Market.
Yeah.
Great market, I think. Testing the mic, yeah.
Well, good afternoon and welcome back to TD Cowen's 46th Annual Healthcare Conference. We're delighted today to be hosting Novavax. Joining me from the company is CEO John Jacobs, CFO Jim Kelly, and Head of R&D Ruxandra Draghia. John, maybe to kick off Q&A, the company is successfully executing its growth strategy, but maybe for investors that are less familiar with that, can you provide a high-level overview of what the company is doing out there?
Yeah, thank you, Chris. You know, in the last three years we've executed a successful pivot away from a company that was solely focused on COVID-19 with our one asset made from our technology platform to a company now that's focused on out licensing that technology, partnering it out with the goal of exponentially seeing the impact of that technology on society and on value in the future for our company, and then supporting that with R&D, Chris. We do that through three key pillars Rux can touch on later on today. First and foremost, generating data as further proof points of our technology. Also working on expanding the utility of our unique Matrix-M adjuvant matrix platform. We're working on new formulations of Matrix, for instance, like dry powder.
We're also working on completely new set of Matrix-based adjuvants with the goal of having a portfolio of adjuvants in the future that can be targeted and selected, selectively targeted to very difficult to treat diseases, including beyond infectious disease into oncology, which we're currently exploring. Last but not least, we also have an early-stage pipeline of assets we intend to bring through phase one, potentially phase two, with the intent of partnering those out and using that also to generate that data and learn more about where we wanna take Matrix-M in the future. Exciting times proven out by first and foremost Sanofi, but then more recently Pfizer, which we just announced in Q1 this year. Very exciting to have Pfizer on board with up to two assets that they can use our Matrix in.
We also have a potential pipeline of partners behind Pfizer as we started that journey of reaching out and letting companies explore with our Matrix technology through material transfer agreements and providing supplies of Matrix so they can see what it can do to unlock potential in their own portfolios of vaccines. We have numerous parties. In fact, we're seeing more interest than I can recall in the last three years since I started in our technology right now today than before. Very exciting.
Wow. with so much opportunity ahead, what are you looking forward to in 2026? What, which data points or readouts or updates should investors hone in on?
Well, obviously continued execution of our new strategy post pivot here. That's really important. That includes, you know, the furthering of our current partnership plans. Looking for Sanofi for feedback on when they're going to initiate clinical trials for their potential combination vaccines. That's the combination of their world-leading flu vaccines and our proven Nuvaxovid COVID vaccine. In addition, other milestones from a partner like Sanofi and royalties from this fall season for COVID, where Sanofi has the first opportunity for a full cycle launch of our COVID vaccine, starting with early retail negotiations the end of last year through now under a BLA with all of the pieces they need in place to leverage their know-how and expertise appropriately.
Looking for Pfizer to take initial steps with the one area they have selected to explore Matrix-M in and to select that second field that they're eligible for and make that announcement. Last but not least, very important, new partnership announcements which we're intending to be able to deliver should we continue to succeed on that front, as well as data coming out of our pipeline from Ruxandra.
You touched a bit on this topic. This is one topic we get a lot of investor questions on. What are the key success factors for winning share in the U.S. COVID vaccine market? In what ways is Nuvaxovid really well-positioned in the hands of Sanofi going into the 2026 season?
Good question. Jim?
Hey, certainly. So as we enter into the fall season of 2026, 2027, especially in the U.S. market, really excited to have Sanofi at the lead, commercializing with what is effectively their first full year being able to use all the key commercial tools at their disposal. Sanofi has made it no secret that one of the things that they really appreciate about Nuvaxovid beyond the efficacy is the tolerability profile. You should certainly expect to hear more about that in their efforts. Importantly, three things come to mind as they embark on this first full year. One, the importance of contracting. I think what folks know about the COVID season, it takes a significantly long contracting cycle.
It usually goes about from January through March, April each year to be prepared for the fall. Finally, this year will be the first year they're able to negotiate with under a full BLA, a six-month shelf life, and integrated into their core contracting platform. That's part 1. Part 2, related to the profile I mentioned a moment ago, Sanofi had the ability to pilot some commercial messaging in select markets that last year that they can now pull through as a part of their go-to-market strategy. A third piece to watch out for is Sanofi has likely the best proprietary distribution network for non-retail in the industry, and so the ability to take full advantage of that network as well.
When it comes to expectations, we of course, can't speak with them in what they do. What we know from their flu business, their market-leading enhanced flu business, is that they're a methodical competitor. Just watch and you know, it would be our expectation that they'd seek to build share methodically over time, as they unlock the full value of Nuvaxovid.
Just for the benefit of investors, the royalty rate you have on that, on that opportunity is?
Yeah. On the Nuvaxovid sales, it's high teens to low twenties on net sales.
