x
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QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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¨
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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Delaware
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22-2816046
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(State
or other jurisdiction of
incorporation
or organization)
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(I.R.S.
Employer
Identification
No.)
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9920
Belward Campus Drive, Rockville, MD
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20850
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(Address
of principal executive offices)
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(Zip
code)
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Large
accelerated filer ¨
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Accelerated
filer x
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Non-accelerated
filer ¨
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Smaller
reporting company ¨
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(Do not check if a smaller reporting company)
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Page No.
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PART
I. FINANCIAL INFORMATION
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Item
1.
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Financial
Statements
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Consolidated
Balance Sheets as of March 31, 2010 (unaudited) and December 31,
2009
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1
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Consolidated
Statements of Operations for the three months ended March 31, 2010 and
2009 (unaudited)
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2
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Consolidated
Statements of Cash Flows for the three months ended March 31, 2010 and
2009 (unaudited)
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3
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Notes
to the Consolidated Financial Statements (unaudited)
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4
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Item
2.
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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10
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Item
3.
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Quantitative
and Qualitative Disclosures about Market Risk
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15
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Item
4.
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Controls
and Procedures
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16
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PART
II. OTHER INFORMATION
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Item
1.
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Legal
Proceedings
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16
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Item
1A.
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Risk
Factors
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16
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Item
6.
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Exhibits
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17
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SIGNATURES
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18
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March
31,
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December 31,
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|||||||
2010
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2009
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|||||||
(unaudited)
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||||||||
ASSETS
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||||||||
Current
assets:
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||||||||
Cash
and cash equivalents
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$ | 14,575 | $ | 38,757 | ||||
Short-term
investments available-for-sale
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18,313 | 4,193 | ||||||
Accounts
and other receivables
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231 | 258 | ||||||
Prepaid
expenses and other current assets
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698 | 1,295 | ||||||
Total
current assets
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33,817 | 44,503 | ||||||
Property
and equipment, net
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8,259 | 7,801 | ||||||
Goodwill
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33,141 | 33,141 | ||||||
Other
non-current assets
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160 | 160 | ||||||
Total
assets
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$ | 75,377 | $ | 85,605 | ||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
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||||||||
Current
liabilities:
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||||||||
Accounts
payable
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$ | 5,474 | $ | 2,098 | ||||
Accrued
expenses and other current liabilities
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3,326 | 5,417 | ||||||
Current
portion of notes payable
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80 | 80 | ||||||
Deferred
revenue
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61 | 150 | ||||||
Deferred
rent
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292 | 282 | ||||||
Total
current liabilities
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9,233 | 8,027 | ||||||
Non-current
portion of notes payable
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380 | 406 | ||||||
Deferred
rent
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2,625 | 2,707 | ||||||
Total
liabilities
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12,238 | 11,140 | ||||||
Commitments
and contingences
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— | — | ||||||
Stockholders’
equity:
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||||||||
Preferred
stock, $0.01 par value, 2,000,000 shares authorized; no shares issued and
outstanding
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— | — | ||||||
Common
stock, $0.01 par value, 200,000,000 shares authorized; and 100,753,640
shares issued and 100,286,543 shares outstanding at March 31, 2010 and
100,717,890 shares issued and 100,262,460 shares outstanding at December
31, 2009
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1,008 | 1,007 | ||||||
Additional
paid-in capital
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350,957 | 350,810 | ||||||
Notes
receivable from former directors
