1、 UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549 Form 10-K xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31,2016OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For
2、the transition period from to .Commission File No.0-26770NOVAVAX,INC.(Exact name of Registrant as specified in its charter)Delaware20 Firstfield Road,Gaithersburg,Maryland 2087822-2816046(State of incorporation)(Address of principal executive offices)(I.R.S.Employer Identification No.)Registrants te
3、lephone number,including area code:(240)268-2000 Securities registered pursuant to Section 12(b)of the Act:Title of each class Name of each exchange on which registeredCommon Stock,Par Value$0.01 per share The NASDAQ Global Select Market Securities registered pursuant to Section 12(g)of the Act:Not
4、ApplicableIndicate by check mark if the Registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No x Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d)of the Act.Yes No x Indicate by check mark whether the Regi
5、strant:(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934during the preceding 12 months(or for such shorter period that the Registrant was required to file such reports),and(2)has been subject to such filingrequirements for the past 90 days.Yes
6、 x No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site,if any,every Interactive Data Filerequired to be submitted and posted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorte
7、rperiod that the registrant was required to submit and post such files).Yes x No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein,and will not be contained,to thebest of the Registrants knowledge,in definitive proxy or informati
8、on statements incorporated by reference in Part III of this Form 10-K or any amendment tothis Form 10-K.x Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,or a smaller reporting company.Seethe definitions of“large accelerated fil
9、er,”“accelerated filer”and“smaller reporting company”in Rule 12b-2 of the Exchange Act.(Check one):Large accelerated filer xAccelerated filer Non-accelerated filer(Do not check if a smaller reporting company)Smaller reporting company Indicate by check mark whether the Registrant is a shell company(a
10、s defined in Rule 12b-2 of the Exchange Act).Yes No x The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant(based on the last reported sale price ofRegistrants common stock on June 30,2016 on the NASDAQ Global Select Market)was approximately$1
11、,646,900,000.As of February 23,2017,there were 271,947,036 shares of the Registrants common stock outstanding.Documents incorporated by reference:Portions of the Registrants Definitive Proxy Statement to be filed no later than 120 days after the fiscal yearended December 31,2016 in connection with t
12、he Registrants 2017 Annual Meeting of Stockholders are incorporated by reference into Part III of this AnnualReport on Form 10-K to the extent indicated herein.NOVAVAX,INC.TABLE OF CONTENTS Page PART I 1Item 1.BUSINESS 1Item 1A.RISK FACTORS 14Item 1B.UNRESOLVED STAFF COMMENTS 32Item 2.PROPERTIES 32I
13、tem 3.LEGAL PROCEEDINGS 32Item 4.MINE SAFETY DISCLOSURES 32 PART II 33Item 5.MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 33Item 6.SELECTED FINANCIAL DATA 35Item 7.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 36Item 7A.QUANTITATIVE AND
14、QUALITATIVE DISCLOSURES ABOUT MARKET RISK 53Item 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 53Item 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 53Item 9A.CONTROLS AND PROCEDURES 53Item 9B.OTHER INFORMATION 54 PART III 54Item 10.DIRECTORS,EXECUTIVE OFFICER
15、S AND CORPORATE GOVERNANCE 54Item 11.EXECUTIVE COMPENSATION 54Item 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATEDSTOCKHOLDER MATTERS 55Item 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,AND DIRECTOR INDEPENDENCE 55Item 14.PRINCIPAL ACCOUNTING FEES AND SERVICES 55 P
16、ART IV 55Item 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 55Item 16.FORM 10-K SUMMARY 60 CERTAIN DEFINITIONS All references in this Annual Report on Form 10-K to“Novavax,”the“Company,”“we,”“us”and“our”refer to Novavax,Inc.and its wholly-ownedsubsidiary,Novavax AB(unless the context otherwise indic
17、ates).NOTE REGARDING TRADEMARKS Novavax,Resolve,Prepare,Matrix-M and Matrix are trademarks of Novavax.Any other trademarks referred to in this Annual Report on Form 10-K are the property of their owners.All rights reserved.We do not intend our use or display of other companies trade names or tradema
18、rks to imply anendorsement or sponsorship of us by such companies,or any relationship with any of these companies.FORWARD-LOOKING INFORMATION This Annual Report on Form 10-K contains forward-looking statements that involve risks and uncertainties.In some cases,forward-looking statements areidentifie
19、d by words such as“believe,”“anticipate,”“intend,”“plan,”“will,”“may,”“expect”and similar expressions.All forward-looking statements arebased on information available to us at this time and speak only as of the date of this Annual Report on Form 10-K.We assume no obligation to update anyof these sta
20、tements.Actual results could differ materially from those projected in these forward-looking statements as a result of many factors,including thoseidentified in the sections titled“Risk Factors”and“Managements Discussion and Analysis of Financial Condition and Results of Operations”.We urge youto re
21、view and consider the various disclosures made by us in this report,and those detailed from time to time in our other filings with the Securities andExchange Commission(“SEC”),that identify risks and factors that may affect our future results.Given these risks and uncertainties,readers are cautioned
22、 notto place undue reliance on such forward-looking statements.PART I Item 1.BUSINESS Overview Novavax,Inc.,together with our wholly-owned Swedish subsidiary,Novavax AB,is a clinical-stage biotechnology company focused on thediscovery,development and commercialization of recombinant nanoparticle vac
23、cines and adjuvants.Using innovative proprietary recombinant nanoparticlevaccine technology,we produce vaccine candidates to efficiently and effectively respond to both known and emerging disease threats.We were incorporated in 1987 under the laws of the State of Delaware.Our principal executive off
24、ices are located at 20 Firstfield Road,Gaithersburg,Maryland,20878,and our telephone number is(240)268-2000.Our common stock is listed on the NASDAQ Global Select Market under thesymbol“NVAX.”Our vaccine candidates are genetically engineered three-dimensional nanostructures that incorporate recombin
25、ant proteins critical to diseasepathogenesis.Our product pipeline targets a variety of infectious diseases,with clinical vaccine candidates for respiratory syncytial virus(“RSV”)and Ebolavirus(“EBOV”),and preclinical programs for Zika virus(“ZIKV”),seasonal influenza and a combination respiratory va
26、ccine candidate,as well as otherinfectious disease vaccine candidates.We are also developing immune stimulating saponin-based adjuvants through Novavax AB.Our lead adjuvant,Matrix-M,has been shown toenhance immune responses and was well-tolerated in a Phase 1/2 clinical trial for our pandemic H7N9 i
27、nfluenza vaccine candidate,as well as in a Phase 1clinical trial for our EBOV vaccine candidate.Genocea Biosciences,Inc.has licensed rights to our Matrix technology and has conducted Phase 2 clinicaltrials with its herpes simplex 2 vaccine candidate using Matrix-M.Product Pipeline Our product pipeli
28、ne includes vaccine candidates engineered to elicit differentiated immune responses with the potential to provide increasedprotection.Our nanoparticle technology targets antigens with conserved epitopes essential for viral function.Unlike traditional vaccines that mimic virusesand elicit naturally o
29、ccurring immune responses to them,our nanoparticles are engineered to elicit differentiated immune responses,which may be moreefficacious than naturally-occurring immunity.Our vaccine technology has the potential to be applied broadly to a wide variety of human infectiousdiseases.Program CurrentDeve
30、lopment Stage Respiratory Syncytial Virus(“RSV”)Infants via Maternal Immunization Phase 3*Older Adults Phase 2 Pediatrics Phase 1 Emerging Viruses Ebola Virus(“EBOV”)Phase 1 Zika Virus(“ZIKV”)Preclinical Seasonal Influenza Nanoparticle Preclinical Combination Respiratory Preclinical*Supported by the
31、$89.1 million grant from the Bill and Melinda Gates Foundation(“BMGF”)A current summary of our significant research and development programs and status of the related products in development follows:1 Respiratory Syncytial Virus We are developing our respiratory syncytial virus fusion(F)protein nano
32、particle vaccine candidate(“RSV F Vaccine”)for three susceptible targetpopulations:infants via maternal immunization,older adults(60 years of age and older)and children six months to five years of age(“pediatrics”).Webelieve our RSV F Vaccine represents a multi-billion dollar revenue opportunity,wor
33、ldwide.Currently,there is no approved RSV vaccine available.Repeat infection and lifelong susceptibility to RSV are common and we currently estimate the global cost burden of RSV to be in excess of$88billion.1 Despite decades of effort to develop an RSV vaccine,there are currently no licensed vaccin
34、es.Although the monoclonal antibody palivizumab(Synagis)is indicated for the prevention of serious lower respiratory tract disease caused by RSV in children at high risk of RSV disease,it is not indicatedfor use in other populations.We made a breakthrough in developing a vaccine that targets the fus
35、ion protein,or F-protein,of the virus.The F-protein hashighly conserved amino acid sequences,called antigenic sites,which we believe are ideal vaccine targets.Palivizumab,which targets one such site,antigenicsite II,has demonstrated protection in five randomized clinical trials.We genetically engine
36、ered a novel F-protein antigen resulting in enhancedimmunogenicity by exposing these antigenic sites.The RSV F Vaccine assembles into a recombinant protein nanoparticle optimized for F-protein antigenpresentation.We are seeking to bring the first RSV vaccine to market to combat the 64 million RSV in
37、fections that occur globally each year.2,3 RSV Infants via Maternal Immunization Program Burden of Disease RSV is the most common cause of lower respiratory tract infections and the leading viral cause of severe lower respiratory tract disease in infants andyoung children worldwide.4,5 In the U.S.,R
38、SV is the leading cause of hospitalization of infants,and globally,is second only to malaria as a cause of death inchildren under one year of age.6,7 Despite the induction of post-infection immunity,repeat infection and lifelong susceptibility to RSV is common.8,9 Clinical Trial Update Prepare Phase
39、 3 Trial(Ongoing)We initiated Prepare,a global pivotal Phase 3 clinical trial of our RSV F Vaccine,using aluminum phosphate as an adjuvant,in 5,000 to 8,255healthy pregnant women in December 2015.The primary objective of the Prepare trial is to determine the efficacy of maternal immunization with th
40、e RSV FVaccine against symptomatic RSV lower respiratory tract infection with hypoxemia in infants through a minimum of the first 90 days of life.The Prepare trialutilizes a group sequential design and is expected to take between three and four years to complete.We are currently in discussion with t
41、he U.S.Food andDrug Administration,Center for Biologics Evaluation and Research(“FDA”)about conducting an informational analysis of the Prepare trial in late 2017.These discussions lead us to believe we will be allowed to conduct an informational analysis that would provide an indication of the vacc
42、ines potentialefficacy against the primary endpoint.The Prepare trial is supported by a grant(the“Grant”)of up to$89.1 million from BMGF.The Grant supports development activities,productlicensing efforts and World Health Organization(“WHO”)prequalification of our RSV F Vaccine.In 2015,along with the
