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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________________________________
Form 10-Q
__________________________________________________________
(Mark One)

x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025
or

o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to
Commission file number: 001-34207
__________________________________________________________
Dynavax Technologies Corporation
(Exact name of registrant as specified in its charter)
__________________________________________________________

Delaware |  | 33-0728374
(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)

2100 Powell Street, Suite 720
Emeryville, CA 94608
(510) 848-5100
(Address, including Zip Code, and telephone number, including area code, of the registrant’s principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class: | Trading symbol(s): | Name of each exchange on which registered:
Common Stock, $0.001 par value | DVAX | Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during 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 filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registration was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer |  | x |  | Accelerated filer |  | o
Non-accelerated filer |  | o |  | Smaller reporting company |  | o
Emerging growth company |  | o |  |  |  |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x
As of November 3, 2025, the registrant had outstanding 117,424,968 shares of common stock.

Table of Contents
INDEX
DYNAVAX TECHNOLOGIES CORPORATION

| Page No.
PART I FINANCIAL INFORMATION |
Item 1. | Financial Statements (Unaudited) | 4
| Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 | 4
| Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024 | 5
| Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2025 and 2024 | 6
| Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2025 and 2024 | 7
| Condensed Consolidated Statements of Cash Flows for the Three and Nine Months Ended September 30, 2025 and 2024 | 8
| Notes to Unaudited Condensed Consolidated Financial Statements | 9
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 27
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 37
Item 4. | Controls and Procedures | 37
PART II OTHER INFORMATION |
Item 1. | Legal Proceedings | 39
Item 1A. | Risk Factors | 39
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 73
Item 3. | Defaults upon Senior Securities | 73
Item 4. | Mine Safety Disclosures | 73
Item 5. | Other Information | 73
Item 6. | Exhibits | 74
SIGNATURES | 75

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FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to a number of risks and uncertainties. All statements that are not historical facts are forward-looking statements, including statements about sales of HEPLISAV-B®, our ability to successfully commercialize HEPLISAV-B, CpG 1018 adjuvant or any future product, our anticipated market opportunity and level of sales of HEPLISAV-B and CpG 1018 adjuvant, our ability to manufacture sufficient supply of HEPLISAV-B to meet future demand, our business, collaboration, distribution and regulatory strategy, our ability to successfully support the development, manufacture and commercialization of other vaccines containing our CpG 1018 adjuvant, including any current or potential vaccine or vaccine candidate that stems from any of our collaborations, our ability to manufacture sufficient supply of CpG 1018 adjuvant to meet potential future demand in connection with new vaccines, our ability to advance our other product candidates, such as our shingles, plague and pandemic influenza programs, and to otherwise develop and expand our clinical research pipeline, including our Lyme disease program, expected timing of Investigational New Drug filings, initiation and completion of clinical trials and expected timing for data readouts, our ability to meet regulatory requirements, including post-marketing obligations and commitments, uncertainty regarding our capital needs and future operating results and profitability, anticipated sources of funds, liquidity and cash needs (including our ability to collect on accounts receivables), anticipated future revenue, success of our strategic partnerships, including our license agreement with Vaxart, Inc., anticipated benefits of our capital allocation strategy in general, including our share repurchase program, as well as our plans, objectives, strategies, expectations and intentions for our business. These statements appear throughout this Quarterly Report on Form 10-Q and can be identified by the use of forward-looking language such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “future,” or “intend,” or the negative of these terms or other variations or comparable terminology. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject.
Actual results may vary materially from those in our forward-looking statements as a result of various factors that are identified in “Item 1A—Risk Factors” and “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this document. No assurance can be given that the risk factors described in this Quarterly Report on Form 10-Q are all of the factors that could cause actual results to vary materially from the forward-looking statements. All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Readers should not place undue reliance on these forward-looking statements and are cautioned that any such forward-looking statements are not guarantees of future performance. We assume no obligation to update any forward-looking statements after the date they are made.
This Quarterly Report on Form 10-Q includes trademarks and registered trademarks of Dynavax Technologies Corporation. Products or service names of other companies mentioned in this Quarterly Report on Form 10-Q may be trademarks or registered trademarks of their respective owners. References herein to “we,” “our,” “us,” “Dynavax” or the “Company” refer to Dynavax Technologies Corporation and its subsidiaries.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Dynavax Technologies Corporation
Condensed Consolidated Balance Sheets
(In thousands, except per share amounts)

| September 30, 2025 |  | December 31, 2024
| (unaudited) |  | (Note 1)
Assets |  |  |
Current assets: |  |  |
Cash and cash equivalents | $ | 160,247 |  |  | $ | 95,883 |
Marketable securities available-for-sale | 487,568 |  |  | 617,951 |
Accounts receivables, net of allowance for doubtful accounts of $0 and $12,313 at September 30, 2025 and December 31, 2024, respectively | 72,359 |  |  | 45,281 |
Other receivables | 962 |  |  | 1,625 |
Inventories | 73,288 |  |  | 70,054 |
Prepaid expenses and other current assets | 19,907 |  |  | 18,147 |
Total current assets | 814,331 |  |  | 848,941 |
Property and equipment, net | 45,855 |  |  | 39,001 |
Operating lease right-of-use assets | 19,904 |  |  | 21,608 |
Goodwill | 2,199 |  |  | 1,946 |
Other assets, net of allowance for doubtful accounts of $10,970 at September 30, 2025 | 64,217 |  |  | 74,760 |
Total assets | $ | 946,506 |  |  | $ | 986,256 |
Liabilities and stockholders’ equity |  |  |
Current liabilities: |  |  |
Accounts payable | $ | 3,948 |  |  | $ | 9,061 |
Accrued research and development | 6,697 |  |  | 4,310 |
Accrued liabilities | 51,889 |  |  | 61,066 |
Convertible Notes, current portion, net of debt discount of $135 at September 30, 2025 (Note 7) | 40,073 |  |  | - |
Other current liabilities | 4,232 |  |  | 4,197 |
Total current liabilities | 106,839 |  |  | 78,634 |
Convertible Notes, net of debt discount of $4,034 and $1,646 at September 30, 2025 and December 31, 2024, respectively (Note 7) | 220,966 |  |  | 223,854 |
Long-term portion of lease liabilities | 23,985 |  |  | 26,388 |
CEPI accrual long-term (Note 6) | 60,337 |  |  | 60,337 |
Other long-term liabilities | 241 |  |  | 244 |
Total liabilities | 412,368 |  |  | 389,457 |
Commitments and contingencies (Note 5) |  |  |
Stockholders’ equity: |  |  |
Preferred stock: $0.001 par value, 5,000 shares authorized at September 30, 2025 and December 31, 2024; zero shares outstanding at September 30, 2025 and December 31, 2024 | - |  |  | - |
Common stock: $0.001 par value, 278,000 shares authorized at September 30, 2025 and December 31, 2024; 117,364 shares and 125,450 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively | 117 |  |  | 125 |
Additional paid-in capital | 1,486,947 |  |  | 1,504,671 |
Accumulated other comprehensive income | 800 |  |  | (4,722) |
Accumulated deficit | (953,726) |  |  | (903,275) |
Total stockholders’ equity | 534,138 |  |  | 596,799 |
Total liabilities and stockholders’ equity | $ | 946,506 |  |  | $ | 986,256 |

See accompanying notes.
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Dynavax Technologies Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Revenues: |  |  |  |  |  |  |
Product revenue, net | $ | 89,954 |  |  | $ | 79,345 |  |  | $ | 246,785 |  |  | $ | 197,377 |
Other revenue | 4,922 |  |  | 1,285 |  |  | 11,697 |  |  | 7,837 |
Total revenues | 94,876 |  |  | 80,630 |  |  | 258,482 |  |  | 205,214 |
Operating expenses: |  |  |  |  |  |  |
Cost of sales - product | 14,403 |  |  | 13,084 |  |  | 42,207 |  |  | 36,035 |
Research and development | 19,116 |  |  | 14,403 |  |  | 55,112 |  |  | 42,881 |
Selling, general and administrative | 40,086 |  |  | 43,061 |  |  | 138,123 |  |  | 128,788 |
Bad debt expense | — |  |  | — |  |  | 10,970 |  |  | — |
Total operating expenses | 73,605 |  |  | 70,548 |  |  | 246,412 |  |  | 207,704 |
Income (loss) from operations | 21,271 |  |  | 10,082 |  |  | 12,070 |  |  | (2,490) |
Other income (expense): |  |  |  |  |  |  |
Interest income | 6,593 |  |  | 9,382 |  |  | 21,130 |  |  | 28,050 |
Interest expense | (1,643) |  |  | (1,699) |  |  | (4,976) |  |  | (5,090) |
Sublease income | 2,225 |  |  | 2,205 |  |  | 6,677 |  |  | 2,808 |
Loss on debt extinguishment | — |  |  | — |  |  | (82,095) |  |  | — |
Other loss | (27) |  |  | (152) |  |  | (1,046) |  |  | (52) |
Net income (loss) before income taxes | 28,419 |  |  | 19,818 |  |  | (48,240) |  |  | 23,226 |
Provision for income taxes | (1,492) |  |  | (2,224) |  |  | (2,211) |  |  | (2,967) |
Net income (loss) | $ | 26,927 |  |  | $ | 17,594 |  |  | $ | (50,451) |  |  | $ | 20,259 |
Net income (loss) per share: |  |  |  |  |  |  |
Basic | $ | 0.23 |  |  | $ | 0.13 |  |  | $ | (0.42) |  |  | $ | 0.15 |
Diluted | $ | 0.21 |  |  | $ | 0.12 |  |  | $ | (0.42) |  |  | $ | 0.15 |
Weighted-average shares used in computing net income (loss) per share: |  |  |  |  |  |  |
Basic | 117,307 |  |  | 131,133 |  |  | 120,471 |  |  | 130,746 |
Diluted | 136,468 |  |  | 154,807 |  |  | 120,471 |  |  | 133,644 |

See accompanying notes.
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Condensed Consolidated Statements of Comprehensive Income (loss)
(In thousands)
(Unaudited)

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Net income (loss) | $ | 26,927 |  |  | $ | 17,594 |  |  | $ | (50,451) |  |  | $ | 20,259 |
Other comprehensive income, net of tax: |  |  |  |  |  |  |
Change in unrealized gain or loss on marketable securities available-for-sale | 200 |  |  | 4,021 |  |  | 121 |  |  | 2,275 |
Cumulative foreign currency translation adjustments | (52) |  |  | 1,404 |  |  | 5,401 |  |  | 347 |
Total other comprehensive income | 148 |  |  | 5,425 |  |  | 5,522 |  |  | 2,622 |
Total comprehensive income (loss) | $ | 27,075 |  |  | $ | 23,019 |  |  | $ | (44,929) |  |  | $ | 22,881 |

See accompanying notes.
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Dynavax Technologies Corporation
Condensed Consolidated Statements of Stockholders’ Equity
(In thousands)
(Unaudited)

| Common Stock |  |  |  |  |  |  |  |  |  |
Three Months Ended September 30, 2025 | Shares |  | Par Amount |  |  |  |  |  | Additional Paid-In Capital |  | Accumulated Other Comprehensive (Loss) Income |  | Accumulated Deficit |  | Total Stockholders' Equity
Balances at June 30, 2025 | 117,230 |  | $ | 117 |  |  |  |  |  |  | $ | 1,474,046 |  |  | $ | 652 |  |  | $ | (980,653) |  |  | $ | 494,162 |
Issuance of common stock upon exercise of stock options | 11 |  | - |  |  |  |  |  | 95 |  | - |  | - |  | 95
Issuance of common stock upon release of restricted and performance stock awards, net of statutory tax withholdings | 50 |  | - |  |  |  |  |  | (248) |  | - |  | - |  | (248)
Issuance of common stock under Employee Stock Purchase Plan | 73 |  | - |  |  |  |  |  | 664 |  | - |  | - |  | 664
Repurchase of common stock inclusive of excise tax (Note 11) | — |  |  | — |  |  |  |  |  |  | — |  |  | - |  | - |  | — |
Stock compensation expense | - |  | - |  |  |  |  |  | 12,390 |  | - |  | - |  | 12,390
Total other comprehensive income | - |  | - |  |  |  |  |  | - |  | 148 |  | - |  | 148
Net income | - |  | - |  |  |  |  |  | - |  | - |  | 26,927 |  | 26,927
Balances at September 30, 2025 | 117,364 |  | $ | 117 |  |  |  |  |  |  | $ | 1,486,947 |  |  | $ | 800 |  |  | $ | (953,726) |  |  | $ | 534,138 |
Nine Months Ended September 30, 2025 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balances at December 31, 2024 | 125,450 |  | $ | 125 |  |  |  |  |  |  | $ | 1,504,671 |  |  | $ | (4,722) |  |  | $ | (903,275) |  |  | $ | 596,799 |
Issuance of common stock upon exercise of stock options | 734 |  | 1 |  |  |  |  |  | 6,833 |  | - |  | - |  | 6,834
Issuance of common stock upon release of restricted and performance stock awards, net of statutory tax withholdings | 1,495 |  | 2 |  |  |  |  |  | (11,810) |  | - |  | - |  | (11,808)
Issuance of common stock under Employee Stock Purchase Plan | 162 |  | - |  |  |  |  |  | 1,499 |  | - |  | - |  | 1,499
Repurchase of common stock inclusive of excise tax (Note 11) | (10,477) |  | (11) |  |  |  |  |  | (100,624) |  |  | - |  | - |  | (100,635)
Unwind of capped call options (Note 7) | - |  | - |  |  |  |  |  | 46,554 |  | - |  | - |  | 46,554
Stock compensation expense | - |  | - |  |  |  |  |  | 39,824 |  | - |  | - |  | 39,824
Total other comprehensive income | - |  | - |  |  |  |  |  | - |  | 5,522 |  | - |  | 5,522
Net loss | - |  | - |  |  |  |  |  | - |  | - |  | (50,451) |  | (50,451)
Balances at September 30, 2025 | 117,364 |  | $ | 117 |  |  |  |  |  |  | $ | 1,486,947 |  |  | $ | 800 |  |  | $ | (953,726) |  |  | $ | 534,138 |
| Common Stock |  |  |  |  |  |  |  |  |  |
Three Months Ended September 30, 2024 | Shares |  | Par Amount |  |  |  |  |  | Additional Paid-In Capital |  | Accumulated Other Comprehensive Loss |  | Accumulated Deficit |  | Total Stockholders' Equity
Balances at June 30, 2024 | 130,984 |  | $ | 131 |  |  |  |  |  |  | $ | 1,575,548 |  |  | $ | (4,911) |  |  | $ | (927,919) |  |  | $ | 642,849 |
Issuance of common stock upon exercise of stock options | 221 |  | - |  |  |  |  |  | 1,871 |  | - |  | - |  | 1,871
Issuance of common stock upon release of restricted stock awards, net of statutory tax withholdings | 49 |  | - |  |  |  |  |  | (251) |  | - |  | - |  | (251)
Issuance of common stock under Employee Stock Purchase Plan | 91 |  | - |  |  |  |  |  | 856 |  | - |  | - |  | 856
Stock compensation expense | - |  | - |  |  |  |  |  | 13,083 |  | - |  | - |  | 13,083
Total other comprehensive income | - |  | - |  |  |  |  |  | - |  | 5,425 |  | - |  | 5,425
Net income | - |  | - |  |  |  |  |  | - |  | - |  | 17,594 |  | 17,594
Balances at September 30, 2024 | 131,345 |  | $ | 131 |  |  |  |  |  |  | $ | 1,591,107 |  |  | $ | 514 |  |  | $ | (910,325) |  |  | $ | 681,427 |
Nine Months Ended September 30, 2024 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balances at December 31, 2023 | 129,530 |  | $ | 130 |  |  |  |  |  |  | $ | 1,554,634 |  |  | $ | (2,108) |  |  | $ | (930,584) |  |  | $ | 622,072 |
Issuance of common stock upon exercise of stock options | 515 |  | - |  |  |  |  |  | 3,925 |  | - |  | - |  | 3,925
Issuance of common stock upon release of restricted stock awards, net of statutory tax withholdings | 1,115 |  | 1 |  |  |  |  |  | (8,827) |  | - |  | - |  | (8,826)
Issuance of common stock under Employee Stock Purchase Plan | 185 |  | - |  |  |  |  |  | 1,760 |  | - |  | - |  | 1,760
Stock compensation expense | - |  | - |  |  |  |  |  | 39,615 |  | - |  | - |  | 39,615
Total other comprehensive income | - |  | - |  |  |  |  |  | - |  | 2,622 |  | - |  | 2,622
Net income | - |  | - |  |  |  |  |  | - |  | - |  | 20,259 |  | 20,259
Balances at September 30, 2024 | 131,345 |  | $ | 131 |  |  |  |  |  |  | $ | 1,591,107 |  |  | $ | 514 |  |  | $ | (910,325) |  |  | $ | 681,427 |

See accompanying notes.
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Dynavax Technologies Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

| Nine Months Ended September 30,
| 2025 |  | 2024
Operating activities |  |  |
Net (loss) income | $ | (50,451) |  |  | $ | 20,259 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |  |  |
Depreciation and amortization | 3,706 |  |  | 3,443 |
Amortization of right-of-use assets | 2,463 |  |  | 2,538 |
Inventory write off | 3,638 |  |  | 1,264 |
Sublease termination loss (Note 5) | - |  |  | 4,765 |
Accretion of discounts on marketable securities | (5,034) |  |  | (11,892) |
Stock-based compensation expense | 39,824 |  |  | 39,615 |
Bad debt expense (Note 6) | 10,970 |  |  | - |
Non-cash interest expense | 820 |  |  | 2,272 |
Loss on debt extinguishment | 82,095 |  |  | - |
Changes in operating assets and liabilities: |  |  |
Accounts and other receivables, net | (26,415) |  |  | (30,744) |
Inventories | (6,872) |  |  | (10,376) |
Prepaid manufacturing | - |  |  | (6,893) |
Prepaid expenses and other current assets | (2,260) |  |  | (2,643) |
Other assets | - |  |  | (878) |
Accounts payable | (5,148) |  |  | 2,023 |
Lease liabilities | (3,151) |  |  | (3,220) |
Accrued and other liabilities | (6,564) |  |  | 3,968 |
Net cash provided by operating activities | 37,621 |  |  | 13,501 |
Investing activities |  |  |
Purchases of marketable securities | (251,655) |  |  | (491,047) |
Proceeds from maturities and redemption of marketable securities | 387,297 |  |  | 452,520 |
Purchases of property and equipment, net | (6,617) |  |  | (2,874) |
Net cash provided by (used in) investing activities | 129,025 |  |  | (41,401) |
Financing activities |  |  |
Proceeds from issuance of Convertible Notes (Note 7) | 39,708 |  |  | - |
Payment for debt issuance costs (Note 7) | (4,500) |  |  | - |
Payments for debt extinguishment (Note 7) | (80,938) |  |  | - |
Proceeds from unwind of capped call options (Note 7) | 46,554 |  |  | - |
Payments for repurchase of common stock (Note 11) | (101,207) |  |  | - |
Proceeds from exercise of stock options | 6,833 |  |  | 3,925 |
Proceeds from Employee Stock Purchase Plan | 1,499 |  |  | 1,760 |
Payments for taxes related to net share settlement of restricted and performance stock units | (11,810) |  |  | (8,827) |
Net cash used in financing activities | (103,861) |  |  | (3,142) |
Effect of exchange rate changes on cash and cash equivalents, and restricted cash | 1,613 |  |  | 98 |
Net increase (decrease) in cash and cash equivalents, and restricted cash | 64,398 |  |  | (30,944) |
Cash and cash equivalents, and restricted cash at beginning of period | 96,154 |  |  | 150,556 |
Cash and cash equivalents, and restricted cash at end of period | $ | 160,552 |  |  | $ | 119,612 |
Supplemental disclosure of cash flow information |  |  |
Cash paid during the period for income taxes | $ | 2,605 |  |  | $ | 4,577 |
Cash paid during the period for interest | $ | 2,021 |  |  | $ | 2,819 |
Non-cash investing and financing activities: |  |  |
Purchases of property and equipment, not yet paid | $ | 2,105 |  |  | $ | 762 |
Right-of-use assets obtained in exchange of operating lease liabilities | $ | 405 |  |  | $ | - |

See accompanying notes.
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Dynavax Technologies Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Organization
Dynavax Technologies Corporation (“we,” “our,” “us,” “Dynavax” or the “Company”) is a commercial stage biopharmaceutical company developing and commercializing innovative vaccines to help protect the world against infectious diseases. Our first marketed product, HEPLISAV-B® [Hepatitis B Vaccine (Recombinant), Adjuvanted] is approved in the United States (“U.S.”), the European Union (“EU”) and the United Kingdom (“UK”) for the prevention of infection caused by all known subtypes of hepatitis B virus in adults aged 18 years and older. We do not currently market HEPLISAV-B outside the U.S.
We are advancing a pipeline of differentiated product candidates that leverage our CpG 1018® adjuvant, the adjuvant used in HEPLISAV-B, to develop improved vaccines in indications with unmet medical needs. These programs currently include vaccine candidates under development for shingles and a plague vaccine candidate program in collaboration with and fully funded by the U.S. Department of Defense (“DoD”), and additional vaccine programs in preclinical development.
Additionally, we manufacture and have in the past supplied CpG 1018 adjuvant through both commercial supply agreements, and through preclinical and clinical research collaborations with third-party organizations.
Basis of Presentation
Our accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X. In our opinion, these unaudited condensed consolidated financial statements include all normal recurring adjustments, which we consider necessary to present fairly our financial position and the results of our operations and cash flows. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted. Interim-period results are not necessarily indicative of results of operations or cash flows to be expected for a full-year period or any other interim-period.
The condensed consolidated balance sheet as of December 31, 2024, has been derived from audited financial statements at that date, but excludes some disclosures required by GAAP for complete financial statements.
The unaudited condensed consolidated financial statements and these notes should be read in conjunction with the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the Securities and Exchange Commission (the “SEC”).
The unaudited condensed consolidated financial statements include the accounts of Dynavax and our wholly-owned subsidiaries, Dynavax GmbH, located in Düsseldorf, Germany, Dynavax India LLP, located in India, and a branch of Dynavax registered in Italy. All significant intercompany accounts and transactions among these entities have been eliminated from the unaudited condensed consolidated financial statements. We operate in one business segment: discovery, development, and commercialization of novel vaccines.
Use of Estimates
The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make informed estimates and assumptions that may affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes, including amounts of revenues and expenses during the reported periods. Management’s estimates are based on historical information available as of the date of the unaudited condensed consolidated financial statements and various other assumptions we believe are reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. Changes in estimates are reflected in reported results in the period in which they become known.
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Recent Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the impact of adopting ASU 2023-09.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires the disaggregation of certain expense captions into specified categories in disclosures within the notes to the financial statements to provide enhanced transparency into the expense captions presented on the face of the income statement. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted, and may be applied either prospectively or retrospectively to financial statements issued for reporting periods after the effective date of ASU 2024-03 or retrospectively to any or all prior periods presented in the financial statements. We are currently evaluating the impact of adopting ASU 2024-03.
In November 2024, the FASB issued ASU 2024-04, Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments, which amends ASC 470-202 and seeks to clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. ASU 2024-04 is effective for all entities for annual reporting periods beginning after December 15, 2025, and interim periods within those annual reporting periods. Early adoption is permitted for all entities that have adopted the amendments in ASU 2020-06. We are currently evaluating the impact of adopting ASU 2024-04.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326) Measurement of Credit Losses for Accounts Receivable and Contract Assets, which amends ASC 326 and provides a practical expedient to assume that current conditions as of the balance sheet date will persist through a reasonable and supportable forecast period when estimating credit losses for current accounts receivable and current contract assets. Entities will still be required to adjust historical data used in the estimation to reflect current conditions. ASU 2025-05 is effective for all entities for annual reporting periods beginning after December 15, 2025, and interim periods within those annual reporting periods. Early adoption is permitted for all entities that have adopted the amendments in ASU 2025-05. We are currently evaluating the impact of adopting ASU 2025-05.
2. Fair Value Measurements
We measure fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The accounting standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:
•Level 1—Observable inputs, such as quoted prices in active markets for identical assets or liabilities;
•Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
•Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities; therefore, requiring an entity to develop its own valuation techniques and assumptions.
Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. We review the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain assets or liabilities within the fair value hierarchy. There were no transfers between Level 1, 2 and 3 during the three and nine months ended September 30, 2025.
The carrying amounts of cash equivalents, accounts and other receivables, accounts payable and accrued liabilities are considered reasonable estimates of their respective fair value because of their short-term nature.
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Recurring Fair Value Measurements
The following table represents the fair value hierarchy for our financial assets (cash equivalents and marketable securities) measured at fair value on a recurring basis (in thousands):

| Level 1 |  | Level 2 |  | Level 3 |  | Total
September 30, 2025 |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |
Money market funds | $ | 142,383 |  |  | $ | - |  |  | $ | - |  |  | $ | 142,383 |
U.S. treasuries | - |  |  | 201,935 |  |  | - |  |  | 201,935 |
U.S. government agency securities | - |  |  | 69,317 |  |  | - |  |  | 69,317 |
Corporate debt securities | - |  |  | 216,316 |  |  | - |  |  | 216,316 |
Total assets | $ | 142,383 |  |  | $ | 487,568 |  |  | $ | - |  |  | $ | 629,951 |
| Level 1 |  | Level 2 |  | Level 3 |  | Total
December 31, 2024 |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |
Money market funds | $ | 83,726 |  |  | $ | - |  |  | $ | - |  |  | $ | 83,726 |
U.S. treasuries | - |  |  | 199,879 |  |  | - |  |  | 199,879 |
U.S. government agency securities | - |  |  | 158,871 |  |  | - |  |  | 158,871 |
Corporate debt securities | - |  |  | 259,201 |  |  | - |  |  | 259,201 |
Total assets | $ | 83,726 |  |  | $ | 617,951 |  |  | $ | - |  |  | $ | 701,677 |

