Good morning, and welcome to Novavax' First Quarter 2024 Financial Results and Operational Highlights Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Erika Schultz, Senior Director, Investor Relations. Please go ahead.

Good morning, and thank you all for joining us today to discuss our first quarter 2024 financial results and operational highlights. A press release announcing our results is currently available on our website at novavax.com, and an audio archive of this conference call will be available on our website later today. Please turn to Slide 2. Before we begin with prepared remarks, I need to remind you that this presentation includes forward-looking statements, including information relating to the future of Novavax. Its key strategic priorities, statements related to potential royalties and milestones, operating plans, objectives and prospects, full year 2024 financial guidance, the amount and impact of Novavax' cost reduction plans, its future financial or business performance conditions or strategies, its partnerships, anticipated timing and outcome of future regulatory filings and actions, and the ongoing development, marketing opportunities, manufacturing capacity and future availability of our vaccine candidates, and key upcoming milestones. Each forward-looking statement contained in this presentation is subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements. Additional information regarding these factors appears under the heading Cautionary Note regarding forward-looking statements in the slide deck we issued this morning and under the heading Risk Factors in our most recent Form 10-K and subsequent Form 10-Qs, filed with the Securities and Exchange Commission available at www.sec.gov and on our website at novavax.com. The forward-looking statements in this presentation speak only as of the original date of this presentation, and we undertake no obligation to uptake -- update or revise any of these statements. Please turn to Slide 3. Joining me today is John Jacobs, our President and CEO, who will discuss our agreement with Sanofi announced this morning. Additionally, John Trizzino, our President and Chief Operating Officer, will provide an update on our commercial activities; and Dr. Filip Dubovsky, President of Research and Development, will discuss our clinical development and pipeline. Finally, Jim Kelly, Chief Financial Officer and Treasurer, will provide an overview of our financial results and implications of the Sanofi partnership. I would now like to hand over the call to John Jacobs. Please turn to Slide 4.

Thank you, Erika, and thank you, everyone, for joining us today. Today, we enter a new and exciting chapter in the history of Novavax. This morning, we announced that we have signed a global co-development and co-commercialization agreement with Sanofi. This agreement is both material and strategically important for Novavax. It is a further validation of our technology platform and provides significant opportunity to drive value creation and benefit global public health. The agreement represents a multibillion-dollar opportunity over time for Novavax. Via this agreement, we generate significant near-term cash flow, a strengthened balance sheet as well as the opportunity to strategically pivot to a new lean operating model, focusing more on our strength in research and development and pipeline expansion to accelerate our growth and generate long-term value for our shareholders. First, the upfront and near-term milestones associated with this agreement are anticipated to equate to approximately $1.3 billion in cash, of which approximately half is expected within 10 days of signing. These cash payments provide us with a significant capital infusion to help us manage our business. And this, in turn, also enables us to remove the going concern status for Novavax. Second, beginning in 2025, it allows us to leverage one of the largest proven global leaders in the vaccine business to commercialize Nuvaxovid in the U.S., U.K. and Europe initially and worldwide over time. Affording hundreds of millions of dollars in potential cost synergies, enabling us to drive toward a new, more lean operating model with total costs anticipated to be well below our prior stated cost reduction targets. And we expect our royalties and milestones from Sanofi's efforts with Nuvaxovid to exceed the value of what our own efforts might have yielded, if we had kept the product ourselves exclusively. By licensing Sanofi to use…

Thank you, John. Please turn to Slide #5. This new agreement with Sanofi provides for a multibillion-dollar potential across upfronts, equity investment, milestone and royalties. The anticipated present value of the royalties on Sanofi's Nuvaxovid and CIC sales are expected to be the largest individual component of value in this transaction. The COVID-19-related terms include the potential for up to approximately $1.3 billion in cash payments and equity investments. Plus Novavax is eligible to receive two royalties on related product sales. In addition, were eligible to receive up to $200 million in milestones plus ongoing royalties for each new vaccine developed utilizing Novavax' Matrix-M adjuvant. For example, if Sanofi develops five products with our Matrix-M each with $1 billion in sales, this would represent hundreds of millions in royalties per year plus up to $1 billion in onetime milestones. During the second quarter of 2024, the initial cash payments include the $500 million upfront and the approximately $70 million equity investment in Novavax stock. Near-term Nuvaxovid COVID-19 milestones of $350 million and CIC milestones of another $350 million should provide important future cash flow to the company. In addition, Novavax is eligible to receive tiered royalties on net sales in each of the COVID-19 related product categories, that enable Novavax' meaningful participation and future economics from the current and future products under this agreement. Please turn to Slide #6. New vaccines developed with Matrix-M by Sanofi, create a broad opportunity to advance this technology and provide Novavax with multiple revenue generation sources. Novavax will support Sanofi as it prepares to advance all programs associated with this agreement, and Novavax will be eligible for cost reimbursement across a host of spend categories. John will now walk you through the first quarter commentary. John?