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(1,572 | ) | (1,572 | ) | ||||
Accumulated
deficit
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(285,562 | ) | (274,150 | ) | ||||
Treasury
stock, 467,097 and 455,430 shares at March 31, 2010 and December 31, 2009,
respectively, cost basis
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(2,450 | ) | (2,450 | ) | ||||
Accumulated
other comprehensive income
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758 | 820 | ||||||
Total
stockholders’ equity
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63,139 | 74,465 | ||||||
Total
liabilities and stockholders’ equity
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$ | 75,377 | $ | 85,605 |
For the Three Months
Ended March 31,
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||||||||
2010
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2009
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|||||||
Revenue
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$ | 110 | $ | 21 | ||||
Operating
expenses:
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||||||||
Research
and development
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9,029 | 4,266 | ||||||
General
and administrative
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2,535 | 2,892 | ||||||
Total
operating expenses
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11,564 | 7,158 | ||||||
Loss
from continuing operations
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(11,454 | ) | (7,137 | ) | ||||
Other
income (expense):
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||||||||
Interest
income
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44 | 104 | ||||||
Interest
expense
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(2 | ) | (437 | ) | ||||
Impairment
of short-term investments
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— | (879 | ) | |||||
Net
loss
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$ | (11,412 | ) | $ | (8,349 | ) | ||
Basic
and diluted net loss per share
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$ | (0.11 | ) | $ | (0.12 | ) | ||
Basic
and diluted weighted average number of common shares
outstanding
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100,188 | 68,692 |
For the Three Months
Ended March 31,
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||||||||
2010
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2009
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|||||||
Operating
Activities:
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||||||||
Net
loss:
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$ | (11,412 | ) | $ | (8,349 | ) | ||
Reconciliation
of net loss to net cash used in operating activities:
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||||||||
Depreciation
and amortization
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296 | 294 | ||||||
Amortization
of debt discount
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— | 103 | ||||||
Amortization
of deferred financing costs
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— | 64 | ||||||
Loss
on disposal of property and equipment
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— | 29 | ||||||
Deferred
rent
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(72 | ) | (66 | ) | ||||
Non-cash
stock-based compensation
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84 | 497 | ||||||
Impairment
of short-term investments
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— | 879 | ||||||
Changes
in operating assets and liabilities:
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||||||||
Accounts
and other receivables
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27 | 216 | ||||||
Prepaid
expenses and other current assets
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597 | (152 | ) | |||||
Accounts
payable and accrued expenses
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1,189 | (242 | ) | |||||
Deferred
revenue
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(89 | ) | — | |||||
Net
cash used in operating activities
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(9,380 | ) | (6,727 | ) | ||||
Investing
Activities:
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||||||||
Capital
expenditures
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(658 | ) | (63 | ) | ||||
Proceeds
from disposal of property and equipment
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— | 6 | ||||||
Proceeds
from maturities of short-term investments
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— | 125 | ||||||
Purchases
of short-term investments
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(14,182 | ) | — | |||||
Net
cash (used in) provided by investing activities
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(14,840 | ) | 68 | |||||
Financing
Activities:
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||||||||
Principal
payments of notes payable
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(26 | ) | (807 | ) | ||||
Net
proceeds from sales of common stock
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— | 122 | ||||||
Proceeds
from the exercise of stock options
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64 | 35 | ||||||
Net
cash provided by (used in) financing activities
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38 | (650 | ) | |||||
Net
decrease in cash and cash equivalents
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(24,182 | ) | (7,309 | ) | ||||
Cash
and cash equivalents at beginning of period
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38,757 | 26,938 | ||||||
Cash
and cash equivalents at end of period
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$ | 14,575 | $ | 19,629 | ||||
Supplemental
disclosure of non-cash activities:
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||||||||
Equipment
purchases included in accounts payable
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$ | 96 | $ | 47 | ||||
Supplemental
disclosure of cash flow information:
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||||||||
Cash
interest payments
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$ | — | $ | 523 |
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·
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Level
1: Observable inputs such as quoted prices (unadjusted) in active markets
for identical assets or
liabilities.
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·
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Level
2: Inputs other than quoted prices that are observable for the asset or
liability, either directly or indirectly. These include quoted prices for
similar assets or liabilities in active markets and quoted prices for
identical or similar assets or liabilities in markets that are not
active.
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·
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Level
3: Unobservable inputs that reflect the reporting entity’s own
assumptions.
