Healthcare Conference. I'm Pete Stavropoulos, a Biotech Analyst for Cantor.
You're also a DJ, Pete.
There we go. With us, we have Novavax, and I'm pleased to introduce John Jacobs, CEO, Bob Walker, Head of Research & Development, and Jim Kelly, our CFO. With that introduction, please start off with an introduction of yourselves, snapshot of the company, for those not familiar.
Thank you, Pete. I'm John Jacobs, CEO, as you said. Bob Walker's to my left, Head of R&D, and Jim Kelly, our esteemed CFO. Let's talk about Novavax a little bit. Just for those who don't know us, Novavax is an innovative biotech company that has a proven technology platform in vaccines and potentially immunotherapeutics. With our nanoparticle protein-based platform for antigen development and our unique and differentiated Matrix-M adjuvant, which can help vaccines perform even better, driving immunity and potentially lower COGS and other things for other pharmaceutical companies when used in combination.
We've really transformed ourselves over the last three years from a company, Pete, who was solely focused on commercializing one vaccine, our COVID vaccine, during the pandemic, to a company now that's in a completely different arena, where our focus is out licensing our technology to global partners who have the infrastructure and capabilities to build portfolios of potential vaccines that might include our technology. Also, while maintaining our own R&D capabilities, we're making select bets to advance our own assets and expand the utility of our own technology. In fact, we're deep into exploration now on oncology potential, not just infectious disease potential. We'll talk a little bit more about that today.
And over that last three years, in parallel with developing and launching this new strategy, we have reduced our expense base between 80% and 90%, along with headcount, while maintaining key talent and capabilities and positioning the company with over a two-year cash runway to support the continued execution of our new strategy.
All right. You joined the company as CEO in 2023. You've been sort of steering the company forward with this new strategy. Just touch where you are and the outcomes to date for the strategy pivot, and how are you positioning the company for long-term value creation?
We're very pleased so far with what we've achieved in the strategic execution, and we launched the new strategy formally and fully in January of 2025, Pete. To date, we now have four of the world's top 10 pharmaceutical companies working with us, either as direct license partners, Sanofi and Pfizer, or through MTAs, material transfer agreements, where they get access to our technology and can experiment with that in their own laboratories. In fact, earlier this year, we announced one of the four top 10 was a new signee into this MTA arrangement with us and is a global leader, not only top 10 market cap pharma company, but a global leader in oncology as well.
Yeah.
We're really excited about where that could take us. Just a few highlights and examples of the progress we've made so far. As I just said, four of the top 10, we are having right now about 30 different unique areas of exploration. That's what our partners have access to right now across infectious disease and oncology targets, encompassing a wide array of tumor types, a wide array of viral and bacterial infectious diseases, and across a number of different types of vaccine platforms. If you take a look at those 30 areas of exploration that we talk about, encompass roughly half of that market opportunity in oncology and infectious disease. If a fraction of that works out in our favor and turns to license agreements, we're excited about the potential that represents for Novavax.
All right. Let's touch on Matrix-M tech platform. Give us an overview of what Matrix-M is exactly, where it is currently being used, and how are you thinking about leveraging for new vaccine disease areas? Bob.
Yeah, sure. Matrix-M is a saponin-based adjuvant, which is now available in two commercially available vaccines, Nuvaxovid, our COVID vaccine, and R21 malaria vaccine. That is a WHO pre-qualified vaccine and administered to millions of kids in Africa. Matrix has some unique properties, and now that we have had experience with literally tens of millions of people who have received Matrix and a Matrix-containing vaccine, we know that its safety profile, its tolerability profile, looks very strong. And-
I can attest to that because one vaccine I did take -
It lets you-
...was yours. Yeah.
It's also antigen-sparing. As an immune stimulant, it allows you to administer a smaller dose of antigen to get the same immunologic benefit. That has advantages, not only in terms of exposing individuals to smaller doses of antigens, but there's cost of production, manufacturing savings that go along with that that can be very important. We're leveraging Matrix in basically two ways. In the infectious disease portfolio, here we're focusing currently on hard to treat, hard to prevent infections, and C. diff is a perfect example of a candidate vaccine that we're working to get into the clinic. So difficult to treat infections would be one area we would expect to be able to capitalize on some of the properties that Matrix brings.
Right.