Thank you, Jim. Please turn to Slide 7. It took a lot of hard work over the past 15 months to get here, and a determined focus on the strategic priorities we identified when I first joined the company. To better position Novavax to execute significant business development opportunities like this partnership with Sanofi. In fact, since early 2023, the management team and I have been making significant progress on our three priorities: Priority one, delivering an updated product for the fall vaccination season, priority two, reducing our rate of spend, managing our cash flow and evolving our scale and structure. And finally, priority three, leveraging our technology platform, our capabilities and our assets to drive additional value beyond Nuvaxovid alone. Importantly, we had to make significant progress on the first two priorities in order to optimize the potential of our third priority. And over the last 15 months by strengthening our balance sheet, reducing significant onetime legacy liabilities, including Gavi, and proving that we could streamline our strain selection process and update our vaccine to align with regulatory requirements, we put Novavax in a position to be able to execute meaningful business development agreements. The Sanofi agreement is strategically important for our company, as it enables a pivot to a new growth strategy, a new lean operating model and a new chapter in the history of Novavax. With that in mind, we have made appropriate adjustments to our priorities for the remainder of 2024. For the remainder of this year, we will be focusing on the following: #1, prioritizing the successful transition of our new partnership with Sanofi. #2, continuing to expand and diversify organic opportunities and create additional value from our technology platform. #3, preparing to initiate an additional cost reduction program to reduce 2025 R&D plus SG&A expenses, net of Sanofi cost reimbursement to below $500 million. And #4, delivering an updated product for the '24 '25 fall vaccination season. As our strategy, vision and new expanded pipeline for the company evolved we intend to share more with you about the new path forward for Novavax. We will spend the next several months analyzing and crystallizing our future pipeline and our strategic focus with the goal of sharing our updated plans for Novavax in more detail towards the end of this year. And now I would like to hand it over to the team to discuss our results from the quarter in more detail, beginning with John Trizzino for our commercial updates. John?

Thank you, John. Please turn to Slide 8. We are very excited about the potential of the Sanofi agreement for our business. And as John mentioned, our first priority is operationalizing the agreement to enable Sanofi to commence co-commercialization activities starting January 1 of next year. This collaboration agreement with Sanofi is a validation of the significant investment made in the Novavax technology platform to date and of the dedicated and passionate effort of the many people that have contributed along the way. While we are steadfast in our belief that our COVID vaccine is the best one approved for use, it has been challenging to transition from being an innovator focused on developing vaccines for infectious diseases to being a commercial business focused on operational execution. Now, partnered with Sanofi, we see very clearly the opportunity to leverage their brand and global infrastructure for the benefit of public health, revenue generation and increased return to our investors. The burden of disease for COVID remains clear and well documented. Vaccination continues to be recommended as the best defense for the prevention of severe disease, hospitalization and death. Advisory committees like the CDC ACIP and other health policy bodies around the globe continue to recognize this need. The COVID virus for now continues to circulate throughout the year, but with concentrated disease burden during the typical winter respiratory disease season from late fall to early spring. The ongoing need for both a COVID and influenza annual seasonal vaccination leads to the public health benefit for a single combination vaccine. A single visit and vaccination creates a convenience that we believe will translate into improved vaccination rates, especially in older adults who are most at risk. Sanofi is well recognized -- Sanofi is the well-recognized leader in influenza vaccines, and this collaboration…