43、 Grant agreement(the“GrantAgreement”),we concurrently entered into a Global Access Commitments Agreement with BMGF,under which we agreed to make the RSV F Vaccineavailable and accessible at affordable pricing to people in certain low and middle income countries.1 Estimated value of life lost,future
44、health implications and lost earnings;Preliminary data based on Novavax research of available epidemiology and health outcomes data2 Nair,H.,et al.,(2010)Lancet.375:1545-15553 WHO Acute Respiratory Infections September 2009 Update:http:/apps.who.int/vaccine_research/diseases/ari/en/index2.html4 Nair
45、,H.,et al.,(2010)Lancet.375:1545-15555 CDC:https:/www.cdc.gov/rsv/research/us-surveillance.html6 Hall,C.B.et al.(2013)Pediatrics;132(2):E341-3487 Oxford Vaccine Group:http:/www.ovg.ox.ac.uk/rsv8 Glezen,W.P.et al.(1986)Am J Dis Child;140:543-5469 Glenn,G.M.et al.(2016)JID;213(3):411-12 2 Phase 2 Safe
46、ty and Immunogenicity Trial(Completed)In September 2015,we announced positive top-line data from a Phase 2 clinical trial of our RSV F Vaccine in 50 healthy pregnant women and theirinfants.This clinical trial evaluated the safety and immunogenicity of our RSV F Vaccine in pregnant women in their thi
47、rd trimester,and assessed thetransplacental transfer of maternal antibodies induced by the vaccine.The trial also examined the impact of maternal immunization on infant safety duringthe first year of life and RSV-specific antibody levels through the infants first six months of life.Immunized women d
48、emonstrated a geometric mean 14-foldrise in anti-F IgG,29-fold rise in palivizumab-competing antibodies and a 2.7 and 2.1-fold rise in microneutralization titers against RSV/A and RSV/B,respectively.In contrast,women who received placebo demonstrated no significant change in antibody levels.The infa
49、nts antibody levels at deliveryaveraged 90-100%of the mothers levels,indicating efficient transplacental transfer of antibodies from mother to infant.The estimated half-lives of infantPCA,anti-F IgG,RSV/A and RSV/B microneutralizing antibodies,based on data through day 60,were 41,30,36 and 34 days,r
50、espectively.Fast Track Designation The FDA has granted Fast Track designation to our RSV F Vaccine for protection of infants via maternal immunization.Fast Track designation isintended for products that treat serious or life-threatening diseases or conditions,and that demonstrate the potential to ad
51、dress unmet medical needs for suchdiseases or conditions.The program is designed to facilitate development and expedite review of drugs to treat serious and life-threatening conditions so thatan approved product can reach the market expeditiously.RSV Older Adults Program Burden of Disease Adults 60
52、years of age and older are at increased risk for RSV disease due to immunosenescence,the age-related decline in the human immunesystem.In this population,RSV is an important respiratory virus,distinct from influenza,that is frequently responsible for serious lower respiratory tractdisease and may le
53、ad to hospitalization or even death.Additionally,RSV infection can lead to exacerbation of underlying co-morbidities such as chronicobstructive pulmonary disease,asthma and congestive heart failure.In the U.S.,the incidence rate is approximately 2.5 million infections per year,and RSVis increasingly
54、 recognized as a significant cause of morbidity and mortality in the population of 64 million older adults.10,11 Based on our analysis ofpublished literature applied to 2014 U.S.population estimates,the disease causes 207,000 hospitalizations and 16,000 deaths among adults older than65.12,13 Annuall
55、y,we estimate that there are approximately 900,000 medical interventions directly caused by RSV disease across all populations.14,15 10 Falsey,A.R.et al.(2005)NEJM.352:174959 extrapolated to 2015 census population11 Falsey,A.R.et al.(1995)JID.172:389-9412 Falsey,A.R.et al.(2005)NEJM.352:174959 extra
56、polated to 2015 census population13 W.W.Thompson et al.Mortality associated with influenza and respiratory syncytial virus in the United States.JAMA 2003;289(2):179-18614 K.Widmer et al.Rates of hospitalizations for respiratory syncytial virus,human metapneumovirus,and influenza virus in older adult
57、s.J Infect Dis.2012;206:56-6215 K.Widmer et al.Respiratory syncytial virus&human metapneumovirus-associated emergency department and hospital burden in adults.Influenza and Other RespiratoryViruses.2014;8(3):347-352.3 Clinical Trial Update Phase 2 Safety and Immunogenicity Trial(Ongoing)In January 2
58、017,we announced the initiation of a Phase 2 clinical trial of the RSV F Vaccine in older adults.The objective of this Phase 2 trial is toassess safety and immunogenicity to one and two dose regimens of the RSV F Vaccine,with and without aluminum phosphate or Novavax proprietaryMatrix-M adjuvant,in
59、older adults.The trial is a randomized,observer-blinded,placebo-controlled trial which has enrolled 300 older adults in the SouthernHemisphere.Participants were enrolled and vaccinated outside of the RSV season to best assess immunogenicity,with top-line data expected in the thirdquarter of 2017.Res
60、olve Phase 3 Trial(Completed)In September 2016,we announced top-line data from the Phase 3 clinical trial of our RSV F Vaccine in older adults,known as Resolve.Resolvewas a randomized,observer-blinded,placebo-controlled trial that began in November 2015,and was fully enrolled with 11,856 older adult
61、 subjects at 60sites in the U.S.by December 2015.Historically,annual seasonal attack rates for all symptomatic respiratory disease due to RSV(“RSV ARD”)of between3%and 7%have been observed in older adults.16 In our Phase 2 trial conducted during the 2014-2015 RSV season,we observed an RSV ARD attack
62、 rate of 4.9%,with an attack rate of 1.8%formoderate-severe RSV-associated lower respiratory tract disease(“RSV msLRTD”),which aligns with peer-reviewed literature.1 7 In the Resolve trial,incontrast,we observed an RSV ARD attack rate of 2.0%and an RSV msLRTD attack rate of 0.4%.These unexpectedly l
63、ow attack rates indicated a mild 2015-2016 RSV season in older adults.The trial did not meet the pre-specified primary or secondary efficacy objectives and did not demonstrate vaccine efficacy.The primary objective of the Resolve trial was to demonstrate efficacy in the prevention of RSV msLRTD,as d
64、efined by the presence of multiple lowerrespiratory tract symptoms.The secondary objective of the trial was to demonstrate efficacy of the RSV F Vaccine in reducing the incidence of allsymptomatic respiratory disease due to RSV ARD.The trial also evaluated the safety of the unadjuvanted,135 microgra
65、m dose of the RSV F Vaccinecompared to placebo and consistent with our previous clinical experience,the vaccine was well-tolerated.We continue to analyze data from the Resolve trialin order to better understand these results and to map a path forward for this important program.Our efforts include an
66、alyses of existing immunogenicity andefficacy data,and application of new assays to archived samples.We have also undertaken external epidemiology studies to further understand the attackrate,healthcare burden and seasonality of RSV disease in older adults.We expect these analyses to provide importa
67、nt information and context when wereview the results from the Phase 2 clinical trial in older adults that we initiated in January 2017 and evaluate our next steps.Phase 2 Rollover Trial(Completed)In September 2016,we also announced positive top-line data from the Phase 2 rollover clinical trial of o
68、ur RSV F Vaccine in older adults.The trialwas a randomized,observer-blinded,placebo-controlled rollover trial which enrolled 1,329 older adults from the prior Phase 2 trial,conducted at the same 10sites in the U.S.as our completed Phase 2 clinical trial in older adults.The primary objectives of the
69、trial evaluated safety and serum anti-F IgG antibodyconcentrations in response to immunization with the RSV F Vaccine.The exploratory objectives of the trial evaluated the efficacy of a second annual dose ofthe RSV F Vaccine in the prevention of RSV ARD and RSV msLRTD.Participants previously randomi
70、zed to receive 135 microgram RSV F Vaccine orplacebo were re-enrolled and re-randomized in the current trial to receive either 135 microgram RSV F Vaccine or placebo.This resulted in analysis of fourseparate trial arms:a)participants receiving a placebo in both the first trial and second trial(“Plac
71、ebo-Placebo”);b)participants receiving RSV F Vaccine inthe first trial and placebo in the second trial(“Vaccine-Placebo”);c)participants receiving placebo in the first trial and RSV F Vaccine in the second trial(“Placebo-Vaccine”);and d)participants receiving RSV F Vaccine in both the first trial an
72、d second trial(“Vaccine-Vaccine”).16 Falsey,A.R.et al.(2005)NEJM.352:174959 extrapolated to 2015 census population17 Falsey,A.R.et al.(2005)NEJM.352:1749594 The rollover trial demonstrated immunogenicity in all active vaccine recipients,with a 6-fold increase in anti-F IgG in the Placebo-Vaccine arm
73、,consistent with the Phase 2 efficacy trial.There was higher anti-F IgG at baseline in the Vaccine-Vaccine arm compared to the Placebo-Vaccine arm and theVaccine-Vaccine arm showed a greater than 2-fold increase in anti-F IgG from the higher baseline.The rollover trial confirmed the low attack rates
74、 witnessedduring the Resolve trial.Phase 2 Trial in Older Adults(Completed)In August 2015,we announced positive top-line data from a Phase 2 clinical trial of our RSV F Vaccine in 1,600 older adults.The clinical trial wasdesigned to prospectively examine the incidence of all symptomatic respiratory
75、illnesses associated with RSV infection,in community-living older adultswho were treated with placebo.The trial also evaluated safety and immunogenicity of our RSV F Vaccine compared to placebo.Finally,the trial estimatedthe efficacy of our RSV F Vaccine in reducing the incidence of respiratory illn
76、ess due to RSV.The trial was the first to demonstrate efficacy of an active RSVimmunization in any clinical trial population.In the per protocol population,the clinical trial showed statistically significant vaccine efficacy in preventionof all symptomatic RSV disease(41%)and,in an ad hoc analysis,s
77、howed a decrease in RSV disease with any symptoms of lower respiratory tract infection(45%)in older adults.The clinical trial established an attack rate for symptomatic RSV disease of 4.9%in older adults,95%of which included lowerrespiratory track symptoms.Efficacy against more severe RSV illness,de
78、fined by the presence of multiple lower respiratory tract symptoms or signsassociated with difficulty breathing,was 64%in ad hoc analyses.RSV Pediatric Program Burden of Disease There are currently approximately 18 million children in the U.S.between six months and five years of age.18 In the U.S.,R
79、SV is responsible forapproximately 57,000 hospitalizations of children under five years of age annually,the vast majority of which occur in infants less than one year old,andespecially those under six months of age.19,20,21,22,23 Clinical Trial Update In September 2015,we announced positive top-line
80、 data from a Phase 1 clinical trial of our RSV F Vaccine in healthy children between two and sixyears of age.This clinical trial evaluated the safety and immunogenicity of our RSV F Vaccine,with one or two doses,with or without aluminum phosphateadjuvant.Trial enrollment was concluded with a smaller
81、 than planned cohort so that dosing could be completed ahead of the 2014-2015 RSV season.Thevaccine was well-tolerated and serum samples collected from a subset of 18 immunized children in the per-protocol population,demonstrated that the RSV FVaccine was highly immunogenic at all formulations and r
82、egimens.There were greater than 10-fold increases in both anti-F IgG and PCA antibody titers inthe adjuvanted group and greater than 6-fold increases in anti-F IgG and PCA antibody titers in the unadjuvanted group.We are assessing the next steps inthe development of our RSV F Vaccine for pediatrics.