The other is in the field of oncology that John mentioned a few minutes ago. In oncology, it's all about turning cold tumors hot-
Yeah
...making them accessible to the immune system. Matrix has certain properties that we are excited about and we think could play a really important role in this exciting new area of oncology.
Yeah. I think it is overlooked, the fact that you actually have a very huge database of safety with Matrix-M.
Totally agree.
You have already signed the MTAs with multiple top 10 pharma partners. Can you sort of speak to the level of interest you are seeing around the platform and how you intend to translate this to a level of interest, this level of interest into new licensing agreements and sort of stable revenue?
Pete, I really appreciate the question because not only is there more interest than we've ever seen before in our technology at Novavax, behind the scenes from top 10 pharma, mid-size pharma, and small innovative biotechs, many of whom explore in the oncology arena, working with us behind the scenes, calling us, talking to us about maybe even signing up for an MTA, that first step. So more interest than we've ever seen since I joined in January of 2023. So it's almost like we say internally, facetiously, the secret's out about Matrix-M, with our potential partners and collaborations.
In addition to that, though, Pete, you see the excitement around vaccines starting to build again. It's like this waxing and waning a little bit over time historically. There was a bit of hesitancy with vaccines and some pressure from government officials and things like that. But what you're seeing with the news around Moderna-
Yep
...with personalized mRNA oncology vaccine options and a checkpoint inhibitor, Merck's KEYTRUDA, fantastic news for the whole industry, and I think for humankind, because it shows that there's a new approach that might be able to help to take on this scourge of cancer around the globe. We had started about 18-24 months ago when we launched our new strategy formally in 2025, for sure, with certainty, to pursue and explore the potential of Matrix-M and our technology in oncology. We're well into our own experiments.
We expect data in the coming quarters on those experiments. The top 10 pharma who signed with us earlier this year, who's a leader in oncology, we'll also see data from their experiments, which are underway in the coming quarters. We hope to see in the future, as part of our future vision, licensed partnerships involving targeted oncology immunotherapeutics and vaccine interventions over time. So really exciting to be part of this wave, and that excitement is building externally in the macro environment as well as behind the scenes with what we're seeing.
Got it. All right. You did mention back in April there was a new MTA signed with a top 10 pharma partner in oncology to explore Matrix-M in oncology. What do you believe Matrix-M could offer in the oncology setting from a mechanistic standpoint?
Go ahead, Bob.
Yeah. From a mechanistic perspective, I'll just build on some of the things that John said earlier. Again, it's about converting cold tumors into hot tumors. What Matrix-M is able to do is activate not only the antibody side of the immune system, but the cell-mediated T cell side. In oncology, you probably know, CD8 cells are the key critical killer cell. Tumor-directed immunity is, that story is all about activating CD8 cells, which Matrix-M has the ability to do. We've seen that, and we're continuing to explore that with our own R&D programs at Novavax. We have a variety of tumor models that we're exploring that exemplify cells from head and neck tumor, for example, colorectal tumor, pancreatic cancer, melanoma.
In these types of model systems, we're exploring the ability of Matrix-M plus tumor antigens to induce those very specific immune responses that we were talking about a moment ago. Our partners, and John mentioned this also, are also doing some of this similar types of work in their model systems or with preclinical experiments that are specific to the areas where they're investigating. Those are data that we expect to see in the coming months, and we're very excited about that. We already see early signs that are encouraging. Yeah, so again, mechanistically, I come back to that point, it's turning cold tumors warm.
Okay. And now we expect to see data generated internally, preclinical data or partners?
Both.
Okay.
Yeah.
That's good. So moving on to Nuvaxovid for COVID. Congrats on getting the recent approval for the updated formulation. Can you just provide us with an overview of where Nuvaxovid will be marketed this season, and by which partners, plus your views on the global market opportunity?
Jim, you want to take that?
Yeah, certainly. Happy to cover that. Pete, one of the critical things about the market that is being reinforced is that the burden of disease of COVID continues to be exceptionally high, even while vaccination rates are not reaching that equal parity with flu, which has a very similar burden of disease. Therefore, when we look at the market globally, I will start first with, A, who are our partners, what areas of the world are they covering?
Sanofi under our collaboration license agreement is the lead commercialization partner for Nuvaxovid in the U.S., in Europe, Canada, and major markets around the world. We have Takeda as a long-standing partner in Japan. We believe we have got some of the best partners globally in the respiratory space with Nuvaxovid. In particular, as we look at the U.S. marketplace, your timing of the question couldn't be better. Shipments to retail of Nuvaxovid occurred over the weekend.