Thanks, John. Please turn to Slide 12. Today, I want to cover several topics. First, I want to share data on our JN1 candidate before I touch base on our revised CIC and influenza Phase III plans. Then I will show you some preclinical data on our optimized RSV vaccine candidate that we evaluate for future development. Finally, I want to introduce you to two innovative expansions of our technology, mucosal vaccination and the development of a novel nanoparticle format, which we are exploring is an avian H5N1 pandemic vaccine. As John mentioned, these innovations are examples of work we've been doing over the past year, to generate additional value from our technology platform. Please turn to Slide 13 and 14. The World Health Organization and EMA have recommended the JN1 line vaccines for the '24/'25 season. This is a variant we've previously advanced in the commercial development. Here, I'm showing neutralizing responses in nonhuman primates that were vaccinated with XBB.1.5 vaccine and boosted with a single dose of JN1. On the left-hand side, you can see the responses to the JN1 variants were low prior to boosting. On the right-hand side, the responses to JN1 and JN1 drift variants are robust following a boost. These data provide us confidence our vaccine has utility against the currently circulating strains, such as KP2 as well as potentially future proofing our vaccine against other variants that evolve from JN-1. The strain selection will be confirmed by VRBPAC on June 5, and we plan on submitting our string change filing shortly after that. Okay. Let's go to Slide 15 and 16. We've modified our plans for the upcoming Phase III study to include the valuation of a stand-alone seasonal influenza vaccine in addition to our COVID influenza combination vaccine in adults, greater than…

All right. Thank you, Filip. Please turn to Slides 26 and 27. We're focused on improving the financial health and performance of Novavax to enable long-term value creation. Today, we announced the strategically important Sanofi agreement and have removed our going concern disclosure that evidence this progress. I will now share a few of the key themes for the first quarter of 2024, and a look towards full year 2024 and beyond. For the first quarter of 2024, Novavax recorded total revenue of $94 million and significantly improved our balance sheet profile, by reducing current liabilities by $831 million. The Gavi and Fuji Film settlements continue our efforts to address legacy contractual matters. As we continue to transform Novavax into a more lean and agile organization, we reduced our Q1 2024 R&D and SG&A by 50% compared to prior year. As we look to 2024, we are updating our targeted guidance for R&D and SG&A expenses of between $700 million and $750 million, as we continue to resize our organization. For 2025, Novavax is prepared to initiate an additional cost reduction program to reduce R&D plus SG&A expenses, to below $500 million. A portion of which we expect to be reimbursed by Sanofi under today's announced agreement. We ended the first quarter of 2024 with cash and accounts receivable of $570 million, and have over $600 million in potential dose deliveries under our APAs over the next 3 years. With the Sanofi agreement announced today, we have approximately $570 million in cash payments for the second quarter of 2024 that further improved our financial position. Please turn to Slide 28. Turning to a more detailed view of our first quarter 2024 financial results, where I'll provide commentary with specific focus on revenue, COGS and combined R&D and SG&A. For the…

Thank you, Jim, and thank you, everyone, for joining us today. Before we take your questions, I would like to reiterate our key priorities for the remainder of this year. Priority one, prioritizing the successful transition of our new partnership with Sanofi. Priority two, continuing to expand and diversify our organic opportunities and create additional value via our technology platform. Priority three, preparing to initiate an additional cost reduction program to reduce 2025 R&D plus SG&A expenses, net of Sanofi cost reimbursement to below $500 million and priority four, delivering our updated product for the '24-'25 fall vaccination season. I would now like to turn the call over to our operator for Q&A. Operator?

[Operator Instructions] Your first question comes from Roger Song from Jefferies.

Congrats for the Sanofi deal. A couple of questions from us. Maybe start from the Sanofi deal. Can you give us a little bit clarity around the reimbursement for the co-development, commercial and regulatory costs, particularly helpful you already give us the guidance for 2024 and 2025. And how should we think about the cost moving forward after 2025?

Yes, Roger, good question. Roger, I'll have Jim Kelly address that, but we believe the deal affords us hundreds of millions of dollars in potential cost synergy. But Jim, why don't you take the question?

