore, we are talking about combination vaccines.
This is why we are moving towards an RSV combination, which is not only building on our historical expertise, but really taking the data available in the literature and asking the question, can we build a better vaccine that could address a multitude of needs? Our technology has the potential to improve the current standard of care and enable a more tolerable, less reactogenic shingles vaccine. This is the reason behind the third program. Finally, C. diff. Why C. diff? There is a significant unmet medical need with no approved vaccine. Our technology has the potential to facilitate the development of a multivalent adjuvanted vaccine that could have a right enhanced activity. With that, I'm turning to Jim.
All right. Thank you very much, Ruxandra.
In addition to advancing our priorities to improve human health through our validated technology platform, our plan is to do so with a lean operating model as a means to drive shareholder value. Here is exactly what we mean. Our intent is to drive to profitability. By this, we mean non-GAAP profitability, pull out non-cash items like stock-based comp, but drive to non-GAAP P&L profitability as early as 2027. How do you get there? We introduced our 2025 revenue framework, where you can see through a combination of milestones as described earlier and the beginnings of royalties that we see can be exceptionally valuable over time through the Sanofi agreement and additional partnering agreements over time, we have the ability to drive significant top-line growth. In parallel, we are driving down our cost structure.
As we had described our R&D and SG&A for 2025, what we have shared with everyone is our intent is to drive our core spend of R&D and SG&A to $250 million or below. When you do so and you adjust for our current CIC investment and Sanofi support, you discover that we're well on our way towards that goal. The combination of all these things, driving top-line revenue through partnering and royalties, plus driving down our cost structure, are key ingredients to driving long-term value. As we continue to monetize our innovative technology through additional partnering deals, we believe there is great value to be created as we move forward. With that said, what do and what should everyone expect as we move forward? Keep a close eye on additional Sanofi-related milestones.
Exceptionally happy to report last month the BLA authorization and the receipt of the $175 million related milestone. Watch for additional partnerships. There is significant interest in our technology as described today. Also watch for the advancement of our early stage pipeline. We are planning for an investor day in the second half of this year where we can further report back on the important advancements we're making with that pipeline. In terms of milestones, I mentioned a moment ago the BLA approval in May. Today, exceptionally important, we announced our CIC and stand-alone flu data. Important because we believe we have got ourselves a dataset that's partner-ready when we have every intent to partner those programs. As we move forward, Sanofi begins to commercialize our COVID vaccine this fall in both the U.S. and Europe.
As Sanofi has noted, this year is a learning year for them, which makes perfect sense. We just got our BLA approved. As we have heard, 2026 is going to be the year where they have the full cycle to prepare and drive our COVID vaccine in the marketplace. In addition, in 2025, we will be transitioning the US and European markets. Both those markets upon transition, $50 million milestone will be available to the company. Finally, something we are all watching closely are those two phase I/II CIC programs that Sanofi has ongoing. Upon completion of them, the potential to initiate a phase III , one or more themselves. With all that said, this is just the beginning. We could not be more excited of the progress to date and the opportunity that lies ahead of us. With that, I would like to thank you.
Thank you, Jim. Thank you, Ruxandra. Thank you, everyone, for joining us today.