Money market funds are highly liquid investments and are actively traded. The pricing information on these investment instruments is readily available and can be independently validated as of the measurement date. This approach results in the classification of these securities as Level 1 of the fair value hierarchy.
U.S. treasuries, U.S. government agency securities and corporate debt securities are measured at fair value using Level 2 inputs. We review trading activity and pricing for these investments as of each measurement date. When sufficient quoted pricing for identical securities is not available, we use market pricing and other observable market inputs for similar securities obtained from various third-party data providers. These inputs represent quoted prices for similar assets in active markets or these inputs have been derived from observable market data. This approach results in the classification of these securities as Level 2 of the fair value hierarchy.
3. Cash and Cash Equivalents, Restricted Cash and Marketable Securities
The following table provides a reconciliation of cash and cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same amounts shown in the condensed consolidated statements of cash flows (in thousands):

| September 30, 2025 |  | December 31, 2024 |  | September 30, 2024 |  | December 31, 2023
Cash and cash equivalents | $ | 160,247 |  |  | $ | 95,883 |  |  | $ | 119,332 |  |  | $ | 150,279 |
Restricted cash (1) | 305 |  |  | 271 |  |  | 280 |  |  | 277 |
Total cash and cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows | $ | 160,552 |  |  | $ | 96,154 |  |  | $ | 119,612 |  |  | $ | 150,556 |

(1)Restricted cash is included in "Other assets" in the Condensed Consolidated Balance Sheets.
Restricted cash balances relate to certificates of deposit issued as collateral to certain letters of credit issued as security to our lease arrangements (see Note 5).
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Cash and cash equivalents, and marketable securities consist of the following (in thousands):

| Amortized Cost |  | Unrealized Gains |  | Unrealized Losses |  | Estimated Fair Value
September 30, 2025 |  |  |  |  |  |  |
Cash and cash equivalents: |  |  |  |  |  |  |
Cash | $ | 17,864 |  |  | $ | - |  |  | $ | - |  |  | $ | 17,864 |
Money market funds | 142,383 |  |  | - |  |  | - |  |  | 142,383 |
Total cash and cash equivalents | 160,247 |  |  | - |  |  | - |  |  | 160,247 |
Marketable securities available-for-sale: |  |  |  |  |  |  |
U.S. treasuries | 201,540 |  |  | 408 |  |  | (13) |  |  | 201,935 |
U.S. government agency securities | 69,202 |  |  | 126 |  |  | (11) |  |  | 69,317 |
Corporate debt securities | 216,105 |  |  | 241 |  |  | (30) |  |  | 216,316 |
Total marketable securities available-for-sale | 486,847 |  |  | 775 |  |  | (54) |  |  | 487,568 |
Total cash and cash equivalents, and marketable securities | $ | 647,094 |  |  | $ | 775 |  |  | $ | (54) |  |  | $ | 647,815 |
December 31, 2024 |  |  |  |  |  |  |
Cash and cash equivalents: |  |  |  |  |  |  |
Cash | $ | 12,157 |  |  | $ | - |  |  | $ | - |  |  | $ | 12,157 |
Money market funds | 83,726 |  |  | - |  |  | - |  |  | 83,726 |
Total cash and cash equivalents | 95,883 |  |  | - |  |  | - |  |  | 95,883 |
Marketable securities available-for-sale: |  |  |  |  |  |  |
U.S. treasuries | 199,741 |  |  | 460 |  |  | (322) |  |  | 199,879 |
U.S. government agency securities | 158,605 |  |  | 486 |  |  | (220) |  |  | 158,871 |
Corporate debt securities | 259,004 |  |  | 418 |  |  | (221) |  |  | 259,201 |
Total marketable securities available-for-sale | 617,350 |  |  | 1,364 |  |  | (763) |  |  | 617,951 |
Total cash and cash equivalents, and marketable securities | $ | 713,233 |  |  | $ | 1,364 |  |  | $ | (763) |  |  | $ | 713,834 |

The maturities of our marketable securities available-for-sale are as follows (in thousands):

| September 30, 2025
| Amortized Cost |  | Estimated Fair Value
Mature in one year or less | $ | 370,115 |  |  | $ | 370,594 |
Mature after one year through two years | 116,732 |  |  | 116,974 |
| $ | 486,847 |  |  | $ | 487,568 |

We have classified our entire investment portfolio as available-for-sale ("AFS") and available for use in current operations and accordingly have classified all investments as short-term. Our AFS securities are carried at fair value based on inputs that are observable, either directly or indirectly, such as quoted market prices for similar securities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the securities. Unrealized losses are included in accumulated other comprehensive loss in stockholders’ equity. We determine whether a decline in the fair value of our AFS debt securities below their amortized cost basis (i.e., an impairment) is due to credit-related factors or noncredit-related factors. Any impairment that is not credit related is recognized in other comprehensive income (loss), net of applicable taxes. Credit-related impairments (if any) are recognized as an allowance on the balance sheet with a corresponding adjustment to earnings. Both the allowance and the adjustment to net income can be reversed if conditions change.
There were no realized gains or losses from the sale of marketable securities during the three and nine months ended September 30, 2025 and 2024. We do not intend to sell, and are not required to sell, the investments that are in an unrealized loss position before recovery of their amortized cost basis. During the three and nine months ended
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September 30, 2025, we did not record an allowance for credit losses, as management believes any such losses would be immaterial based on the investment-grade credit rating for each of the investments as of September 30, 2025. As such, there have been no declines in fair value that have been identified as a credit-related impairment.
4. Inventories
The following table presents inventories (in thousands):

| September 30, 2025 |  | December 31, 2024
Raw materials | $ | 39,965 |  |  | $ | 42,639 |
Work-in-process | 13,327 |  |  | 14,569 |
Finished goods | 19,996 |  |  | 12,846 |
Total inventories | $ | 73,288 |  |  | $ | 70,054 |

During the nine months ended September 30, 2025, we recorded approximately $3.1 million in Cost of sales - product primarily related to yield loss during the production process. During the nine months ended September 30, 2024, we recorded approximately $1.3 million in Cost of sales - product related to one manufacturing batch that did not meet approved release specifications.
5. Commitments and Contingencies
Leases
We lease our facilities in Emeryville, California and Düsseldorf, Germany. We lease and sublease certain manufacturing and office space with lease terms ranging from 3 to 12 years. These leases require monthly lease payments that may be subject to annual increases throughout the lease term. Certain of these leases also include options to renew or extend the lease for two successive five-year terms. These optional periods have not been considered in the determination of the right-of-use assets or lease liabilities associated with these leases as we did not consider the exercise of these options to be reasonably certain.
Our lease-related amounts are presented below (in thousands):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Operating lease expense | $ | 1,461 |  |  | $ | 1,437 |  |  | $ | 4,323 |  |  | $ | 4,349 |
Cash paid for lease liabilities (1) | $ | 1,745 |  |  | $ | 1,923 |  |  | $ | 5,405 |  |  | $ | 5,701 |
Sublease income (2) | $ | 2,225 |  |  | $ | 2,205 |  |  | $ | 6,677 |  |  | $ | 2,808 |

(1)Cash paid for amounts included in the measurement of lease liabilities is included in change in lease liabilities in our condensed consolidated statement of cash flows.
(2)Sublease income is included net within “Other income (expense)” in our condensed consolidated statements of operations. Rent received from our subtenant in excess of rent paid to the landlord is shared by paying the landlord 50% of the excess rent. The excess rent is considered a variable lease payment and the total estimated payments are being recognized as additional rent expense on a straight-line basis.
The balance sheet classification of our operating lease liabilities was as follows (in thousands):

| September 30, 2025 |  | December 31, 2024
Operating lease liabilities: |  |  |
Current portion of lease liabilities (included in other current liabilities) | $ | 4,199 |  |  | $ | 4,175 |
Long-term portion of lease liabilities | 23,985 |  |  | 26,388 |
Total operating lease liabilities | $ | 28,184 |  |  | $ | 30,563 |

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As of September 30, 2025, the maturities of our sublease income and operating lease liabilities were as follows (in thousands):

Years ending December 31, | Sublease Income |  | Operating Lease Liabilities
2025 (remaining) | $ | 1,532 |  |  | $ | 1,739 |
2026 | 6,342 |  |  | 6,711 |
2027 | 6,564 |  |  | 6,654 |
2028 | 6,794 |  |  | 6,639 |
2029 | 7,031 |  |  | 6,483 |
Thereafter | 9,160 |  |  | 8,759 |
Total | $ | 37,423 |  |  | 36,985 |
Less: |  |  |
Present value adjustment |  |  | (8,801) |
Total |  |  | $ | 28,184 |

The weighted average remaining lease term and the weighted average discount rate used to determine the operating lease liabilities were as follows:

| September 30, 2025 |  | December 31, 2024
Weighted average remaining lease term | 5.4 years |  | 5.9 years
Weighted average discount rate | 10.1 | % |  | 10.1 | %

Commitments
We have entered into material purchase commitments with commercial manufacturers for the supply of HEPLISAV-B. As of September 30, 2025, our material non-cancelable purchase and other commitments for the supply of HEPLISAV-B totaled $83.2 million, which are expected to be paid through 2029.
In addition to the non-cancelable commitments included above, we have entered into contractual arrangements that obligate us to make payments to the contractual counterparties upon the occurrence of future events. In addition, in the normal course of operations, we have entered into license and other agreements and intend to continue to seek additional rights relating to compounds or technologies in connection with our discovery, manufacturing and development programs. Under the terms of the agreements, we may be required to pay future up-front fees, milestones and royalties on net sales of products originating from the licensed technologies, if any, or other payments contingent upon the occurrence of future events that cannot reasonably be estimated.
We also rely on and have entered into agreements with research institutions, contract research organizations and clinical investigators as well as clinical material manufacturers. These agreements are terminable by us upon written notice. Generally, we are liable only for actual effort expended by the organizations at any point in time during the contract through the notice period.
Contingencies
From time to time, we may be involved in claims, suits, and proceedings arising from the ordinary course of our business, including actions with respect to intellectual property claims, commercial claims, and other matters. Such claims, suits, and proceedings are inherently uncertain and their results cannot be predicted with certainty. Regardless of the outcome, such legal proceedings can have an adverse impact on us because of legal costs, diversion of management resources, and other factors. In addition, it is possible that a resolution of one or more such proceedings could result in substantial damages, fines, penalties or orders requiring a change in our business practices, which could in the future materially and adversely affect our financial position, results of operations, or cash flows in a particular period.
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6. Collaborative Research, Development and License Agreements
Coalition for Epidemic Preparedness Innovations
In January 2021, we entered into an agreement (together with subsequent amendments, the “CEPI Agreement”) with Coalition for Epidemic Preparedness Innovations (“CEPI”) providing for the funding, manufacture and reservation of a specified quantity of CpG 1018 adjuvant. We refer to the adjuvant funded by CEPI and reserved for CEPI designees herein as “CpG 1018 Materials.”
In exchange for manufacturing, reserving CpG 1018 Materials, and agreeing to sell CpG 1018 Materials to designated CEPI partners in specified quantities and at pre-negotiated prices, CEPI agreed to pre-pay the cost of such manufacturing in the form of an interest-free, unsecured, forgivable loan (the “Advance Payments”). We are obligated to repay the Advance Payments for CpG 1018 Materials, on a pro rata basis, only if, and to the extent, we receive payments from sales of CpG 1018 Materials reserved under the CEPI Agreement from designated CEPI partners. Under the terms of the CEPI Agreement, for any unsold CpG 1018 Materials reserved thereunder, the applicable Advance Payments would have been forgiven upon destruction by us at the end of the CEPI Agreement’s term, as defined therein. At the time the CEPI Agreement expired, we retained no CpG 1018 Materials. Our obligation to reimburse CEPI for any sold CpG 1018 Materials upon payment from a designated CEPI partner survived expiration, to the extent any remained outstanding.
Through September 30, 2025, we received Advance Payments from CEPI totaling approximately $175.0 million pursuant to the CEPI Agreement, of which $67.3 million has been repaid by us and $47.4 million was forgiven by CEPI in connection with our Biological E Limited (“Bio E”) Supply Agreement dated July 2021 (the “Bio E Supply Agreement”), as amended. As of September 30, 2025, remaining Advance Payments totaling $60.3 million were reflected in CEPI accrual long-term in our condensed consolidated balance sheets, representing the outstanding balance of the Advance Payments relating to the CpG 1018 Materials we sold pursuant to the Clover Supply Agreement (as defined and discussed below).
Zhejiang Clover Biopharmaceuticals, Inc. and Clover Biopharmaceuticals (Hong Kong) Co., Limited
In June 2021, we entered into an agreement with Zhejiang Clover Biopharmaceuticals, Inc. and Clover Biopharmaceuticals (Hong Kong) Co., Limited (collectively, “Clover”) for the commercial supply of CpG 1018 adjuvant for use in Clover’s COVID-19 vaccine candidate, SCB-2019 (together with subsequent amendments, the “Clover Supply Agreement”). Under the Clover Supply Agreement, Clover committed to purchase specified quantities of CpG 1018 adjuvant, a portion of which included CpG 1018 Materials funded by CEPI, at pre-negotiated prices pursuant to the CEPI Agreement, for use in Clover’s commercialization of vaccines containing SCB-2019 and CpG 1018 adjuvant (“Clover Product”). During 2022 and 2023, we signed four amendments to the Clover Supply Agreement. The terms and conditions of the Clover Supply Agreement were operative through December 2022, and as of December 31, 2022, we had satisfied all delivery obligations thereunder.
For CpG 1018 Materials reserved for Clover under the CEPI Agreement and purchased by Clover under the Clover Supply Agreement, Clover is obligated to pay us the purchase price upon the earliest of (i) the true-up exercise (as defined therein), (ii) within a specified period after Clover delivers Clover Product to a customer, (iii) Clover’s receipt of payment for Clover Product from a customer (as defined therein), or (iv) upon the CpG 1018 adjuvant no longer being sellable as part of a Clover Product. When we transfer control of CpG 1018 Materials that are reserved under the CEPI Agreement, we recognize product revenue and a corresponding contract asset, as our right to consideration is contingent on something other than the passage of time, as outlined above.
During the nine months ended September 30, 2025, we recorded an allowance for doubtful accounts of approximately $11.0 million relating to the contract asset recognized for Clover. This determination was based on our evaluation of credit risk associated with Clover, driven by the formal termination by the Global Alliance for Vaccines and Immunization (“GAVI”) of its advanced purchase agreement option with Clover on April 24, 2025, Clover’s recent write-down of the carrying value of its CpG 1018 Materials, and Clover's liquidity position, as reflected by cash and cash equivalents reported in Clover’s audited consolidated statement of financial position as of December 31, 2024.
The $11.0 million allowance for doubtful accounts represents the portion of Clover's contract asset that is incremental to the amounts which were directly funded using the Advance Payments from CEPI of approximately $60.3 million to manufacture the corresponding CpG 1018 Materials.
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Accordingly, the contract asset balance associated with Clover was $60.3 million as of September 30, 2025, compared to $71.3 million as of December 31, 2024. The contract asset was included in other assets (non-current) and represents amounts due from Clover that we expect to become payable more than twelve months after September 30, 2025.
Advance Payments from CEPI of $60.3 million are recorded in CEPI accrual long-term in our condensed consolidated balance sheets as of September 30, 2025. We are only obligated to repay these Advance Payments to CEPI if, and to the pro rata extent, of our receipt from Clover of their payment for the corresponding CpG 1018 Materials. Pursuant to the terms of the Clover Supply Agreement, we intend to continue to pursue collection of the full $71.3 million due from Clover. Of this amount, $60.3 million will be payable to CEPI upon the occurrence of the applicable payment trigger events described above, whichever occurs first.
Biological E. Limited
On April 26, 2023, we entered into a third amendment to the Bio E Supply Agreement (the “Bio E Amendment No. 3”). The Bio E Amendment No. 3 provided for additional payments of either $5.5 million in the event that Bio E receives at least $125.0 million, or $12.3 million in the event that Bio E receives at least $250.0 million in payments from the Government of India associated with its CORBEVAX product on or before August 15, 2025. Bio E did not receive any payments from the Government of India for its CORBEVAX product by August 15, 2025. Accordingly, no accounts receivable is recorded from Bio E as of September 30, 2025.
U.S. Department of Defense
Since September 2021, we have been developing a plague (rF1V) vaccine candidate adjuvanted with CpG 1018 in collaboration with, and fully funded by, the DoD. In December 2024, we executed a contract totaling $30.0 million to support additional Phase 2 clinical and manufacturing activities through the first half of 2027. In August 2025, we executed an amendment to the agreement to include additional clinical activities totaling $14.0 million through 2027.
We recognized revenue of $4.7 million and $10.9 million from our agreement with the DoD for the three and nine months ended September 30, 2025, respectively. We recognized revenue of $1.3 million and $7.7 million from our agreement with the DoD for the three and nine months ended September 30, 2024, respectively. Revenue from our agreement with the DoD is included in other revenue in our condensed consolidated statements of operations.
7. Convertible Notes
Refinancing Transaction
On March 13, 2025 (the "Settlement Date"), we entered into privately negotiated exchange and subscription agreements (the "Exchange Agreements") with certain holders of our outstanding 2.50% Convertible Senior Notes due 2026 (the "2026 Notes") and one new investor. Pursuant to the Exchange Agreements, we issued $225.0 million aggregate principal amount of 2.00% Convertible Senior Notes due 2030 (the "2030 Notes," and together with the 2026 Notes, the "Convertible Notes"), consisting of (i) approximately $185.3 million issued in exchange for a corresponding principal amount of 2026 Notes, and (ii) approximately $39.7 million of 2030 Notes issued to existing holders of the 2026 Notes and a new investor (the "Refinancing Transaction").
Following the completion of the Refinancing Transaction, the total principal balance of our outstanding convertible notes as of September 30, 2025, was $265.2 million, which comprised $225.0 million principal amount of the 2030 Notes and $40.2 million principal amount of the remaining 2026 Notes.
In connection with the Refinancing Transaction, we unwound a portion of our existing capped call options in a notional amount corresponding to the amount of 2026 Notes exchanged under the Exchange Agreements, receiving approximately $46.6 million in cash proceeds, which were recognized as an increase to additional paid-in capital. These proceeds were used to offset a majority of the fair value of the retired 2026 Notes above par and accrued interest.
We also repurchased approximately $8.0 million of our common stock from certain participants in the Refinancing Transaction at $14.01 per share, which was the closing price of our common stock on March 5, 2025, with the goal of facilitating a net neutral exchange of shares.
The Refinancing Transaction was accounted for as an extinguishment of debt under ASC 470-50-40, which requires that the difference between the reacquisition price of the debt and the net carrying amount of the extinguished debt
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is recognized in the statement of operations. Accordingly, we recognized a loss on debt extinguishment of $82.1 million, which is included in other income (expense) in the condensed consolidated statements of operations for the nine months ended September 30, 2025. Approximately $4.5 million in debt issuance costs were capitalized and will be amortized over the term of the 2030 Notes.
Convertible Notes Summary
The following table summarizes key details of the 2026 Notes and 2030 Notes:

Senior Convertible Notes | Offering Completion Date |  | Stated Interest Rate |  | Aggregate Principal Amount Issued (in millions) |  | Aggregate Principal Amount Outstanding (in millions) |  | Maturity Date |  | Net Proceeds (1) (in millions) |  | Initial Conversion Rate (shares) (2) (per $1,000 principal amount) |  | Initial Conversion Price (per share) (3) |  | Settlement Methods (4)
2026 Notes | May 2021 |  | 2.50% |  | $225.5 |  | $40.2 |  | May 15, 2026 |  | $219.8 |  | 95.5338 |  | $10.47 |  | Cash and/or shares
2030 Notes | March 2025 |  | 2.00% |  | $225.0 |  | $225.0 |  | March 15, 2030 |  | $220.5 |  | 54.9058 |  | $18.21 |  | Cash and/or shares

(1)Net proceeds are calculated by deducting debt issuance costs directly related to the transaction from the aggregate principal amount of the applicable series of notes.
(2)Subject to adjustments as defined in the applicable indentures.
(3)In connection with the 2026 Notes, we entered into capped call options. The cap price of the capped call options was initially $15.80 per share, subject to certain adjustments under the terms of the capped call options.
(4)The 2026 Notes and 2030 Notes may be settled in cash, shares of our common stock, or a combination thereof, solely at our election.
Convertible Senior Notes due 2026
Following the Refinancing Transaction, the remaining principal balance of our 2026 Notes is $40.2 million as of September 30, 2025. These remaining 2026 Notes carry an unamortized debt discount of approximately $0.1 million as of September 30, 2025, which will continue to be amortized to interest expense over the remaining term using the effective interest method.
The 2026 Notes are general unsecured obligations and accrue interest at a rate of 2.50% per annum payable semiannually in arrears on May 15 and November 15 of each year, beginning on November 15, 2021. The 2026 Notes mature on May 15, 2026, unless converted, redeemed or repurchased prior to such date. As of September 30, 2025, we reclassified the remaining principal balance of our 2026 Notes totaling $40.2 million from long-term liabilities to current liabilities as the notes mature within 12 months of the reporting date.
The 2026 Notes are convertible into cash, shares of our common stock or a combination of cash and shares of our common stock, at our election, at an initial conversion rate of 95.5338 shares of our common stock per $1,000 principal amount of the 2026 Notes, which is equivalent to an initial conversion price of approximately $10.47 per share of our common stock. The 2026 Notes are convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding February 15, 2026, only under the following circumstances:
•During any calendar quarter (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;
•During the five business day period after any ten consecutive trading day period (the “measurement period”), in which the “trading price” (as defined in the indenture governing the 2026 Notes) per $1,000 principal amount of the 2026 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day;
•If we call such 2026 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or
•Upon the occurrence of specified corporate events as set forth in the indenture governing the 2026 Notes.
On or after February 15, 2026 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the 2026 Notes may convert all or any portion of their 2026 Notes regardless of the foregoing circumstances.
Since we have the option to settle conversions of the 2026 Notes in cash, shares of our common stock, or a combination of both, we continued to classify the 2026 Notes as a liability on our condensed consolidated balance sheets as
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of September 30, 2025. As the 2026 Notes mature within 12 months of the reporting date, the principal balance has been classified as a current liability on our condensed consolidated balance sheets as of September 30, 2025.
We may redeem for cash all or any portion of the 2026 Notes (subject to the partial redemption limitation described in the indenture governing the 2026 Notes), at our option, on or after May 20, 2024 and prior to the 31st scheduled trading day immediately preceding the maturity date, if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on the trading day immediately preceding the date on which we provide notice of redemption, at a redemption price equal to 100% of the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
If we undergo a fundamental change (as defined in the indenture governing the 2026 Notes), holders of the 2026 Notes may require us to repurchase for cash all or any portion of their 2026 Notes at a repurchase price equal to 100% of the principal amount of the 2026 Notes to be repurchased, plus accrued and unpaid interest, but excluding, the fundamental change repurchase date. In addition, following certain corporate events (as defined in the indenture governing the 2026 Notes) or if we deliver a notice of redemption prior to the maturity date, we will, in certain circumstances, adjust the conversion rate for holders who elect to convert their 2026 Notes in connection with such a corporate event or such notice of redemption.
As of September 30, 2025, the 2026 Notes were recorded at the aggregate principal amount of $40.2 million less unamortized issuance costs of $0.1 million as a current liability on the condensed consolidated balance sheets. As of September 30, 2025, the fair value of the 2026 Notes was $45.5 million. The fair value was estimated using a reputable third-party valuation model based on observable inputs and is considered Level 2 in the fair value hierarchy. The debt issuance costs are amortized to interest expense over the contractual term of the 2026 Notes at an effective interest rate of 3.1%.
Convertible Senior Notes due 2030
The 2030 Notes were issued under an indenture on the Settlement Date. The 2030 Notes are general unsecured obligations and accrue interest at a rate of 2.00% per annum, payable semiannually in arrears on March 15 and September 15, beginning September 15, 2025. The 2030 Notes mature on March 15, 2030, unless earlier converted, redeemed, or repurchased prior to such date.
The 2030 Notes are convertible into cash, shares of our common stock, or a combination of cash and shares of our common stock, at our election, at an initial conversion rate of 54.9058 shares of our common stock per $1,000 principal amount of the 2030 Notes, which is equivalent to an initial conversion price of approximately $18.21 per share of our common stock. The 2030 Notes are convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding December 15, 2029, only under the following circumstances:
•During any calendar quarter commencing after the calendar quarter ending on June 30, 2025 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;
•During the five business day period after any ten consecutive trading day period (the “measurement period”), in which the “trading price” (as defined in the indenture governing the 2030 Notes) per $1,000 principal amount of the 2030 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day;
•If we call such 2030 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or
•Upon the occurrence of specified corporate events, as set forth in the indenture governing the 2030 Notes.
On or after December 15, 2029, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the 2030 Notes may convert all or any portion of their 2030 Notes regardless of the foregoing circumstances.
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Since we have the option to settle conversions of the 2030 Notes in cash, shares of our common stock, or a combination of both, we classified the 2030 Notes as long-term debt on our condensed consolidated balance sheets as of September 30, 2025.
We may redeem for cash all or any portion of the 2030 Notes (subject to the partial redemption limitation described in the indenture governing the 2030 Notes), at our option, on or after March 20, 2028, and prior to the 26th scheduled trading day immediately preceding the maturity date, if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on the trading day immediately preceding the date on which we provide notice of redemption, at a redemption price equal to 100% of the principal amount of the 2030 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
If we undergo a fundamental change (as defined in the indenture governing the 2030 Notes), holders of the 2030 Notes may require us to repurchase for cash all or any portion of their 2030 Notes at a repurchase price equal to 100% of the principal amount of the 2030 Notes to be repurchased, plus accrued and unpaid interest, but excluding, the fundamental change repurchase date. In addition, following certain corporate events (as defined in the indenture governing the 2030 Notes) or if we deliver a notice of redemption before the maturity date, we will, in certain circumstances, adjust the conversion rate for holders who elect to convert their 2030 Notes in connection with such corporate event or such notice of redemption.
As of September 30, 2025, the 2030 Notes were recorded at the aggregate principal amount of $225.0 million less unamortized issuance costs of $4.0 million as a long-term liability on our condensed consolidated balance sheets. As of September 30, 2025, the fair value of the 2030 Notes was $209.2 million. The fair value was estimated using a reputable third-party valuation model based on observable inputs and is considered Level 2 in the fair value hierarchy. The debt issuance costs are amortized to interest expense over the contractual term of the 2030 Notes at an effective interest rate of 2.4%.
The following table presents the components of interest expense related to our Convertible Notes (in thousands):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Stated coupon interest | $ | 1,376 |  |  | $ | 1,409 |  |  | $ | 4,156 |  |  | $ | 4,227 |
Amortization of debt issuance cost | 267 |  |  | 290 |  |  | $ | 820 |  |  | $ | 863 |
Total interest expense | $ | 1,643 |  |  | $ | 1,699 |  |  | $ | 4,976 |  |  | $ | 5,090 |