Yes, certainly. And thank you, Roger. The categories of cost reimbursement under this agreement include R&D activities that Novavax may do under the joint budget, to support the COVID-19 program from 2025 forward. And that includes, for example, the pediatric studies that are ongoing and select medical affair activities. An additional category of reimbursement will include activities related to the technology transfer, this is going to be exceptionally important as we support Sanofi as they ramp up their commercial capabilities. In addition to that, we are entering into supply agreements for both COVID-19 supply in the coming years, plus for specifically Matrix-M adjuvant. And so we're eligible for reimbursement across all those. As I look specifically, and I'll put the supply to the side, and I look to potential reimbursement in 2025 with respect to R&D activities and track transfer, we believe that reimbursement amount could be up to $100 million, and so I think, $75 million to $100 million. And then as I described driving our R&D plus SG&A to below $500 million you then subtract that reimbursement. And now we're talking about, hey, we're targeting $400 million or so, on a go-forward basis. You're watching the continued evolution of our cost structure. We know we're nimble. We know we act with urgency. This is our path.

Excellent. That's very, very helpful. Thank you for color. And then in terms of the milestone payment, I see you laid out the milestone payments for the COVID side. Just curious about the COVID [flu] combination side, how much near term milestone we should look at all those are back-ended milestone?

Go ahead, Jim.

Yes. Listen, we're exceptionally excited by the potential for Sanofi to advance the combination of COVID vaccine along with their market-leading flu vaccine. Those milestones, the $350 million are, in fact, across both product development and approval milestones. So [indiscernible] non-sales base, but rather related to the near-term development and approval of those programs. We're not offering additional detail at this time, but it is certainly a priority of the agreement.

And Roger, it's John. Just to build upon Jim's response to your good question. I want to make sure that everyone understands that this deal is not a $1.2 billion or $1.3 billion deal. This is a multibillion-dollar deal. The $1.3 billion represents the initial upfront, the $70 million equity investment in the company and the near-term milestones associated with our activities related to Nuvaxovid and Sanofi developing their own combo vaccine. But importantly, the majority of what we see as the future value of this deal according to our estimates, come from the anticipated royalties that will be ongoing from Sanofi's ability to sell. Our COVID vaccine and their own combination or combination vaccines, plural, using our Nuvaxovid and through the deal, they have the opportunity to develop their own flu COVID combination, but also other combination products, including additional antigens, each of which we get royalties for. And in addition, there's another component beyond that, which is their access to our Matrix-M adjuvant platform. which allows them to develop multiple products using Matrix-M. Each of the products they may develop using our adjuvant technology platform has up to $200 million of potential onetime miles, as well as ongoing royalties, a flat royalty rate for years to come. When you look at the entirety of the agreement between the upfront payments and the near-term milestones, which are the $1.3 billion that we noted, including the equity investment. And then you consider the immensity of the potential royalties when we partner with the power of a company like Sanofi that's a world leader in vaccine development and commercialization with a leading flu franchise, plus what they could do with our Matrix M over time. We truly believe this is a multibillion-dollar opportunity. So I want to make sure people don't misunderstand the potential of this partnership and what it might do for the future of Novavax and for global public health.

Excellent, that's very helpful. I understand the milestone payment for the COVID combination is contingent upon the development approval, not the sales milestone payment. Got it. Okay. And then maybe just lastly for the existing APA understanding you are reducing to [indiscernible] $600 million. I just want to confirm that's already post negotiation with different parties of your partners, compared to the last time, maybe around $1 billion? And then the second part of the question is for the outstanding APA given the partnership with Sanofi, who's going to book the sales or Novavax will only get the royalty from the APA?

All right. So looking to John Trizzino, maybe talk a little bit about the status of our APAs, but I'll just kind of reiterate, kind of bridging what the pieces to the change in our revenue guidance are. Emphasizing that specifically the $350 million related to APAs -- we're continuing active dialogue with these APAs have been great partners. The pieces there were, we took $100 million related to Canada and we've placed it to the side while we await that order. It just seemed prudent at this time to not have it in our guidance. While we await their order for the upcoming season, our intent is, of course, to add it back once we have clarity. And then when it comes to the $250 million across Australia, New Zealand and Israel, $200 million which is specific to Australia. There are ongoing regulatory matters related to Australia. I'll let John hit that and perhaps characterize some of the dialogue.