We had approvals of Nuvaxovid right in line with the other vaccines in late August, shipments over the weekend. We just began to see some of the early vaccination data coming through public sources like IQVIA overnight. We are at the very beginnings of individuals looking to pick a protein-based option. You should expect in coming days the ability to get Nuvaxovid scheduled at your local pharmacy. Exceptionally important. In terms of the sizing of the market, we are seeing a global market for 2026, say approximately $5 billion, plus or minus, with an expectation, ex-U.S. data not as good as U.S., but expectation about a 50/50 split between U.S., ex-U.S. That gets you a top five market in terms of vaccines. COVID is still an exceptionally meaningful market. As we look forward where the market is going, it is combination, COVID plus flu.
Flu being a $5 billion-$6 billion market. When you combine where this market is going, COVID plus flu, and it is a $10 billion plus market, it is one of the top markets in all of vaccines. That is why you are seeing our partners, and in particular, you are seeing Sanofi lean into not only marketing Nuvaxovid, but the development of the combination of our Nuvaxovid plus their market-leading enhanced flu. That is what we are really excited about, is not only the ability of our partners to execute today, but where they are headed in terms of driving combination vaccines.
Of course, Sanofi, in the U.S. market, what are the sort of keys to grow the share?
Yeah, certainly. Part one is access to retail. The retail market is 85%-90% of the total marketplace. Well, step one, make sure you've got contracts and availability across all the major players. Check. They've done exactly that. They've stated as much. And in a timely manner. That season's starting now. So availability on the shelf. Part two is the pull-through of, hey, what's your direct-to-consumer look like? Are you activating consumers? The answer, yes, they're rolling out their new program. It actually started earlier this week, their new program, the digital program, direct-to-consumer, to help activate those looking for a protein-based option. So those are some of the critical keys to getting product out there. Now, I would say, when you look at Sanofi, they've got in the enhanced flu 2/3 market share. So they're like 70%+ in the enhanced flu market. How did they get there?
They did it by investing. Investing in data and methodically growing that business over time, which leads us to another critical success. Hey, are you generating real-world evidence and data? And they put out earlier this year something called the COMPARE study that showed the favorable profile of Nuvaxovid versus mRNA. And it built onto data we presented, the SHIELD-Utah study, SHIELD study, University of Utah, where we showed Nuvaxovid exceptionally favorable tolerability profile. So what we anticipate as Sanofi markets Nuvaxovid over time, methodically growing market share over time, and then combining Nuvaxovid with their market-leading flu combination product.
Yeah, and Jim, it's not just the U.S., right? They're launching in Canada, U.K., other markets around the world.
Exactly.
Sweden, they just recently had a win there. So there's a lot happening around the world, too, as they start to build that base methodically-
Methodically.
...of that business, and will penetrate that market successfully over time is our belief.
Okay.
Maybe we can just sort of switch gears, and you just did mention it, COVID-influenza combo. Recently, Sanofi shared that they were in advanced discussions with the regulators regarding the phase III study timing for their program using Nuvaxovid and their own flu vaccine. What are the next steps and potential timeline? Just share your views on the other global market opportunity there.
Jim, do you want to take that one, and I can add to it?
Yeah, certainly. In terms of their next steps, while we of course don't speak for our partner, they've been clear. They have said that they intend to be an early market entrant into the combination marketplace. All the incentives are there. The market's going there. They got a market-leading flu. Very recently, mRNA got approved in Europe. The incentive is there to certainly cover their home base as well. We have every expectation-
Wow.
...that in the near term.
Bless you.
Sanofi's going to be advancing their late-stage programs, pivotal programs, and as they described it themselves, they're in late discussions with regulators on the timing of the initiation of these pivotal studies for not just one, but potentially two combination products. That's where they are on the development cycle. In terms of the market opportunity itself, you heard me mention earlier, when you take COVID plus flu, this is a $10 billion plus marketplace. The opportunity to grow that market because the vaccination rate in 65+ is twice as high for flu as COVID. When you combine these products, it has the ability to lift vaccination of COVID and therefore expand the market. Importantly, given the burden of disease, it's great for public health. We're really looking forward to where this market's headed.