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Fair Value Measurement at
March 31, 2010 using Fair Value Hierarchy
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||||||||||||||||
Assets
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Level 1
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Level 2
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Level 3
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Fair Value
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||||||||||||
Cash
and cash equivalents
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$ | 14,575 | $ | — | $ | — | $ | 14,575 | ||||||||
Short-term
investments
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— | 18,313 | — | 18,313 | ||||||||||||
Total
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$ | 14,575 | $ | 18,313 | $ | — | $ | 32,888 |
Amortized
Cost
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Gross
Unrealized
Gains
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Gross
Unrealized
Losses
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Fair Value
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|||||||||||||
Auction
rate securities
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$ | 3,373 | $ | 766 | $ | — | $ | 4,139 | ||||||||
Corporate
debt securities
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14,182 | — | (8 | ) | 14,174 | |||||||||||
Total
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$ | 17,555 | $ | 766 | $ | (8 | ) | $ | 18,313 |
Three Months Ended
March 31,
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||||||||
2010
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2009
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Research
and development
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$ | (69 | ) | $ | 179 | |||
General
and administrative
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153 | 318 | ||||||
Total
stock-based compensation expenses
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$ | 84 | $ | 497 |
2005 Stock Incentive
Plan
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1995 Stock Option
Plan
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1995 Director Stock
Option Plan
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||||||||||||||||||||||
Stock
Options
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Weighted-
Average
Exercise
Price
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Stock
Options
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Weighted-
Average
Exercise
Price
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Stock
Options
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Weighted-
Average
Exercise
Price
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|||||||||||||||||||
Outstanding
at January 1, 2010
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4,878,675 | $ | 2.38 | 1,086,319 | $ | 5.72 | 30,000 | $ | 5.63 | |||||||||||||||
Granted
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1,018,250 | $ | 2.36 | — | $ | — | — | $ | — | |||||||||||||||
Exercised
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(35,750 | ) | $ | 1.78 | — | $ | — | — | $ | — | ||||||||||||||
Canceled
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(468,383 | ) | $ | 2.45 | (386,469 | ) | $ | 7.25 | (30,000 | ) | $ | 5.63 | ||||||||||||
Outstanding
at March 31, 2010
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5,392,792 | $ | 2.37 | 699,850 | $ | 4.90 | — | $ | — | |||||||||||||||
Shares
exercisable at March 31, 2010
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2,836,534 | $ | 2.24 | 699,850 | $ | 4.90 | — | $ | — | |||||||||||||||
Shares
available for grant at March 31, 2010
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2,590,849 |
Three Months Ended
March 31,
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|||||
2010
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2009
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Weighted
average fair value of options granted
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$1.62
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$0.39
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|||
Risk-free
interest rate
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1.46%-2.89%
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1.56%-2.27%
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|||
Dividend
yield
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0%
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0%
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|||
Volatility
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99.53%-107.83%
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85.68%-95.08%
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Expected
life (in years)
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3.11-6.26
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4.00-6.29
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Expected
forfeiture rate
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21.07%
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21.96%
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Number of
Shares
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Per Share
Weighted-
Average
Grant-Date
Fair Value
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|||||||
Outstanding
at January 1, 2010
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90,000 | $ | 3.04 | |||||
Restricted
stock granted
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— | $ | — | |||||
Restricted
stock vested
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(28,333 | ) | $ | 2.77 | ||||
Restricted
stock forfeited
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(11,667 | ) | $ | 2.77 | ||||
Outstanding
at March 31, 2010
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50,000 | $ | 3.26 |
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·
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our
ability to progress any product candidates into pre-clinical studies or
clinical trials;
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·
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the
scope, initiation, rate and progress of our pre-clinical studies and
clinical trials and other research and development
activities;
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·
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clinical
trial results;
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·
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even
with positive data from pre-clinical studies or clinical trials, the
product candidate may not prove to be safe and
efficacious;
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·
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regulatory
approval is needed before any vaccines can be sold in or outside the
United States and, to date, no governmental authority has approved any of
our vaccine candidates for sale;
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·
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influenza
is seasonal in nature, and if approval or commercial launch after approval
is not timely in relation to the influenza season, we may not be able to
manufacture or sell our influenza vaccines on terms favorable to us until
the next influenza season, if at
all;
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·
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we
have not manufactured any of our vaccine candidates at a commercial
level;
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·
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we
utilize a unique manufacturing process and the scale-up of that process
may prove difficult and/or costly;
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·
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our
dependence on third parties to manufacture and distribute our
vaccines;
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·
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risks
associated with conducting business outside of the United
States;
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·
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the
cost of filing, prosecuting, defending and enforcing any patent claims and
other intellectual property rights;
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·
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competition
for clinical resources and patient enrollment from drug candidates in
development by other companies with greater resources and
visibility;
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·
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our
ability to enter into future collaborations with industry partners and the
terms, timing and success of any such
collaboration;
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·
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our
ability to obtain adequate financing in the future through product
licensing, co-promotional arrangements, public or private equity or debt
financing or otherwise;
|
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·
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the
inability to win any government grants, including BARDA, in a timely
manner or at all; and
|
|
·
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other
factors referenced herein.