Yes. And Roger, just to build upon Jim's answer, I think you asked about the $600 million total go forward. And I think Jim notes in his commentary that, that did not include deferred revenue, from Canadian prepayments in the past. So you might have been looking at that and thinking it could have been higher, but we excluded deferred revenue, which is an accounting matter and you looked at the $600 million. I believe you asked about -- and we can have Jim further clarify if needed, Roger. You also asked about what happens if I heard you correctly, as the APAs wind down when it relates to Sanofi. And right now in our commentary, you heard us say that Sanofi will take commercialization on in 2025 for the U.S., Europe, U.K. and then over time, the rest of the globe. So we're maintaining responsibility to manage these APAs through their fruition in 2026, and we take that responsibility seriously and intend to bring forward the majority of value in the remaining APAs, albeit it may be spread out over time to better meet global market demand. But our future is not about the APA business. So as those APAs wind down, it's the final chapter in the legacy of the pandemic, we moved to a bright and exciting future for Novavax. And when I first got here, Roger, the APA value in our business was 100% of our business opportunity. It was the business model. It was over $2 billion. We've pulled down roughly 2/3 of that value. In the last 15 months, we have roughly 1/3 left, we intend to optimize that between now and the end of 2026, and we're looking forward to a bright future. So as those APAs wind down, it's our intention to have those markets offered to Sanofi so they can begin commercializing our Nuvaxovid vaccine and the other products they may develop in those markets as APAs wrap up. I hope that answers your question.

Your next question comes from Eric Joseph from JPMorgan.

My congrats on the deal. What I'm hoping to do is just get a better -- a bit of a better understanding of the strategic positioning of your Covid-flu program versus Sanofi's Covid-flu ambitions, right? Would you be targeting different market segments? And I'm also curious on whether you see opportunities for your own flu stand-alone, and maybe as a follow-up to that, can you talk about sort of what work Sanofi has done on the feasibility of a Nuvaxovid Fluzone Quad combination or Fluzone HD combo?

Eric, for competitive reasons, we're not going to get into details on specific strategies around our pipeline assets. But what I can say to address your question is we're very excited that we've been able to double our shots on goal in our late-stage program, by adjusting our original CIC clinical trial, as Filip described today to include a stand-alone flu vaccine. And Filip shared some exciting data on H5N1 flu, and has previously shared positive immunogenicity and other data results from our prior flu work. So we're very excited that we have two potentially registration-worthy vaccine assets, this time next year, should we succeed with that clinical program. And as I said before, our strategy is to consider optionality on how we would monetize those and bring them forward should we have success. And that could include additional partnering and business development, out-licensing to other organizations who would like to see those vaccines, creating additional deals of this nature that we have with Sanofi or deciding to go it alone. What we'll do is allow the data to feed that strategy, Eric, to make sure we see how those cards overturn by mid next year, and that will guide further strategic thinking on the assets. What we're excited about is the value of our technology platform, and that the Sanofi deal has further validated the immense value that Matrix-M and our nanoparticle technology have to offer, and we intend to keep optimizing that. And in addition, what you see is we're expanding our portfolio with some early stage work, exploring RSV, et cetera. So hopefully, that addresses your question. I'd rather not comment on what Sanofi may be thinking, or why they came to the conclusion that this is such an exciting platform to partner with, but we're not surprised because we know the value our technology can offer. And I'll leave it there for now.

Your next question comes from Alec Stranahan from Bank of America.

Congrats on the deal. This is John on for Alex. Probably just some clarification questions for us. I think the first one, for the $350 million in milestones for activities related to Nuvaxovid. What are the potential milestones in the upcoming like a year or 2 that we could see for your company to receive? That's the first question. And secondly, for marketing and branding, in terms of future commercialization of Sanofi branded products. So like how would that work? Could you maybe shed some light on the branding message in the future?

John, do you want to take that question?