Capped Call Options
In connection with the issuance of the 2026 Notes, we entered into capped call option transactions with one of the initial purchasers of the 2026 Notes and other financial institutions, totaling $27.2 million (the “Capped Calls”). The Capped Calls cover, subject to customary adjustments, the number of shares of our common stock that initially underlie the 2026 Notes (or 21,542,871 shares of our common stock). The Capped Calls have an initial strike price and an initial cap price of $10.47 per share and $15.80 per share, respectively, subject to certain adjustments. Conditions that cause adjustments to the initial strike price of the Capped Calls mirror conditions that result in corresponding adjustments to the conversion price of the 2026 Notes. The Capped Calls are expected to offset the potential dilution to our common stock as a result of any conversion of the 2026 Notes, subject to a cap based on the cap price.
As part of the Refinancing Transaction completed in March 2025, we unwound a portion of the Capped Calls. As part of the unwind, we received $46.6 million in cash, which was used to partially fund the cash payment associated with the Refinancing Transaction and the repurchase of our common stock. As of September 30, 2025, following the partial unwind, Capped Calls covering approximately 3,841,222 shares of common stock remain outstanding.
For accounting purposes, the cash received from the unwind of the Capped Calls was recorded as an increase to additional paid-in capital within the condensed consolidated statements of stockholders’ equity.
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8. Segment Reporting
We operate in one operating segment that is focused on the discovery, development, and commercialization of innovative vaccines. Our Chief Executive Officer is the Chief Operating Decision Maker (“CODM”). The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. The following table presents segment revenue, measures of our segment’s profit or loss, and significant segment expenses (in thousands):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Total revenues | $ | 94,876 |  |  | $ | 80,630 |  |  | $ | 258,482 |  |  | $ | 205,214 |
Less (add) (1): |  |  |  |  |  |  |
Cost of sales - product | 14,403 |  |  | 13,084 |  |  | 42,207 |  |  | 36,035 |
Research and development | 19,116 |  |  | 14,403 |  |  | 55,112 |  |  | 42,881 |
Selling and marketing | 21,791 |  |  | 23,902 |  |  | 70,199 |  |  | 73,701 |
General and administrative | 18,295 |  |  | 19,159 |  |  | 67,924 |  |  | 55,087 |
Other segment items (2) | (5,656) |  |  | (7,512) |  |  | 73,491 |  |  | (22,749) |
Segment income (loss) (3) | $ | 26,927 |  |  | $ | 17,594 |  |  | $ | (50,451) |  |  | $ | 20,259 |

(1)The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.
(2)Other segment items includes the net of: bad debt expense (Note 6), interest income, interest expense, sublease income (Note 5), loss on debt extinguishment (Note 7), other expenses, and provision for income taxes, as presented on the face of our condensed consolidated statements of operations.
(3)Net income (loss) is our reported measure of segment profit or loss.
9. Revenue Recognition
Disaggregation of Revenues
The following table disaggregates our product revenue, net by product and geographic region and disaggregates our other revenues by geographic region (in thousands):

| Three Months Ended September 30, 2025 |  | Three Months Ended September 30, 2024
| U.S. |  | Non U.S. |  | Total |  | U.S. |  | Non U.S. |  | Total
Product revenue, net |  |  |  |  |  |  |  |  |  |  |
HEPLISAV-B | $ | 89,954 |  |  | $ | - |  |  | $ | 89,954 |  |  | $ | 79,345 |  |  | $ | - |  |  | $ | 79,345 |
Total product revenue, net | 89,954 |  |  | - |  |  | 89,954 |  |  | 79,345 |  |  | - |  |  | 79,345 |
Other revenue | 4,739 |  |  | 183 |  |  | 4,922 |  |  | 1,263 |  |  | 22 |  |  | 1,285 |
Total revenues | $ | 94,693 |  |  | $ | 183 |  |  | $ | 94,876 |  |  | $ | 80,608 |  |  | $ | 22 |  |  | $ | 80,630 |

| Nine Months Ended September 30, 2025 |  | Nine Months Ended September 30, 2024
| U.S. |  | Non U.S. |  | Total |  | U.S. |  | Non U.S. |  | Total
Product revenue, net |  |  |  |  |  |  |  |  |  |  |
HEPLISAV-B | $ | 245,163 |  |  | $ | 1,622 |  |  | $ | 246,785 |  |  | $ | 195,030 |  |  | $ | 2,347 |  |  | $ | 197,377 |
Total product revenue, net | 245,163 |  |  | 1,622 |  |  | 246,785 |  |  | 195,030 |  |  | 2,347 |  |  | 197,377 |
Other revenue | 10,903 |  |  | 794 |  |  | 11,697 |  |  | 7,663 |  |  | 174 |  |  | 7,837 |
Total revenues | $ | 256,066 |  |  | $ | 2,416 |  |  | $ | 258,482 |  |  | $ | 202,693 |  |  | $ | 2,521 |  |  | $ | 205,214 |

Revenues from Major Customers and Collaboration Partners
HEPLISAV-B product sales in the U.S. are to certain wholesalers and specialty distributors whose customers include integrated delivery networks, retail pharmacies, independent hospitals and clinics, public health clinics and prisons, the Department of Defense, and the Department of Veterans Affairs.
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In May 2021, we entered into a commercialization agreement with Bavarian Nordic for the marketing and distribution of HEPLISAV-B in Germany, and in May 2022, we commenced commercial shipments of HEPLISAV-B in Germany. In the second quarter of 2025, the commercialization agreement was not renewed. Bavarian Nordic will retain the distribution rights for HEPLISAV-B in Germany through April 2026, after which Dynavax will regain the commercialization rights. We do not currently market HEPLISAV-B outside the U.S.
The following table summarizes HEPLISAV-B product revenue from each of our three largest customers (as a percentage of total HEPLISAV-B product revenue):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Largest customer | 33 | % |  | 31 | % |  | 30 | % |  | 29 | %
Second largest customer | 21 | % |  | 20 | % |  | 20 | % |  | 21 | %
Third largest customer | 21 | % |  | 19 | % |  | 20 | % |  | 18 | %

Contract Balances
The following table summarizes balances and activities in HEPLISAV-B product revenue allowance and reserve categories for the nine months ended September 30, 2025 (in thousands):

| Balance at Beginning of Period |  | Provisions related to current period sales |  | Credit or payments made during the period |  | Adjustments (3) |  | Balance at End of Period
Nine months ended September 30, 2025: |  |  |  |  |  |  |  |  |
Accounts receivable reserves (1) | $ | 9,317 |  |  | $ | 69,176 |  |  | $ | (66,495) |  |  | $ | (2) |  |  | $ | 11,996 |
Revenue reserve accruals (2) | $ | 31,479 |  |  | $ | 46,346 |  |  | $ | (42,590) |  |  | $ | (11,187) |  |  | $ | 24,048 |

(1)Reserves are for chargebacks, discounts and other fees.
(2)Accruals are for returns, rebates and other fees.
(3)Adjustments for $11.2 million primarily from a change in estimate for product returns.
When we perform services under our agreement with the DoD, we recognize product revenue and a corresponding contract asset as our right to consideration is conditioned on something other than the passage of time. See Note 6 for further discussion. The following table summarizes balances and activities in our contract asset account (in thousands):

| Balance at Beginning of Period |  | Additions |  | Subtractions |  | Balance at End of Period
Nine months ended September 30, 2025 |  |  |  |  |  |  |
Contract asset, included in other current assets (1) | $ | 351 |  |  | $ | 10,903 |  |  | $ | (8,178) |  |  | $ | 3,076 |
Contract asset, included in other assets (long term) (2) | $ | 71,307 |  |  | $ | — |  |  | $ | (10,970) |  |  | $ | 60,337 |

(1)The $3.1 million contract asset is derived from our agreement with the DoD.
(2)The Clover contract asset was included in non-current assets to reflect the timing of expected long term demand for CpG 1018 adjuvant for Clover Product. During the nine months ended September 30, 2025, we recorded an allowance for doubtful accounts of approximately $11.0 million relating to the contract asset recognized for Clover. See Note 6 for further discussion.
10. Net Income (Loss) Per Share
Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of our common stock outstanding.
For the calculation of diluted net income per share, net income for basic net income per share is adjusted by the effect of dilutive securities, including awards under our equity compensation plans. Diluted net income per share is computed by dividing the resulting net income by the weighted-average number of fully diluted common shares outstanding.
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The numerators and denominators of the basic net income (loss) and diluted net income per share computations for our common stock are calculated as follows (in thousands):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Numerator |  |  |  |  |  |  |
Net income (loss), basic | $ | 26,927 |  |  | $ | 17,594 |  |  | $ | (50,451) |  |  | $ | 20,259 |
Add: interest expense on convertible notes | $ | 1,231 |  |  | $ | 1,274 |  |  | $ | — |  |  | $ | — |
Net income (loss), diluted | $ | 28,158 |  |  | $ | 18,868 |  |  | $ | (50,451) |  |  | $ | 20,259 |
Denominator |  |  |  |  |  |  |
Weighted average common stock outstanding, basic | 117,307 |  |  | 131,133 |  |  | 120,471 |  |  | 130,746 |
Effect of dilutive shares: |  |  |  |  |  |  |
Stock-based compensation plans | 2,966 |  |  | 2,131 |  |  | — |  |  | 2,898 |
Convertible Notes (as converted to common stock) | 16,195 |  |  | 21,543 |  |  | — |  |  | — |
Weighted average common stock outstanding, diluted | 136,468 |  |  | 154,807 |  |  | 120,471 |  |  | 133,644 |
Net income (loss) per share |  |  |  |  |  |  |
Basic | $ | 0.23 |  |  | $ | 0.13 |  |  | $ | (0.42) |  |  | $ | 0.15 |
Diluted | $ | 0.21 |  |  | $ | 0.12 |  |  | $ | (0.42) |  |  | $ | 0.15 |

The following were excluded from the calculation of diluted net income (loss) per share as the effect of their inclusion would have been anti-dilutive (in thousands).

| Three months ended September 30, |  | Nine months ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Outstanding securities not included in diluted net income (loss) per share calculation: |  |  |  |  |  |  |
Stock options and stock awards | 11,095 |  | 8,987 |  | 18,189 |  | 8,172
Convertible Notes (as converted to common stock) | - |  | - |  | 16,195 |  | 21,543
Total | 11,095 |  | 8,987 |  | 34,384 |  | 29,715

11. Common Stock
Common Stock Outstanding
As of September 30, 2025, there were 117,364,147 shares of our common stock outstanding. As of September 30, 2025, we had $120.0 million remaining under the at-the-market Sales Agreement (the “ATM Agreement”) with Cowen and Company, LLC (“Cowen”).
Share Repurchase Program
In November 2024, our Board of Directors authorized a share repurchase program (the “Repurchase Program”) allowing us to repurchase up to $200.0 million worth of our common stock. On November 8, 2024, we entered into an accelerated share repurchase agreement (the “ASR Agreement”) with Goldman Sachs & Co. LLC (“Goldman”) to repurchase an aggregate amount of $100.0 million of our common stock. Under the ASR Agreement, we made an aggregate upfront payment of $100.0 million to Goldman and received an aggregate initial delivery of 6,149,116 shares of our common stock on November 12, 2024, representing approximately 80% of the total shares that would be repurchased under the ASR Agreement measured based on the closing price of our common stock on November 8, 2024.
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Repurchases under the ASR Agreement were completed on February 11, 2025, and upon final settlement, we received an additional 1,771,422 shares of our common stock, bringing the total number of shares repurchased under the ASR Agreement to 7,920,538. The final number of shares repurchased was determined based on the average of the daily volume-weighted average price “VWAP”) per share of our common stock during the repurchase period, subject to adjustments pursuant to the terms and conditions of the ASR Agreement.
In addition to the shares repurchased under the ASR Agreement, during the nine months ended September 30, 2025, we repurchased 8,135,637 shares of our common stock for an aggregate purchase price of approximately $91.7 million through open market transactions under the Repurchase Program. These repurchases were made in accordance with Rule 10b-18 under the Exchange Act and were funded using cash on hand.
In connection with the Refinancing Transaction completed on March 13, 2025, and pursuant to our Repurchase Program, we repurchased an additional 569,560 shares of our common stock for approximately $8.0 million in privately negotiated transactions at a price per share of $14.01 (See Note 7).
As of September 30, 2025, we have incurred approximately $0.9 million in excise taxes related to our share repurchase activity during the year, which are recorded in additional paid-in capital.
As of September 30, 2025, we have completed all repurchases of our common stock under our Repurchase Program.
Shares of our common stock repurchased under the Repurchase Program are immediately retired upon receipt and returned to authorized and unissued status. Repurchased common stock is reflected as a reduction of stockholders’ equity. Any excess of cost over par value is charged to additional paid-in capital to the extent that a balance is present. Once additional paid-in capital is fully depleted, any remaining excess of cost over par value is charged to accumulated deficit.
12. Equity Plans and Stock-Based Compensation
Equity Plans
In January 2021, we adopted the Dynavax Technologies Corporation 2021 Inducement Award Plan (“2021 Inducement Plan”), pursuant to which we reserved 1,500,000 shares of common stock for issuance under the plan to be used exclusively for grants of awards to individuals who were not previously our employees or directors. In June 2021, we amended the 2021 Inducement Plan (“Amended 2021 Inducement Plan”) to increase the number of shares of common stock reserved under the 2021 Inducement Plan to 3,250,000. The Amended 2021 Inducement Plan was terminated effective as of April 3, 2022 and, therefore, there are no shares of our common stock available for grant.
In May 2024, our stockholders approved the amendment and restatement of our 2018 Equity Incentive Plan (the “Amended 2018 EIP”) to, among other things, increase the authorized number of shares of common stock by 11,400,000. The maximum number of shares of common stock that may be issued under the Amended 2018 EIP will not exceed 41,440,250 shares of common stock. As of September 30, 2025, the Amended 2018 EIP and the Amended and Restated 2014 Employee Stock Purchase Plan are our active plans.
The Amended 2018 EIP is administered by our Board of Directors, or a designated committee of the Board of Directors, and awards granted under the Amended 2018 EIP have a term of seven years unless earlier terminated by the Board of Directors. As of September 30, 2025, there were 8,583,472 shares of common stock reserved for issuance under the Amended 2018 EIP.
Under our Amended 2018 EIP, we may grant stock options, restricted stock units (“RSUs”), performance-based awards, and other awards that are settled in shares of our common stock. Our equity awards generally vest over a three-year period contingent upon continuous service and unless exercised, expire seven or ten years from the date of grant (or earlier upon termination of continuous service). Activity under the Amended 2018 EIP is set forth below:
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Stock Options
The following table summarizes the activity of stock options for the nine months ended September 30, 2025:

| Shares Underlying Outstanding Options (in thousands) |  | Weighted- Average Exercise Price Per Share |  | Weighted- Average Remaining Contractual Term (years) |  | Aggregate Intrinsic Value (in thousands)
Balance as of December 31, 2024 | 11,142 |  | $ | 11.15 |  |  | 3.79 |  | $ | 24,210 |
Options granted | 1,819 |  | 12.41 |  |  |  |  |
Options exercised | (734) |  | 9.29 |  |  |  |  |
Options cancelled: |  |  |  |  |  |  |
Options forfeited (unvested) | (131) |  | 12.33 |  |  |  |  |
Options expired (vested) | (975) |  | 16.39 |  |  |  |  |
Balance as of September 30, 2025 | 11,121 |  | $ | 11.01 |  |  | 3.77 |  | $ | 7,631 |
Vested and expected to vest as of September 30, 2025 | 10,950 |  | $ | 10.99 |  |  | 3.73 |  | $ | 7,631 |
Exercisable as of September 30, 2025 | 8,186 |  | $ | 10.54 |  |  | 2.97 |  | $ | 7,628 |

Restricted Stock Units
The following table summarizes the activity of RSUs for the nine months ended September 30, 2025:

| Number of Shares (in thousands) |  | Weighted-Average Grant-Date Fair Value Per Share
Non-vested as of December 31, 2024 | 5,363 |  | $ | 12.15 |
Granted | 2,760 |  | 12.61 |
Vested (1) | (2,222) |  | 12.06 |
Forfeited | (308) |  | 12.29 |
Non-vested as of September 30, 2025 | 5,593 |  | $ | 12.40 |

(1)Inclusive of approximately 837,586 RSUs for the nine months ended September 30, 2025, which were not converted into shares due to net share settlement in order to cover the required amount of employee withholding taxes. The value of the withheld shares was classified as a reduction to additional paid-in capital.
Market-based Performance Stock Units
We granted market-based performance restricted stock units (“PSUs”) to certain executives. These PSUs vest upon a specified market condition. The summary of PSU activities for the nine months ended September 30, 2025 is as follows:

| Number of Shares (in thousands) |  | Weighted-Average Grant-Date Fair Value Per Share
Non-vested as of December 31, 2024 | 1,115 |  | $ | 16.59 |
Granted | 517 |  | 20.19 |
Vested (1) | (193) |  | 11.62 |
Non-vested as of September 30, 2025 | 1,439 |  | $ | 18.55 |

(1)Inclusive of approximately 81,972 PSUs for the nine months ended September 30, 2025, which were not converted into shares due to net share settlement in order to cover the required amount of employee withholding taxes. The value of the withheld shares was classified as a reduction to additional paid-in capital.
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Performance-based Options
As of September 30, 2025, approximately 36,000 shares underlying performance-based options were outstanding.
Significant Assumptions in Estimating Option Fair Value
The fair value of each time-based option is estimated on the date of grant using the Black-Scholes option valuation model. The fair value of each RSU is determined at the date of grant using our closing stock price. The fair value of each PSU is estimated using the Monte Carlo simulation method on the date of grant. The weighted-average assumptions used in the calculations of these fair value measurements are as follows:

| Stock Options |  | Stock Options |  | Market-Based Performance Stock Units
| Three Months Ended September 30, |  | Nine Months Ended September 30, |  | Nine Months Ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024 |  | 2025 |  | 2024
Weighted-average fair value per share | N/A |  | $ | 6.66 |  |  | $ | 7.13 |  |  | $ | 7.82 |  |  | $ | 20.19 |  |  | $ | 17.23 |
Risk-free interest rate | N/A |  | 3.8 | % |  | 4.2 | % |  | 4.2 | % |  | 4.2 | % |  | 4.3 | %
Expected life (in years) | N/A |  | 4.5 |  | 4.5 |  | 4.5 |  | 2.9 |  | 2.9
Volatility | N/A |  | 0.8 |  | 0.7 |  | 0.8 |  | 0.4 |  | 0.6

Stock-based Compensation
Compensation expense is based on awards ultimately expected to vest and reflects estimated forfeitures. For equity awards with time-based vesting, the fair value is amortized to expense on a straight-line basis over the vesting periods.
We have also granted performance-based equity awards to certain of our employees. For equity awards with performance-based vesting criteria, the fair value is amortized to expense when the achievement of the vesting criteria becomes probable.
The following table summarizes stock-based compensation expense recorded in each component of operating expenses in our condensed consolidated statements of operations and amounts capitalized to our inventories (in thousands):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Research and development | $ | 2,482 |  |  | $ | 3,135 |  |  | $ | 8,300 |  |  | $ | 8,681 |
Selling, general and administrative | 8,620 |  |  | 8,703 |  |  | 27,392 |  |  | 26,878 |
Cost of sales - product | 370 |  |  | 397 |  |  | 1,316 |  |  | 1,505 |
Inventories | 918 |  |  | 848 |  |  | 2,816 |  |  | 2,551 |
Total | $ | 12,390 |  |  | $ | 13,083 |  |  | $ | 39,824 |  |  | $ | 39,615 |

13. Income Taxes
We are subject to U.S. federal, state and foreign income taxes. Our consolidated provision for income taxes and our effective income tax rate consists of the following (in thousands):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Provision for income taxes | $ | (1,492) |  |  | $ | (2,224) |  |  | $ | (2,211) |  |  | $ | (2,967) |
Effective income tax rate | 5.3 | % |  | 11.2 | % |  | (4.6) | % |  | 12.8 | %