Oh, great. Maybe looking at Novavax's internal pipeline and technology, you've talked about partnering as a core part of that strategy. Can you share some of the recent updates and highlights on your partnering efforts?
Yeah, you know, what we had shared publicly, Chris, is that we had in Q4 of last year, another MTA signed by a large pharmaceutical partner in that regard. Just before earnings in a relatively early timeframe this year, we had two additional MTAs. One was an extension of an existing MTA with a large top 10 pharmaceutical company who came back to Novavax and asked to expand their exploration of our Matrix-M into another field. We amended that and had a second field allowed there. Most recently, an oncology company signed up with us also through an MTA. That's a key point in our process.
Again, it gives potential partners the chance to experiment with Matrix-M in their own laboratory with their own assets and technology platforms, and a chance to see what we believe it can do with their own eyes, with their own scientists. We saw that with Pfizer. They came back and signed a meaningful deal with us, for years to come now with a potential opportunity that's significant. We intend to have others come on board as well through that process.
maybe digging into that a bit more, what types of questions or hypotheses could be evaluated under an MTA, and how does that differ from the questions that Pfizer could explore under its full formal collaboration?
When we are talking about an MTA, so a material transfer agreement, typically the Matrix-M, they're using it in conjunction with their vaccines, be it vaccines where they're facing a lot of competition or maybe things that have been put on a high shelf and now they are to get a new life, on a new vaccine platform, or with new antigens being viral or bacterial or now in the oncology field. There are a multitude of areas where that early exploration, typically in animal experiments is happening.
If the data is turning out to be positive, both from the point of view of immunogenicity, maybe efficacy, if they would run a challenge study, safety, of course, Matrix has a very good safety reactogenicity tolerability profile, then they can move to the next step where they would explore the use of Matrix, potentially in human clinical trials.
That would be covered under a more formal collaboration like Pfizer's?
In a more formal collaboration, indeed.
Great. Maybe going back to your Q4 earnings call, you highlighted plans to develop a portfolio of new adjuvants. What's the rationale for doing that? Can you provide any update on timing for those efforts?
Yeah, it's a very good question. Of course, we do have Matrix-M. Matrix-M has, you know, again, a very nice safety tolerability profile. Moving into new applications, for instance, on oncology, one might want to tweak the type of immune responses that are generated, for instance, more CD8 positive cells, or cellular-mediated immunity that would be important for some hard to treat infectious diseases and in oncology. That was the purpose of even asking the question, can we actually do some tweaking to the Matrix platform, to the adjuvant platform in order to be able to generate other types of immune responses that might be used in these new applications.
I believe you mentioned a dry powder inhaler formulation longer term. Could you provide any color on that?
Yes, surely. Aside from the new adjuvants that we referred to in the previous question, we thought that Matrix-M as it is, can be delivered in different other formulations. For instance, one would be the dry powder if one envisions, you know, an intranasal administration, for instance, of a vaccine or an oral administration over the vaccine, or where, you know, that vaccine would have to be delivered in climatic conditions that call for prolonged thermostability. All those can be achieved potentially through a dry powder formulation.
Very interesting. Maybe moving to oncology. You mentioned this is a specific area of exploration. Can you expand upon this and kind of put some timelines around those efforts?
We are actually exploring the use of Matrix-M and these new Matrix-based adjuvants in oncology together with partners. To be very clear, as John likes to say many times, we are not going to be the next oncology company. There are many partners out there that again, have not seen maybe the full potential of their antigens. They are hard to treat tumors. A type of immune response might not be ideal or one might have to go to a personalization. Really develop an antigen for each and every one of the patients. We believe that using our technology, we can again target the platforms that would enable to target some different types of tumors and different categories of patients.
Maybe moving to Novavax's internal pipeline. You highlighted your C. diff vaccine. Can you maybe just touch upon the unmet need for a vaccine like C. diff?
C. difficile is an infection that occurs typically in hospitalized patients, typically in individuals that are 65 and older, and they're going in the hospital to have a specific surgery. Unfortunately, they can be either. Typically, you have already colonized your intestinal tract with C. diff, but it can either reactivate or really, one can have these hypervirulent strains that are actually acquired in the hospital, which, of course, are treatable with antibiotics. The problem is that this bug likes to create spores. Spores are not actually responding to antibiotics, so they are colonizing further the colon, and it entails repeat and repeat and repeat infections. A vaccine, in this case, would be extraordinarily useful because it would prevent either the primary infection and/or the recurrence of the disease.
Currently, there is no such vaccine on the market.
You touched upon some of the data you're seeing for your candidate vaccine. Can you maybe talk about what makes you excited in the data that you're seeing?
The data from our early preclinical studies is very exciting for a scientist like I am. It's hard to say I love this one more than the other. We have actually-
You just made Rux's day, by the way.
Yes. We have actually took the learnings from previous work done by...