Yes. I'll take the second one first, right, which is talking about what the opportunity is in the marketplace. So as John said, we can't comment on exactly what the marketing and sales strategies are. But I think it's good to understand what the marketplace looks like today, and how the combination of our COVID vaccine with their flu vaccine could have profound opportunities in the market, as we said, both from a public health standpoint, and revenue generation. Understanding that Sanofi is the market leader in flu vaccinations in the U.S. around the globe. There's a clear need for a combination vaccine. Any market assessment for combo vaccine would include what we would refer to as the cannibalization of the flu market, the leveraging of the flu market for the benefit of uptake of COVID vaccination in that combination format. So there's a significant opportunity here with the market leader to identify what that opportunity is, and to expand vaccination rates for both COVID and flu by virtue of the combo, the vaccine. As we're building towards that, obviously, their position in the marketplace from a co-commercialization standpoint would be critical in helping us leverage the Sanofi brand, leverage their infrastructure, leverage their deep reach into the vaccine market and their confidence in the strength and safety and efficacy of that product, I think, says volumes about what the potential is. And we see much more market -- significant market share and vaccination rate increase as a result of this relationship.

And then I'm happy to take the first question regarding the breakdown and timing of the $350 million in future milestones. So on Slide #5, we mapped it out. the expectation is that these are all near-term activities over the next 12 to 24 months. certainly, the COVID-19 manufacturing tech transfer may take a little bit longer as we look at these, but the other ones are certainly -- we're not, at this time, providing more timing on that beyond that, they're all important strategic activities that are priorities.

And Eric, as I said earlier, the majority of value we anticipate from this deal goes well beyond the initial $1.2 billion or $1.3 billion, to ongoing royalties of anticipated sales that Sanofi will have for our Nuvaxovid and their own combinations product. And then in addition to that, anything they may develop with Matrix-M, each individual new Matrix-M product eligible for up to $200 million in additional onetime milestones and ongoing flat royalties. So I think it's very important to understand the different pieces of value in this deal, and why we believe it has the potential to be a multibillion dollar deal for Novavax. Thank you.

And your next question comes from Mayank Mamtani from B. Riley Securities.

Congrats on this landmark deal. So glad to hear the BLA is being -- is already submitted. Is there a PDUFA date granted yet? That's my quick follow-up to the prior question. And then with everything in place now, the BLA plan and the FDA EUA, some pharmacy contracting, preferred [indiscernible] looks like on plan. I was just curious in your non-APA revenue guidance, which I assume is royalty revenue focused. Could you comment on what that market share assumption might be, in that $250 million to $350 million that you have in a footnote? And then I have a couple of follow-ups.

Yes, John, why don't you take the BLA question first. Yes.

Yes. Mayank, there's a couple of pieces to the question there. So first of all, as you all know, we have been intending and have accomplished in fact, the submission of the BLA to FDA. But there was a couple of steps involved with that. So it was the initial approval of the BLA for the XBB strain that was under emergency use authorization last year. We were then going to be adding the prefilled syringe and the strain change into that BLA submission, and having that all tied up in a nice bow in front of the season, right? While that strategy was communicated to the FDA, and it was very thoughtful about the ability for that to get us to the market on time. Reassessing that we in collaboration and conversations with FDA, we felt like if we focused on the strain change and we focused on the prefilled syringe, authorization that the EUA pathway would be the best way to do that, instead of the more formal BLA path. So as I said in the remarks, we're going to be pursuing in a parallel path. This parallel pathway ensures our timeliness to the marketplace. And I think that's most critical. The product is authorized for use. There are no restrictions in how we communicate the benefits of this vaccine. We're going to have inventory in our 3PL distribution center in mid-August. As soon as authorization is granted, we're going to be in the market, and I think that's the most critical component of that strategy.

And Mayank, as we said in our comments, and I'll hand it back to John on your market share question, and maybe, John, you could take that as the potential we see in the U.S. marketplace, assuming we are indeed staying on track, which we are now, with our prefilled syringe in a time we launch the season. Because we -- Mayank, we're excited about the opportunity to perform significantly better than we did last season in the U.S. market. But let's address the PDUFA date question. We will get a PDUFA date from FDA once they formally accept our file. We have completed that file and are waiting for that formal acceptance. John, go ahead on the market share question.

Yes. So the -- yes, the PDUFA date question is part of yet another element of why the timing for EUA and BLA was kind of critical balancing act here. While the FDA could act more quickly if they so desired, the PDUFA data is not the ultimate -- they don't have to fill to the PDUFA date, but it just streamline the activities in a significant way. As far as market share is concerned, again, the critical elements; the new strain, prefilled syringe, on time to the market, awareness of Novavax access, some awareness and access to critical elements. We think that there's a significant opportunity in the U.S. market, and we're going to see a dramatic shift from where we were last year. As you recall, in the '23 season, we relate to the market by almost a full 4 to 5 weeks, and almost 50% of the COVID market had been administered by that time. And we were also in a 5-dose presentation. So a dramatic shift in positioning for us. And so I think there will be well established and set up for the '24 season.