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On July 4, 2025, the President signed into law the One Big Beautiful Bill Act (“OBBBA”). The OBBBA includes numerous changes to existing tax law including extending or making permanent certain business and international tax measures initially established under the 2017 Tax Cuts and Jobs Act, which were set to expire.
The OBBBA permanently eliminates the requirement to capitalize and amortize U.S.-based research and experimental expenditures over five years, making these expenditures fully deductible in the period incurred. We have accounted for the effects of OBBBA in the three and nine-months ended September 30, 2025, of which the primary impact is a reduction of current income tax liabilities and a corresponding reduction to income tax expense. Additionally, we anticipate that these provisions will enhance cash flows, as they reduce our overall tax liability. However, given the complexity of tax laws, related regulations, and evolving interpretations, our estimates may require revision as additional information becomes available regarding the application of the OBBBA provisions. We will continue to analyze the downstream implications of the OBBBA on state regulations and will reflect their impact on the financial statements in the period of enactment.
For the nine months ended September 30, 2025, the primary difference between the effective tax rate and the federal statutory rate is driven by federal, state and foreign tax expense, offset by the benefit of net operating losses utilized during the period and the full valuation allowance we established on our federal, state, and certain foreign deferred tax assets and the income tax benefits of the OBBBA. For the nine months ended September 30, 2024, the primary difference between the effective tax rate and the federal statutory rate is due to the benefit of net operating losses utilized during the periods and the full valuation allowance we established on our federal, state and certain foreign deferred tax assets.
The tax benefit of net operating losses, temporary differences and credit carryforwards is required to be recorded as an asset to the extent that management assesses that realization is "more likely than not." Realization of the future tax benefits is dependent on our ability to generate sufficient taxable income within the carryforward period. A high degree of judgment is required to determine if, and the extent to which, valuation allowances should be recorded against deferred tax assets. In making such determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. Based on all available evidence as of September 30, 2025, both positive and negative, and the weight of that evidence to the extent such evidence can be objectively verified, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not more likely than not to be realized, and, accordingly, has provided a valuation allowance.
14. Subsequent Events
New Share Repurchase Program
In October 2025, our Board of Directors authorized a share repurchase program (the “New Repurchase Program”) to repurchase up to $100.0 million worth of our common stock.
Vaxart Agreement
In November 2025, we entered into an agreement with Vaxart, Inc. (“Vaxart”), under which Vaxart granted us an exclusive, worldwide license to develop and commercialize oral vaccines based on Vaxart’s delivery platform (the “Vaxart Platform”) for SARS-CoV-2, SARS, MERS and other coronavirus infections and respiratory illnesses caused by coronavirus infections, including COVID-19 (“Vaxart Agreement”). Vaxart’s oral pill COVID-19 vaccine candidate is currently in a Phase 2b clinical trial (the “COVID-19 Vaccine Candidate”) funded under an agreement between Vaxart and Advanced Technology International, the Rapid Response Partnership Vehicle’s Consortium Management Firm funded by BARDA (the U.S. Biomedical Advanced Research and Development Authority) as part of Project NextGen.
Under the terms of the Vaxart Agreement, we will pay Vaxart an upfront license fee of $25.0 million and make a $5.0 million equity investment in Vaxart. Vaxart will retain full operational and financial responsibility for the development of the COVID-19 Vaccine Candidate through the completion of the Phase 2b clinical trial and the subsequent End of Phase 2 meeting with the U.S. Food and Drug Administration (“FDA”). In addition, after receiving the results of the Phase 2b clinical trial, we will pay an additional fee of $50.0 million to Vaxart, unless we elect not to assume responsibility for continued development of the COVID-19 Vaccine Candidate (in which case, the Vaxart Agreement will terminate). We have also agreed to pay milestone payments to Vaxart upon the achievement of certain regulatory approval and commercial milestone events, as well as royalties on product net sales.
As noted above, in connection with the Vaxart Agreement, we and Vaxart have entered into a securities purchase agreement pursuant to which we will purchase $5.0 million of shares of Vaxart common stock.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve a number of risks and uncertainties. Our actual results could differ materially from those indicated by forward-looking statements as a result of various factors, including but not limited to, the period for which we estimate our cash resources are sufficient, the availability of additional funds, as well as those set forth under “Risk Factors” and those that may be identified from time to time in our reports and registration statements filed with the Securities and Exchange Commission.
The following discussion and analysis is intended to provide an investor with a narrative of our financial results and an evaluation of our financial condition and results of operations. This discussion should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and related Notes included in Item 1 of this Quarterly Report on Form 10-Q and the Consolidated Financial Statements and the related Notes and Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the year ended December 31, 2024.
Overview
We are a commercial stage biopharmaceutical company developing and commercializing innovative vaccines to help protect the world against infectious diseases. We are currently focused on our efforts to drive long-term shareholder value by maximizing utilization of our HEPLISAV-B® hepatitis B vaccine, expanding our own portfolio of innovative vaccine candidates leveraging our proven adjuvant technology, and leveraging our CpG 1018® adjuvant supply strategy through both commercial and research collaborations.
Our first marketed product, HEPLISAV-B® [Hepatitis B Vaccine (Recombinant), Adjuvanted], is approved in the United States (“U.S.”), the European Union (“EU”) and the United Kingdom (“UK”) for the prevention of infection caused by all known subtypes of hepatitis B virus in adults aged 18 years and older.
In April 2022, the CDC's Advisory Committee on Immunization Practices (“ACIP”) published its universal recommendation for hepatitis B vaccination in adults, advising that all adults aged 19-59 should be vaccinated against hepatitis B. We believe this is helping create a significantly expanded total annual market opportunity of approximately $900.0 million in the U.S. by 2030, with HEPLISAV-B expected to achieve at least 60% total market share. Additionally, we believe the HEPLISAV-B U.S. market opportunity will remain substantial beyond 2030 due to the ongoing penetration of the unvaccinated eligible adult population, observed revaccination practices by healthcare providers, and continued gains in market share. Our annual revenue has continued to grow significantly since the recommendation was made, primarily as a result of our successful efforts to capture a greater share of an expanding market.
We are advancing a pipeline of differentiated product candidates that leverage our CpG 1018 adjuvant to develop improved vaccines in indications with unmet medical needs. These programs include vaccine candidates under development for shingles and plague and additional vaccine programs in preclinical development. Additionally, we are working to advance product candidates utilizing our CpG 1018 adjuvant through discovery efforts and preclinical and clinical collaborations with third-party research organizations.
In addition, we manufacture and have supplied in the past, and could supply in the future, our CpG 1018 adjuvant to a number of global customers, including companies engaged in the development and manufacture of COVID-19 vaccines across a variety of vaccine platforms utilizing CpG 1018 adjuvant. While we did not recognize any CpG 1018 adjuvant revenue in 2024 or during the three and nine months ended September 30, 2025, we could see new demand in the future if our collaborators work through their inventory on hand and need additional supply, or new programs utilizing our adjuvant advance to later stages up to and including commercialization. However, long-term demand for CpG 1018 adjuvant supporting COVID-19 or other vaccines will be highly dependent on each customer’s ability to commercialize in respective territories and geographies where their respective COVID-19 or other vaccines are approved for use.
In November 2025, we entered into an agreement with Vaxart, Inc. (“Vaxart”), under which Vaxart granted us an exclusive, worldwide license to develop and commercialize oral vaccines based on Vaxart’s delivery platform (the “Vaxart Platform”) for SARS-CoV-2, SARS, MERS and other coronavirus infections and respiratory illnesses caused by coronavirus infections, including COVID-19 (“Vaxart Agreement”). Vaxart’s oral pill COVID-19 vaccine candidate is currently in a Phase 2b clinical trial (the “COVID-19 Vaccine Candidate”) funded under an agreement between Vaxart and Advanced Technology International, the Rapid Response Partnership Vehicle’s Consortium Management Firm funded by BARDA (the U.S. Biomedical Advanced Research and Development Authority) as part of Project NextGen. See Note 14 –
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Subsequent Events, in the accompanying notes to the unaudited condensed consolidated financial statements included in Part I, Item 1, “Financial Statements (unaudited)” of this Quarterly Report on Form 10-Q.
HEPLISAV-B® Vaccine [Hepatitis B Vaccine (Recombinant), Adjuvanted]
In Phase 3 trials, HEPLISAV-B demonstrated faster and higher rates of protection with two doses in one month compared to another currently approved hepatitis B vaccine, which requires three doses over six months, with a similar safety profile. HEPLISAV-B is the only two-dose hepatitis B vaccine for adults approved in the U.S., the EU and the UK.
We have worldwide commercial rights to HEPLISAV-B and we currently market it in the U.S. only. There are four other vaccines approved for the prevention of hepatitis B in the U.S.: Engerix-B and Twinrix® from GlaxoSmithKline plc, Recombivax-HB® from Merck & Co and PreHevbrio™ from VBI Vaccines Inc. In February 2021, we received Marketing Authorization of HEPLISAV-B from the European Commission for prevention of infection caused by all known subtypes of hepatitis B virus in adults aged 18 years and older. In March 2023, we received marketing authorization in the UK for HEPLISAV-B for the active immunization against hepatitis B virus infection caused by all known subtypes of hepatitis B virus in adults aged 18 years and older.
In May 2021, we entered into a commercialization agreement with Bavarian Nordic for the marketing and distribution of HEPLISAV-B in Germany, and in May 2022, we commenced commercial shipments of HEPLISAV-B in Germany. The agreement was not renewed upon its expiration in the second quarter of 2025. Under the terms of the agreement, Bavarian Nordic retains the right to distribute remaining inventory of HEPLISAV-B in Germany through April 30, 2026, after which commercialization rights will revert to Dynavax. We do not currently market HEPLISAV-B outside the U.S.
HEPLISAV-B product sales in the U.S. are to certain wholesalers and specialty distributors whose principal customers include independent hospitals and clinics, integrated delivery networks, public health clinics and prisons, the Department of Defense, the Department of Veterans Affairs and retail pharmacies. For the three and nine months ended September 30, 2025, HEPLISAV-B product revenue, net was $90.0 million and $246.8 million, respectively.
CpG 1018® Adjuvant Supply for COVID-19 Vaccines
In January 2021, we entered into an agreement (together with subsequent amendments, the “CEPI Agreement”) with Coalition for Epidemic Preparedness Innovations (“CEPI”) for the manufacture and reservation of a specified quantity of CpG 1018® adjuvant. Through September 30, 2025, we have received approximately $175.0 million in advance payments (the “Advance Payments”) under the CEPI Agreement. Of this amount, $67.3 million has been repaid and $47.4 million has been forgiven. As of September 30, 2025, the remaining $60.3 million, representing the outstanding balance of the Advance Payments relating to the Clover Supply Agreement (as defined and discussed below), is recorded in CEPI accrual long-term in our condensed consolidated balance sheets, and may be repaid from collections from Clover or forgiven under the terms of the CEPI Agreement.
In June 2021, we entered into a commercial supply agreement (together, the “Clover Supply Agreement”) with Zhejiang Clover Biopharmaceuticals, Inc. and Clover Biopharmaceuticals (Hong Kong) Co., Limited (collectively, “Clover”) for the commercial supply of CpG 1018 adjuvant for use with its protein-based COVID-19 vaccine candidate, SCB-2019. During the nine months ended September 30, 2025, we recorded an allowance for doubtful accounts of approximately $11.0 million relating to the contract asset recognized for Clover. This determination was based on our evaluation of credit risk associated with Clover, driven by the formal termination by the Global Alliance for Vaccines and Immunization (“GAVI”) of its advanced purchase agreement option with Clover on April 24, 2025, Clover’s recent write-down of the carrying value of its CpG 1018 Materials, and Clover's liquidity position, as reflected by cash and cash equivalents reported in Clover’s audited consolidated statement of financial position as of December 31, 2024.
The $11.0 million allowance for doubtful accounts represents the portion of Clover's contract asset that is incremental to the amounts which were directly funded using the Advance Payments from CEPI of approximately $60.3 million to manufacture the corresponding CpG 1018 Materials.
Accordingly, the contract asset balance associated with Clover was $60.3 million as of September 30, 2025, compared to $71.3 million as of December 31, 2024. The contract asset was included in other assets (non-current) and represents amounts due from Clover that we expect to become payable more than twelve months after September 30, 2025.
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Advance Payments from CEPI of $60.3 million are recorded in CEPI accrual long-term in our condensed consolidated balance sheets as of September 30, 2025. We are only obligated to repay these Advance Payments to CEPI if, and to the extent, of our receipt from Clover of their payment for the corresponding CpG 1018 Materials. Advance Payments may be forgiven in accordance with the CEPI Agreement in the event we do not collect corresponding amounts from Clover. Pursuant to the terms of the Clover Supply Agreement, we intend to continue to pursue full collection of the $71.3 million due from Clover, of which $60.3 million will be payable to CEPI upon the occurrence of the applicable payment trigger events described above, whichever occurs first.
On April 26, 2023, we entered into a third amendment to the Bio E Supply Agreement (the “Bio E Amendment No. 3”). The Bio E Amendment No. 3 provided for additional payments of either $5.5 million in the event that Bio E receives at least $125.0 million, or $12.3 million in the event that Bio E receives at least $250.0 million in payments from the Government of India associated with its CORBEVAX product on or before August 15, 2025. Bio E did not receive any payments from the Government of India for its CORBEVAX product by August 15, 2025. Accordingly, no accounts receivable is recorded from Bio E as of September 30, 2025.
Clinical and Preclinical Pipeline
We are advancing a pipeline of product candidates that leverage our CpG 1018 adjuvant, which has demonstrated its ability to enhance the immune response with a favorable tolerability profile in a wide range of clinical trials and real-world commercial use.
Shingles Vaccine Program:
Z-1018 is an investigational vaccine candidate being developed for the prevention of shingles in adults aged 50 years and older.
•In August 2025, we presented positive topline data from Part 1 of the randomized, observer-blinded, active-controlled Phase 1/2 clinical trial of Z-1018. At all doses and formulations evaluated in Part 1 of the trial, Z-1018 was well-tolerated and demonstrated a favorable tolerability profile, including lower solicited local and systemic post-injection reactions, versus Shingrix®. Z-1018 demonstrated robust immune responses in all dose arms, including a 100% humoral vaccine response rate at the dose selected for advancement, with comparable immunogenicity to Shingrix.
•In October 2025, we announced that the first participants have been dosed in Part 2 of the Phase 1/2 trial evaluating Z-1018 head-to-head versus Shingrix in adults aged 70 years and older.
•In support of establishing clinical proof-of-concept for Z-1018 as a differentiated, best-in-class shingles vaccine, we anticipate reporting both topline Part 2 results, along with 12-month follow-up data for Part 1, in the second half of 2026.
Plague Vaccine Program:
We are developing a plague (rF1V) vaccine candidate adjuvanted with CpG 1018® in collaboration with, and fully funded by, the U.S. Department of Defense (DoD).
•In the fourth quarter of 2024, we and the DoD executed an agreement for approximately $30.0 million through the first half of 2027 to support additional clinical and manufacturing activities.
•In the third quarter of 2025, we executed an amendment to the agreement for approximately $14.0 million from the DoD to support additional non-human primate studies.
•We initiated Part 1 of the Phase 2 clinical trial evaluating the plague vaccine candidate and completed enrollment in the third quarter of 2025.
Pandemic Influenza Adjuvant Program:
We are evaluating CpG 1018 in an adjuvanted H5N1 influenza vaccine as a proof-of-concept for its potential use with pandemic influenza vaccines.
•During the second quarter of 2025, we completed Part 1 of the randomized, active-controlled Phase 1/2 study to evaluate the safety and immunogenicity of an investigational H5N1 influenza vaccine adjuvanted with CpG 1018 in 101 participants aged 18 to 49.
•Based on the results from Part 1 of the study, we are advancing the optimal formulation of CpG 1018 adjuvant to evaluate in Part 2 of the Phase 1/2 trial, with topline immunogenicity and safety data expected in 2026.
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Lyme Disease Vaccine Program:
We are developing an investigational multivalent protein subunit vaccine candidate adjuvanted with CpG 1018 for the prevention of Lyme disease, a bacterial infection that is the most common vector-borne illness in the Northern Hemisphere.
•There are currently no approved human vaccines for Lyme disease, and current vaccine candidates in clinical development require a three-dose primary series and annual boosters. We believe our investigational Lyme disease vaccine adjuvanted with CpG 1018, which has a demonstrated ability to amplify immune response and improve durability of protection, has the potential for a differentiated and best-in-class vaccine profile.
•Our Lyme disease vaccine candidate has progressed into Investigational New Drug (IND)-enabling studies, with plans to initiate clinical development in 2027.
HEPLISAV-B for Adults on Hemodialysis:
•We plan to conduct an observational retrospective cohort study to support our sBLA filing for a HEPLISAV-B® vaccine regimen for adults on hemodialysis. In the first quarter of 2025, we received feedback from the FDA that our proposed patient database may be acceptable for the observational retrospective cohort study, and we are engaging with the FDA to finalize the study protocol.
Convertible Notes
On March 13, 2025 (the “Settlement Date”), we entered into privately negotiated exchange and subscription agreements (the “Exchange Agreements”) with certain holders of our outstanding 2.50% Convertible Senior Notes due 2026 (the “2026 Notes”) and one new investor. Pursuant to the Exchange Agreements, we issued $225.0 million aggregate principal amount of 2.00% Convertible Senior Notes due 2030 (the “2030 Notes,” and together with the 2026 Notes, the “Convertible Notes”), consisting of (i) approximately $185.3 million issued in exchange for a corresponding principal amount of 2026 Notes, and (ii) approximately $39.7 million of 2030 Notes issued to existing holders of the 2026 Notes and a new investor (the “Refinancing Transaction”).
Following the completion of the Refinancing Transaction, the total principal balance of our outstanding convertible notes as of September 30, 2025, was $265.2 million, which comprised $225.0 million principal amount of the 2030 Notes and $40.2 million principal amount of the remaining 2026 Notes.
In connection with the Refinancing Transaction, we unwound a portion of our existing capped call options in a notional amount corresponding to the amount of 2026 Notes exchanged under the Exchange Agreements, receiving approximately $46.6 million in cash proceeds, which were recognized as an increase to additional paid-in capital. These proceeds were used to offset a majority of the fair value of the retired 2026 Notes above par and accrued interest.
We also repurchased approximately $8.0 million of our common stock from certain participants in the Refinancing Transaction at $14.01 per share, which was the closing price of our common stock on March 5, 2025, with the goal of facilitating a net neutral exchange of shares.
The Refinancing Transaction was accounted for as an extinguishment of debt under ASC 470-50-40, which requires that the difference between the reacquisition price of the debt and the net carrying amount of the extinguished debt is recognized in the statement of operations. Accordingly, we recognized a loss on debt extinguishment of $82.1 million, which is included in other income (expense) in the condensed consolidated statements of operations for the nine months ended September 30, 2025. Approximately $4.5 million in debt issuance costs were capitalized and will be amortized over the term of the 2030 Notes.
Share Repurchase Programs
In November 2024, our Board of Directors authorized a share repurchase program (the “Repurchase Program”) allowing us to repurchase up to $200.0 million worth of our common stock. Through September 30, 2025, we repurchased a total of 16,625,735 shares, including $100.0 million under an accelerated share repurchase agreement (“ASR”) and approximately $100.0 million through open market and privately negotiated transactions. As of September 30, 2025, we have completed all repurchases of our common stock under our Repurchase Program.
In October 2025, our Board of Directors authorized a share repurchase program (the “New Repurchase Program”) to repurchase up to $100.0 million worth of our common stock.
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Seasonality
HEPLISAV-B is currently our only revenue-producing product. We believe that HEPLISAV-B product revenue is, and will likely continue to be, subject to seasonal variations. Specifically, HEPLISAV-B product revenue has generally been, and will likely continue to be, lower in the fourth quarter of our fiscal year compared to the third quarter due to holiday schedules and increased focus by healthcare providers on respiratory disease vaccines, including vaccines for influenza, COVID-19 and respiratory syncytial virus, during the fall and winter months.
Critical Accounting Estimates
We prepare our unaudited condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles. In doing so, we are required to make estimates and assumptions. Our critical accounting estimates are those estimates that involve a significant level of uncertainty at the time the estimate was made, and changes in them have had or are reasonably likely to have a material effect on our financial condition or results of operations. Actual results could differ materially from our estimates. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis.
We believe that there have been no significant changes in our critical accounting policies during the nine months ended September 30, 2025, as compared with those disclosed in Part II, Item 7 "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024.
Results of Operations
Revenues
Revenues consist of amounts earned from product sales and other revenues. Product revenue, net, consists of sales of HEPLISAV-B.
Revenue from HEPLISAV-B product sales is recorded at the net sales price, which includes estimates of product returns, chargebacks, discounts, rebates and other fees. Overall, product revenue, net, reflects our best estimates of the amount of consideration to which we are entitled based on the terms of the applicable contracts.
Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, we will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known.
The following is a summary of our revenues (in thousands, except for percentages):

| Three Months Ended September 30, |  | Increase (Decrease) from 2024 to 2025 |  | Nine Months Ended September 30, |  | Increase from 2024 to 2025
Revenues: | 2025 |  | 2024 |  | $ |  | % |  | 2025 |  | 2024 |  | $ |  | %
HEPLISAV-B | $ | 89,954 |  |  | $ | 79,345 |  |  | $ | 10,609 |  |  | 13 | % |  | $ | 246,785 |  |  | $ | 197,377 |  |  | $ | 49,408 |  |  | 25 | %
Total product revenue, net | 89,954 |  |  | 79,345 |  |  | 10,609 |  |  | 13 | % |  | 246,785 |  |  | 197,377 |  |  | 49,408 |  |  | 25 | %
Other revenue | 4,922 |  |  | 1,285 |  |  | 3,637 |  |  | 283 | % |  | 11,697 |  |  | 7,837 |  |  | 3,860 |  |  | 49 | %
Total revenues | $ | 94,876 |  |  | $ | 80,630 |  |  | $ | 14,246 |  |  | 18 | % |  | $ | 258,482 |  |  | $ | 205,214 |  |  | $ | 53,268 |  |  | 26 | %

(1) Other revenue primarily includes revenue from our agreement with the DoD.
HEPLISAV-B product revenue increased by $10.6 million and $49.4 million for the three and nine months ended September 30, 2025, respectively, compared to the same periods in 2024.
For the three and nine months ended September 30, 2025, approximately $3.3 million and $20.6 million of the increase in product revenue, respectively, was due to higher volume, largely driven by continued improvement in market share, and growth in the U.S. hepatitis-B vaccine market. Increases in net sales price contributed approximately $8.2 million and $25.5 million for the three and nine months ended September 30, 2025, respectively, compared to the same periods in 2024. Additionally, adjustments to reserve estimates increased product revenue by approximately $2.4 million for the nine months ended September 30, 2025, compared to the same periods in 2024, primarily due to lower observed HEPLISAV-B return rates.
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There was no non-U.S. product revenue for each of the three month ending September 30, 2025, and September 30, 2024. For the nine months ended September 30, 2025, and September 30, 2024, non-U.S. product revenue, net included approximately$1.6 million and $2.3 million, respectively. We do not currently anticipate revenue from non-U.S. sales in the near future.
Cost of Sales – Product
Cost of sales - product consists primarily of raw materials, certain fill, finish and overhead costs and any inventory adjustment charges for HEPLISAV-B.
The following is a summary of our cost of sales - product (in thousands, except for percentages):

| Three Months Ended September 30, |  | Increase from 2024 to 2025 |  | Nine Months Ended September 30, |  | Increase from 2024 to 2025
Cost of Sales - Product | 2025 |  | 2024 |  | $ |  | % |  | 2025 |  | 2024 |  | $ |  | %
HEPLISAV-B | $ | 14,403 |  |  | $ | 13,084 |  |  | $ | 1,319 |  |  | 10 | % |  | $ | 42,207 |  |  | $ | 36,035 |  |  | $ | 6,172 |  |  | 17 | %
Total cost of sales - product | $ | 14,403 |  |  | $ | 13,084 |  |  | $ | 1,319 |  |  | 10 | % |  | $ | 42,207 |  |  | $ | 36,035 |  |  | $ | 6,172 |  |  | 17 | %

HEPLISAV-B cost of sales-product increased by $1.3 million and $6.2 million for the three and nine months ended September 30, 2025, respectively, compared to the same periods in 2024. The increase was primarily due to the growth in HEPLISAV-B sales volume. Cost of sales-product for the nine months ended September 30, 2025, also included approximately $3.1 million primarily related to yield loss during the production process, compared to approximately $1.3 million during the nine months ended September 30, 2024, related to one manufacturing batch that did not meet approved release specifications.
Research and Development Expenses
Research and development expenses are tracked on a program-by-program basis and consist primarily of costs incurred for the continued research and development of HEPLISAV-B and CpG 1018 adjuvant, clinical product candidates, and preclinical studies. These expenses include, but are not limited to, compensation and related personnel costs (which include benefits, recruitment and travel costs), expenses incurred under agreements with contract research organizations, contract manufacturing organizations and service providers that assist in conducting clinical studies, and costs associated with our preclinical activities, including engineering activities at our manufacturing facility in Düsseldorf related to functional improvements of our product and process advances, development activities and regulatory operations. We do not allocate stock-based compensation or facility expenses to specific programs because these costs are deployed across multiple programs.
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The following is a summary of our research and development expenses (in thousands, except for percentages):

| Three Months Ended September 30, |  | Increase (Decrease) from 2024 to 2025 |  | Nine Months Ended September 30, |  | Increase (Decrease) from 2024 to 2025
Program Expenses: | 2025 |  | 2024 |  | $ |  | % |  | 2025 |  | 2024 |  | $ |  | %
Shingles | $ | 9,903 |  |  | $ | 5,141 |  |  | $ | 4,762 |  |  | 93 | % |  | $ | 22,587 |  |  | $ | 12,289 |  |  | $ | 10,298 |  |  | 84 | %
Plague (1) | 2,187 |  |  | 503 |  |  | 1,684 |  |  | 335 | % |  | 4,872 |  |  | 3,580 |  |  | 1,292 |  |  | 36 | %
HEPLISAV-B and CpG 1018 adjuvant development | 1,146 |  |  | 1,093 |  |  | 53 |  |  | 5 | % |  | 4,368 |  |  | 4,091 |  |  | 277 |  |  | 7 | %
Tdap | — |  |  | 1,119 |  |  | (1,119) |  |  | (100) | % |  | 127 |  |  | 3,805 |  |  | (3,678) |  |  | (97) | %
Other | 2,757 |  |  | 2,741 |  |  | 16 |  |  | 1 | % |  | 13,088 |  |  | 8,411 |  |  | 4,677 |  |  | 56 | %
Other research and development expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Facility costs | 641 |  |  | 671 |  |  | (30) |  |  | (4 | %) |  | 1,770 |  |  | 2,024 |  |  | (254) |  |  | (13 | %)
Non-cash stock-based compensation | 2,482 |  |  | 3,135 |  |  | (653) |  |  | (21 | %) |  | 8,300 |  |  | 8,681 |  |  | (381) |  |  | (4 | %)
Total research and development | $ | 19,116 |  |  | $ | 14,403 |  |  | $ | 4,713 |  |  | 33 | % |  | $ | 55,112 |  |  | $ | 42,881 |  |  | $ | 12,231 |  |  | 29 | %

(1)In September 2021, we entered into an agreement with the DoD for the development of a recombinant plague vaccine utilizing CpG 1018 adjuvant. Under the agreement, we conducted a Phase 2 clinical trial and studies combining our CpG 1018 adjuvant with the DoD's rF1V vaccine. We are being fully reimbursed by the DoD for the costs of this study, which is recorded in other revenue in our condensed consolidated statements of operations.
Research and development expenses increased by $4.7 million and $12.2 million for the three and nine months ended September 30, 2025, respectively, compared to the same periods in 2024. The increase in research and development expenses was primarily driven by higher costs associated with our shingles program due to the ongoing Phase 1/2 clinical trial, the progression of our plague vaccine candidate in a Phase 2 clinical study, increased investment in the initiation and completion of enrollment for Part 1 of a Phase 1/2 clinical study for our pandemic influenza program, and continued work on IND-enabling activities for our Lyme disease program, which began in the first quarter of 2025. These increases were partially offset by reduced expenses following the discontinuation of our Tdap program in late 2024.
As we continue to progress our clinical and preclinical stage pipeline, we expect research and development expenses to continue to represent a substantial portion of our expenses and to continue to increase, both in dollar amount and proportion of total expense, in future years.
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist primarily of compensation and related costs for our commercial support personnel, medical education professionals, and personnel in executive and other administrative functions, including legal, finance and information technology; costs for outside services such as sales and marketing, post-marketing studies of HEPLISAV-B, accounting, commercial development, consulting, business development, investor relations and insurance; legal costs that include corporate and patent-related expenses; allocated facility costs and non-cash stock-based compensation.
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The following is a summary of our selling, general and administrative expenses (in thousands, except for percentages):

Selling, General and Administrative: | Three Months Ended September 30, |  | Increase (Decrease) from 2024 to 2025 |  | Nine Months Ended September 30, |  | Increase (Decrease) from 2024 to 2025
2025 |  | 2024 |  | $ |  | % |  | 2025 |  | 2024 |  | $ |  | %
Compensation and related personnel costs | $ | 17,018 |  |  | $ | 16,933 |  |  | $ | 85 |  |  | 1 | % |  | $ | 52,118 |  |  | $ | 53,610 |  |  | $ | (1,492) |  |  | (3 | %)
Outside services | 12,019 |  |  | 15,551 |  |  | (3,532) |  |  | (23 | %) |  | 50,818 |  |  | 41,652 |  |  | 9,166 |  |  | 22 | %
Facility costs | 2,429 |  |  | 1,874 |  |  | 555 |  |  | 30 | % |  | 7,795 |  |  | 6,648 |  |  | 1,147 |  |  | 17 | %
Non-cash stock-based compensation | 8,620 |  |  | 8,703 |  |  | (83) |  |  | (1 | %) |  | 27,392 |  |  | 26,878 |  |  | 514 |  |  | 2 | %
Total selling, general and administrative | $ | 40,086 |  |  | $ | 43,061 |  |  | $ | (2,975) |  |  | (7 | %) |  | $ | 138,123 |  |  | $ | 128,788 |  |  | $ | 9,335 |  |  | 7 | %