83、Emerging Disease Ebola Virus EBOV,formerly known as Ebola hemorrhagic fever,is a severe,often fatal illness in humans.Multiple strains of EBOV have been identified,themost recent of which,the Makona EBOV strain,is associated with a case fatality rate of 50%to 90%.24 There are currently no licensed t
84、reatments proven toneutralize the virus,but a range of blood,immunological and drug therapies are under development.Despite the development of such therapies,currentvaccine approaches target either a previous strain of the virus or were initially developed to be delivered by genetic vectors.In contr
85、ast,our EBOVglycoprotein vaccine candidate(“Ebola GP Vaccine”)was developed using the Makona EBOV strain.18 U.S.Census.www.census.go/population/international/data/idb/informationGateway.php19 Stockman,L.J.et al(2012)Pediatr Infect Dis J.31:5-920 CDC update May 5,2015.http:/www.cdc.gov/rsv/research/u
86、s-surveillance.html21 Boyce,T.G.et al(2000)Pediatrics;137:865-87022 Hall,C.B.et al(2009)NEJM;360(6):588-9823 Hall,C.B.et al(2013)Pediatrics;132(2):E341-824 WHO:http:/www.who.int/mediacentre/factsheets/fs103/en/5 In July 2015,we announced top-line data from our Phase 1 clinical trial of our Ebola GP
87、Vaccine in ascending doses,with and without our Matrix-Madjuvant,in 230 healthy adults.Participants received either one or two intramuscular injections ranging from 6.5g to 50g of antigen,with or withoutadjuvant,or placebo.Immunogenicity was assessed at multiple time points,including days 28 and 35.
88、These Phase 1 data demonstrated that our Ebola GPVaccine is highly immunogenic,well-tolerated and,in conjunction with our proprietary Matrix-M adjuvant,resulted in significant antigen dose-sparing.Although the adjuvanted Ebola GP Vaccine was highly immunogenic at all dose levels,the adjuvanted two-d
89、ose regimens induced Ebola anti-GP antibodygeometric mean responses between 45,000 and 70,000 ELISA units,representing a 500 to 750-fold rise over baseline at day 35.In 2015,we also announcedsuccessful data from two separate non-human primate challenge studies of our Ebola GP Vaccine in which,in bot
90、h cases,the challenge was lethal for thecontrol animal,whereas 100%of the immunized animals were protected.ZIKV EnvD Vaccine We initiated development of a vaccine against the Zika virus(“ZIKV”)in response to the unmet global medical need for a response to this seriousdisease.Beginning in 2015,ZIKV s
91、pread in South,Central and North America,via mosquito-borne and sexual transmission.Although acute ZIKV infectionsin adults are generally either asymptomatic or associated with mild symptoms(fever,joint pains and skin rash),more serious outcomes can occur,includingGuillain-Barr syndrome in adults an
92、d,microcephaly in infants of women infected during pregnancy.There is no approved vaccine against ZIKV,although anumber of companies have announced vaccine development efforts.We are currently conducting IND-enabling preclinical studies,including studies in non-human primates and other animal models
93、,with the goal of initiating a Phase 1 clinical trial of our ZIKV envelope dimer nanoparticle vaccine candidate(“ZIKV EnvD Vaccine”)in 2017.Seasonal Influenza Influenza is a world-wide infectious disease that causes illness in humans with symptoms ranging from mild to life-threatening or even death.
94、Serious illness occurs not only in susceptible populations such as pediatrics and older adults,but also in the general population largely because of uniquestrains of influenza for which most humans have not developed protective antibodies.Current estimates for seasonal influenza vaccine growth in th
95、e topseven markets(U.S.,Japan,France,Germany,Italy,Spain and UK),show a potential increase from approximately$3.2 billion in the 2012-2013 season to$5.3 billion by the 2021-2022 season.25 The Advisory Committee for Immunization Practices of the Center for Disease Control and Prevention(“CDC”)recomme
96、nds that all persons agedsix months and older be vaccinated annually against seasonal influenza.Influenza is a major burden on public health worldwide:an estimated one milliondeaths each year are attributed to influenza.26 It is further estimated that,each year,influenza attacks between 5%and 10%of
97、adults and 20%to 30%ofchildren,causing significant levels of illness,hospitalization and death.27 Recombinant seasonal influenza vaccines,like the candidate we are developing,have an important advantage:once licensed for commercial sale,large quantities of such vaccine can potentially be manufacture
98、d quickly and in a cost-effective manner,without the use of either the live influenza virus or eggs.25 Influenza Vaccines Forecasts.Datamonitor(2013)26 Resolution of the World Health Assembly.(2003)WHA56.19.2827 WHO position paper(2012)Weekly Epidemiol Record;87(47):46176 6 After many years of devel
99、oping virus-like particle(“VLP”)-based seasonal influenza vaccine candidates,we have identified advantages ofdeveloping nanoparticle-based seasonal influenza vaccines.In particular,influenza nanoparticles can display conserved antigenic regions,which have thepotential to elicit broadly neutralizing
100、antibodies that may offer protection against a range of drifted strains.Additionally,nanoparticles offer improvedpurity and manufacturability and advantages for co-formulation with other nanoparticle-based vaccines.We expect to continue to develop our nanoparticleinfluenza vaccine program in 2017 wi
101、th an ongoing goal of generating additional proof-of-concept data.Combination Respiratory Vaccine Given the ongoing development of our RSV F Vaccine and our desire to develop a combination respiratory vaccine with the potential to protectagainst both RSV and seasonal influenza,we made the decision t
102、o shift our seasonal influenza vaccine development focus from VLP-based seasonalinfluenza vaccines to nanoparticle-based seasonal influenza vaccines.Early preclinical development efforts give us confidence that such a combinationvaccine is feasible.CPLB Joint Venture(India)CPL Biologicals Private Li
103、mited(“CPLB”),our joint venture company with Cadila Pharmaceuticals Limited(“Cadila”)in India,is activelydeveloping a number of vaccine candidates that were genetically engineered by us.CPLB is owned 20%by us and 80%by Cadila.CPLB operates amanufacturing facility in India for the production of vacci
104、nes.Seasonal Influenza CPLB received marketing authorization,the Indian equivalent of approval of a Biologics License Application,for its trivalent seasonal VLPinfluenza vaccine and is currently manufacturing with limited sales in 2016 and limited expected sales in 2017.Rabies In October 2016,CPLB i
105、nitiated its Phase 3 clinical trial in India of a rabies G protein vaccine candidate that we genetically engineered,and thatcan be administered both as a pre-exposure and a post-exposure prophylactic regimen.The post-exposure regimen has the potential to use fewer doses(threedoses)than the current s
106、tandard of care(five doses).Vaccine Technology Our recombinant protein nanoparticle vaccine technology is based on self-assembly of surface protein antigens from pathogenic organismsincluding viruses,bacteria or parasites.The conformations of these nanoparticles are similar but not identical to the
107、natural structure of surface antigens ofdisease organisms,and lack the genetic material required for replication and therefore are not infectious.Potential immunological advantages of proteinnanoparticles may be associated with the nanoparticle conformation and the presentation of key functional epi
108、topes that are often immunologically hiddenin the native pathogen.This leads to efficient recognition by the immune systems antigen presenting cells that trigger robust immune responses.Recognition of the nanoparticle vaccines repeating protein patterns by the antigen presenting cells toll-like rece
109、ptors to stimulate innate immunity and thehigh purity and lack of synthetic material adds to the potential safety of recombinant nanoparticle vaccines.Protein nanoparticle vaccine technology hasexpanded our early-stage vaccines in development to include both virus and non-virus disease targets.Our m
110、ost advanced protein nanoparticle vaccinecandidate is our RSV F Vaccine,which self-assembles from our highly purified F-protein antigen.Matrix Adjuvants Adjuvants are predominantly used to enable a vaccine to increase the amplitude of the immune response and qualitatively change it,broaden itsspecif
111、icity to provide protection against related microorganisms and allow for effective immunization with much lower doses of antigen.Novavax AB hasdeveloped a number of adjuvant formulations,all based on our proprietary Matrix technology.These adjuvant formulations possess excellentimmunostimulatory fea
112、tures with the ability to increase and prolong the protective benefits of vaccines.7 While adjuvants based on novel,poorly characterized substances have been hampered by safety concerns and limited efficacy,Matrix adjuvantsstimulate strong antibody and cell-mediated immune responses.Matrix adjuvants
113、 may allow for lower antigen doses,longer-duration immune responses andcarry a lower risk for allergic reactions or other adverse events.Our Matrix technology typically induces strong cellular activation of both Th1 and Th2 types,thereby generating all classes and subclasses of antibodies,as well as
114、 potent cellular responses,including cytotoxic T lymphocytes.Our Matrix-M adjuvantprovides a potent adjuvant effect that has been well tolerated in clinical trials.We also believe that the strong immune response and opportunity to reducethe quantity of antigen dose can significantly reduce the produ
115、ction cost of our vaccines.This means that our Matrix-M adjuvant has the potential to be ofsignificant value when there is inadequate vaccine manufacturing capacity during an emerging disease threat such as an influenza pandemic.Competition in RSV,EBOV,ZIKV,Influenza and Other Vaccines The vaccine m