Very helpful. Makes sense. And then on the Phase III CIC trial design, obviously, awesome to see the stand-alone [indiscernible]. I was just curious since you already have control data from a Phase III study with NanoFlu, and I don't know if this candidate is the same as NanoFlu, but could you just talk about what the key immunogenicity objectives are being agreed upon with the FDA on the different strains and how noninferiority or superiority will have to be relative to the three arms that you're using?

Yes, Filip, why don't you take that one?

Yes. So you're right. We've kind of tried this ground before. And the real difference in this is twofold. One of them is a specific age population we're targeting. because we think that's where the medical use the greatest and is also the most lucrative market in the U.S. at least. And the second one is the competitors. So the competitors we're choosing are going to position us to have commercial success going into the future. And I'm not going to give any more details about the specific criteria used to establish superiority or non-inferiority but certainly the non-inferiority criteria that's also well to ground, which many other sponsors have used in the past.

Understood. And lastly, I don't know if it's too early to comment, but investors care about profitability because you guys do have a real business. So if you could talk about your expectations for breakeven given OpEx ramp down, should it continue into next year. But then obviously, you're looking to build a broad respiratory pipeline infrastructure long term. How should we think about that?

Thank you, Mayank. Go ahead, Jim. And then we'll need to move on to the next set of questions. Go ahead, Jim.

All right. Guiding principle one. We're building an enterprise towards cash flow positive and value creation. One of the things you heard John mention earlier is, we believe that the economics and cash flow under this agreement with Sanofi across this portfolio is, in fact, superior to the cash flow we might have been able to drive to ourselves. You are hearing that we are creating and driving to an important value creation platform, to increase shareholder value. And so we will continue to give you updates on how our business model evolves to deliver against that guiding principle.

Your next question comes from Brendan Smith from TD Cowen.

Huge, huge congrats. It's really great to see. Maybe just a quick one from us first. Apologies if I missed this, but we've been hearing a little bit from some of the COVID competitors that FDA might actually be considering authorization the updated boosters even earlier this year, possibly for August. I wanted to see if that's been part of your conversation, do you think that would impact any of your timing or launch capabilities. And then honestly, just stepping back maybe to the broader opportunity now. I wanted to get your thoughts on strategy and what you're thinking -- how you're thinking about each of these other non-COVID non flu areas for you, namely like what strong you were and how you're thinking about where to go first maybe what makes sense for Novavax alone versus part of the collaboration.

Brendan, excellent questions. I'll take the second question and then hand it over to John Trizzino and Filip to address your question about strain timing and launch timing for the season. So when it comes to strategy, we're going to continue to crystallize our future pipeline and organic growth strategy from our own tech platform in the coming months and look forward to sharing more detail with you. What we were so excited about sharing with you today was the new science that Filip and his team have been working on new data and approaches to leverage our technology in different ways for months and months now, and we unveiled some of that today to share with the investor community. We're still working through the best way to optimize some of those assets, and we're also considering additional early-stage assets that we can work with in our pipeline, and we intend to do so all within the new lean operating model that Jim Kelly started to outline before in his prepared comments and the questions he answered. So more to come on that. We look forward to sharing more details with you as our thoughts crystallize further, and we're ready to share them. So why don't I hand it over to John Trizzino and Filip to answer your first question.

Right. So you know that the EMA and the double [indiscernible] have already designated a strain, and we aren't expecting the strain to be designated from the FDA until early June. And we've been in discussions with all those agencies for on a continuous basis. Right now, what we stated is that we're going to be submitting our supplemental filing immediately after VRBPAC. And I think that John has mentioned before, we anticipate having product available in mid-August. Now none of that matters as much as when the season is -- doesn't get to start by the FDA and by the CDC. So that's really what we're targeting. We feel like we're in a good position to be able to achieve really whatever time frames the season starts. And John?