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Three Months Ended
March 31
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||||||||||||
2010
|
2009
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Change
2009 to
2010
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||||||||||
Revenue:
|
||||||||||||
Total
revenue
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$ | 110 | $ | 21 | $ | 89 |
Three Months Ended
March 31
|
||||||||||||
2010
|
2009
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Change
2009 to
2010
|
||||||||||
Operating
Expenses:
|
||||||||||||
Research
and development
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$ | 9,029 | $ | 4,266 | $ | 4,763 | ||||||
General
and administrative
|
2,535 | 2,892 | (357 | ) | ||||||||
Total
operating expenses
|
$ | 11,564 | $ | 7,158 | $ | 4,406 |
Three Months Ended
March 31
|
||||||||||||
2010
|
2009
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Change
2009 to
2010
|
||||||||||
Other
Income (Expense):
|
||||||||||||
Interest
income
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$ | 44 | $ | 104 | $ | (60 | ) | |||||
Interest
expense
|
(2 | ) | (437 | ) | 435 | |||||||
Impairment
of short-term investments
|
— | (879 | ) | 879 | ||||||||
Total
other income (expense)
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$ | 42 | $ | (1,212 | ) | $ | 1,254 |
Three Months Ended
March 31
|
||||||||||||
2010
|
2009
|
Change
2009 to
2010
|
||||||||||
Net
Loss:
|
||||||||||||
Net
loss
|
$ | (11,412 | ) | $ | (8,349 | ) | $ | (3,063 | ) | |||
Net
loss per share
|
$ | (0.11 | ) | $ | (0.12 | ) | $ | 0.01 | ||||
Weighted
shares outstanding
|
100,188 | 68,692 | 31,496 |
Three Months Ended
March 31
|
||||||||||||
2010
|
2009
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Change 2009
to 2010
|
||||||||||
Summary of Cash
Flows:
|
||||||||||||
Net
cash (used in) provided by:
|
||||||||||||
Operating
activities
|
$ | (9,380 | ) | $ | (6,727 | ) | $ | (2,653 | ) | |||
Investing
activities
|
(14,840 | ) | 68 | (14,908 | ) | |||||||
Financing
activities
|
38 | (650 | ) | 688 | ||||||||
Net
decrease in cash and cash equivalents
|
(24,182 | ) | (7,309 | ) | (16,873 | ) | ||||||
Cash
and cash equivalents at beginning of period
|
38,757 | 26,938 | 11,819 | |||||||||
Cash
and cash equivalents at end of period
|
$ | 14,575 | $ | 19,629 | $ | (5,054 | ) |
10.11††
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Severance
Agreement of James Robinson dated February 1, 2010 (Incorporated by
reference to Exhibit 10.11 to the Company’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2009, filed March 16,
2010)
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10.19††
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Form
of Indemnity Agreement, entered into between the Company and its directors
and officers (Incorporated by reference to Exhibit 10.19 to the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2009,
filed March 16, 2010)
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10.38
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At
Market Issuance Sales Agreement, dated March 15, 2010, by and between
Novavax, Inc. and McNicoll, Lewis and Vlak, LLC (Incorporated by reference
to Exhibit 10.38 to the Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2009, filed March 16,
2010)
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10.47*††
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Severance
Agreement of Raymond J. Hage dated April 7, 2010
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31.1*
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Certification
of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(e) of the
Securities Exchange Act
|
31.2*
|
Certification
of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(e) of the
Securities Exchange Act
|
32.1*
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
32.2*
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
NOVAVAX,
INC.
|
||
Date:
May 10, 2010
|
By:
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/s/ Rahul Singhvi
|
President
and Chief Executive Officer
|
||
and
Director
|
||
(Principal
Executive Officer)
|
||
Date:
May 10, 2010
|
By:
|
/s/ Frederick W.
Driscoll
|
Vice
President, Chief Financial Officer
|
||
and
Treasurer
|
||
(Principal
Financial and Accounting
Officer)
|