Selling, general and administrative expenses decreased by $3.0 million for the three months ended September 30, 2025, compared to the same period in 2024, primarily due to marketing campaign expenses incurred in the three months ended September 30, 2024, that did not recur in the same period in 2025. Selling, general and administrative expenses increased by $9.3 million for the nine months ended September 30, 2025, compared to the same period in 2024, primarily driven by higher professional consulting and legal fees of $12.5 million related to our successful proxy contest campaign.
Bad Debt Expense
During the first quarter of 2025, we recorded an allowance for doubtful accounts of approximately $11.0 million relating to the contract asset recognized for Clover. This charge is reflected in our results for the nine months ended September 30, 2025. This determination was based on our evaluation of credit risk associated with Clover, driven by the formal termination by the GAVI of its advanced purchase agreement option with Clover on April 24, 2025, Clover’s recent write-down of the carrying value of its CpG 1018 Materials, and Clover's liquidity position, as reflected by cash and cash equivalents reported in Clover’s audited consolidated statement of financial position as of December 31, 2024.
Other Income (Expense)
Interest income is reported net of amortization of premiums and discounts on marketable securities and includes realized gains on investments. Interest expense includes the stated interest and accretion of discount of our Convertible Notes. Sublease income is recognized in connection with our sublease of office and laboratory space. Loss on debt extinguishment is a one-time charge recognized in connection with the Refinancing Transaction.
The following is a summary of our other income (expense) (in thousands, except for percentages):

| Three Months Ended September 30, |  | Increase (Decrease) from 2024 to 2025 |  | Nine Months Ended September 30, |  | Increase (Decrease) from 2024 to 2025
| 2025 |  | 2024 |  | $ |  | % |  | 2025 |  | 2024 |  | $ |  | %
Interest income | $ | 6,593 |  |  | $ | 9,382 |  |  | $ | (2,789) |  |  | (30 | %) |  | $ | 21,130 |  |  | $ | 28,050 |  |  | $ | (6,920) |  |  | (25 | %)
Interest expense | $ | (1,643) |  |  | $ | (1,699) |  |  | $ | 56 |  |  | 3 | % |  | $ | (4,976) |  |  | $ | (5,090) |  |  | $ | 114 |  |  | 2 | %
Sublease income | $ | 2,225 |  |  | $ | 2,205 |  |  | $ | 20 |  |  | 1 | % |  | $ | 6,677 |  |  | $ | 2,808 |  |  | $ | 3,869 |  |  | 138 | %
Loss on debt extinguishment | $ | — |  |  | $ | — |  |  | $ | — |  |  | — | % |  | $ | (82,095) |  |  | $ | — |  |  | $ | 82,095 |  |  | 100 | %
Other (loss) income | $ | (27) |  |  | $ | (152) |  |  | $ | 179 |  |  | 100 | % |  | $ | (1,046) |  |  | $ | (52) |  |  | $ | (994) |  |  | (100) | %

Interest income decreased due to lower balances and average yield in our marketable securities portfolio for the three and nine months ended September 30, 2025.
The increase in sublease income for the nine months ended September 30, 2025 was primarily due to the recognition of a net loss of $3.5 million during the first quarter of 2024 in connection with a sublease termination.
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Loss on debt extinguishment, which represents the difference between the reacquisition price of the debt and the net carrying amount of the extinguished debt, of $82.1 million was recorded for the nine months ended September 30, 2025, in connection with the Refinancing Transaction completed in March 2025.
Income Taxes
We are subject to U.S. federal, state and foreign income taxes. Our consolidated provision for income taxes and our effective income tax rate consists of the following (in thousands):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Provision for income taxes | $ | (1,492) |  |  | $ | (2,224) |  |  | $ | (2,211) |  |  | $ | (2,967) |
Effective income tax rate | 5.3 | % |  | 11.2 | % |  | (4.6) | % |  | 12.8 | %