116、arket is intensely competitive,characterized by rapid technological progress.Our technology is based upon utilizing the baculovirusexpression system in insect cells to make recombinant vaccines.We believe this system offers many advantages when compared to other technologies and isuniquely well-suit
117、ed for developing RSV and influenza vaccines,as well as vaccines against a number of other infectious diseases.There is currently no approved RSV vaccine for sale in the world;however,a number of vaccine manufacturers,academic institutions and otherorganizations currently have,or have had,programs t
118、o develop such a vaccine.In addition,many other companies are developing products to preventdisease caused by RSV using a variety of technology platforms,including various viral vector technologies and competitive recombinant technologies.Webelieve that our RSV vaccine candidate,utilizing a recombin
119、ant F-protein antigen,is more effective than RSV vaccine candidates in development by ourcompetitors;however,such efficaciousness cannot be guaranteed.Although we are not aware of all our competitors efforts,we believe that MedImmune,LLC(“MedImmune”),a subsidiary of AstraZeneca PLC,may have the seco
120、nd most advanced RSV vaccine program after Novavax,as it has reported testingin Phase 1 and Phase 1/2 clinical trials of an intranasal,recombinant,live attenuated,RSV vaccine for the prevention of lower respiratory tract disease causedby RSV,as well as a combination intranasal vaccine for the preven
121、tion of several infant respiratory illnesses,including RSV.In older adults,MedImmunealso conducted a Phase 2 trial of MEDI-7510(recombinant F subunit with an adjuvant administered intramuscularly).In both MedImmune vaccine programs,the trials did not report complete success.Additional entities have
122、also entered into early clinical trials including GlaxoSmithKline,Sanofi,Bavarian Nordic,J&J/Crucell,Immunovaccine,Mucosis,Vaxart and the National Institute of Allergy and Infectious Diseases,an institute under the U.S.National Institutes ofHealth(“NIAID”).Vaccine candidates against EBOV have been i
123、n development for more than a decade;however,with the recent epidemic in West Africa(nowsubsided),focus on viable vaccine candidates has intensified.The WHO has reported two vaccine candidates that are currently being tested in humans:oneby GlaxoSmithKline in collaboration with NIAID,and the other b
124、y a collaboration of NewLink Genetics,Merck Vaccines USA(“Merck”)and the PublicHealth Agency of Canada.The Merck vaccine is the only one to have completed some human trials before the epidemic faded,published their data,and nowfiling for licensure.While these and other vaccine candidates offer promi
125、se,we believe there are accompanying challenges,including:high-dose levelrequirements;utilization of glycoprotein from older strains that have a significant number of amino acid changes when compared to the 2014 Makona strain;difficult storage requirements at temperatures below 60C;and challenges as
126、sociated with immunity to the viral vectors,which could limit their multi-dosevaccine potential.In contrast,we have developed a Phase 1 vaccine candidate that has performed well with low doses utilizing our Matrix-M adjuvant,wasderived from the 2014 Makona strain,appears to be stable at 28C and appe
127、ars to provide enhanced immunogenicity as a multi-dose vaccine.Although we are not aware of all our competitors efforts,we believe there are over 25 vaccines in development for ZIKV,which include candidatesfrom large vaccine companies,smaller biotech companies and governmental research institutions.
128、Many of these programs have external funding from a thirdparty source.At least three vaccines are currently in Phase 1 clinical trials(Inovio,NIAID and WRAIR/Sanofi),while others,including Novavax,are inpreclinical development.We believe that Inovio initiated the first ZIKV vaccine clinical trial in
129、 July 2016;however,additional clinical trials are expected tostart with candidates from Takeda,Moderna/Valera,Baharat(India),NIAID(various live attenuated formulations)and Themis(EU).There are at least sixprimary vaccine technology platforms being applied,including DNA,mRNA,inactivated whole virus,l
130、ive attenuated,recombinant proteins/subunit andvector-based genetics with some novel variations within each platform.Our ZIKV vaccine candidate is based on highly purified ZIKV envelope proteindimers(“EnvD”)stabilized with a proprietary formulation.In addition,our ZIKV vaccine has a highly conserved
131、 quartinary neutralizing epitope that appears,in animal studies,to induce neutralizing antibody responses against multiple stains of ZIKV and other flaviviruses.While we have not yet tested our ZIKVvaccine candidate in humans,we believe that its development profile suggests broad protection,high eff
132、icacy and good stability.8 There are a number of companies developing and selling vaccines for seasonal influenza employing both traditional and new vaccine technologies.Many seasonal influenza vaccines are currently approved and marketed,and most of these are marketed by major pharmaceutical compan
133、ies that havesignificantly greater financial and technical resources,experience and expertise.Competition in the sale of seasonal influenza vaccines is intense.Therefore,newly developed and approved products must be differentiated from existing vaccines in order to have commercial success.In order t
134、o show differentiationin the seasonal influenza market,a product may need to be more efficacious and/or be less expensive and quicker to manufacture.Many of our competitorsare working on new products and new generations of current products,some by adding an adjuvant that is used to increase the immu
135、nogenicity of thatproduct,each of which is intended to be more efficacious than currently marketed products.Another differentiating factor is recombinant manufacturing,which we believe can be quicker and less-expensive than traditional egg-based manufacturing.Despite the significant competition and
136、advancingtechnologies,some of which are similar to our own,we believe that our nanoparticle seasonal influenza product could be as efficacious as,or more so than,current products or products being developed by our competitors,and that our manufacturing system provides savings in both time and money;
137、however,there can be no guarantee that our seasonal influenza vaccine will prove to be efficacious or that our manufacturing system will prove to be sufficientlyeffective and differentiated to ensure commercial success.In general,competition among pharmaceutical products is based in part on product
138、efficacy,safety,reliability,availability,price and patentposition.An important factor is the relative timing of the market introduction of our products and our competitors products.Accordingly,the speed withwhich we can develop products,complete the clinical trials and approval processes and supply
139、commercial quantities of the products to the market is animportant competitive factor.Our competitive position also may depend upon our ability to show differentiation with a product that is more efficaciousand/or be less expensive and quicker to manufacture.Other factors affecting our competitive p
140、osition include our ability to attract and retain qualifiedpersonnel,obtain patent protection or otherwise develop proprietary products or processes and secure sufficient capital resources for the lengthy periodbetween technological conception and commercial sale.Patents and Proprietary Rights We ge
141、nerally seek patent protection for our technology and product candidates in the U.S.and abroad.The patent position of biotechnology andpharmaceutical firms generally is highly uncertain and involves complex legal and factual questions.Our success will depend,in part,on whether we can:obtain patents
142、to protect our own technologies and product candidates;obtain licenses to use the technologies of third-parties,which may be protected by patents;protect our trade secrets and know-how;andoperate without infringing the intellectual property and proprietary rights of others.Patent Rights;Licenses.We
143、have intellectual property(patents,licenses,know-how)related to our vaccines,manufacturing processes and other technologies.Currently,wehave or have rights to over 250 U.S.patents and corresponding foreign patents and patent applications relating to vaccines and vaccine-related technologies.Since 20
144、07,we have maintained a non-exclusive license arrangement with Wyeth Holdings LLC,a subsidiary of Pfizer Inc.(Wyeth),to a family ofpatents and patent applications covering VLP technology for use in human vaccines in certain fields,with expected patent expiration in early 2022.In July 2010,U.S.Patent
145、 No.7,763,450 for Functional Influenza Virus-Like Particles was issued by the U.S.Patent&Trademark Office.The patentcovers,in part,the use of influenza gene sequences for high-yield production of consistent influenza VLP vaccines to protect against current and futureseasonal and pandemic strains of
146、influenza viruses.In December 2011,European Patent No.1644037 was issued by the European Patent Office covering thistechnology.9 In December 2011,U.S.Patent No.8,080,255 for Functional Influenza Virus-Like Particles was issued by the U.S.Patent&Trademark Office.Thepatent covers,in part,methods of in
147、ducing substantial immunity to an influenza virus infection in a human and administering to the human a VLPcomprising M1,HA and NA proteins.The M1 protein is derived from a particular avian influenza strain,A/Indonesia/5/05.In April 2013,European Patent No.2343084 for Functional Influenza Virus-Like
148、 Particles was issued by the European Patent Office.The patentcovers,in part,vaccine compositions containing VLPs that contain M1,HA,and NA proteins.The VLPs are self-assembled from host cells.In August 2013,U.S.Patent No.8,506,967 for Functional Influenza Virus-Like Particles was issued by the U.S.