Yeah, Jim, we're excited about Sanofi's potential, assuming they do succeed, launch clinical programs and succeed and launch those products in Europe and the U.S. If they can leverage that world-leading flu business that has that 2/3 roughly market share, Jim, in the 65+ segment, where you have higher margins in Western countries on that and greater unmet medical need there. You see the consumers lining up that are 6+ to get that high-dose flu from Sanofi. There's a big incentive then why not get your both shots in one, if they have the combos. We can build upon that. Roughly half of the dollar value of the global flu market is in Sanofi's hands right now. Roughly a quarter of the combined COVID flu market in their hands right now, if you do that similar math. Then how far will they penetrate with Nuvaxovid?
This is their first full bite of the apple in the U.S. market. They're expanding launches into other countries that they've made public, including Canada, U.K., and others. As they start to grow that business, then we believe that they will continue to go forward and launch their combination vaccine over time, then leverage that market position to drive additional share and growth.
Okay.
They're well- positioned to succeed over time.
Of course. I'm switching gears a little bit. Just provide investors the scope of the terms of the Sanofi and Pfizer agreements, including on near and long-term drivers of cash flow. Also, how will the near-term milestones and royalties impact cash flow?
Well, excellent. I'll start first by acknowledging, wow, what a change in our business model here to unlock value. As an example, three years ago, we were a very large multinational company, just uniquely focused on pulling through COVID, with significant liabilities, right, and trying to get our cost structure under control. Today, are different, right? You got a cash runway of over two years. You've got on track to get to that lean, agile operating model. In the past three years, we've already brought in $800 million between upfronts and milestones across both Pfizer and Sanofi. When you bring in that $800 million, what you're doing is you're pulling forward those later cash flows we might have had to wait for on our own commercial efforts and bringing them into today to stabilize the company while getting our technology in the hands of market leaders, right?
That is an incredibly important strategic pivot to get our technology into as many innovators to drive public health, great access, and the stability and cash flow of the company. In terms of near term, what are some expectations? We have shared with investors our intent to drive to a non-GAAP P&L profitability as early as 2028. To do so, what do we need to do? On the cost structure we have guided to, that would imply, revenue is over $150 million, give or take. Therefore, what is happening as we are moving towards that? We are doing two things. You are watching us drive down our cost structure, while, in parallel, Sanofi in the near term, we are looking to royalties from the Nuvaxovid, plus milestones, which you mentioned earlier, plus royalties and milestones from our other partners, like Takeda and Serum Institute.
You are seeing the beginnings of that diversified revenue stream. Our intent, it is not just to break even. It is to have cash flows that are order of magnitude higher than our cost structure. That is how we are driving value. Along the way, what are some near-term milestones to look for? We have highlighted $200 million worth. $75 million linked to a tech transfer of our Nuvaxovid manufacturing. We said we anticipate having that mid-next year as we set up Sanofi to manufacture on their own.
The next one, or the next important one, $125 million that we earn when Sanofi initiates a pivotal phase III for their combination vaccines in the U.S. or Europe. When you look at those $200 million total in milestones, if you heard me mention earlier, we have cash runway through 2028. That incremental $200 million will put us into 2030s. The stability of the company is coming into sharp focus on a financial stability basis, and therefore, we can focus more and more on unlocking incremental cash flows through execution of our partners and potentially new deals, which we are talking about today.
What a journey the last three years, Jim.
Incredible.
A lot of hard work to put the company in this position where the vast majority of our energy is now looking forward at a very bright and exciting future.
Exactly.
I would like to ask. You don't have to answer. The light bulb went off in whose mind or combination of minds to basically restructure the company and leverage Matrix-M?
The question, Pete, is who thought of that?
Yes.
Well, I never take personal credit for anything. It's our team, our management team, working together always as a team. But I will say that when I decided to come here in January of 2023, it was because of the technology and the inherent capabilities and knowledge base in this company. AB Sweden, the inventors of Matrix-M. We still have the original scientists who invented Matrix-M on our staff in Sweden.
We manufacture the product there. The remarkable talent, abilities, and the technology of Novavax said to me that it should be very successful, but it needed a different model. When we put out the first strategy, I think it was, Jim, eight weeks into the job when we had our first earnings call, maybe six weeks. In that earnings call, if you go back and look at that, you'll see pillar three, it was the third pillar, now it's first, was to monetize our technology.