For the nine months ended September 30, 2025, the primary difference between the effective tax rate and the federal statutory rate was driven by federal, state and foreign tax expense offset by the benefit of net operating losses utilized during the period and the full valuation allowance we established on our federal, state, and certain foreign deferred tax assets. For the nine months ended September 30, 2024, the primary difference between the effective tax rate and the federal statutory rate was driven by state and foreign tax expense.
Liquidity and Capital Resources
As of September 30, 2025, we had $647.8 million in cash and cash equivalents, and marketable securities. Since our inception, we have relied primarily on the proceeds from public and private sales of our equity securities, borrowings, government grants and revenues from product sales and collaboration agreements to fund our operations. Our funds are currently invested in money market funds, U.S. treasuries, U.S. government agency securities and corporate debt securities. We currently anticipate that our cash and cash equivalents, and short-term marketable securities as of September 30, 2025, and anticipated revenues from HEPLISAV-B will be sufficient to fund our operations for at least the next 12 months from the date of this filing.
Advance Payments received from CEPI to reserve a specified quantity of CpG 1018 adjuvant are initially accounted for as long-term deferred revenue. When we deliver CpG 1018 adjuvant to CEPI partners or when we receive payment from CEPI partners, we reclassify the Advance Payments from long-term deferred revenue to accrued liabilities. As of September 30, 2025, we had no CEPI-related net accounts receivable relating to Bio E. As of September 30, 2025, CEPI-related accruals and contract assets (net of allowance for doubtful accounts) related to Clover, totaled $60.3 million. As of September 30, 2025, the CEPI-related accrual relating to Clover may be repaid using cash to be collected from Clover or forgiven in accordance with the CEPI Agreement.
On April 26, 2023, we entered into a third amendment to the Bio E Supply Agreement (the “Bio E Amendment No. 3”). The Bio E Amendment No. 3 provided for additional payments of either $5.5 million in the event that Bio E receives at least $125.0 million, or $12.3 million in the event that Bio E receives at least $250.0 million in payments from the Government of India associated with its CORBEVAX product on or before August 15, 2025. Bio E did not receive any payments from the Government of India for its CORBEVAX product by August 15, 2025. Accordingly, no accounts receivable is recorded from Bio E as of September 30, 2025.
In November 2024, our Board of Directors authorized a $200.0 million share repurchase program (the “Repurchase Program”). On November 8, 2024, we entered into a $100.0 million accelerated share repurchase agreement (the “ASR Agreement”) with Goldman Sachs & Co. LLC, under which we made an upfront payment of $100.0 million and received an initial delivery of 6,149,116 shares on November 12, 2024. Repurchases under the ASR Agreement were completed on February 11, 2025, and upon final settlement, we received an additional 1,771,422 shares, bringing the total shares repurchased under the ASR Agreement to 7,920,538, based on the average daily volume-weighted average price ("VWAP") of our common stock over the repurchase period. In addition, during the nine months ended September 30, 2025, we repurchased 8,135,637 shares for approximately $91.7 million through open market transactions and 569,560 shares for approximately $8.0 million in privately negotiated transactions in connection with the March 13, 2025 Refinancing Transaction. As of September 30, 2025, we have completed all repurchases of our common stock under our Repurchase Program. All repurchased shares were retired upon receipt and returned to authorized and unissued status. See Note 11 – Common Stock, in the accompanying notes to the unaudited condensed consolidated financial statements included in Part I, Item 1, “Financial Statements (unaudited)” of this Quarterly Report on Form 10-Q.
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In October 2025, our Board of Directors authorized the New Repurchase Program to repurchase up to $100.0 million worth of our common stock.
Following the completion of the Refinancing Transaction, the total principal balance of our outstanding Convertible Notes as of September 30, 2025, was $261.0 million net of debt discount of $4.2 million, which comprised $225.0 million principal amount of the 2030 Notes and $40.2 million principal amount of the remaining 2026 Notes. The 2026 Notes bear interest at a rate of 2.50% per year, payable semiannually in arrears on May 15 and November 15 of each year. The 2030 Notes bear interest at 2.00% per year, payable semiannually on March 15 and September 15, starting September 15, 2025. The 2026 Notes and the 2030 Notes mature on May 15, 2026 and March 15, 2030, respectively, unless converted, redeemed or repurchased prior to such date. As of September 30, 2025, we reclassified the remaining principal balance of our 2026 Notes totaling $40.2 million from long-term liabilities to current liabilities as the 2026 Notes mature within 12 months of the reporting date. See Note 7 – Convertible Notes, in the accompanying notes to the unaudited condensed consolidated financial statements included in Part I, Item 1, “Financial Statements (unaudited)” of this Quarterly Report on Form 10-Q.
As of September 30, 2025, we had $120.0 million remaining under the at-the-market Sales Agreement (the "ATM Agreement") with Cowen and Company, LLC (“Cowen”). We have not issued or sold any shares under the ATM Agreement during the nine months ended September 30, 2025.
Prior to January 1, 2021, we incurred net losses in each year since our inception. For the three and nine months ended September 30, 2025, we recorded net income and net loss of $26.9 million and $50.5 million, respectively. For the three and nine months ended September 30, 2024, we recorded net income of $17.6 million and $20.3 million, respectively. We cannot be certain that sales of our products, and the revenue from our other activities will be sustainable. Further, we expect to continue to incur substantial expenses as we continue investing in commercialization of HEPLISAV-B, advancing our research and development pipeline, and investing in clinical trials and other development. If we cannot generate a sufficient amount of revenue from product sales, we will need to finance our operations through strategic alliance and licensing arrangements and/or future public or private debt and equity financings. Raising additional funds through the issuance of equity or debt securities could result in dilution to our existing stockholders, increased fixed interest payment obligations, or both. In addition, these securities may have rights senior to those of our common stock and could include covenants that would restrict our operations.
Our ability to raise additional capital in the equity and debt markets, should we choose to do so, is dependent on a number of factors, including, but not limited to, the market demand for our common stock, which itself is subject to a number of development and business risks and uncertainties, our creditworthiness and the uncertainty that we would be able to raise such additional capital at a price or on terms that are favorable to us or at all. In addition, our ability to raise additional funds may be adversely impacted by deteriorating global economic conditions, such as inflation, changes in interest rates, prospects of a recession, government shutdowns, further changes in tariffs and other trade restrictions, civil or political unrest, military conflicts, and the recent or future disruptions to and volatility in the credit and financial markets in the U.S. and worldwide. Adequate financing may not be available to us on acceptable terms, or at all. If adequate funds are not available when needed, we may need to significantly reduce our operations while we seek strategic alternatives, which could have an adverse impact on our ability to achieve our intended business objectives.
Cash Flows
During the nine months ended September 30, 2025, we generated $37.6 million of cash in our operations, which consisted of i) a net loss of $50.5 million, ii) $138.5 million of net adjustments from non-cash items, which included depreciation and amortization, amortization of right-of-use assets, inventory write off, accretion of discounts on marketable securities, stock-based compensation expense, bad debt expense, non-cash interest expense, loss on debt extinguishment, and iii) approximately $50.4 million net changes from operating assets and liabilities, which included an increase of $26.4 million in accounts and other receivables, net driven by higher sales, an increase of $6.9 million in inventories primarily related to higher number of batches produced, an increase of $2.3 million in prepaid expenses and other current assets primarily related to interest receivable, prepaid taxes, and prepaid insurance, a decrease of $5.1 million in accounts payable, a decrease of $3.2 million in lease liabilities and a decrease of $6.6 million in accrued and other liabilities. By comparison, during the nine months ended September 30, 2024, we generated $13.5 million of cash from our operations, which consisted of i) a net income of $20.3 million, ii) $42.0 million of net adjustments from non-cash items, which included depreciation and amortization, amortization of right-of-use assets, inventory write off, sublease termination loss, accretion of discounts on marketable securities, stock-based compensation expense, non-cash interest expense, and iii) approximately $48.8 million net changes from operating assets and liabilities, which included an increase of $30.7 million in accounts and other receivables, net driven by higher sales, an increase of $10.4 million in inventories primarily related to higher number of batches produced, an increase of $6.9 million in prepaid manufacturing related to prepayments made to third-party manufacturers of CpG 1018 adjuvant, and an increase of $2.6 million in prepaid assets and other current assets
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primarily related to interest receivable, prepaid taxes, and prepaid insurance. Net cash provided by operating activities is impacted by changes in our operating assets and liabilities due to timing of cash receipts and expenditures.
During the nine months ended September 30, 2025, net cash provided by investing activities was $129.0 million compared to $41.4 million of cash used in investing activities for the nine months ended September 30, 2024. Cash provided by investing activities during the nine months ended September 30, 2025 included $135.6 million of net proceeds from marketable securities compared to $38.5 million of net purchases of marketable securities for the nine months ended September 30, 2024. Net cash provided by investing activities during the nine months ended September 30, 2025, was partially offset by $6.6 million of net purchases of property and equipment.
During the nine months ended September 30, 2025, net cash used in financing activities was $103.9 million compared to $3.1 million of cash used in financing activities for the nine months ended September 30, 2024. Cash used in financing activities for the nine months ended September 30, 2025, included $80.9 million of payments for debt extinguishment, $101.2 million of payments for the repurchase of common stock, and $11.8 million for the payments of taxes related to net share settlement of RSUs, partially offset by $35.2 million of net proceeds from the issuance of the 2030 Notes net of debt issuance costs, $46.6 million of proceeds from the unwinding of capped call options, and $8.3 million of proceeds received from the exercise of options and from common stock purchases under our employee stock purchase plan. Cash used in financing activities for the nine months ended September 30, 2024, included $8.8 million for the payments of taxes related to net share settlement of RSUs, partially offset by proceeds received from the exercise of options and from purchases under our employee stock purchase plan for $5.7 million combined.
Contractual Obligations
On March 13, 2025, we issued $225.0 million of our 2.00% 2030 Notes as part of the Refinancing Transaction. Following the completion of the Refinancing Transaction, the total principal balance of our outstanding Convertible Notes as of September 30, 2025, was $261.0 million net of debt discount of $4.2 million, which comprised $225.0 million principal amount of the 2030 Notes and $40.2 million principal amount of the remaining 2026 Notes. The 2026 Notes bear interest at a rate of 2.50% per year, payable semiannually in arrears on May 15 and November 15 of each year. The 2030 Notes bear interest at 2.00% per year, payable semiannually on March 15 and September 15, starting September 15, 2025. The 2026 Notes and the 2030 Notes mature on May 15, 2026 and March 15, 2030, respectively, unless converted, redeemed or repurchased prior to such date. As of September 30, 2025, we reclassified the remaining principal balance of our 2026 Notes totaling $40.2 million from long-term liabilities to current liabilities as the 2026 Notes mature within 12 months of the reporting date. See Note 7 – Convertible Notes, in the accompanying notes to the unaudited condensed consolidated financial statements included in Part I, Item 1, “Financial Statements (unaudited)” of this Quarterly Report on Form 10-Q.
We have entered into material purchase commitments with commercial manufacturers for the supply of HEPLISAV-B. As of September 30, 2025, our material non-cancelable purchase and other commitments for the supply of HEPLISAV-B totaled $83.2 million, which are expected to be paid through 2029.
In November 2025, we entered into the Vaxart Agreement. See Note 14 – Subsequent Events, in the accompanying notes to the unaudited condensed consolidated financial statements included in Part I, Item 1, “Financial Statements (unaudited)” of this Quarterly Report on Form 10-Q.
There were no other material changes to the contractual obligations previously disclosed in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
During the nine months ended September 30, 2025, there were no material changes to our market risk disclosures as set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2024.
ITEM 4. CONTROLS AND PROCEDURES
(a)Evaluation of disclosure controls and procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods
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specified in the Securities and Exchange Commission rules and forms and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can only provide reasonable, not absolute, assurance of achieving the desired control objectives.
Based on their evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report, our management, with participation of our Chief Executive Officer and our Chief Financial Officer, concluded that our disclosure controls and procedures are effective and were operating at the reasonable assurance level to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.
(b)Changes in internal controls
There have been no changes in our internal controls over financial reporting as defined in Rule 13a-15(f) under the Exchange Act during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time in the ordinary course of business, we receive claims or allegations regarding various matters, including employment, vendor and other similar situations in the conduct of our operations. We are not currently aware of any material legal proceedings involving the Company.
ITEM 1A. RISK FACTORS
Various statements in this Quarterly Report on Form 10-Q are forward-looking statements, including, but not limited to, statements concerning our future efforts to obtain regulatory approval, advance our collaborations and our pipeline, manufacture and commercialize approved products, or expectations about our anticipated expenses, revenues, liquidity and cash needs, as well as our plans and strategies. These forward-looking statements are based on current expectations and we assume no obligation to update this information. Numerous factors could cause our actual results to differ significantly from the results described in these forward-looking statements, including those in the risk factors that follow. We have marked with an asterisk (*) those risks described below that reflect material changes from, or additions to, the risks described under Part 1, Item 1A “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2024 that was filed with the Securities and Exchange Commission on February 20, 2025.
RISK FACTOR SUMMARY
Below is a summary of material factors that make an investment in our securities speculative or risky. Importantly, this summary does not address all of the risks and uncertainties that we face. Additional discussion of the risks and uncertainties summarized in this risk factor summary, as well as other risks and uncertainties that we face, can be found in the more detailed discussion that follows this summary, and the below summary is qualified in its entirety by that more complete discussion of such risks and uncertainties. You should carefully consider the risks and uncertainties described herein as part of your evaluation of an investment in our securities:
•HEPLISAV-B faces significant competition in the United States ("U.S."), the only geographic region in which we currently market it. Since this is our first marketed product, the timing of uptake and distribution efforts are unpredictable and there is a risk that we may not achieve and sustain commercial success for HEPLISAV-B.
•Our financial results may vary significantly from quarter to quarter or may fall below the expectations of investors or securities analysts, each of which may adversely affect our stock price.
•We have incurred annual net losses in most years since our inception and could continue to incur significant losses if we do not successfully commercialize HEPLISAV-B, launch new products and/or significant sales of our CpG 1018 adjuvant do not resume. Until we are able to generate significant revenues or achieve profitability through product sales on a consistent basis, we may require substantial additional capital to finance our operations.
•Many of our competitors have greater financial resources and expertise than we do. If we are unable to successfully compete with existing or potential competitors as a result of these disadvantages, we may be unable to generate sufficient, or any, revenues and our business will be harmed.
•We rely on our facility in Düsseldorf, Germany and third parties to supply materials or perform processes necessary to manufacture our products and our product candidates. We rely on a limited number of suppliers to produce the oligonucleotides we require for development and commercialization. Additionally, we have limited experience in manufacturing our products or product candidates in commercial quantities. With respect to HEPLISAV-B, we use a pre-filled syringe presentation of the vaccine and our ability to meet future demand will depend on our ability to manufacture or have manufactured sufficient supply in this presentation.
•As we continue to focus on the commercialization of our HEPLISAV-B vaccine and our CpG 1018 adjuvant, we may encounter difficulties in managing our commercial growth and expanding our operations successfully.
•As we continue to grow as a commercial organization and enter into supply agreements with customers, those supply agreements will have obligations to deliver product that we are in part reliant upon third parties to manufacture on our behalf.
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•We face uncertainty regarding coverage, pricing and reimbursement and the practices of third-party payors, which may make it difficult or impossible to sell certain of our products or product candidates on commercially reasonable terms.
•We are subject to ongoing U.S. Food and Drug Administration (“FDA”), the European Union ("EU") and comparable foreign post-marketing obligations concerning HEPLISAV-B, which may result in significant additional expense, and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated regulatory issues with HEPLISAV-B. If HEPLISAV-B or any products we develop are not accepted by the market or if regulatory authorities limit our labeling indications, require labeling content that diminishes market uptake of HEPLISAV-B or any other products we develop, or limit our marketing claims, we may be unable to generate significant future revenues, if any.
•HEPLISAV-B and all of our clinical programs rely on oligonucleotide toll-like receptor (“TLR”) agonists. In the event of serious adverse events relating to TLR agonists, we may be required to reduce the scope of, or discontinue, our operations, or reevaluate the viability of strategic alternatives.
•HEPLISAV-B is subject to regulatory obligations and continued regulatory review, and if we receive regulatory approval for our other product candidates, we will be subject to ongoing FDA and foreign regulatory obligations and continued regulatory review for such products.
•Regulatory authorities may require more clinical trials for our product candidates than we currently expect or are conducting before granting regulatory approval, if regulatory approval is granted at all. Our clinical trials may be extended which may lead to substantial delays in the regulatory approval process for our product candidates and may impair our ability to generate revenues.
•Clinical trials for our commercial product and product candidates are expensive and time consuming, may take longer than we expect or may not be completed at all, and have uncertain outcomes.
•A key part of our business strategy for products in development is to establish collaborative relationships to help fund or manage development and commercialization of our product candidates and research programs. We may not succeed in establishing and maintaining collaborative relationships, which may significantly limit our ability to continue to develop and commercialize those products and programs, if at all.
•As we plan for the broader commercialization of our HEPLISAV-B vaccine and for the requisite capacity to manufacture our CpG 1018 adjuvant, our financial commitments for manufacturing and supply capacity might outpace actual demand for our products.
•We may develop, seek regulatory approval for and market HEPLISAV-B or any other product candidates outside of the U.S., the EU and the United Kingdom ("UK"), requiring a significant additional commitment of resources. Failure to successfully manage our international operations could result in significant unanticipated costs and delays in regulatory approval or commercialization of our products or product candidates.
•We rely on clinical research organizations (“CROs”) and clinical sites and investigators for our clinical trials. If these third parties do not fulfill their contractual obligations or meet expected deadlines, our planned clinical trials may be delayed and we may fail to obtain the regulatory approvals necessary to commercialize our product candidates.
•As a biopharmaceutical company, we engage CROs to conduct clinical studies, and failure by us or our CROs to conduct a clinical study in accordance with good clinical practices (“GCP”) standards and other applicable regulatory requirements could result in disqualification of the applicable clinical trial from consideration in support of approval of a potential product.
•If third parties assert that we have infringed their patents or other proprietary rights or challenge our patents or other proprietary rights, we may become involved in disputes and litigation that would be costly, time consuming and have a negative impact on the commercialization of our current products and delay or prevent development or commercialization of our product candidates.
•As part of our strategy, we have obtained rights to vaccine candidates or technology from other parties, and we may acquire or obtain rights to other vaccine candidates or technology in the future. Any such agreements or transactions may not result in any of the benefits anticipated from such arrangements, which could adversely affect our ability to develop and commercialize potential future products.
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•Our stock price is subject to volatility, and your investment may suffer a decline in value.
•Future sales of our common stock or the perception that such sales may occur in the public market could cause our stock price to fall.
•Servicing our Convertible Notes requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt. Conversion of the Convertible Notes may dilute the ownership interest of our stockholders or may otherwise depress the price of our common stock.
•The loss of key personnel could delay or prevent achieving our objectives. In addition, our continued growth to support commercialization may result in difficulties in managing our growth and expanding our operations successfully.
•If our information technology systems or those of third parties upon which we rely, or our data are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse consequences.
Risks Related to our Business and Capital Requirements
HEPLISAV-B faces significant competition in the U.S., the only geographic region in which we currently market it. Since this is our first marketed product, the timing of uptake and distribution efforts are unpredictable and there is a risk that we may not achieve and sustain commercial success for HEPLISAV-B.*
We have established sales, marketing and distribution capabilities and commercialized HEPLISAV-B in the U.S. We have also received approval in the EU and the UK for HEPLISAV-B. Successful commercialization of HEPLISAV-B in these regions or elsewhere, to the extent we pursue such efforts, will require significant resources and time, and there can be no certainty that we will succeed in these efforts. While our personnel are experienced with respect to marketing of healthcare products, because HEPLISAV-B is our first marketed product, the potential uptake of the product through distribution, and the timing, trajectory, rate and sustainability for growth in sales is unpredictable, and we may not be successful in commercializing HEPLISAV-B in the long term. In particular, successful commercialization of HEPLISAV-B will require that we continue to negotiate and enter into contracts with wholesalers, distributors, group purchasing organizations, and other parties, and that we maintain those contractual relationships. There is a risk that we may fail to complete or maintain some or all of these important contracts on favorable terms or at all, or that in a potentially evolving reimbursement environment, our efforts may fail to overcome established competition at favorable pricing, or at all.
Although we have had some success developing our field sales force following the launch of HEPLISAV-B, there is no guarantee that we will be able to generate sales at the same or improved rates going forward, if at all. In addition, retention of capable sales personnel may be more difficult for us compared to our competitors, as we focus on a single product offering. We must retain our sales force in order for HEPLISAV-B to maintain or expand its commercial presence.
Moreover, we expect that we will need to divert resources in order to successfully market, sell and distribute HEPLISAV-B for use with dialysis patients, one of our targeted patient populations. We do not yet have approval to market the regimen for dialysis. In the second quarter of 2024, the FDA issued a Complete Response Letter (“CRL”) for the supplemental Biologics License Application (“sBLA”) to include a four-dose regimen for adults on hemodialysis in the U.S. label, and we are exploring approaches to address the deficiencies noted in the CRL. In the fourth quarter of 2024, we received feedback from the FDA regarding the potential to conduct an observational retrospective cohort study to support our sBLA filing for adults on hemodialysis. In the first quarter of 2025, we received feedback from the FDA that our proposed patient database may be acceptable for the observational retrospective cohort study, and we are engaging with the FDA to finalize the study protocol. We may be unsuccessful in conducting an observational retrospective cohort study, may not successfully resubmit our sBLA for a four-dose regimen for adults on hemodialysis, and may never obtain FDA approval for such indication, which would limit our addressable market and revenue. Although the Centers for Disease Control and Prevention (“CDC”) and the CDC’s Advisory Committee on Immunization Practices (“ACIP”) recommend that all adults aged 19-59, including patients on dialysis, receive hepatitis B vaccinations, our predictions of how many of those patients actually receive HEPLISAV-B may be inaccurate. In addition, the recent replacement of all of the members of the ACIP may result in future changes to such recommendation. Similarly, vaccine skepticism and disinformation may impact the willingness of patients to consider hepatitis B vaccination and may require more direct to consumer promotion than has been historically necessary.
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In addition to the risks with employing and maintaining our own commercial capabilities and with contracting, other factors that may inhibit our efforts to successfully commercialize HEPLISAV-B include:
•whether we are able to continue recruiting and retaining adequate numbers of effective sales and marketing personnel;
•whether we are able to access key health care providers to discuss HEPLISAV-B;
•whether we can continue to compete successfully as a relatively new entrant in established distribution channels for vaccine products; and
•whether we will maintain sufficient financial resources to cover the costs and expenses associated with sustaining a capable sales and marketing organization and related commercial infrastructure.
If we are not able to enter new markets ourselves, we may be required to collaborate or partner HEPLISAV-B with a third-party pharmaceutical or biotechnology company with existing products. To the extent we collaborate or partner, as we previously did for HEPLISAV-B distribution in Germany, the product’s financial value will be shared with another party and we will need to establish and maintain a successful collaboration arrangement, and we may not be able to enter into these arrangements on acceptable terms, in a timely manner, or at all, in order to establish HEPLISAV-B in these potential new markets. To the extent that we enter into co-promotion or other arrangements, any revenues we receive will depend upon the efforts of third parties, which may not be successful and are only partially in our control. In that event, our product revenues may be lower than if we marketed and sold our products directly with the highest priority, and we may be required to reduce or eliminate much of our commercial infrastructure and personnel as a result of such collaboration or partnership.
Governments influence the price of medicinal products in the EU through their pricing and reimbursement rules and control of national healthcare systems that fund a large part of the cost of those products to consumers. Even though we have been granted a marketing authorization in the EU for HEPLISAV-B, we have yet to obtain broad reimbursements and pricing approval in any EU Member State or the UK, and we have not yet achieved significant sales in either jurisdiction. Some jurisdictions operate positive and negative list systems under which products may only be marketed once a reimbursement price has been agreed. To obtain reimbursement or pricing approval, some of these countries may require the completion of clinical trials that compare the cost-effectiveness of a particular product candidate to currently available therapies. Other EU Member States allow companies to fix their own prices for medicines, but monitor and control company profits. Any delay in being able to market our products in the EU, the UK or elsewhere may adversely affect our business and financial condition.
If we, or any future partners, are not successful in setting our marketing, pricing and reimbursement strategies, recruiting and maintaining effective sales and marketing personnel or building and maintaining the infrastructure to support commercial operations, through distributors or otherwise, in the U.S. or elsewhere, we will have difficulty successfully commercializing HEPLISAV-B, which would adversely affect our business and financial condition.
Our financial results may vary significantly from quarter to quarter or may fall below the expectations of investors or securities analysts, each of which may adversely affect our stock price.
Numerous factors, many of which are outside our control, may cause or contribute to significant fluctuations in our quarterly and annual operating results. For example, during the year ended December 31, 2022, we recognized $587.7 million of CpG 1018 adjuvant revenue. However, our CpG 1018 adjuvant supply agreements expired at the end of 2022, and as a result, we did not recognize CpG 1018 adjuvant revenue for the years ended December 31, 2024 and December 31, 2023, nor for the nine months ended September 30, 2025. Similarly, if demand for HEPLISAV-B decreases from recent trends for any reason, that could also cause unexpected fluctuations in our quarterly and annual operating results.
The occurrence and timing of any transfer of control of product sold to customers can also be difficult to predict, and the recognition of revenue can vary widely depending on timing of product deliveries and satisfaction of other obligations. As an example, any future revenue we do receive from sales of our CpG 1018 adjuvant has been and will continue to be difficult to predict, if it materializes at all. Historically, we generally required customers to place orders for CpG 1018 adjuvant with at least six months lead time and to make an advance payment toward the finished order. Where we receive such advance payments, we record such payments as deferred revenue until we have delivered the adjuvant and met all criteria to recognize revenue. In accordance with our stated revenue policy, we historically recorded revenue for these contracts upon meeting all of the criteria for revenue recognition under Accounting Standards Codification 606, which includes, among other criteria, the transfer of control for CpG 1018 adjuvant to our customer. During the years ended December 31, 2024 and December 31, 2023, we did not receive any advanced payments from any of our customers
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to purchase CpG 1018 adjuvant. Our collaborators in many cases have purchase agreements with government agencies. If our collaborators do not receive payment from these agencies for any past or future adjuvant orders, our ability to collect our own receivables may be adversely affected. For example, as of December 31, 2024, we had recorded an allowance for doubtful accounts of $12.3 million in connection with our accounts receivable balance due from Bio E, which was determined by assessing changes in Bio E’s credit risk, contemplation of ongoing negotiations relating to an amendment to the supply agreement with Bio E, and Bio E’s dependence on cash collections from the Government of India, which did not materialize. Bio E did not receive any payments from the Government of India for its CORBEVAX product by August 15, 2025. Accordingly, no accounts receivable is recorded from Bio E as of September 30, 2025.
We have in the past, and may in the future, adjust delivery dates, allow cancellations or give concessions on outstanding receivables in certain circumstances to better enable our customers to meet their obligations, which can impact the timing or amount of our revenue recognition, cash collections and transfer of control. For example, in August and October 2022, we entered into amendments to our Supply Agreement, dated June 29, 2021, with Zhejiang Clover Biopharmaceuticals, Inc. and Clover Biopharmaceuticals (Hong Kong) Co., Limited (the "Clover Supply Agreement"), which, among other things, modified the scope of the Clover Supply Agreement to reduce certain quantities of CpG 1018 adjuvant deliverable under the agreement and/or reduce amounts receivable, which we originally intended to deliver in accordance with a purchase order previously issued by Clover, and apply prepayments Clover previously made to us as payment for portions of pending outstanding purchase orders. In January 2023, we entered into another amendment to the Clover Supply Agreement to modify the price per dose of CpG 1018 adjuvant paid by Clover for adjuvant used in finished vaccine doses sold through government procurement programs relating to the booster program promoted by the China National Health Commission. During the nine months ended September 30, 2025, we recorded an allowance for doubtful accounts of approximately $11.0 million relating to the contract asset recognized for Clover. This determination was based on our evaluation of credit risk associated with Clover, driven by the formal termination by the Global Alliance for Vaccines and Immunization (“GAVI”) of its advanced purchase agreement option with Clover on April 24, 2025, Clover’s recent write-down of the carrying value of its CpG 1018 Materials, and Clover's liquidity position, as reflected by cash and cash equivalents reported in Clover’s audited consolidated statement of financial position as of December 31, 2024.
In addition, in April 2023, we entered into the Bio E Amendment No. 3 and the CEPI-Bio E Assignment Agreement, pursuant to which CEPI forgave amounts outstanding relating to the Bio E CEPI Advance Payments and assumed our previous rights to collect $47.4 million of Bio E accounts receivable. Among other things, the CEPI-Bio E Assignment Agreement resulted in no accounts receivable from Bio E, the derecognition of $47.4 million CEPI accrual in connection with the Bio E CEPI Advance Payments, and certain additional future payments contingent on Bio E’s receipt of payments from the Government of India associated with its CORBEVAX product on or before August 15, 2025, which did not materialize.
Moreover, our revenue or operating expenses in one period may be disproportionately higher or lower relative to the others due to, among other factors, revenue fluctuations or increases in expenses as we invest in our pipeline. We may also incur significant expenses in any given reporting period related to shareholder engagement matters, including, without limitation, fees for legal, financial and other professional advisors. Accordingly, comparing our operating results on a period-to-period basis may not be meaningful, and investors should not rely on any particular past results as an indication of our future performance. If such fluctuations occur or if our operating results deviate from our expectations or the expectations of investors or securities analysts, our stock price may be adversely affected.
We have incurred annual net losses in most years since our inception and could continue to incur significant losses if we do not successfully commercialize HEPLISAV-B, launch new products and/or significant sales of our CpG 1018 adjuvant do not resume.
Prior to January 1, 2021, we had incurred losses in each year since we commenced operations in 1996. While we recognized revenue for the years ended December 31, 2021, 2022 and 2024, we recognized a net income of $26.9 million and a net loss of $50.5 million for the three and nine months ended September 30, 2025, respectively. As of September 30, 2025, we had an accumulated deficit of $953.7 million.
With our investment in the launch and commercialization of HEPLISAV-B in the U.S. and advancing our clinical trials in different indications, we have in the past, and could in the future, incur operating losses. Our expenses have increased substantially as we maintain our HEPLISAV-B commercial infrastructure, including investments in internal infrastructure to support our investments in manufacturing and supply chain commitments to maintain commercial supply of HEPLISAV-B. Further, we expect to increase research and development costs as we invest in our pipeline. We are already advancing a multi-program clinical pipeline leveraging CpG 1018 adjuvant to develop improved vaccines in indications with unmet medical needs including a Phase 1/2 clinical trial for shingles and additional clinical and manufacturing activities, including a Phase 2 clinical trial initiated in the third quarter of 2025 for plague, in collaboration with and fully funded by the U.S. Department of Defense (“DoD”). We expect research and development costs to increase further if we add additional programs to our pipeline. If we are not able to successfully execute our development plans to
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support advancement of our clinical pipeline on our expected timelines, we will not be able to generate the expected revenue streams from these programs, which would significantly harm our business prospects.
Sales of CpG 1018 adjuvant generated significant revenue during the COVID-19 pandemic, but we do not currently expect such revenues to continue in the long term, and we did not recognize any CpG 1018 adjuvant revenue in 2024 or during the nine months ended September 30, 2025. The timing for uptake of our products in the U.S. and abroad may further affect costs or losses related to commercialization. Due to the numerous risks and uncertainties associated with developing and commercializing vaccine products or other products we may choose to offer in the future, we are unable to predict the extent of any future losses or when, if ever, we will become profitable on an annual recurring basis, or, that if we are able to reach consistent profitability that it will be sustainable for any period of time.
Many of our competitors have greater financial resources and expertise than we do. If we are unable to successfully compete with existing or potential competitors as a result of these disadvantages, we may be unable to generate sufficient, or any, revenues and our business will be harmed.
We compete with pharmaceutical companies, biotechnology companies, academic institutions and research organizations, in developing and marketing vaccines and adjuvants. For example, HEPLISAV-B competes in the U.S. with established hepatitis B vaccines marketed by Merck and GlaxoSmithKline plc (“GSK”), and with vaccines from those companies as well as several additional established pharmaceutical companies who market abroad. There are also modified schedules of conventional hepatitis B vaccines for limited age ranges that are approved in the U.S., the EU and the UK. Competition in European markets could affect our success. In addition, HEPLISAV-B competes against Twinrix, a bivalent vaccine marketed by GSK for protection against hepatitis B and hepatitis A.
We are also in competition with companies developing vaccines and vaccine adjuvants, generally including, among others, GSK, Pfizer, Inc., Sanofi S.A., Merck, Bavarian Nordic A/S, Emergent BioSolutions, Inc., Novavax, Inc., Medicago Inc., Valneva, AstraZeneca plc, Moderna, Inc., Johnson & Johnson, BioNTech SE and Curevo Vaccine. We will likely compete with several of these companies in the hepatitis space, shingles space, and other spaces occupied by any other product candidates we ultimately choose to advance through our pipeline in the future.
Products in our clinical pipeline, if approved, will also face competition from competitors who have competing clinical programs or already approved products. Existing and potential competitors or other market participants may also compete with us for qualified commercial, scientific and management personnel, as well as for technology that would otherwise be advantageous to our business. Our success in developing marketable products and achieving a competitive position will depend, in part, on our ability to attract and retain qualified personnel in the near-term, particularly with respect to HEPLISAV-B commercialization. If we do not succeed in attracting new personnel and retaining and motivating existing personnel, our operations may suffer and we may be unable to properly manage our business, obtain financing as needed, enter into collaborative arrangements, advance or sell our product candidates or generate revenues.
We rely on our facility in Düsseldorf, Germany and third parties to supply materials or perform processes necessary to manufacture our products and our product candidates. We rely on a limited number of suppliers to produce the oligonucleotides we require for development and commercialization. Additionally, we have limited experience in manufacturing our products or product candidates in commercial quantities. With respect to HEPLISAV-B, we use a pre-filled syringe presentation of the vaccine and our ability to meet future demand will depend on our ability to manufacture or have manufactured sufficient supply in this presentation.
We rely on our facility in Düsseldorf and third parties to perform the multiple processes involved in manufacturing hepatitis B surface antigen for use in HEPLISAV-B, the combination of the oligonucleotide and the antigens, and formulation, fill and finish. We may continue to do the same for any additional products we might add in the future through natural internal expansion of our pipeline, or in transactions with an external third-party or parties. The FDA approved our pre-filled syringe presentation of HEPLISAV-B in 2018 and we expect such presentation will be the sole presentation for HEPLISAV-B going forward. We have limited experience in manufacturing and supplying this presentation ourselves, and rely on a contract manufacturer to do so. Our contract manufacturer is the only approved provider that we have, and there can be no assurance that we or they can successfully manufacture sufficient quantities of pre-filled syringes in compliance with good manufacturing practice ("GMP") in order to meet market demand, whether because of problems with our supplier’s own operations, operations of its sub-suppliers, issues with downstream supply chains or otherwise. If our contract manufacturer is unable to source components needed to complete fill and finish of our pre-filled syringes, we may be required to identify a second source which would have associated costs and regulatory requirements. Qualifying a second source could take more than a year to accomplish. If we are unable to do all this, on a timely basis or at all, our HEPLISAV-B sales could be materially and adversely impacted.