149、Patent&Trademark Office.Thepatent covers,in part,methods of inducing substantial immunity to an influenza virus infection in a human and administering to the human a VLPcomprising M1,HA and NA proteins.The M1 protein is from an avian influenza M1 protein from a different strain of influenza virus th
150、an the influenza HAprotein and the influenza NA protein.In October 2013,U.S.Patent No.8,551,756 for Avian influenza chimeric Virus-Like Particles was issued by the U.S.Patent&Trademark Office.Thepatent covers,in part,methods of increasing the efficiency of VLP production using M1 proteins derived fr
151、om strain A/Indonesia/5/05.In November 2013,U.S.Patent No.8,592,197 for Functional Influenza Virus-Like Particles was issued by the U.S.Patent&Trademark Office.Thepatent covers,in part,influenza VLP vaccines containing M1,HA,and NA proteins where the M1 protein is from a different stain than the HA
152、and NAproteins.In April 2014,U.S.Patent No.8,697,088 for Novel VLPs Derived From Cells That do not Express a Viral Matrix or Core Protein was issued by theU.S.Patent&Trademark Office.The patent covers,in part,methods of making influenza VLP that contain HA and NA proteins but lack any viral matrix o
153、rcore protein.In May 2014,U.S.Patent No.8,715,692 for Modified RSV F Proteins and Methods of Their Use was issued by the U.S.Patent&Trademark Office.The patent covers,in part,RSV F vaccines.Between February 2015 and December 31,2015,U.S.Patent Nos.8,951,537,8,992,939,9,144,607,9,050,290,and 9,180,18
154、0 were issued by theU.S.Patent&Trademark Office.These patents all relate to aspects of our influenza VLP program.In addition,9,205,147,directed to our Matrix Adjuvantprogram,issued in January 2015.In 2016,U.S.Patent Nos.9,381,239,9,464,276,and 9,474,799,related to the influenza VLP program,were issu
155、ed by the U.S.Patent&TrademarkOffice.In addition,European Patent No.237009,related to the RSV F vaccine program issued in Europe.The Federal Technology Transfer Act of 1986 and related statutory guidance encourages the dissemination of science and technology innovation.While our expired contract wit
156、h the Department of Health and Human Services,Biomedical Advanced Research and Development Authority provided uswith the right to retain ownership in our inventions that may have arisen during performance of that contract,with respect to certain other collaborativeresearch efforts with the U.S.gover
157、nment,certain developments and results that may have commercial potential are to be freely published,not treated asconfidential,and we may be required to negotiate a license to developments and results in order to commercialize products.There can be no assurance thatwe will be able to successfully o
158、btain any such license at a reasonable cost,or that such development and results will not be made available to ourcompetitors on an exclusive or non-exclusive basis.Trade Secrets.We also rely significantly on trade secret protection and confidentiality agreements to protect our interests.It is our p
159、olicy to require employees,consultants,contractors,manufacturers,collaborators and other advisors to execute confidentiality agreements upon the commencement of employment,consulting or collaborative relationships with us.We also require confidentiality agreements from any entity that is to receive
160、confidential information fromus.With respect to employees,consultants and contractors,the agreements generally provide that all inventions made by the individual while renderingservices to us shall be assigned to us as our property.10 Government Regulations The development,production and marketing o
161、f biological products,which included the vaccine candidates being developed by Novavax or ourcollaborators,are subject to regulation for safety,efficacy and quality by numerous governmental authorities in the U.S.and other countries.As a U.S.basedcompany,we focus on the U.S.regulatory process and th
162、e standards imposed by the FDA,International Conference on Harmonisation(“ICH”)and otheragencies because we believe,for the most part,meeting U.S.and ICH standards will allow us to satisfy regulatory agencies in other countries where we intendto do business.We are aware that expectations in some ven
163、ues,notably in the European Union,differ to some degree and we are taking proactive steps toaddress such differences.In the U.S.,the development,manufacturing and marketing of human pharmaceuticals and vaccines are subject to extensiveregulation under the Federal Food,Drug,and Cosmetic Act,and biolo
164、gical products are subject to regulation under provisions of that act and the PublicHealth Service Act.The FDA not only assesses the safety and efficacy of these products but it also regulates,among other things,the testing,manufacture,labeling,storage,record-keeping,advertising and promotion of suc
165、h products.The process of obtaining FDA licensure for a new vaccine is costly and time-consuming.Vaccine clinical development follows the same general regulatory pathway as drugs and other biologics.Before applying for FDA licensure tomarket any new vaccine candidate,we expect to first submit an inv
166、estigational new drug application(“IND”)that explains to the FDA,among other things,the results of preclinical toxicology testing conducted in laboratory animals,the method of manufacture,quality control tests for release,the stability of theinvestigational product and what we propose to do for huma
167、n testing.At this stage,the FDA decides whether it is reasonably safe to move forward withtesting the vaccine candidate in humans.We must then conduct Phase 1 clinical trials and larger-scale Phase 2 and 3 clinical trials that demonstrate thesafety,immunogenicity and efficacy of our vaccine candidat
168、e to the satisfaction of the FDA.Once these trials are complete,a Biologics License Application(“BLA”)can be submitted to the FDA requesting licensure of the vaccine for marketing based on the vaccines safety and efficacy.During the FDAs review of a BLA,the proposed manufacturing facility undergoes
169、a pre-approval inspection during which the FDA examines indetail the production of the vaccine,the manufacturing facility and the quality documentation related to the vaccine.Vaccine licensure also requires theprovision of adequate product labeling to allow health care providers to understand the va
170、ccines proper use,including its potential benefits and risks,tocommunicate with patients and parents,and to safely deliver the vaccine to the public.Until a vaccine is given to the general population,all potentialadverse events cannot be anticipated.Thus,the FDA typically requires Phase 4 post-marke
171、ting clinical trials for vaccines after licensure to continuegathering safety,and sometimes effectiveness/efficacy data in the indicated and additional populations.In order to ensure continuing safety,the FDA continues to oversee the production of vaccines even after the vaccine and manufacturing pr
172、ocessesare approved.For example,monitoring of the vaccine and of production activities,including periodic facility inspections,must continue as long as themanufacturer holds a license for the product.Manufacturers may also be required to submit to the FDA the results of their own tests for potency,s
173、afety andpurity for each vaccine lot,if requested by the FDA.They may also be required to submit samples of each vaccine lot to the FDA for testing.In addition to obtaining FDA licensure for each product,each domestic manufacturing establishment must be registered with the FDA,is subject toFDA inspe
174、ction and must comply with cGMP regulations.To supply products for use either in the U.S.or outside the U.S.,including clinical trials,U.S.andforeign manufacturing establishments,including third-party facilities,must comply with GMP regulations and are subject to periodic inspection by the FDAor by
175、corresponding regulatory agencies in their home country.In 1992,the FDA instituted regulations that allow approval of certain products that treat serious or life-threatening illnesses and provide meaningfultherapeutic benefit over existing treatments based on a surrogate endpoint,versus a clinical o
176、utcome,which can take many more years to demonstrate.Surrogate endpoints,generally a laboratory measurement or other physical sign shown to have some correlation with clinical benefit,can considerablyshorten the development time leading up to FDA licensure.The FDA bases its decision on whether to ac
177、cept a proposed surrogate endpoint on the scientificsupport for that endpoint.The company developing the product is required to conduct further studies to confirm the clinical benefit in Phase 4 confirmatoryefficacy trials.We plan to seek traditional approval for our seasonal influenza vaccine,but h
178、ave not ruled out the potential use of accelerated approval forspecific populations and/or for potential pandemic influenza vaccine candidates.11 In addition to regulatory approvals that must be obtained in the U.S.,an investigational product is also subject to regulatory approval in othercountries
179、in which it is intended to be marketed.No such product can be marketed in a country until the regulatory authorities of that country have approvedan appropriate marketing application.FDA licensure does not assure approval by other regulatory authorities.In addition,in many countries,the governmentis
180、 involved in the pricing of the product.In such cases,the pricing review period often begins after market approval is granted.We are also subject to regulation under the Occupational Safety and Health Act,the Environmental Protection Act,the Toxic Substances ControlAct,the Resource Conservation and
181、Recovery Act and other present and potential federal,state or local regulations,including national and local regulationsthat govern our facility in Sweden.These and other laws govern our use,handling and disposal of various biological and chemical substances used in,andwaste generated by our operati
182、ons.Our research and development involves the controlled use of hazardous materials,chemicals and viruses.Although webelieve that our safety procedures for handling and disposing of such materials comply with the standards prescribed by state and federal regulations,the riskof accidental contaminati
183、on or injury from these materials cannot be completely eliminated.In the event of such an accident,we could be held liable for anydamages that result and any such liability could exceed our resources.Additionally,for formulations containing controlled substances,we are subject toDrug Enforcement Act
184、 regulations.There have been numerous federal and state legislative changes made over the last few years regarding the pricing of pharmaceutical and biologicalproducts,the exertion of government control and other changes to the healthcare system of the U.S.It is uncertain how such legislative change
185、s will beadopted or what actions federal,state or private payers for medical goods and services may take in response to such legislation.We cannot predict the effectsuch healthcare changes will have on our business,and no assurance can be given that any such reforms will not have a material adverse
186、effect.Manufacturing Our primary manufacturing facility is located at our corporate headquarters at 20 Firstfield Road in Gaithersburg,Maryland.The facility has 53,000square feet of combined GMP manufacturing and laboratory space.Our Rockville,Maryland facility houses our 10,000 square foot GMP pilo
187、t manufacturingfacility that produces early-stage clinical trial material.Novavax AB,located in Uppsala,Sweden,produces our Matrix adjuvants in an approximately 24,000square foot facility comprised of GMP manufacturing,laboratory and office space.Sources of Supply Most of the raw materials and other
188、 supplies required in our business are generally available from established vendors in quantities adequate to meetour needs.In some cases,we have only qualified one vendor for certain of our manufacturing components.Prior to the initiation of commercial production,we plan,where feasible,to qualify m
189、ultiple vendors of critical raw materials.One key vendor is GE Healthcare Company(“GEHC”),which suppliesdisposable components,resins,media and buffers used in our manufacturing process.GEHC and other vendors that supply our key manufacturing materialshave been or will be audited for compliance with
190、GMP standards.An important component of our Matrix adjuvant technology is extracted from a species of soap-bark tree(Quillaja saponaria)that grows mainly inChile,and we have been able to acquire high-quality quillaja extract as needed from our current suppliers.12 Business Development We believe our
191、 proprietary vaccine technology affords us a range of traditional and non-traditional commercialization options that are broader thanthose of existing vaccine companies.We strive to create sustainable value by working to obtain non-dilutive funding,similar to our agreement with BMGFto fund our RSV p
192、rogram,that would allow for:continued development of our vaccine candidates until such vaccines can be licensed;retained commercial rights in one or more major markets;product sales revenue;andin certain markets,commercialized products through partners and other strategic relationships.In addition t
193、o our aforementioned agreement with BMGF,another example of a strategic relationship is our joint venture we established with Cadila.CPLB is owned 20%by us and 80%by Cadila.It was established in 2009 to develop and manufacture certain vaccine candidates,biogeneric products anddiagnostic products for
194、 the territory of India.CPLB operates a manufacturing facility in India for the production of vaccines and is actively developing anumber of vaccine candidates that were genetically engineered by us.Employees As of February 23,2017,we have 355 full-time employees,of whom 65 hold M.D.or Ph.D.degrees