Yeah.
... the scientific community when they've designed their own C. diff vaccines. We've looked at different antigens to incorporate. We've asked the question, can we possibly generate mucosal immunity? Can we have some durability of our immune responses? All that was actually taken into account when designing our programs.
That's well said, Rux. I mean, I think very importantly, we put a lot of time and energy and effort into deciding where to make these lean bets in our pipeline. One thing that we all said to, you know, our scientific team is, you know, "Tell us why. Convince us as a management team why we should pursue C. diff where others have failed with a vaccine, and what do you know about or suspect about why those vaccines might have failed in the past, and how can we apply those learnings?" Clinical trial design, approach to antigens, approach to toxins, the way that we're putting together the antigen, what Matrix-M might be able to do differently, et cetera. We're convinced by Rux and her team that there's a shot on goal here that's worth trying, and we're very excited about what we're seeing early on.
We're being careful about what we share and how much we put on the table because we think we've found an interesting path forward to continue working on. We're very excited so far about what we're seeing, and we'll keep you informed as we can over time.
Great. Well, it seems like a major unmet medical need. Hopefully-
Yeah
... we'll see some good progress there. Maybe moving to the financials. Novavax is in a much stronger financial position today. Can you remind us of your cash runway?
Certainly. When we provided an update just last week, we shared that we've got an expected cash runway into 2028, so over two years, and that's quite a journey since where we were just a few years ago. The importance on how we characterize that runway is that that is based on our year-end cash and receivables, our Q1 non-dilutive cash generated from the Pfizer deal and from a new credit facility, plus, of course, reimbursements from partners in the future. That said, no incremental cash to the company, right? No new BD deals, no royalties, no milestones. We believe we've put the company on a very good financial footing to now enable us and investors to really focus on the value creation to occur that, and that lies ahead of us.
Maybe looking out to some of the financial outlook you've given, what are the pushes and pulls for achieving non-GAAP profitability as early as 2028?
Right. The significance of that goal of achieving a non-GAAP profitability is profound. I mean, we are super excited about all the things we can do in R&D for our technology, but we also recognize we have shareholders and that we anticipate that over time, we're gonna be able to generate orders of magnitude more cash flow into the company through royalties and milestones versus this lean infrastructure that we're maintaining to drive innovation. As you look at, as early as 2028, a primary contributor, and there's multiple contributors who can get you there, a primary is, for example, Sanofi's advancement to market of their IXCHIQ vaccines. It might be one, it might be two. There's a $225 million milestone.
To offer context, we recently guided that 2028, our target is $200 million or below for R&D and SG&A. You get a picture of exactly what a P&L break even might look like. Part one is the potential milestone from IXCHIQ, but also consider royalties growing from the Nuvaxovid sales. Look at the potential for royalties from a IXCHIQ vaccine. Think about new partnerships in different milestones and cash flows that can come from there. We are certainly looking forward to driving to this not just profitability, but throwing off cash as a company beyond that point.
Great. Do we have any questions from the room? If not, maybe as we close every panel, at our conference, what could be the biggest surprise or change at Novavax over the next decade, maybe from a financial standpoint, R&D standpoint, and then overall corporate strategy standpoint?
We're intending for it not to be a surprise. I think the biggest change is what Jim just finished saying, which is that throwing off cash orders of magnitude greater than the lean infrastructure we're building and targeting. For the last three years, you know, we've told our investors that we're reducing costs. We came from roughly a $1.7 billion SG&A and R&D number, and even if you take out reimbursements from APA contracts, about a $1.4 billion-$1.5 billion range roughly, all the way down to this target in 2028, which we're on track for right now to $200 million or below in SG&A and R&D minus reimbursement from partners.
Certainly that lean infrastructure puts us in a good position, Chris, and we're looking to put multiple shots on goal through multiple partners with multiple portfolios of products that incorporate our technology platform really throughout licensure and partnering over time. You've got Sanofi, you've got Pfizer. We intend to put new partnerships with both large, mid, and small-sized pharma companies on the table there, each potentially with multiple assets. You know, even if some don't work out, some might, and then you have lots of shots on goal there to generate revenue, and we're bridging that with milestones. Some upfront payments we would like to consider in the vast majority of contracts that we would put forward. Milestones for clinical development, regulatory success, commercial and sales success, and royalties for a long period of time trailing. That's the goal.
I think it might come as a surprise to some investors as we announce a deal because we can't really say much about these things as they're underway behind the scenes in the negotiation stage. Really can only announce them, obviously, once they're inked. Hopefully people start to see this is something we're going to be able to do. That's our intention over and over. It shouldn't be a surprise that we achieve that over time.
Looking forward to seeing all the progress along the way. Thank you.
Thank you, Chris.
All right. Thank you.
Thanks, everyone.
Thank you.
Appreciate it.