From the very beginning, part of the vision that I agreed on with our board of directors and the management team that we built together was to get the company to a position where we could truly monetize this technology, not just about revenue, but to position it to have a much better global impact. You are sitting on a technology platform that has the ability to potentially, we believe, turn cold tumors hot and to help technologies take on cancer, right? We have a technology that could take on some of the world's toughest infectious diseases and help other vaccines perform even better, be lower cost to produce, more accessible to others.
We could sit back and make one thing with that technology and try to drive revenue in a fully integrated organization globally, taking on big pharma as a small company, or we could open our arms and share that tech with the world in a way that creates a vision that we see. From the beginning, the vision was to have a Novavax with multiple partners, big and small, where each partner would have one or more assets, even portfolios of assets that could include our technology, having a positive impact on potentially billions of people around the world on health, across cancer, across viral and bacterial infectious diseases. We're already seeing sparks of that now with R21 taking on malaria in Africa. 5 million or so doses per quarter, Jim, or so is the run rate right now.
Incredible.
600,000 or so children a year were dying or having severe disease from malaria that we can help prevent. Imagine that times multiple assets-
Yep
...across multiple disease areas with a low cost structure, maintaining a strong IP base, strong revenue base that is exponentially higher than our costs over time and reaching profitability, and then continuing to innovate. The last piece is, we are driving our own R&D forward, not at a tremendous expense within the parameters Jim has often discussed in our public commentary on where we are taking our costs. That $150 million-$200 million non-GAAP SG&A and R&D range that Jim always talks about. Within that, innovating and bringing forward assets like our C. diff vaccine, which could be in the clinic as early as next year. We are looking at other assets to bring forward, and we are also experimenting with Matrix itself. Imagine if Matrix itself might be a therapy or an innovation someday in the future. We keep on working on it. We believe in our future.
We are very excited about where we can take the company. No guarantees in biotech. It is a tough business, and it can be risky, but when you have a proven platform, it is de-risked. We already have assets out. We know it is safe. We know it works. We have a multimillion patient database on safety. There is a lot there to work with already for Novavax, and we are excited about the future.
Okay. We have a couple of minutes left. I know Jim wants to answer these questions.
Yeah.
How close are we to having the structure in place to support sustainable growth and cash flow positivity?
Yes, certainly. Given where we are in our journey, the capabilities we need to succeed in the future, we have today. We really do. What is occurring as we are advancing our company is we are rolling off some of those capabilities we no longer need to be a commercial entity. Think about all that infrastructure and manufacturing that we once needed, annual strain change to be a standalone COVID company.
One of the things that I think I have been most impressed with Novavax, is the ability to attract top-rate talent, and whether that is in Sweden, that's in United States , in a remote environment, we can be anywhere. I just think we've attracted exceptional talent and, working with John on defining, and Bob, the key capabilities to unlock some of the great vaccine innovation questions we talked about today, we feel like we've got those capabilities to really drive long-term shareholder value.
Last question. If we're sitting here a year from now, what would you like to say has been sort of the key value-creating accomplishments for Novavax during that year?
Thank you, Pete. Great question. We just talked about our vision. Multiple partners, multiple products around the world that include our technology having an impact on billions of lives. If we fast-forward maybe to the next Cantor conference here in New York City, so we're sitting here again next year, what would we like to see and envision? What we'd like to see is continued execution by our existing partners, right? That Sanofi has indeed initiated that combination COVID flu trial, and that they're moving forward to progress that. That they have indeed started to grow market share for Nuvaxovid in the United States this season, and also around the world in new product launches.
That our other partners continue to flourish and continue to drive. Serum with R21 on malaria, Takeda in Japan, one of the world's largest markets, where they've driven meaningful market share for Nuvaxovid. We'd like to see new partnerships emerging, one or more new partnerships. We'd like to see our proof of concept emerge in oncology with some data to show that Matrix-M does have potential to turn cold tumors hot and to have an impact to help the body fight cancers of different types, different tumor types. That's where we'd like to be.
All right. Well, we ran out of time. I really appreciate your time and coming to the Cantor Healthcare Conference. Looking forward to watching all the progress over the next year and see you here again next year.
Thanks, Pete. Want to thank our investors and thank our employees for their belief in us and their hard work. Nothing's easy in biotech. It takes a village. We appreciate everyone. Thank you.
Thank you