195、and 107 of whom hold other advanced degrees.Of our total workforce,304 are engaged primarily in research,development and manufacturing activities and 51 are engaged primarily in executive,businessdevelopment,finance and accounting,legal and administrative functions.None of our U.S.employees are repr
196、esented by labor unions or covered bycollective bargaining agreements;33 of our 34 Swedish employees are covered by typical collective bargaining agreements.We consider our relations withour employees to be good.Availability of Information Our website address is .We make available,free of charge and
197、 through our website,our Annual Reports on Form 10-K,QuarterlyReports on Form 10-Q,Current Reports on Form 8-K and our other filings with the SEC,and any amendments to any such reports filed or furnished pursuantto Section 13(a)or 15(d)of the Securities Exchange Act of 1934,as amended,as soon as rea
198、sonably practicable after filed with or furnished to the SEC.Further,a copy of this Annual Report on Form 10-K is located at the SECs Public Reference Room at 100 F Street,NE,Washington,D.C.20549.Informationon the operation of the Public Reference Room can be obtained by calling the SEC at 1-800-SEC
199、-0330.The SEC maintains an Internet site that containsreports,proxy and information statements,and other information regarding issuers that file electronically with the SEC at www.sec.gov.We use our website()as a means of disclosing material non-public information and for complying with our disclosu
200、re obligationsunder Regulation Fair Disclosure promulgated by the SEC.These disclosures are included on our website()in the“Investor Info”or“Newsroom”sections.Accordingly,investors should monitor these portions of our website(),in addition to following our press releases,SEC filings and public confe
201、rence calls and webcasts.Also available on our website is information relating to corporate governance at Novavax and our Board of Directors,including our Code ofBusiness Conduct and Ethics.We intend to disclose on our website any future amendments to and waivers from this code that apply to our Chi
202、ef ExecutiveOfficer,Principal Financial Officer,Principal Accounting Officer and Controller,and persons performing similar functions,as promptly as practicable,as maybe required under applicable SEC and NASDAQ rules.We webcast our earnings calls and certain events we participate in or host with memb
203、ers of the investment community on the investor relationssection of our website.Additionally,we provide notifications of news or announcements regarding press and earnings releases as part of the investor relationssection of our website.The contents of our website are not part of this Annual Report
204、on Form 10-K,or any other report we file with,or furnish to,the SEC.13 Item 1A.RISK FACTORS You should carefully consider the following risk factors in evaluating our business.There are a number of risk factors that could cause our actualresults to differ materially from those that are indicated by
205、forward-looking statements.Some of the risks described relate principally to our business and theindustry in which we operate.Others relate principally to the securities market and ownership of our common stock.The risks and uncertainties describedbelow are not the only ones facing us.Additional ris
206、ks and uncertainties that we are unaware of,or that we currently deem immaterial,also may becomeimportant factors that affect us.If any of the following risks occur,our business,financial condition or results of operations could be materially and adverselyaffected.You should also consider the other
207、information included in this Annual Report on Form 10-K.RISKS RELATED TO OUR BUSINESS AND INDUSTRY We have a history of losses and our future profitability is uncertain.Our expenses have exceeded our revenue since our formation in 1987,and our accumulated deficit at December 31,2016 was$930.0 millio
208、n.Ourrevenue for the last three fiscal years was$15.4 million in 2016,$36.3 million in 2015,and$30.7 million in 2014.We cannot be certain that we will besuccessful in entering into strategic alliances or collaborative arrangements with other companies and government agencies that will result in sign
209、ificantrevenue to offset our expenses.Our net losses for the last three fiscal years were$280.0 million in 2016,$156.9 million in 2015,and$82.9 million in 2014.Our recent historical losses have predominantly resulted from research and development expenses for our vaccine candidates,manufacturing-rel
210、atedexpenses,costs related to protection of our intellectual property and for other general operating expenses.Our expenses have exceeded our revenue sinceinception and we believe our expenses will continue to increase over time,as a result of continuing research and development efforts to support t
211、hedevelopment of our vaccine candidates.For example,we experienced a significant increase in research and development expenses in 2016 over prior yearsprimarily due to additional RSV F Vaccine clinical trials in older adult immunization and infants via maternal immunization,as well as higher employe
212、e-related costs to support product development of our RSV F Vaccine and other potential vaccine candidates.Although certain specified costs associated with the development of our RSV maternal vaccine may be reimbursed under our contract with BMGF,we expect to continue to incur significant operating
213、expenses and anticipate that our losses will increase over time as we seek to:conduct clinical trials for RSV and other vaccine candidates;conduct preclinical studies for other vaccine candidates;comply with the FDAs manufacturing facility and compliance requirements in anticipation of commercializa
214、tion;invest in our manufacturing process for commercial-scale and cost-efficiency;andmaintain,expand and protect our intellectual property portfolio.As a result,we expect our cumulative operating losses to increase until such time,if ever,that product sales,licensing fees,royalties,milestones,contra
215、ct research and other sources generate sufficient revenue to fund our operations.We cannot predict when,if ever,we might achieve profitability andcannot be certain that we will be able to sustain profitability,if achieved.We have limited financial resources and we are not certain that we will be abl
216、e to maintain our current level of operations or be able to fund thefurther development of our vaccine candidates.We do not expect to generate revenue from product sales,licensing fees,royalties,milestones,contract research or other sources in an amountsufficient to fully fund our operations for the
217、 foreseeable future,and we will therefore use our cash resources and expect to require additional funds tomaintain our operations,continue our research and development programs,commence future preclinical studies and clinical trials,seek regulatory approvalsand manufacture and market our products.We
218、 will seek such additional funds through public or private equity or debt financings,collaborative licensingand development arrangements,non-dilutive government contracts and grants and other sources.While we continue to apply for contracts or grants fromacademic institutions,non-profits and governm
219、ental entities,there are no assurances that we would be successful.We cannot be certain that adequateadditional funding will be available to us on acceptable terms,if at all.If we cannot raise the additional funds required for our anticipated operations,we maybe required to delay significantly,reduc
220、e the scope of or eliminate one or more of our research or development programs,downsize our general andadministrative infrastructure,or seek alternative measures to avoid insolvency,including arrangements with collaborative partners or others that may requireus to relinquish rights to certain of ou
221、r technologies or vaccine candidates.If we raise additional funds through future offerings of shares of our commonstock or other securities,such offerings would cause dilution of current stockholders percentage ownership in the Company,which could be substantial.Future offerings also could have a ma
222、terial and adverse effect on the price of our common stock.14 Economic uncertainty may adversely affect our access to capital,cost of capital and ability to execute our business plan as scheduled.Generally,worldwide economic conditions remain uncertain.Access to capital markets is critical to our ab
223、ility to operate.Traditionally,biotechnology companies have funded their research and development expenditures through raising capital in the equity markets.Declines and uncertaintiesin these markets in the past have severely restricted raising new capital and have affected companies ability to cont
224、inue to expand or fund existing researchand development efforts.We require significant capital for research and development for our vaccine candidates and clinical trials.The general economic andcapital market conditions,both in the U.S.and worldwide,have been volatile in the past and at times have
225、adversely affected our access to capital andincreased the cost of capital.There is no certainty that the capital and credit markets will be available to raise additional capital on favorable terms.Ifeconomic conditions become worse,our future cost of equity or debt capital and access to the capital
226、markets could be adversely affected.In addition,if weare unable to access the capital markets on favorable terms,this could affect our ability to execute our business plan as scheduled.Moreover,we rely andintend to rely on third-parties,including our clinical research organizations and certain other
227、 important vendors and consultants.As a result of the globaleconomic situation,there may be a disruption or delay in the performance of our third-party contractors and suppliers.If such third-parties are unable toadequately satisfy their contractual commitments to us in a timely manner,our business
228、could be adversely affected.Even with the Grant Agreement with BMGF,we may not be able to fully fund our RSV F Vaccine for infants via maternal immunization.The Grant Agreement reimburses a portion of specified expenses associated with the development of our RSV F Vaccine for infants via maternalimm
229、unization and there is no guarantee that additional activities will not be needed and,if so,that BMGF will partially reimburse us for these activities.The Grant Agreement with BMGF does not guarantee that we will be successful in future clinical trials associated with our RSV F Vaccine forinfants vi
230、a maternal immunization or that the vaccine candidate will be licensed by the FDA.The Grant Agreement reimburses a portion of specified expenses associated with the development of our RSV F Vaccine for infants via maternalimmunization,but we remain fully responsible for conducting these development
231、activities.The Grant Agreement does not guarantee that any of theseactivities will be successful.Our inability to be successful with certain key clinical or development activities could jeopardize our ability to obtain FDAlicensure to sell this vaccine.Our wholly-owned subsidiary Novavax AB,collabor
232、ations with regional partners,such as Cadila and BMGF,as well as contracts withinternational providers,expose us to additional risks associated with doing business outside the U.S.,and any adverse event could have a materialnegative impact on our operations.Swedish-based Novavax AB is a wholly-owned
233、 subsidiary of Novavax,Inc.We have also formed a joint venture with Cadila in India,a clinicaldevelopment agreement with BMGF and have entered into other agreements and arrangements with companies in other countries.We plan to continue toenter into collaborations or partnerships with companies,non-p
234、rofit organizations and local governments in other parts of the world.Risks of conductingbusiness outside the U.S.include:15 multiple regulatory requirements could affect our ability to develop,manufacture and sell products in such local markets;compliance with anti-bribery laws such as the United S
235、tates Foreign Corrupt Practices Act and similar anti-bribery laws in other jurisdictions;existing,new or changes in interpretations of existing trade protections measures,including tariffs,and import and export licensingrequirements;difficulties in and costs of staffing,managing and operating our in
236、ternational operations;changes in environmental,health and safety laws;fluctuations in foreign currency exchange rates;potentially negative consequences from new,changes in or changes in interpretations of tax laws;political instability and actual or anticipated military or potential conflicts;econo
237、mic instability,inflation,recession and interest rate fluctuations;minimal or diminished protection of intellectual property;andpossible nationalization and expropriation.These risks,individually or in the aggregate,could have a material adverse effect on our business,financial conditions,results of
238、 operations andcash flows.Current or future regional relationships may hinder our ability to engage in larger transactions.We have entered into regional collaborations to develop our vaccine candidates in certain parts of the world,and we may enter into additionalregional collaborations.Our relation
239、ships with Cadila and BMGF are examples of these regional relationships.These relationships are likely to involve thelicensing of our technology to our partner or entering into a distribution agreement,frequently on an exclusive basis.Generally,these exclusive agreementsare restricted to certain ter
240、ritories.Because we have entered into exclusive license and distribution agreements,larger companies may not be interested,orable,to enter into collaborations with us on a worldwide-scale.Also,these regional relationships may make us an unattractive target for an acquisition.We are a biotechnology c
241、ompany and face significant risk in developing,manufacturing and commercializing our products.We focus our research and development activities on vaccines,an area in which we have particular strengths and a technology that appearspromising.The outcome of any research and development program is highl