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Historically, we have also relied on a limited number of suppliers to produce oligonucleotides for clinical trials and a single supplier to produce (i) our CpG 1018 adjuvant for manufacture of HEPLISAV-B and for sale to our collaborators and (ii) our pre-filled syringe presentation. In 2021, we qualified a second supplier to manufacture CpG 1018 adjuvant for our COVID business. If we are unable to maintain our existing suppliers for CpG 1018 adjuvant, we would have to establish an alternate qualified manufacturing capability ourselves, which would result in significant additional operating costs and delays in manufacturing HEPLISAV-B, or CpG 1018 adjuvant, and developing and commercializing our, and potentially our collaborators’, product candidates. We or other third parties may not be able to produce product at a cost, quantity and quality that are available from our current third-party suppliers, or at all.
In countries outside of the U.S., we may not be able to comply with comparable foreign regulations, and our manufacturing process may be subject to delays, disruptions or quality control/quality assurance problems. Noncompliance with these regulations or other problems with our manufacturing process may limit or disrupt the commercialization of our products or our and our collaborators’ product candidates and could result in significant expense.
As we continue to focus on the commercialization of our HEPLISAV-B vaccine and our CpG 1018 adjuvant, we may encounter difficulties in managing our commercial growth and expanding our operations successfully.
As our commercial operations expand, we expect that we will also need to manage additional relationships with various third parties, including sole source suppliers, distributors, collaboration partners, wholesalers and hospital customers. Future growth will impose significant added responsibilities on our organization, in particular on management. Our future financial performance and our ability to successfully commercialize our HEPLISAV-B vaccine and CpG 1018 adjuvant or any new products, and to compete effectively will depend, in part, on our ability to manage any future growth effectively. To that end, we may not be able to manage our growth efforts effectively, and hire, train, retain and integrate additional management, administrative and sales and marketing personnel, or secure sufficient or timely supply from third party service and product providers. Any failure to accomplish any of these activities could prevent us from successfully increasing or maintaining the same level of commercial growth as we have seen in the past.
If HEPLISAV-B or any products we develop are not accepted by the market or if regulatory authorities limit our labeling indications, require labeling content that diminishes market uptake of HEPLISAV-B or any other products we develop, or limit our marketing claims, we may be unable to generate significant future revenues, if any.
Even if we obtain regulatory approval for our product candidates, such as our U.S., EU and the UK approvals of HEPLISAV-B, and are able to commercialize them as we have with HEPLISAV-B, our products may not gain market acceptance among physicians, patients, healthcare payors and the medical community.
The degree of market acceptance of HEPLISAV-B and any of our future approved products will depend upon a number of factors, including:
•the indication for which the product is approved and its approved labeling;
•the presence of other competing approved products;
•the potential advantages of the product over existing and future treatment methods;
•the relative convenience and ease of administration of the product;
•the strength of our sales, marketing and distribution efforts;
•the price and cost-effectiveness of the product; and
•third-party coverage and adequate reimbursement and the willingness of patients to pay out-of-pocket in the absence of sufficient reimbursement by third-party payors.
Market acceptance of vaccines has been negatively impacted in recent years due to increasing vaccine skepticism and disinformation. The potential for individuals with anti-vaccine views to hold governmental and other roles of influence and for disinformation campaigns to negatively impact potential market acceptance for HEPLISAV-B and any of our future approved products may slow our sales growth and weaken our market prospects.
The FDA or other regulatory authorities could limit the labeling indication for which our product candidates may be marketed or could otherwise limit marketing efforts for our products. If we are unable to achieve approval or successfully market any of our products or product candidates, or marketing efforts are restricted by regulatory limits, our ability to generate revenue could be significantly impaired.
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As we continue to grow as a commercial organization and enter into supply agreements with customers, those supply agreements will have obligations to deliver product that we are in part reliant upon third parties to manufacture on our behalf.
As our commercial business begins to expand in connection with commercial sales of HEPLISAV-B or CpG 1018 adjuvant, as applicable, the contracts we enter into with our customers will generally carry delivery obligations that require us to deliver product in certain quantities and meet certain quality thresholds, among other things, all within specified timeframes. If, for any reason, whether due to reliance on third-party manufacturers or otherwise, we are unable to deliver timely, compliant products to our customers in quantities that meet our contractual obligations, we could be subject to lost revenue, contractual penalties, suits for damages, harm to our reputation or other problems that could materially and adversely affect our business. To the extent we add new products in the future, these risks could be exacerbated by the added complexity of managing multiple product lines.
We face uncertainty regarding coverage, pricing and reimbursement and the practices of third-party payors, which may make it difficult or impossible to sell certain of our products or product candidates on commercially reasonable terms.
In both domestic and foreign markets, our ability to achieve profitability will depend in part on the negotiation of a favorable price, as well as the availability of coverage and adequate reimbursement, from third-party payors, in particular for HEPLISAV-B, where existing products are already marketed. In the U.S., pricing for hepatitis B vaccines is currently stable and reimbursement is favorable as we believe private and public payors recognize the value of prophylaxis in this setting given the high costs of potential morbidity and mortality, and we have achieved coverage with most third-party payors. However, there is a risk that some payors may limit coverage to specific products on an approved list, also known as a formulary, which might not include HEPLISAV-B. Reimbursement or pricing in jurisdictions outside the U.S. may be less favorable. Thus, there can be no assurance that HEPLISAV-B will achieve and sustain stable pricing and favorable reimbursement. Our ability to successfully obtain and retain market share and achieve and sustain profitability will be significantly dependent on the market’s acceptance of a price for HEPLISAV-B sufficient to achieve profitability, and future acceptance of such pricing. If we are not able to successfully retain and increase HEPLISAV-B market share, it may fail to reach its full revenue potential, which would adversely affect our financial results.
Third-party payors are increasingly challenging the price and cost-effectiveness of medical products and services, and pricing, as well as coverage and reimbursement decisions, may not allow our future products to compete effectively with existing competitive products. Because we intend to offer products, if approved, that involve new technologies, the willingness of third-party payors to reimburse for our products is uncertain. We will have to charge a price for HEPLISAV-B or any other products we commercialize that is sufficient to enable us to recover our considerable investment in product development and our operating costs. Further, coverage policies and third‑party reimbursement rates may change at any time. Therefore, even if favorable coverage and reimbursement status is attained, less favorable coverage policies and reimbursement rates may be implemented in the future. For example, the current administration may be more skeptical of the safety and efficacy of vaccine products, which could lead to increased regulatory scrutiny and more restrictive coverage policies regarding our products and product candidates. Adequate third-party payor reimbursement may not be available to enable us to maintain price levels sufficient to achieve or maintain profitability, and such unavailability could harm our future prospects and reduce our stock price.
The UK and many EU Member States periodically review their reimbursement procedures for medicinal products, which could have an adverse impact on reimbursement status. We expect that legislators, policymakers and healthcare insurance funds in European countries will continue to propose and implement cost-containing measures, such as lower maximum prices, lower or lack of reimbursement coverage and incentives to use cheaper, usually generic, products as an alternative to branded products, and/or branded products available through parallel import to keep healthcare costs down. Moreover, in order to obtain reimbursement for our products in some European countries, including some EU Member States, we may be required to compile additional data comparing the cost-effectiveness of our products to other available therapies. This Health Technology Assessment ("HTA") of medicinal products is becoming an increasingly common part of the pricing and reimbursement procedures in some EU Member States, including those representing the larger markets. The HTA process is the procedure to assess therapeutic, economic and societal impact of a given medicinal product in the national healthcare systems of the individual country. The outcome of an HTA will often influence the pricing and reimbursement status granted to these medicinal products by the competent authorities of individual EU Member States. The extent to which pricing and reimbursement decisions are influenced by the HTA of the specific medicinal product currently varies between EU Member States.
In December 2021, Regulation No 2021/2282 on HTA amending Directive 2011/24/EU, was adopted in the EU. This Regulation, which entered into force in January 2022 and applies as of January 12, 2025, is intended to boost cooperation among EU Member States in assessing health technologies, including new medicinal products, and providing the basis for cooperation at EU level for joint clinical assessments in these areas. The Regulation permits EU Member
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States to use common HTA tools, methodologies, and procedures across the EU, working together in four main areas, including joint clinical assessment of the innovative health technologies with the most potential impact for patients, joint scientific consultations whereby developers can seek advice from HTA authorities, identification of emerging health technologies to identify promising technologies early, and continuing voluntary cooperation in other areas. Individual EU Member States continue to be responsible for assessing non-clinical (e.g., economic, social, ethical) aspects of health technologies, and making decisions on pricing and reimbursement. If we are unable to maintain favorable pricing and reimbursement status in EU Member States for product candidates that we may successfully develop and for which we may obtain regulatory approval, any anticipated revenue from and growth prospects for those products in the EU could be negatively affected. In light of the fact that the UK has left the EU, Regulation No 2021/2282 on HTA does not apply in the UK. However, the UK Medicines and Healthcare products Regulation Agency (“MHRA”) is working with UK HTA bodies and other national organizations, such as the Scottish Medicines Consortium (“SMC”), the National Institute for Health and Care Excellence (“NICE”), and the All-Wales Medicines Strategy Group, to introduce new pathways supporting innovative approaches to the safe, timely and efficient development of medicinal products. For example, in March 2021, the UK introduced the Innovative Licensing and Access Pathway (“ILAP”) which brings together the MHRA, NICE, SMC and the All Wales Therapeutics and Toxicology Centre, to accelerate time to market for certain innovative products. The ILAP temporarily stopped accepting applications on November 20, 2024, and applications under a relaunched ILAP reopened in March 2025 with changes including improvements to interaction with the National Health Service and an amended eligibility and selection criteria.
Legislators, policymakers and healthcare insurance funds in the EU and the UK may continue to propose and implement cost-containing measures to keep healthcare costs down, particularly due to the financial strain that COVID-19 placed on national healthcare systems of European countries. These measures could include limitations on the prices we would be able to charge for product candidates that we may successfully develop and for which we may obtain regulatory approval or the level of reimbursement available for these products from governmental authorities or third-party payors. Further, an increasing number of EU and other foreign countries use prices for medicinal products established in other countries as “reference prices” to help determine the price of the product in their own territory. Consequently, a downward trend in prices of medicinal products in some countries could contribute to similar downward trends elsewhere.
We are subject to ongoing FDA, EU and comparable foreign post-marketing obligations concerning HEPLISAV-B, which may result in significant additional expense, and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated regulatory issues with HEPLISAV-B.
Our HEPLISAV-B regulatory approval in the U.S. is subject to certain post-marketing obligations and commitments to the FDA. For example, we were required to conduct an observational comparative study of HEPLISAV-B to Engerix-B to assess occurrence of acute myocardial infarction (“AMI”). This post-marketing study was initiated in August 2018 and concluded in November 2020. While the results of the study, announced in April 2021, indicated that there was no increased risk of AMI associated with vaccination with HEPLISAV-B compared to Engerix-B, we may be required to conduct further studies on HEPLISAV-B or our other product candidates in the future. Also, we received data from the autoimmune portion of our observational study, and the data indicated no association between HEPLISAV-B and any of the studied autoimmune diseases. In addition, we conducted a pregnancy registry study to provide information on outcomes following pregnancy exposure to HEPLISAV-B and submitted the information to the FDA in December 2023. In May 2024, the FDA released us from the post-marketing commitment related to the pregnancy registry study. Failure to complete any future post-marketing obligation to the satisfaction of the FDA could result in withdrawal of our biologics license application approval, which would have a material adverse effect on our business, results of operations, financial condition and prospects. As we advance our pipeline, similar studies may be required for other candidates. The results of post-marketing studies may also result in additional warnings or precautions for the HEPLISAV-B label or labels of any future products, if authorized, or expose additional safety concerns that may result in product liability and withdrawal of a product or products from the market, any of which would have a material adverse effect on our business, results of operations, financial condition and prospects.
Similar post-marketing obligations and commitments exist in the EU and the UK. For example, we are required to submit periodic safety update reports to the European Medicines Agency ("EMA") and the MHRA and to keep an up-to-date risk management plan that takes into account new information that may lead to a significant change in the risk/benefit profile of HEPLISAV-B. In addition, in accordance with our EU marketing authorization for HEPLISAV-B, HEPLISAV-B is subject to additional monitoring, meaning that it is monitored more intensively than other medicinal products. We may have similar obligations for future products if and when approved. Non-compliance with EU or the UK requirements regarding safety monitoring or pharmacovigilance can result in significant financial penalties.
In addition, the manufacturing processes, labelling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for HEPLISAV-B are subject to extensive and ongoing regulatory
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requirements in the U.S., the EU and the UK. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with current good manufacturing practices (“cGMP”), good clinical practices (“GCP”), International Conference on Harmonization guidelines, and good laboratory practices (“GLP”). If we are not able to meet and maintain regulatory compliance for HEPLISAV-B or any future product, if authorized, we may lose marketing approval and be required to withdraw our product. Withdrawal of our product would have a material adverse effect on our business.
HEPLISAV-B and all of our clinical programs rely on oligonucleotide TLR agonists. In the event of serious adverse events relating to TLR agonists, we may be required to reduce the scope of, or discontinue, our operations, or reevaluate the viability of strategic alternatives.
Our programs, including HEPLISAV-B, incorporate TLR9 agonist CpG oligonucleotides. If any of our product candidates in clinical trials or similar products from competitors or collaborators result in serious adverse events, we may be required to delay, discontinue or modify our clinical trials or our clinical trial strategy, or significantly reevaluate strategic alternatives. If a safety risk based on mechanism of action or the molecular structure were identified, it may hinder our ability to develop our product candidates or enter into potential collaboration or commercial arrangements. Rare diseases and a numerical imbalance in cardiac adverse events have been observed in patients in our clinical trials. If adverse events are found to relate to our TLR agonist as a whole, we may be required to significantly reduce or discontinue our operations.
HEPLISAV-B is subject to regulatory obligations and continued regulatory review, and if we receive regulatory approval for our other product candidates, we will be subject to ongoing FDA and foreign regulatory obligations and continued regulatory review for such products.
With respect to HEPLISAV-B and our other product candidates in development, we and our third-party manufacturers and suppliers are required to comply with applicable cGMP regulations and other international regulatory requirements. The regulations require that our products and product candidates be manufactured and records maintained in a prescribed manner with respect to manufacturing, testing and quality control/quality assurance activities. Manufacturers and suppliers of key components and materials must be named in a Biologics License Application (“BLA”) submitted to the FDA for any product candidate for which we are seeking FDA approval. Additionally, third-party manufacturers and suppliers and any manufacturing facility must undergo a pre-approval inspection before we can obtain marketing authorization for any of our product candidates. Even after a manufacturer has been qualified by the FDA, the manufacturer must continue to expend time, money and effort in the area of production and quality control to ensure full compliance with GMP. Manufacturers are subject to regular, periodic inspections by the FDA following initial approval. Further, to the extent that we contract with third parties for the manufacture of our products or product candidates, our ability to control third-party compliance with FDA requirements will be limited to contractual remedies and rights of inspection.
If, as a result of the FDA’s inspections, it determines that the equipment, facilities, laboratories or processes do not comply with applicable FDA regulations and conditions of product approval, the FDA may not approve the product or may suspend the manufacturing operations. If the manufacturing operations of any of the suppliers for our products or product candidates are suspended, we may be unable to generate sufficient quantities of commercial or clinical supplies of product to meet market demand, which would harm our business. In addition, if delivery of material from our suppliers is interrupted for any reason, we might be unable to ship our approved product for commercial supply or to supply our products in development for clinical trials. Significant and costly delays can occur if the qualification of a new supplier is required. Similar requirements and procedures apply outside of the U.S.
Failure to comply with regulatory requirements could prevent or delay marketing approval or require the expenditure of money or other resources to correct. Failure to comply with applicable requirements may also result in warning letters, fines, injunctions, civil penalties, recall or seizure of products, total or partial suspension of production, refusal of the government to renew marketing applications and criminal prosecution, any of which could be harmful to our ability to generate revenues and to our stock price.
Regulatory authorities may require more clinical trials for our product candidates than we currently expect or are conducting before granting regulatory approval, if regulatory approval is granted at all. Our clinical trials may be
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extended which may lead to substantial delays in the regulatory approval process for our product candidates and may impair our ability to generate revenues.
Our registration and commercial timelines depend on further discussions with regulatory authorities and requirements and any requests that they may make for additional data or completion of additional clinical trials. Any such requirements or requests could:
•adversely affect our ability to timely and successfully commercialize or market these product candidates;
•result in significant additional costs;
•potentially diminish any competitive advantages for those products;
•potentially limit the markets for those products;
•adversely affect our ability to enter into collaborations or receive milestone payments or royalties from potential collaborators;
•cause us to abandon the development of the affected product candidate; or
•limit our ability to obtain additional financing on acceptable terms, if at all.
Clinical trials for our commercial product and product candidates are expensive and time consuming, may take longer than we expect or may not be completed at all, and have uncertain outcomes.
Clinical trials, including post-marketing studies, to generate sufficient data to meet FDA and other regulatory authority requirements are expensive and time consuming, may take more time to complete than expected, may not be completed at all, and may not have favorable outcomes if they are completed. In addition, results from smaller, earlier stage clinical studies may not be representative of larger, controlled clinical trials that would be required in order to obtain regulatory approval of a product candidate.
Each of our clinical trials requires the investment of substantial planning, expense and time and the timing of the commencement, continuation and completion of these clinical trials may be subject to significant delays relating to various causes, including scheduling conflicts with participating clinicians and clinical institutions, difficulties in identifying and enrolling participants who meet trial eligibility criteria, failure of participants to complete the clinical trial, delay or failure to obtain Institutional Review Board (“IRB”), Ethics Committee or regulatory approval to conduct a clinical trial at a prospective site, unexpected adverse events and shortages of available vaccine or component supply. Participant enrollment is a function of many factors, including the size of the relevant population, the proximity of participants to clinical sites, the eligibility criteria for the trial, the existence of competing clinical trials and the availability of alternative or new treatments. Failure of one or more product candidates to successfully advance through to approval and licensure could result in the loss of unrecoverable costs expended and impact our ability to generate future revenue from such products, either of which, or both of which, could have an adverse impact on our business.
A key part of our business strategy for products in development is to establish collaborative relationships to help fund or manage development and commercialization of our product candidates and research programs. We may not succeed in establishing and maintaining collaborative relationships, which may significantly limit our ability to continue to develop and commercialize those products and programs, if at all.
We have and may in the future need to establish collaborative relationships to obtain domestic and/or international sales, marketing, research, development and distribution capabilities for our products or product candidates and our discovery research programs. Failure to obtain a collaborative relationship for those products or product candidates and programs in markets outside the U.S. requiring extensive sales efforts may significantly impair the potential for those products and programs and we may be required to raise additional capital to continue them. The process of establishing and maintaining collaborative relationships is difficult and time-consuming, and even if we establish such relationships, they may involve significant uncertainty, including:
•our partners may seek to renegotiate or terminate their relationships with us due to unsatisfactory clinical results, manufacturing issues, a change in business strategy, a change of control or other reasons;
•our perceived shortage of capital resources may impact the willingness of companies to collaborate with us;
•our contracts for collaborative arrangements are often terminable at will on written notice and may otherwise expire or terminate and we may not have alternative funding available;
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•our partners may choose to pursue alternative technologies, including those of our competitors;
•we may have disputes with a partner that could lead to litigation or arbitration;
•we have limited control over the decisions of our partners and they may change the priority of our programs in a manner that would result in termination of the agreement or add significant delay in the partnered program;
•our ability to generate future payments and royalties from our partners depends upon the abilities of our partners to establish the safety and efficacy of product candidates, obtain regulatory approvals and successfully manufacture and commercialize the products developed from product candidates;
•we or our partners may fail to properly initiate, maintain or defend our intellectual property rights, where applicable, or a party may use our proprietary information in such a way as to invite litigation that could jeopardize or potentially invalidate our intellectual property or other proprietary rights or expose us to potential liability;
•our partners may not devote sufficient capital or resources towards our product candidates; and
•our partners may not comply with applicable government regulatory requirements.
Supporting diligence activities conducted by potential collaborators and negotiating the financial and other terms of a collaboration agreement are long and complex processes with uncertain results. Despite our efforts, we may be unable to secure collaborative arrangements. If we are unable to establish and maintain collaborative relationships on acceptable terms or to successfully transition terminated collaborative agreements, we may have to delay or discontinue further development of one or more of our product candidates, undertake development and commercialization activities at our own expense or find alternative sources of capital.
Even when we are successful in entering into collaboration agreements, collaborations can involve greater uncertainty for us, as we have less control over certain aspects of our collaborative programs than we do over our solely-owned development and commercialization programs, and the financial terms upon which collaborators are willing to enter into such an arrangement cannot be certain. If any collaborator fails to fulfill its responsibilities in a timely manner, or at all, our research, clinical development, manufacturing or commercialization efforts pursuant to that collaboration could be delayed or terminated, or it may be necessary for us to assume responsibility for expenses or activities that would otherwise have been the responsibility of our collaborator.
For example, we are working to develop our CpG 1018 adjuvant as a premier vaccine adjuvant through research collaborations, partnerships and supply arrangements. Current relationships and efforts are focused on adjuvanted vaccines for COVID-19, plague and numerous other preclinical programs. For some of these relationships, our collaborators have primary responsibility for the development, conduct of clinical trials, and for seeking and obtaining regulatory approval of potential vaccines containing our adjuvant. We have limited or no control over our collaborators’ decisions, including the amount and timing of resources that any of these collaborators will dedicate to such activities. In circumstances where our collaborators do not purchase as much adjuvant as we anticipate or they delay placing orders or taking certain deliveries, there can be a negative impact on our revenue recognition. If a collaborator fails to conduct collaborative activities successfully, the development and commercialization of a vaccine could be delayed or may not occur at all. Lastly, the ability of our collaborators to deliver, sell and collect on receivables is not guaranteed and this could, in turn, impact our own ability to collect receivables.
Until we are able to generate significant revenues or achieve profitability through product sales on a consistent basis, we may require substantial additional capital to finance our operations.
As of September 30, 2025, we had $647.8 million in cash and cash equivalents, and marketable securities. Prior to January 1, 2021, we incurred net losses in each year since our inception. While we recognized revenue for the years ended December 31, 2021, 2022 and 2024, we recorded a net income of $26.9 million and a net loss of $50.5 million for the three and nine months ended September 30, 2025, respectively. As of September 30, 2025, we had an accumulated deficit of $953.7 million. We expect to continue to incur substantial expenses as we continue to invest in the commercialization and development of HEPLISAV-B and our CpG 1018 adjuvant, clinical trials for our pipeline candidates, and other development. If we cannot generate a sufficient amount of revenue from product sales, we may need to finance our operations through strategic alliance and licensing arrangements and/or future public or private debt and equity financings. Raising additional funds through the issuance of equity or debt securities could result in dilution to our
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existing stockholders, increased fixed payment obligations, or both. In addition, our Convertible Notes and other securities we issue in the future may have rights senior to those of our common stock and could include covenants that restrict our operations.
Our ability to raise additional capital in the equity and debt markets, should we choose to do so, is dependent on a number of factors, including, but not limited to, the market demand for our common stock, which itself is subject to a number of development and business risks and uncertainties, our creditworthiness and the uncertainty that we would be able to raise such additional capital at a price or on terms that are favorable to us. In addition, our ability to raise additional funds may be adversely impacted by deteriorating global economic conditions and disruptions to and volatility in the credit and financial markets in the U.S. and worldwide. Adequate financing may not be available to us on acceptable terms, or at all. If adequate funds are not available when needed, we may need to significantly reduce our operations while we seek strategic alternatives, which could have an adverse impact on our ability to achieve our intended business objectives and the value of our stock.
As we plan for the broader commercialization of our HEPLISAV-B vaccine and for the requisite capacity to manufacture our CpG 1018 adjuvant, our financial commitments for manufacturing and supply capacity might outpace actual demand for our products.
As we manage our production capabilities for HEPLISAV-B and CpG 1018 adjuvant to support recent market share gains and other initiatives, we have been, and in the future could be, required to make significant financial commitments at our contract manufacturing organizations (“CMOs”), including minimum purchase commitments and prepayments of purchase orders to facilitate the procurement of raw materials and the incurrence of various manufacturing costs. Because of minimum or advance purchase commitments and uncertainty about the expected demand for HEPLISAV-B or CpG 1018 adjuvant, the financial commitments we make to our CMOs to support manufacturing may not be recovered in their entirety, or at all, if our customers do not ultimately purchase from us at expected volumes, or other concessions are made by us. Capacity reservation fees are generally not recoverable if we do not use the capacity we have reserved as a result of lower than expected demand, or otherwise. Similarly, prepayments of purchase orders may not be recoverable if we do not ultimately require the entire volume subject to the applicable purchase order. As a result, we could end up making financial commitments that we never recover if demand for HEPLISAV-B or CpG 1018 adjuvant does not materialize in the volumes we are expecting or at all. This may require us to record certain charges or write-offs in one or more fiscal periods, which in turn could result in significant, unexpected fluctuations in our quarterly and annual operating results, and potentially have a material adverse effect on our results of operations, and financial condition.
For example, in August and October 2022, we entered into amendments to the Clover Supply Agreement, which, among other things, modified the scope of the Clover Supply Agreement to reduce certain quantities of CpG 1018 adjuvant that we originally intended to deliver in accordance with a purchase order previously issued by Clover. As a result of the concessions made in the amendments to the Clover Supply Agreement, prior financial commitments made to certain CMOs to manufacture quantities of CpG 1018 adjuvant to fulfill the original Clover purchase order, and reduced demand for CpG 1018 adjuvant, we recorded write-offs of $13.9 million of CpG 1018 adjuvant raw materials inventory and $20.4 million of finished goods inventory during the year ended December 31, 2022. Relating to our Bio E Supply Agreement, we entered into an amendment and an assignment agreement in April 2023, pursuant to which (i) CEPI forgave the entirety of remaining amounts outstanding relating to the Bio E CEPI Advance Payments for CpG 1018 Materials allocated to Bio E and has assumed our previous rights to collect $47.4 million of Bio E accounts receivable, (ii) we collected $14.5 million from Bio E, resulting in no accounts receivable balance as of December 31, 2024 and September 30, 2025, and (iii) we derecognized a $47.4 million CEPI accrual in connection with the Bio E CEPI Advance Payments. It is possible we may have similar write-offs in the future. During the nine months ended September 30, 2025, we recorded an allowance for doubtful accounts of approximately $11.0 million relating to the contract asset recognized for Clover. This determination was based on our evaluation of credit risk associated with Clover, driven by the formal termination by the GAVI of its advanced purchase agreement option with Clover on April 24, 2025, Clover’s recent write-down of the carrying value of its CpG 1018 Materials, and Clover's liquidity position, as reflected by cash and cash equivalents reported in Clover’s audited consolidated statement of financial position as of December 31, 2024.
We may develop, seek regulatory approval for and market HEPLISAV-B or any other product candidates outside of the U.S., the EU and the UK, requiring a significant additional commitment of resources. Failure to successfully manage our international operations could result in significant unanticipated costs and delays in regulatory approval or commercialization of our products or product candidates.
We may seek to introduce HEPLISAV-B, or any other product candidates we may develop, to various additional markets in or outside of the U.S., the EU and the UK. Developing, seeking regulatory approval for and marketing our product candidates in or outside of the U.S., the EU and the UK in jurisdictions where we don't currently
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have approval could impose substantial costs, impose burdens on our personnel, and divert management’s attention from domestic operations. International operations are subject to risk, including:
•the difficulty of managing geographically distant operations, including recruiting and retaining qualified employees, locating adequate facilities and establishing useful business support relationships in the local community;
•compliance with varying international regulatory requirements, laws and treaties;
•securing international distribution, marketing and sales capabilities upon favorable terms;
•adequate protection of our intellectual property rights;
•obtaining regulatory and pricing approvals at a level sufficient to justify commercialization;
•legal uncertainties and potential timing delays associated with tariffs, export licenses and other trade barriers;
•foreign tax compliance and diverse tax consequences;
•the fluctuation of conversion rates between foreign currencies and the U.S. dollar; and
•regional and geopolitical risks.
In the event that we determine to pursue commercialization of HEPLISAV-B outside the U.S., the EU and the UK, our opportunity will depend upon our receiving regulatory approval, which can be costly and time consuming, and there is a risk that one or more regulatory bodies may require that we conduct additional clinical trials and/or take other measures which will take time and require that we incur significant additional expense. In addition, we may not receive approval in one or more jurisdictions, even if we undertake these efforts.
The results of clinical trials conducted to support regulatory approval in one or more jurisdictions, and any failure or delay in obtaining regulatory approval in one or more jurisdictions, may have a negative effect on the regulatory approval process in other jurisdictions, including our existing regulatory approval in the U.S., the EU and UK. If we are unable to successfully manage our international operations, we may incur significant unanticipated costs and delays in regulatory approval or commercialization of our products or product candidates, which would impair our ability to generate revenues.
We rely on CROs and clinical sites and investigators for our clinical trials. If these third parties do not fulfill their contractual obligations or meet expected deadlines, our planned clinical trials may be delayed and we may fail to obtain the regulatory approvals necessary to commercialize our product candidates.
We rely on CROs, clinical sites and investigators for our clinical trials. If these third parties do not perform their obligations or meet expected deadlines our planned clinical trials may be extended, delayed, modified or terminated. While we maintain oversight over our clinical trials and conduct regular reviews of the data, we are dependent on the processes and quality control efforts of our third-party contractors to ensure that clinical trials are conducted properly and that detailed, quality records are maintained to support the results of the clinical trials that they are conducting on our behalf. Any extension, delay, modification or termination of our clinical trials or failure to ensure adequate documentation and the quality of the results in the clinical trials could delay or otherwise adversely affect our ability to commercialize our product candidates and could have a material adverse effect on our business and operations.
Global trade issues and changes in and uncertainties with respect to trade policies and export regulations, including import and export license requirements, trade sanctions, tariffs and international trade disputes, could increase our costs, reduce the competitiveness of our products and otherwise have a material adverse effect on our financial results, business and business prospects.*
The U.S. and other countries have imposed and may continue to impose new trade restrictions and export regulations, have levied tariffs and taxes on certain goods, and could continue to significantly increase tariffs on a broad array of goods, including pharmaceutical and biological products.
In April 2025, the U.S. government imposed a 10% baseline global tariff, and in August 2025, the U.S. government imposed higher “reciprocal” tariffs on numerous other territories, including EU Member States, with the potential for future increases or revisions.
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The U.S. government has also specifically stated that the pharmaceutical industry will be exempt from tariffs. We conduct business globally and our operations, including third-party suppliers, span numerous countries outside the U.S. subject to industry-specific tariffs, and the U.S. government has initiated a related investigation into the national security effects of imported pharmaceuticals and their ingredients. As such, we currently expect that the current pharmaceutical exemption will be short-lived and that such industry-specific pharmaceutical tariffs will be ultimately imposed by the U.S. government.
We rely on our facility in Düsseldorf, Germany and third parties to perform the multiple processes involved in manufacturing hepatitis B surface antigen for use in HEPLISAV-B, the manufacture and combination of the oligonucleotide with the antigens, and formulation, fill and finish. While we cannot at this time predict the ultimate impact of the proposed tariffs, or if they would apply to transactions between a parent company and its foreign subsidiary, we anticipate that that our margins could be adversely affected beginning as early as fiscal 2026, depending on the ultimate scope and duration of tariffs imposed. However, given the volatility and uncertainty regarding the scope and duration of such tariffs and other aspects of U.S. and foreign government trade policies, the ultimate impact on our operations and financial results remains uncertain and could be significant.
Such tariffs may result in additional costs on our business, including costs with respect to the items mentioned above upon which our business depends and may generally increase our manufacturing costs. In addition, such tariffs may increase our supply chain complexity and could also potentially disrupt our existing supply chain. Moreover, other governments have imposed and may continue to impose retaliatory tariffs, trade restrictions or trade barriers impacting HEPLISAV-B, which could impose additional costs and complexity on our business, including with respect to our planned commercialization of HEPLISAV-B.
Further, the continued threats of new or increased tariffs, sanctions, trade restrictions and trade barriers as well as ongoing changes in U.S. and foreign government trade policies, including potential modifications to existing international trade agreements, have had and may continue to have a generally disruptive impact on the global economy and, therefore, could negatively impact revenues from sales of HEPLISAV-B. Given the volatility and uncertainty regarding the scope and duration of such tariffs and other aspects of U.S. and foreign government trade policies, the ultimate impact on our operations and financial results is uncertain and could be significant in the future. In any event, further trade restrictions and export regulations, or new or increased tariffs, including further retaliatory measures, could increase our supply chain complexity and our manufacturing costs, decrease our gross margins, reduce the competitiveness of HEPLISAV-B, or restrict our ability to sell HEPLISAV-B in the EU or in other international markets where we may obtain approval of HEPLISAV-B, or restrict or increase our costs to purchase necessary equipment and supplies. Any of these factors could have a material adverse effect on our financial results, business and business prospects.
As a biopharmaceutical company, we engage CROs to conduct clinical studies, and failure by us or our CROs to conduct a clinical study in accordance with GCP standards and other applicable regulatory requirements could result in disqualification of the applicable clinical trial from consideration in support of approval of a potential product.