I think the variability in there is they're reviewing three files simultaneously, so the FDA has a bit of work to do. I think they've already signaled that they're going to have a formal kind of campaign kick off, post the Labor Day holiday in the U.S. and there's going to be a readiness in front of that. As we said, we're going to have product availability in the warehouse. It might even be queued up at the distributors or even an staging, awaiting that campaign to kick off. But I think the timing is -- it makes a lot of sense, right? We're coming out of the summer vacation period. We're coming back to school, back to work, the CDC's campaign, the other competitors' campaigns will begin kicking in that September 1 -- 1st week in September time frame. And so we're synchronized around that.

Yes. And finally, Brendan, and we'll take final questions next. But finally, to build on John's point earlier, that's another reason for the dual pathway for regulatory authorizations this year, the BLA and the EUA John mentioned because it gives us a chance to have -- to be more nimble and more quick through the EUA pathway with our prefilled syringe and the updated strains fall. We believe we'll be ready and we're excited about the opportunity in the U.S. this fall. One last comment when you asked about portfolio, I just want to make sure everyone is clear, that we have a wholly owned independent portfolio and that our combination influenza COVID vaccine is completely ours and completely independent from the vaccine that Sanofi will develop in their pipeline, using our Nuvaxovid. Just want to make sure that, that's clear to everybody. And we'll take a final questions, Erika, from the final analyst.

Your next question comes from Vernon Bernardino from H.C. Wainwright.

Congratulations from me also. I think one thing that needs to be mentioned is, I think you've found a great partner because you both are advancing protein-based vaccines. I think that's nothing to be recognized. Question I have, just like other analysts and what we tend to do is a 3-part question, but maybe it's just only two now. Regarding the combination vaccine, is there any consideration as far as an [indiscernible] that you'll need to have a BLA approved flu vaccine or Covid vaccine for them to actually progress the work on a combination vaccine, that includes their quadrivalent flu vaccine. And then as a follow-up to that, I was just wondering, obviously, the vaccine does not have Matrix-M. I was wondering if you could remind us the comparison of the [indiscernible] of their quadrivalent versus yours [Fluvax], for example. And with their potential to add Matrix-M to their quadrivalent, what kind of expectancy enhancement do you think they could actually achieve?

Yes. Vernon, I'll hand the question over to Filip. Excellent questions. We're not going to comment on Sanofi's particular technology platform. But Filip, do you want to address the questions about the BLA?

Yes. Their regulatory path will really involve a stand-alone BLA. So in that regard, it doesn't really rely on our regulatory process with Nuvaxovid alone. So, they're going to put together a package, which has to show that their combination of their flu vaccine plus Nuvaxovid is safe and efficacious. And the approach they take, is it going to be really [up] for them to define and to get approval with the regulators.

Perfect. And you won't be able to comment on what you think the addition of metric ton to Sanofi's flu quadrivalent could be?

No, we're not going to comment on that today, Vernon.

Okay. Congratulations.

Thank you, Vernon and one comment to thank you for asking. And importantly, again, we don't want anyone to walk away without total clarity that this deal has tremendous value, multibillion-dollar potential deal for Novavax. Including the upfront payments of the $1.3 billion and then well beyond that anticipated royalties of significant value, we think, even greater value than those upfront payments. And then on top of that, to your point, Vernon, what they could do with Matrix-M, and we think there's immense potential with Sanofi as a powerhouse in vaccine development and commercialization, and we're very excited about some of the concepts and ideas they may be contemplating about what to do with Matrix-M. And with each new Matrix-M product they would choose to bring forward should they do so. We have the potential for up to $200 million in onetime milestones, and ongoing flat royalty for years to come. So those pieces of value are absolutely critical, and that's what makes this deal well beyond the upfront milestones and payments that everyone has been talking about -- a multibillion-dollar deal we feel for Novavax. Thank you so much, everyone, for your questions. Erika, I'll turn it back to you and then the operator to close.

This concludes our question-and-answer session. I would like to turn the conference back over to John Jacobs for any closing comments.

No. Thank you, everyone. Thank you for joining us today. We appreciate your time. We'll keep working with humility, diligence and all of our efforts to return value to our loyal shareholders. And I want to thank all of our employees at Novavax for their time, energy and effort to get us to this next stage in the beginning of a new chapter for the future of our company. Thank you, everyone, for joining us today.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Thank you.