242、y uncertain.Only a small fraction of biopharmaceutical development programsultimately result in commercial products or even product candidates and a number of events could delay our development efforts and negatively impact ourability to obtain regulatory approval for,and to manufacture,market and s
243、ell,a vaccine.Vaccine candidates that initially appear promising often fail to yieldsuccessful products.In many cases,preclinical studies or clinical trials will show that a product candidate is not efficacious or that it raises safety concerns orhas other side effects that outweigh its intended ben
244、efit.Success in preclinical or early clinical trials may not translate into success in large-scale clinicaltrials.Further,success in clinical trials will likely lead to increased investment,accelerating cumulative losses to bring such products to market.Even ifclinical trial results appear positive,
245、regulatory approval may not be obtained if the FDA does not agree with our interpretation of the results and we may facechallenges when scaling-up the production process to commercial levels.Even after a product is approved and launched,general usage or post-marketingclinical trials may identify saf
246、ety or other previously unknown problems with the product,which may result in regulatory approvals being suspended,limitedto narrow indications or revoked,which may otherwise prevent successful commercialization.Intense competition in the vaccine industry could also limitthe successful commercializa
247、tion of our products.Many of our competitors have significantly greater resources and experience,which may negatively impact our commercial opportunities andthose of our current and future licensees.The biotechnology and pharmaceutical industries are subject to intense competition and rapid and sign
248、ificant technological change.We have manypotential competitors,including major pharmaceutical companies,specialized biotechnology firms,academic institutions,government agencies and privateand public research institutions.Many of our competitors have significantly greater financial and technical res
249、ources,experience and expertise in:16 research and development;preclinical testing;designing and implementing clinical trials;regulatory processes and approvals;production and manufacturing;andsales and marketing of approved products.Principal competitive factors in our industry include:the quality
250、and breadth of an organizations technology;management of the organization and the execution of the organizations strategy;the skill and experience of an organizations employees and its ability to recruit and retain skilled and experienced employees;an organizations intellectual property portfolio;th
251、e range of capabilities,from target identification and validation to drug discovery and development to manufacturing and marketing;andthe availability of substantial capital resources to fund discovery,development and commercialization activities.Large and established companies,such as Merck&Co.,Inc
252、.,GlaxoSmithKline plc,CSL Ltd,Sanofi Pasteur,SA,Pfizer Inc.and MedImmune,amongothers,compete in the vaccine market.In particular,these companies have greater experience and expertise in securing government contracts and grants tosupport their research and development efforts,conducting testing and c
253、linical trials,obtaining regulatory approvals to market products,manufacturing suchproducts on a broad scale and marketing approved products.We are also aware that there are multiple companies with active RSV vaccine programs at various stages of development.Thus,while there is noRSV vaccine current
254、ly on the market,there is likely to be significant and consistent competition as these active programs mature.Different RSV vaccinesmay work better for different segments of the population,so it may be difficult for a single RSV vaccine manufacturer to provide vaccines that are marketableto multiple
255、 population segments.Geographic markets are also likely to vary significantly,which may make it difficult to market a single RSV vaccineworldwide.Even if a manufacturer brings an RSV vaccine to license,it is likely that competitors will continue to work on new products that could be moreefficacious
256、and/or less expensive.Our RSV vaccine candidate may not be as far along in development as other active RSV vaccine programs about which weare not aware,nor as efficacious as products under development by competing companies.We believe that there are at least two EBOV vaccine candidates that are curr
257、ently being tested in late stage clinical trials:one by GlaxoSmithKlinein collaboration with the United States National Institute of Allergy and Infectious Diseases,and the other by a collaboration of NewLink Genetics,MerckVaccines USA and the Public Health Agency of Canada.Additional vaccine candid
258、ates are also being tested,although in earlier stage clinical trials.Vaccinecandidates against EBOV have been in development for more than a decade by large pharmaceutical companies,smaller biotech companies,governmentagencies and academic labs worldwide,and with the high visibility of the recent We
259、st Africa epidemic,continued development activities are likely tocontinue and potentially increase.We believe there are over two dozen vaccines in development for ZIKV,which include candidates from large pharmaceutical companies andgovernmental agencies.Many of these programs have obtained external
260、funding from third party sources,which we have yet to obtain.At least three vaccineshave initiated Phase 1 clinical trials while others are in preclinical development.Although we believe our ZIKV EnvD Vaccine has significant advantagesover other candidates in development,there can be no assurance th
261、at we will be able to develop our candidate successfully or that ZIKV will continue to posea health threat.17 There are many seasonal influenza vaccines currently approved and marketed.Competition in the sale of these seasonal influenza vaccines isintense.Therefore,newly developed and approved produ
262、cts must be differentiated from existing vaccines in order to have commercial success.In order toshow differentiation in the seasonal influenza market,a product may need to be more efficacious,particularly in older adults,and/or be less expensive andquicker to manufacture.Many of our competitors are
263、 working on new products and new generations of current products,each of which is intended to be moreefficacious than products currently being marketed.Our nanoparticle seasonal influenza vaccine candidate may not prove to be more efficacious than currentproducts or products under development by our
264、 competitors.Further,our manufacturing system may not provide enough savings of time or money to providethe required differentiation for commercial success.Regardless of the disease,smaller or early-stage companies and research institutions may also prove to be significant competitors,particularlyth
265、rough collaborative arrangements with large and established pharmaceutical companies.As these companies develop their technologies,they may developproprietary positions,which may prevent or limit our product development and commercialization efforts.We will also face competition from these parties i
266、nrecruiting and retaining qualified scientific and management personnel,establishing clinical trial sites and subject registration for clinical trials and inacquiring and in-licensing technologies and products complementary to our programs or potentially advantageous to our business.If any of our co
267、mpetitorssucceed in obtaining approval from the FDA or other regulatory authorities for their products sooner than we do or for products that are more effective or lesscostly than ours,our commercial opportunity could be significantly reduced.In order to effectively compete,we will have to make subs
268、tantial investments in development,testing,manufacturing and sales and marketing orpartner with one or more established companies.There is no assurance that we will be successful in gaining significant market share for any vaccine.Ourtechnologies and vaccines also may be rendered obsolete or non-com
269、petitive as a result of products introduced by our competitors to the marketplace morerapidly and at a lower cost.If we are unable to attract or retain key management or other personnel,our business,operating results and financial condition could bematerially adversely affected.We depend on our seni
270、or executive officers,as well as key scientific and other personnel.The loss of these individuals could harm our business andsignificantly delay or prevent the achievement of research,development or business objectives.We may have turnover situations in key executive positionsand the lack of managem
271、ent continuity and resulting lack of long-term history with our Company along with the learning curve that executives experiencewhen they join our management team could result in operational and administrative inefficiencies and added costs.If we were to experience turnover at theexecutive level,the
272、se risks could be exacerbated.We may not be able to attract qualified individuals for other key management or other personnel positions on terms acceptable to us.Competitionfor qualified employees is intense among pharmaceutical and biotechnology companies,and the loss of qualified employees,or an i
273、nability,given theNovember 2016 workforce reduction,to attract,retain and motivate additional highly skilled employees required for the expansion of our activities,couldhinder our ability to complete clinical trials successfully and develop marketable products.The November 2016 workforce reduction m
274、ay yield unintendedconsequences,such as attrition beyond our planned reduction in workforce and reduced employee morale,which may cause our remaining employees to seekalternative employment.Although we have implemented a retention plan,that plan may not be successful in incentivizing our current emp
275、loyees to continuetheir employment with us.We also rely from time to time on outside advisors who assist us in formulating our research and development and clinical strategy.We may not beable to attract and retain these individuals on acceptable terms,which could have a material adverse effect on ou
276、r business,financial condition and results ofoperations.We may have product liability exposure.The administration of drugs or vaccines to humans,whether in clinical trials or after marketing clearances are obtained,can result in product liabilityclaims.We maintain product liability insurance coverag
277、e in the total amount of$20 million aggregate for all claims arising from the use of products inclinical trials prior to FDA approval.Coverage is relatively expensive,and the market pricing can significantly fluctuate.Therefore,we may not be able tomaintain insurance at a reasonable cost.There can b
278、e no assurance that we will be able to maintain our existing insurance coverage or obtain coverage for theuse of our other products in the future.This insurance coverage and our resources may not be sufficient to satisfy all liabilities resulting from product liabilityclaims.A successful claim may p
279、revent us from obtaining adequate product liability insurance in the future on commercially desirable items,if at all.Even ifa claim is not successful,defending such a claim would be time-consuming and expensive,may damage our reputation in the marketplace and would likelydivert managements attentio
280、n.18 Regardless of merit or eventual outcome,liability claims may result in:decreased demand for our products;impairment of our business reputation;withdrawal of clinical trial participants;costs of related litigation;substantial monetary awards to subjects or other claimants;loss of revenue;andinab
281、ility to commercialize our vaccine candidates.We may not be able to win government,academic institution or non-profit contracts or grants.From time to time,we may apply for contracts or grants from government agencies,academic institutions,and non-profit entities.Such contracts orgrants can be highl
282、y attractive because they provide capital to fund the ongoing development of our technologies and vaccine candidates without dilutingour stockholders.However,there is often significant competition for these contracts or grants.Entities offering contracts or grants may have requirements toapply for o
283、r to otherwise be eligible to receive certain contracts or grants that our competitors may be able to satisfy that we cannot.In addition,such entitiesmay make arbitrary decisions as to whether to offer contracts or make grants,to whom the contracts or grants will be awarded and the size of the contr
284、acts orgrants to each awardee.Even if we are able to satisfy the award requirements,there is no guarantee that we will be a successful awardee.Therefore,we may notbe able to win any contracts or grants in a timely manner,if at all.Raising additional capital by issuing securities or through collabora
285、tion and licensing arrangements may cause dilution to existing stockholdersor require us to relinquish rights to our technologies or vaccine candidates.If we are unable to partner with a third-party to advance the development of one or more of our vaccine candidates,we will need to raise moneythroug
286、h additional debt or equity financings.To the extent that we raise additional capital by issuing equity securities,our stockholders will experienceimmediate dilution,which may be significant.There is also a risk that such equity issuances may cause an ownership change under the Internal RevenueCode
287、of 1986,as amended,and similar state provisions,thus limiting our ability to use our net operating loss carryforwards and credits.To the extent that weraise additional capital through licensing arrangements or arrangements with collaborative partners,we may be required to relinquish,on terms that ma
288、y notbe favorable to us,rights to some of our technologies or vaccine candidates that we would otherwise seek to develop or commercialize ourselves.In addition,current economic conditions may also negatively affect the desire or ability of potential collaborators to enter into transactions with us.T
289、hey may also haveto delay or cancel research and development projects or reduce their overall budgets.Our business may be adversely affected if we do not successfully execute our business development initiatives.We anticipate growing through both internal development projects,as well as external opp
290、ortunities,which include the acquisition,partnering andin-licensing of products,technologies and companies or the entry into strategic alliances and collaborations.The availability of high quality opportunities islimited,and we may fail to identify candidates that we and our stockholders consider su
291、itable or complete transactions on terms that prove advantageous.Inorder to pursue such opportunities,we may require significant additional financing,which may not be available to us on favorable terms,if at all.Even if weare able to successfully identify and complete acquisitions,like our business
292、combination with Novavax AB,we may not be able to integrate the assets ortake full advantage of the opportunities and,consequently,may not realize the benefits that we expect.To effectively manage our current and future potential growth,we will need to continue to enhance our operational,financial a
293、nd managementprocesses and to effectively expand,train and manage our employee base.Supporting our growth initiatives will require significant expenditures andmanagement resources,including investments in research and development,manufacturing and other areas of our business.If we do not successfull
294、y manageour growth and do not successfully execute our growth initiatives,then our business and financial results may be adversely impacted,and we may incur assetimpairment or restructuring charges.19 Litigation could have a material adverse impact on our results of operation and financial condition
295、.In addition to intellectual property litigation,from time to time,we may be subject to other litigation.Regardless of the merits of any claims thatmay be brought against us,litigation could result in a diversion of managements attention and resources and we may be required to incur significantexpen
296、ses defending against these claims.If we are unable to prevail in litigation,we could incur substantial liabilities.Where we can make a reasonableestimate of the liability relating to pending litigation and determine that it is probable,we record a related liability.As additional information becomes
297、available,we assess the potential liability and revise estimates as appropriate.However,because of uncertainties relating to litigation,the amount of ourestimates could be wrong.Security breaches and other disruptions could compromise our information and expose us to liability,which would cause our
298、business andreputation to suffer.In the ordinary course of our business,we collect and store sensitive data,including intellectual property,our proprietary business information anddata about our clinical subjects,suppliers,and business partners and personally identifiable information.The secure main
299、tenance of this information iscritical to our operations and business strategy.Some of this information could be an attractive target of criminal attack by malicious third parties with a widerange of motives and expertise,including organized criminal groups,“hactivists,”patient groups,disgruntled cu
300、rrent or former employees and others.Hackerattacks are of ever-increasing levels of sophistication,and despite our security measures,our information technology and infrastructure may be vulnerable tosuch attacks or may be breached due to employee error or malfeasance.Any such breach could compromise
301、 our networks and the information stored therecould be accessed,publicly disclosed,lost or stolen.Furthermore,if our systems become compromised,we may not promptly discover the intrusion.Likeother companies in our industry,we have experienced attacks to our data and systems,including malware and com
302、puter viruses.Attacks could have amaterial impact on our business,operations or financial results.Any access,disclosure or other loss of information could result in legal claims or proceedings,liability under laws that protect the privacy of personal information,disrupt our operations,and damage our
303、 reputation,which could adversely affect ourbusiness.PRODUCT DEVELOPMENT RISKS Because our vaccine product development efforts depend on new and rapidly evolving technologies,we cannot be certain that our efforts will besuccessful.Our vaccine development efforts depend on new,rapidly evolving techno
304、logies and on the marketability and profitability of our products.Ourdevelopment efforts and,if those are successful,commercialization of our vaccines could fail for a variety of reasons,and include the possibility that:our recombinant nanoparticle vaccine technologies,any or all of the products bas
305、ed on such technologies or our proprietary manufacturingprocess will be ineffective or unsafe,or otherwise fail to receive necessary regulatory clearances or commercial viability;we are unable to scale-up our manufacturing capabilities in a cost-effective manner;the products,if safe and effective,wi
306、ll be difficult to manufacture on a large-scale or uneconomical to market;our manufacturing facility will fail to continue to pass regulatory inspections;proprietary rights of third-parties will prevent us or our collaborators from exploiting technologies,and manufacturing or marketing products;andt
307、hird-party competitors will gain greater market share due to superior products or marketing capabilities.We have not completed the development of vaccine products and we may not succeed in obtaining the FDA licensure necessary to sell suchvaccine products.The development,manufacture and marketing of
308、 our pharmaceutical and biological products are subject to government regulation in the U.S.andother countries,including the European Medicines Agency and the Swedish Medical Products Agency with respect to our adjuvant product being developedin Sweden.In the U.S.and most foreign countries,we must c
309、omplete rigorous preclinical testing and extensive clinical trials that demonstrate the safety andefficacy of a product in order to apply for regulatory approval to market the product.None of our vaccine candidates have yet gained regulatory approval inthe U.S.or elsewhere.We also have vaccine candi
310、dates in clinical trials and preclinical laboratory or animal studies.20 The steps generally required by the FDA before our proposed investigational products may be marketed in the U.S.include:performance of preclinical(animal and laboratory)tests;submissions to the FDA of an IND,which must become e
311、ffective before clinical trials may commence;performance of adequate and well controlled clinical trials to establish the safety and efficacy of the investigational product in the intendedtarget population;performance of a consistent and reproducible manufacturing process intended for commercial use
312、,including appropriate manufacturing dataand regulatory inspections;submission to the FDA of a BLA or a NDA;andFDA approval of the BLA or NDA before any commercial sale or shipment of the product.The processes are expensive and can take many years to complete,and we may not be able to demonstrate th
313、e safety and efficacy of our vaccinecandidates to the satisfaction of regulatory authorities.The start of clinical trials can be delayed or take longer than anticipated for many and varied reasons,many of which are out of our control.Safety concerns may emerge that could lengthen the ongoing clinica
314、l trials or require additional clinical trials to beconducted.Promising results in early clinical trials may not be replicated in subsequent clinical trials.Regulatory authorities may also require additionaltesting,and we may be required to demonstrate that our proposed products represent an improve
315、d form of treatment over existing therapies,which we may beunable to do without conducting further clinical trials.Moreover,if the FDA or a foreign regulatory body grants regulatory approval of a product,theapproval may be limited to specific indications or limited with respect to its distribution.E
316、xpanded or additional indications for approved products may notbe approved,which could limit our revenue.Foreign regulatory authorities may apply similar limitations or may refuse to grant any approval.Consequently,even if we believe that preclinical and clinical data are sufficient to support regul
317、atory approval for our vaccine candidates,the FDA and foreign regulatoryauthorities may not ultimately grant approval for commercial sale in any jurisdiction.If our vaccine candidates are not approved,our ability to generaterevenue will be limited and our business will be adversely affected.If we ar
318、e unable to manufacture our vaccines in sufficient quantities,at sufficient yields or are unable to obtain regulatory approvals for amanufacturing facility for our vaccines,we may experience delays in product development,clinical trials,regulatory approval and commercialdistribution.Completion of ou
319、r clinical trials and commercialization of our vaccine candidates require access to,or development of,facilities to manufacture ourvaccine candidates at sufficient yields and at commercial-scale.We have limited experience manufacturing any of our vaccine candidates in the volumes thatwill be necessa
320、ry to support large-scale clinical trials or commercial sales.Efforts to establish these capabilities may not meet initial expectations as toscheduling,scale-up,reproducibility,yield,purity,cost,potency or quality.Manufacturing our vaccine candidates involves a complicated process with which we have
321、 limited experience.If we are unable to manufacture ourvaccine candidates in clinical quantities or,when necessary,in commercial quantities and at sufficient yields,then we must rely on third-parties.Other third-party manufacturers must also receive FDA approval before they can produce clinical mate
322、rial or commercial products.Our vaccines may be in competitionwith other products for access to these facilities and may be subject to delays in manufacture if third-parties give other products greater priority.We may notbe able to enter into any necessary third-party manufacturing arrangements on a
323、cceptable terms,or on a timely basis.In addition,we have to enter intotechnical transfer agreements and share our know-how with the third-party manufacturers,which can be time-consuming and may result in delays.Like influenza,a licensed RSV vaccine would likely be seasonal in nature.If a seasonal va
324、ccine is not available early enough in the season,wewould likely have difficulty selling that vaccine.For these reasons,any delay in the delivery of a seasonal vaccine could result in lower sales volumes,lowersale prices,or no sales.Strains of the seasonal influenza change annually,which means that
325、inventory of seasonal vaccine cannot be sold during a subsequentinfluenza season.We believe that while RSV strains may also change annually,our RSV F Vaccine is directed at highly-conserved epitopes that are unlikelyto change annually,although that has not yet been definitively demonstrated.Any dela
326、y in the manufacture of our vaccines could adversely affect our abilityto sell the vaccines.21 Our reliance on contract manufacturers may adversely affect our operations or result in unforeseen delays or other problems beyond our control.Because of contractual restraints and the limited number of th
327、ird-party manufacturers with the expertise,required regulatory approvals and facilities tomanufacture our bulk vaccines on a commercial-scale,replacement of a manufacturer may be expensive and time-consuming and may cause interruptions inthe production of our vaccine.A third-party manufacturer may a
328、lso encounter difficulties in production.These problems may include:difficulties with production costs,scale up and yields;availability of raw materials and supplies;quality control and assurance;shortages of qualified personnel;compliance with strictly enforced federal,state and foreign regulations
329、 that vary in each country where product might be sold;andlack of capital funding.As a result,any delay or interruption could have a material adverse effect on our business,financial condition,results of operations and cash flows.We must identify vaccines for development with our technologies and es
330、tablish successful third-party relationships.The near and long-term viability of our vaccine candidates will depend in part on our ability to successfully establish new strategic collaborationswith pharmaceutical and biotechnology companies,non-profit organizations and government agencies.Establishi
331、ng strategic collaborations and obtaininggovernment funding is difficult and time-consuming.Potential collaborators may reject collaborations based upon their assessment of our financial,regulatory or intellectual property position or based on their internal pipeline;government agencies may reject c
332、ontract or grant applications based on theirassessment of public need,the public interest,our products ability to address these areas,or other reasons beyond our expectations or control.If we fail toestablish a sufficient number of collaborations or government relationships on acceptable terms,we ma
333、y not be able to commercialize our vaccine candidatesor generate sufficient revenue to fund further research and development efforts.Even if we establish new collaborations or obtain government funding,these relationships may never result in the successful development orcommercialization of any vaccine candidates for several reasons,including the fact that:we may not have the ability to control th
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