We are responsible for conducting our clinical trials consistent with GCP standards and for oversight of our vendors to ensure that they comply with such standards. We depend on medical institutions and CROs to conduct our clinical trials in compliance with GCP. To the extent that we or they fail to comply with GCP standards, fail to enroll participants for our clinical trials, or are delayed for a significant time in the execution of our trials, including achieving full enrollment, we may be affected by increased costs, program delays or both, which may harm our business.
Clinical trials must be conducted in accordance with FDA or other applicable foreign government guidelines and are subject to oversight by the FDA, other foreign regulatory authorities, IRBs and the Ethics Committees at the medical institutions where the clinical trials are conducted. In addition, clinical trials must be conducted with supplies of our product candidates produced under GMP and other requirements in foreign countries and may require large numbers of participants.
In addition, we obtain guidance from regulatory authorities on certain aspects of our clinical development activities and seek to comply with written guidelines provided by the authorities. These discussions and written guidelines are not binding obligations on the part of the regulatory authorities and the regulatory authorities may require additional patient data or studies to be conducted. Regulatory authorities may revise or retract previous guidance during the course of a clinical trial or after completion of the trial. The authorities may also disqualify a clinical trial from consideration in support of approval of a potential product if they deem the guidelines have not been met. The FDA or foreign regulatory authorities may determine our clinical trials or other data regarding safety, efficacy or consistency of manufacture or compliance with GMP regulations are insufficient for regulatory approval.
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The FDA or other foreign regulatory authorities or we ourselves could delay, suspend or halt our clinical trials of a product candidate for numerous reasons, including with respect to our product candidates and those of our partners in combination agent studies:
•deficiencies in the trial design;
•deficiencies in the conduct of the clinical trial including failure to conduct the clinical trial in accordance with regulatory requirements or clinical protocols;
•deficiencies in the clinical trial operations or trial sites resulting in the imposition of a clinical hold;
•a product candidate may have unforeseen adverse side effects, including fatalities, or a determination may be made that a clinical trial presents unacceptable health risks;
•the time required to determine whether a product candidate is effective may be longer than expected;
•fatalities or other adverse events arising during a clinical trial that may not be related to clinical trial treatments;
•a product candidate or combination study may appear to be no more effective than current therapies;
•the quality or stability of a product candidate may fail to conform to acceptable standards;
•the inability to produce or obtain sufficient quantities of a product candidate to complete the trials;
•our inability to reach agreement on acceptable terms with prospective CROs and trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;
•our inability to obtain IRB or Ethics Committee approval to conduct a clinical trial at a prospective site;
•the inability to obtain regulatory approval to conduct a clinical trial;
•lack of adequate funding to continue a clinical trial, including the occurrence of unforeseen costs due to enrollment delays, requirements to conduct additional trials and studies and increased expenses associated with the services of our CROs and other third parties;
•the inability to recruit and enroll individuals to participate in clinical trials for reasons including competition from other clinical trial programs for the same or similar indications; or
•the inability to retain participants who have initiated a clinical trial but may withdraw due to side effects from the product, lack of efficacy or personal issues, or who are otherwise unavailable for further follow-up.
In addition, we may experience significant setbacks in advanced clinical trials, even after promising results in earlier trials, such as unexpected adverse events that occur when our product candidates are given to larger patient populations, which often occur in later-stage clinical trials, or less favorable clinical outcomes. Moreover, clinical results are frequently susceptible to varying interpretations that may delay, limit or prevent regulatory approvals.
Negative or inconclusive results or adverse medical events, including participant fatalities that may be attributable to our product candidates, during a clinical trial may necessitate that it be redesigned, repeated or terminated. Further, some of our clinical trials may be overseen by a Data Safety Monitoring Board (“DSMB”), and the DSMB may determine to delay or suspend one or more of these trials due to safety or futility findings based on events occurring during a clinical trial. Any such delay, suspension, termination or request to repeat or redesign a trial could increase our costs and prevent or significantly delay our ability to commercialize our product candidates. Even if we complete all such activities without issue, final results may not actually support approval of a particular product candidate.
Our ability to use our net operating loss carryforwards and other tax attributes may be limited.
We have incurred significant net operating losses ("NOLs") during our history, and despite prior profitability, may not be able to achieve sustained profitability over the long term. Unused U.S. federal NOLs for taxable years beginning before January 1, 2018 may be carried forward to offset future taxable income, if any, until such unused
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NOLs expire. Under legislation enacted in 2017, as modified by legislation enacted in 2020, U.S. federal NOLs incurred in taxable years beginning after December 31, 2017 can be carried forward indefinitely, but the deductibility of such U.S. federal NOLs in taxable years beginning after December 31, 2020 is limited to 80% of taxable income. It is uncertain if and to what extent various states will conform to the aforementioned U.S. tax law provisions.
As of December 31, 2024, we had U.S. federal and state NOL carryforwards of $293.5 million and $262.9 million, respectively. Of the $293.5 million U.S. federal NOL carryforwards, $293.1 million may be carried forward indefinitely with utilization limited to 80% of taxable income, and the remainder will begin to expire in 2025. The state NOL carryforwards will begin to expire in 2025.
In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as one or more stockholders or groups of stockholders who own at least 5% of our stock increasing their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period, the corporation’s ability to use its pre-change NOL carryforwards to offset its post-change income or taxes may be limited. We have experienced ownership changes as a result of shifts in our stock ownership in the past, and in the future it is possible that we may be deemed to have experienced additional ownership changes as a result of shifts in our stock ownership, some of which may be outside of our control. This could limit the amount of NOLs that we can utilize annually to offset future taxable income or tax liabilities. Subsequent ownership changes and changes to the U.S. tax rules in respect of the utilization of NOLs may further affect the limitation in future years. In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.
Tax law changes could adversely affect our business and financial condition.
New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time, which could adversely affect our business operations and financial performance. Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us. For example, legislation informally titled the Tax Cuts and Jobs Act of 2017, the 2020 Coronavirus Aid, Relief, and Economic Security Act, and the 2022 Inflation Reduction Act enacted many significant changes to the U.S. tax laws. Future guidance from the Internal Revenue Service and other tax authorities with respect to such legislation may affect us, and certain aspects of the foregoing tax legislation could be repealed or modified in future legislation. In addition, it is uncertain if and to what extent various states will conform to such legislation or any newly enacted federal tax legislation. Changes in corporate tax rates, the realization of net deferred tax assets relating to our operations, the taxation of foreign earnings, and the deductibility of expenses under past or future reform legislation could have a material impact on the value of our deferred tax assets, could result in significant one-time charges, and could increase our future U.S. tax expense.
We and the third parties supporting our operations are subject to stringent and evolving U.S. and foreign laws, regulations, and rules, contractual obligations, industry standards, policies and other obligations related to data privacy and security. Our actual or perceived failure to comply with such obligations (or by the third parties supporting our operations) could lead to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse business consequences.
In the ordinary course of business, we process personal data and other sensitive information, including our proprietary and confidential business data, trade secrets, intellectual property, data we may collect about trial participants in connection with clinical trials, and other sensitive data. Our data processing activities subject us to numerous data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, contracts, and other obligations that govern the processing of personal data by us and on our behalf.
In the U.S., federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), and other similar laws (e.g., wiretapping laws). In the past few years, numerous U.S. states—including California, Virginia, Colorado, Connecticut, and Utah—have enacted comprehensive privacy laws that impose certain obligations on covered businesses, including providing specific disclosures in privacy notices and affording residents with certain rights concerning their personal data. As applicable, such rights may include the right to access, correct, or delete certain personal data, and to opt-out of certain data processing activities, such as targeted advertising, profiling, and automated decision-making. The exercise of these rights may impact our business and ability to provide our products and services. Certain states also impose stricter requirements for processing certain personal data, including sensitive information, such as conducting data privacy impact assessments. These state laws allow for statutory fines for noncompliance. For example, the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights
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Act of 2020 (“CPRA”) (collectively, “CCPA”) requires businesses to provide specific disclosures in privacy notices and honor requests of California residents to exercise certain privacy rights. The CCPA provides for civil penalties of up to $7,500 per intentional violation and allows private litigants affected by certain data breaches to recover significant statutory damages. Similar laws are being considered in several other states, as well as at the federal and local levels. These developments may further complicate compliance efforts and may increase legal risk and compliance costs for us and the third parties upon whom we rely.
We may be subject to new laws governing the privacy of consumer health data, including reproductive, sexual orientation, and gender identity privacy rights. For example, Washington’s My Health My Data Act (“MHMD”) broadly defines consumer health data, places restrictions on processing consumer health data (including imposing stringent requirements for consents), provides consumers certain rights with respect to their health data, and creates a private right of action to allow individuals to sue for violations of the law. Other states are considering and may adopt similar laws. California also recently passed a law protecting privacy of abortion-related records and other reproductive healthcare services. These laws would also apply to our employees in the respective states.
Outside the U.S., an increasing number of laws, regulations, and industry standards may govern data privacy and security. For example, the EU’s General Data Protection Regulation (“EU GDPR”), the UK’s General Data Protection Regulation (“UK GDPR”), Brazil’s General Data Protection Law (Lei Geral de Proteção de Dados Pessoais, or “LGPD”) (Law No. 13,709/2018), and China’s Personal Information Protection Law (“PIPL”) impose strict requirements for processing personal data. For example, under the EU GDPR, companies may face temporary or definitive bans on data processing and other corrective actions; fines of up to 20 million Euros or 4% of annual global revenue, whichever is greater; or private litigation related to processing of personal data brought by classes of data subjects or consumer protection organizations authorized at law to represent their interests.
Regulators in the U.S. are also increasingly scrutinizing certain personal data transfers and may impose data localization requirements, for example, the Biden Administration’s executive order Preventing Access to Americans’ Bulk Sensitive Personal Data and U.S. Government-Related Data by Countries of Concern. Outside the U.S., certain jurisdictions have enacted data localization and cross-border data transfer laws, which could make it more difficult to transfer information across jurisdictions. In particular, the European Economic Area ("EEA") and the UK have significantly restricted the transfer of personal data to the U.S. and other countries whose privacy and data security laws they believe not to offer an adequate level of protection.
Although there are currently various mechanisms that may be used to transfer personal data from the EEA and the UK to the U.S. in compliance with law, such as the EU and UK’s standard contractual clauses, the U.K.’s International Data Transfer Agreement/Addendum and the EU-U.S. Data Privacy Framework and the U.K. extension thereto (which allows for transfers to relevant U.S.-based organizations who self-certify compliance and participate in the Framework), these mechanisms are subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer personal data to the U.S. If we are unable to implement a legal mechanism to ensure that our transfers of personal data from the EEA or the U.K. are lawful, we could face adverse consequences, including increased exposure to regulatory actions, substantial fines and penalties and injunctions against processing or transferring personal data, and could be required to increase our data processing capabilities in the EEA, the U.K. or elsewhere at significant expense. Restrictions on our ability to transfer personal data from the EEA, the U.K. or elsewhere could impact our clinical trial activities in the EEA or the U.K. and limit our ability to collaborate with CROs and other third parties.
We are also bound by contractual obligations related to data privacy and security, and our efforts to comply with such obligations may not be successful. For example, certain privacy laws, such as the GDPR and the CCPA, require our customers to impose specific contractual restrictions on their service providers. We publish privacy policies, marketing materials and other statements, such as compliance with certain certifications or self-regulatory principles, regarding data privacy and security. If these policies, materials or statements are found to be deficient, lacking in transparency, deceptive, unfair or misrepresentative of our practices, we may face adverse consequences, which may include but are not limited to, governmental enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar), litigation (including class-related claims) and mass arbitration demands, additional reporting requirements and/or oversight, bans on processing personal data, orders to destroy or not use personal data, civil and criminal liability and imprisonment of company officials. In particular, plaintiffs have become increasingly more active in bringing privacy-related claims against companies, including class claims and mass arbitration demands. Some of these claims allow for the recovery of statutory damages on a per violation basis, and, if viable, carry the potential for monumental statutory damages, depending on the volume of data and the number of violations. Any of these events could have a material adverse effect on our reputation, business or financial condition, including but not limited to interruptions or stoppages in business operations (including our clinical trials), inability to process personal data or to operate in certain jurisdictions, limited ability to develop or commercialize our products, expenditure of time and resources to defend any claim or inquiry, or revision or restructuring of our operations.
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In addition, privacy advocates and industry groups have proposed, and may propose, standards with which we are legally or contractually bound to comply or may become subject to in the future.
Our obligations related to privacy and data security are quickly changing and becoming increasingly stringent, creating uncertainty. These obligations may be subject to differing applications and interpretations, which may be inconsistent or in conflict among jurisdictions. Preparing for and complying with these obligations requires us to devote significant resources. These obligations may also necessitate changes to our information technologies, systems and practices and those of third parties upon which we rely. Moreover, despite our efforts, our personnel or third parties upon which we rely may fail to comply with such obligations, which could negatively impact our business operations and compliance posture.
For instance, in the EU, the second Network and Information Security Directive (Directive (EU) 2022/2555, “NIS2”) entered into force on 17 January 2023 and had to be transposed into the national law of each Member State by 17 October 2024. NIS2 creates a specific legal framework for the resilience and incident response capabilities of entities operating in 18 sectors, including the health sector. As a result, companies in scope are obligated to maintain robust network and information systems security measures and report any significant incidents that might impact their operations. Companies that fail to comply with NIS2 may face significant operational disruptions, legal liabilities, and regulatory penalties of a maximum of €10 million or up to 2% of the total worldwide turnover of the preceding financial year.
Our employees and other personnel can use generative artificial intelligence (“AI”) technologies, from time to time, in certain circumstances to perform portions of their work, and the disclosure and use of personal data in generative AI technologies is subject to various privacy laws and other privacy obligations. Governments have passed and are likely to pass additional laws regulating generative AI. Our use of this technology could result in additional compliance costs, regulatory investigations and actions, and lawsuits. Our use of generative AI could make it more difficult to comply with various privacy laws and other privacy obligations in the U.S. and Europe and could negatively affect our ability to protect or own certain intellectual property, any or all of which may cause us to incur significant expense, cause reputational damage, and otherwise adversely affect our business.
If we fail to comply with the extensive requirements applicable to biopharmaceutical manufacturers and marketers under the healthcare fraud and abuse, anticorruption, privacy, transparency and other laws of the jurisdictions in which we conduct our business, we may be subject to significant liability.
Our activities, and the activities of our agents, including some contracted third parties, are subject to extensive government regulation and oversight both in the U.S. and in foreign jurisdictions. Our interactions with physicians and others in a position to prescribe or purchase our products are subject to a legal regime designed to prevent healthcare fraud and abuse and off-label promotion. We also are subject to laws pertaining to transparency of transfers of value to healthcare providers; privacy and data protection; compliance with industry voluntary compliance guidelines; and prohibiting the payment of bribes. Relevant U.S. laws include:
•the federal Anti-Kickback Statute, which prohibits persons from, among other things, knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal health care programs, such as the Medicare and Medicaid programs;
•federal false claims laws, including the False Claims Act and Civil Monetary Penalties Law, which prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented, claims for payment to the government or its agents that are false or fraudulent;
•the Federal Food, Drug and Cosmetic Act and governing regulations which, among other things, prohibit off-label promotion of prescription drugs;
•the federal Physician Payments Sunshine Act created under the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education and Reconciliation Act of 2010 (collectively, “ACA”) which requires certain manufacturers of drugs, devices, biologics and medical supplies to report annually to the Centers for Medicare & Medicaid Services, information related to payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other health care professionals (such as physician assistants and nurse practitioners), and teaching hospitals, and ownership and investment interests held by such physicians and their immediate family members;
•the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which created, among other things, new federal criminal statutes that prohibit knowingly and willfully executing, or
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attempting to execute, a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement, in connection with the delivery of, or payment for, healthcare benefits, items or services;
•HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and their implementing regulations, which imposes certain requirements on “covered entities,” including certain healthcare providers, health plans, and healthcare clearinghouses, and their respective “business associates” that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity as well as their covered subcontractors relating to the privacy, security, and transmission of individually identifiable health information;
•the Foreign Corrupt Practices Act, which prohibits the payment of bribes to foreign government officials and requires that a company’s books and records accurately reflect our transactions; and
•foreign and state law equivalents of each of the federal laws described above, such as anti-kickback and false claims laws which may apply to items or services reimbursed by state health insurance programs or any third-party payor, including commercial insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government; state laws that require drug manufacturers to report information on the pricing of certain drugs; state and local laws that require the registration of pharmaceutical sales representatives; and state and foreign laws governing the privacy and security of health information, many of which differ from each other in significant ways and often are not preempted by HIPAA.
In the U.S., the Office of Inspector General for the Department of Health and Human Services, the Department of Justice, states’ Attorneys General and other governmental authorities actively enforce the laws and regulations discussed above. These entities also coordinate extensively with the FDA, using legal theories that connect violations of the Federal Food, Drug and Cosmetic Act (such as off-label promotion) to the eventual submission of false claims to government healthcare programs. Prosecution of such promotion cases under the False Claims Act provides the potential for private parties (qui tam relators, or “whistleblowers”) to initiate cases on behalf of the government and provides for significantly higher penalties upon conviction.
In the U.S., pharmaceutical and biotechnology companies have been the target of numerous government prosecutions and investigations alleging violations of law, including claims asserting impermissible off-label promotion of pharmaceutical products, payments intended to influence the referral of federal or state health care business, submission of false claims for government reimbursement, or submission of incorrect pricing information.
Violations of any of the laws described above or any other applicable governmental regulations and other similar foreign laws may subject us, our employees or our agents to significant criminal, civil and administrative penalties, including fines, civil monetary penalties, exclusion from participation in government health care programs (including, in the U.S., Medicare and Medicaid), disgorgement, imprisonment, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws and the restriction or restructuring of our operations, any of which could adversely affect our ability to operate our business and our financial results. Additionally, whether or not we have complied with the law, an investigation into alleged unlawful conduct may cause us to incur significant expense, cause reputational damage, divert management time and attention, and otherwise adversely affect our business. While we have developed and instituted a corporate compliance program, we cannot guarantee that we, our employees, our consultants, contractors, or other agents are or will be in compliance with all applicable U.S. or foreign laws.
We have applied for, and in some cases have received, grants that, if and when received, may involve pricing or other restrictions.
We have applied for, and in some cases have received, grants from various charitable, philanthropic and other organizations that, if and when received, may come with certain pricing requirements, global access requirements, reporting requirements or other covenants that require us to make the funded product available worldwide and on a nondiscriminatory basis. For example, we received such an initial grant from the Bill and Melinda Gates Foundation in 2020 to help fund the potential scale-up of production of our CpG 1018 adjuvant that may be required in the event the CpG 1018 adjuvant is included in any approved and commercially available vaccine, whether a COVID-19 vaccine or otherwise. Covenants in these types of grants may limit the price we can charge for any funded product and may involve a license to use technology we own that is included in the funded products if we do not comply. Such price limitations or licenses, if invoked, could serve to limit the prices we charge, or our control over the manufacturing and distribution of grant-funded products. Failure to agree to such requirements, may result in us not receiving some or all of the grant.
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Enacted or future legislation, including potentially unfavorable pricing regulations or other healthcare reform initiatives, may have an adverse effect on our operations and business.*
We expect there will continue to be federal and state laws and/or regulations, proposed and implemented, that could impact our operations and business. For example, the ACA, among other things, imposes a significant annual fee on companies that manufacture or import branded prescription drug products. It also contains substantial provisions intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, and impose additional health policy reforms, any or all of which may affect our business. There have been executive, legal and political challenges and amendments to certain aspects of ACA. For example, on August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in ACA marketplaces through plan year 2025. The IRA also eliminates the “donut hole” under the Medicare Part D program beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost and through a newly established manufacturer discount program. It is unclear how any such challenges and additional healthcare reform measures by the current administration will impact the ACA and our business.
Other legislative changes have also been proposed and adopted since the ACA was enacted. For example, the Budget Control Act of 2011 resulted in aggregate reductions in Medicare payments to providers of up to two percent per fiscal year, starting in 2013 and, due to subsequent legislative amendments to the statute, will remain in effect until 2032 unless additional Congressional action is taken. Additionally, on March 11, 2021, the American Rescue Plan Act of 2021 was signed into law, which eliminated the statutory Medicaid drug rebate cap, previously set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, effective January 1, 2024.
Also, there has been heightened governmental scrutiny recently in the U.S. over pharmaceutical pricing practices in light of the rising cost of prescription drugs and biologics. For example, the IRA, among other things, (i) directs the U.S. Department of Health and Human Services (“HHS”) to negotiate the price of certain biologics covered under Medicare that have been on the market for at least 11 years (the “Medicare Drug Price Negotiation Program”) and subjects drug manufacturers to civil monetary penalties and a potential excise tax by offering a price that is not equal to or less than the negotiated “maximum fair price” under the law, and (ii) imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation. These provisions began to take effect progressively in 2023, although the Medicare Drug Price Negotiation Program is currently subject to legal challenge. On August 15, 2024, HHS announced the agreed upon price list of the first ten drugs that were subject to price negotiations, which take effect in January 2026. On January 17, 2025, HHS selected fifteen additional products covered under Part D for price negotiation in 2025. Each year thereafter more Part B and Part D products will become subject to the Medicare Drug Price Negotiation Program. Further, on December 7, 2023, an initiative to control the price of prescription drugs through the use of march-in rights under the Bayh-Dole Act was announced. On December 8, 2023, the National Institute of Standards and Technology published for comment a Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights which for the first time includes the price of a product as one factor an agency can use when deciding to exercise march-in rights. While march-in rights have not previously been exercised, it is uncertain if that will continue under the new framework.
At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, and restrictions on certain product access. In some cases, such legislation and regulations have been designed to encourage importation from other countries and bulk purchasing. For example, on January 5, 2024, the FDA approved Florida’s Section 804 Importation Program (SIP) proposal to import certain drugs from Canada for specific state healthcare programs. It is unclear how this program will be implemented, including which drugs will be chosen, and whether it will be subject to legal challenges in the U.S. or Canada. Other states have also submitted SIP proposals that are pending review by the FDA. Any such approved importation plans, when implemented, may result in lower drug prices for products covered by those programs.
Many EU Member States periodically review their reimbursement procedures for medicinal products, which could have an adverse impact on reimbursement status. We expect that legislators, policymakers and healthcare insurance funds in the EU Member States will continue to propose and implement cost-containing measures, such as lower maximum prices, lower or lack of reimbursement coverage and incentives to use cheaper, usually generic, products as an alternative to branded products, and/or branded products available through parallel import to keep healthcare costs down.
We cannot predict the initiatives that may be adopted in the future or the effect any such initiatives may have on our business. However, in the future, there will likely continue to be additional proposals relating to the reform of the U.S. healthcare system, particularly in light of the recent U.S. Presidential and Congressional elections and other equivalent foreign systems, some of which could further limit coverage and reimbursement of products, including our product candidates. The current presidential administration is pursuing policies to reduce regulations and expenditures across government including at HHS, FDA, CMS and related agencies. These actions, presently directed by executive orders or memoranda from the Office of Management and Budget, may propose policy changes that create additional
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uncertainty for our business. These actions, for example, include (1) directives to reduce agency workforce and cut programs; (2) directing HHS and other agencies to lower prescription drug and vaccine costs through a variety of initiatives, including by establishing Most-Favored-Nation pricing for pharmaceutical products; (3) imposing tariffs on imported pharmaceutical products; and (4) as part of the Make America Healthy Again (MAHA) Commission’s recent Strategy Report, working across government agencies to increase enforcement on direct-to-consumer pharmaceutical advertising. Additionally, in its June 2024 decision in Loper Bright Enterprises v. Raimondo (Loper Bright), the U.S. Supreme Court overturned the longstanding Chevron doctrine, under which courts were required to give deference to regulatory agencies’ reasonable interpretations of ambiguous federal statutes. The Loper Bright decision could result in additional legal challenges to current regulations and guidance issued by federal agencies applicable to our operations, including those issued by the FDA. Congress may introduce and ultimately pass health care related legislation that could, among others, impact the drug and vaccine approval process and reduce Medicaid enrollment and funding. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our products.
In connection with our work with the U.S. Department of Defense ("DoD"), we have become a defense contractor, and are therefore subject to additional administrative burdens and control requirements in connection with the maintenance of that relationship.
In September 2021, we entered into an agreement with the DoD relating to the conduct of a clinical trial and studies in connection with the development of an improved plague vaccine. In July 2023, we entered into a contract modification with the DoD to support advancement into a nonhuman primate challenge study, and in December 2024, we entered into an agreement with the DoD to support additional Phase 2 clinical and manufacturing activities to be performed through the first half of 2027. In August 2025, we executed an amendment to the agreement to include additional clinical work through 2027. In connection with this agreement, we became subject to new administrative and control requirements, including certain reporting obligations as well as a requirement to develop, implement and maintain an International Traffic in Arms Regulations compliance program, among other things. Further, if our efforts result in an improved plague vaccine and we enter into a supply agreement for finished plague vaccines with the DoD, we expect that such a supply contract would impose additional administrative, control, compliance and other obligations. We have limited experience developing and administering such programs. Development and maintenance of such programs can be burdensome and costly and there can be no guarantee that we will be able to maintain compliance with all of the terms of such an agreement. As a federal government contractor, we also maintain plans to ensure compliance with nondiscrimination and regulatory requirements for qualified employees on the basis of gender, race, disability, and veteran status. Consequently, we may be subject to executive orders and regulatory changes affecting various aspects of our operations, including compliance with nondiscrimination plans. Any required elimination or modification of such plans in response to new executive orders could pose challenges in hiring or retaining employees, and may lead to other adverse operational impacts. Failure to comply with requirements applicable to us as a federal contractor could expose us to administrative, civil, or criminal liabilities, including fines, penalties, repayments, or suspension or debarment from eligibility for future U.S. government contracts and could have a significant reputational or financial impact on our business and on our stock price.
We face product liability exposure, which, if not covered by insurance, could result in significant financial liability.
While we have not experienced any product liability claims to date, the use of any of our product candidates in clinical trials and the sale of any approved products, including HEPLISAV-B, will subject us to potential product liability claims and may raise questions about a product’s safety and efficacy. As a result, we could experience a delay in our ability to commercialize one or more of our product candidates or reduced sales of any approved product candidates. In addition, a product liability claim may exceed the limits of our insurance policies and exhaust our internal resources. We have obtained limited clinical trial liability and umbrella insurance coverage for our clinical trials. This coverage may not be adequate or may not continue to be available in sufficient amounts, at an acceptable cost, or at all. While we have obtained product liability insurance coverage for HEPLISAV-B, there is a risk that this coverage may not be adequate or may not continue to be available in sufficient amounts, at an acceptable cost or at all. We also may not be able to obtain commercially reasonable product liability insurance for any product approved for marketing in the future. A product liability claim, product recalls or other claims, as well as any claims for uninsured liabilities or in excess of insured liabilities, would divert our management’s attention from our business and could result in significant financial liability.
Risks Related to our Intellectual Property
If third parties assert that we have infringed their patents or other proprietary rights or challenge our patents or other proprietary rights, we may become involved in disputes and litigation that would be costly, time consuming and have a
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negative impact on the commercialization of our current products and delay or prevent development or commercialization of our product candidates.
We may be exposed to future litigation or other dispute with third parties based on claims that our products, product candidates or proprietary technologies infringe their intellectual property rights, or we may be required to enter into litigation to enforce patents issued or licensed to us or to determine the ownership, scope or validity of our or another party’s proprietary rights, including a challenge as to the validity and scope of our issued and pending claims. From time to time, we have been, and in the future may become, involved in various administrative proceedings related to our intellectual property which can cause us to incur certain legal expenses. If we become involved in any litigation and/or other administrative proceedings related to our intellectual property or the intellectual property of others, we will incur substantial additional expenses and it will divert the efforts of our technical and management personnel.
If we or our collaborators are unsuccessful in defending or prosecuting our issued and pending claims or in defending potential claims against our products, for example, as may arise in connection with the commercialization of HEPLISAV-B or any similar or other product candidate, we or our collaborators could be required to pay substantial damages or be unable to commercialize our product candidates or use our proprietary technologies without a license from such third party. A license may require the payment of substantial fees or royalties, require a grant of a cross-license to our intellectual property or technologies or may not be available on acceptable terms, if at all. Any of these outcomes could require us to change our business strategy and could materially impact our business, operations or financial condition.
If the combination of patents, trade secrets and contractual provisions that we rely on to protect our intellectual property is inadequate, the value of our products or product candidates may decrease, and we may be unable to realize any commercial benefit from the development of our products or product candidates.
Our success depends on our ability to:
•obtain and protect commercially valuable patents or the rights to patents both domestically and abroad;
•operate without infringing upon the proprietary rights of others; and
•prevent others from successfully challenging or infringing our proprietary rights.
We will be able to protect our proprietary rights from unauthorized use only to the extent that these rights are covered by valid and enforceable patents for a commercially sufficient term or are otherwise effectively maintained as trade secrets. We try to protect our proprietary rights by filing and prosecuting U.S. and foreign patent applications. However, in certain cases such protection may be limited, depending in part on existing patents held by third parties, or other disclosures which impact patentability, which may only allow us to obtain relatively narrow patent protection, if any at all. In the U.S., and worldwide, legal standards relating to the validity and scope of patent claims in the biopharmaceutical field can be highly uncertain, are still evolving and involve complex legal and factual questions for which important legal principles remain unresolved. Changes in U.S. patent and ex-U.S. patent laws could diminish the value of patents in general, thereby impairing us and our collaborators’ ability to protect our products.
Our HEPLISAV-B vaccine and CpG 1018 adjuvant have no composition of matter patent protection in the U.S. or elsewhere. We must therefore rely primarily on the protection afforded by method of use patent claims relating to HEPLISAV-B vaccine and the use of CpG 1018 adjuvant in vaccines, and trade secret protection and confidentiality and other agreements to protect our interests in proprietary know-how related to HEPLISAV-B vaccine and CpG 1018 adjuvant. We have three issued U.S. patents relating to certain uses of HEPLISAV-B that are projected to expire in 2032. We have filed patent applications claiming compositions and methods of use of CpG 1018 adjuvant for COVID-19 and other vaccines, but we cannot provide any assurances that we will receive an issued patent for any of these patent applications or that, if issued, any of these patents will provide adequate protection for any intended use of CpG 1018 adjuvant in vaccines. In addition, we are or may be subject to co-ownership of the underlying intellectual property with our collaborators and, therefore, may not be the sole owner and be in a position to diligently control patent prosecution, or enforce our rights. If we are unable to adequately obtain patent protection or enforce our other proprietary rights relating to CpG 1018 adjuvant, we may be unable to realize any recurring commercial benefit from the development of a vaccine containing CpG 1018 adjuvant, and we may not have the ability to prevent others from developing or commercializing a vaccine containing CpG 1018 adjuvant.
We also rely on trade secret protection and confidentiality and other agreements to protect our interests in proprietary know-how related to CpG 1018 adjuvant. If we or our collaborators are unable to adequately obtain, protect or enforce our proprietary rights relating to CpG 1018 adjuvant, we may be unable to realize recurring commercial benefit from the development of a vaccine containing CpG 1018 adjuvant, and we or our collaborators may not have the ability to
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prevent others from developing or commercializing a vaccine containing the adjuvant. Disputes or litigation may also arise with our collaborators (with us and/or with one or more third parties), including disputes over ownership rights to intellectual property, know-how or technologies developed with our collaborators.
Because patent applications in the U.S. and many foreign jurisdictions typically are not published until 18 months after filing and publications of discoveries in the scientific literature lag behind actual discoveries, we cannot be certain that we were the first to file for protection of the inventions set forth in these patent applications or in our issued patents. Further, there could be post-grant proceedings such as inter partes review ("IPR"), post grant review ("PGR"), reexamination, reissue or opposition which could result in claims in our patents being narrowed or invalidated.
Our commercial success depends significantly on our ability to operate without infringing patents and other proprietary rights of third parties. A number of pharmaceutical companies and biotechnology companies, as well as universities and research institutions, may have filed patent applications or may have been granted patents that cover inventions similar to the inventions owned by or licensed to us. We may not be able to determine with certainty whether patents or patent applications of other parties may materially affect our ability to make, use, offer to sell, or sell any products. If another party controls patents or patent applications covering our products, we may not be able to obtain the rights we need to those patents or patent applications in order to commercialize our products.
Litigation may be necessary to enforce patents issued or licensed to us or to determine the scope or validity of another party’s proprietary rights. The existence of third-party patent applications and patents could significantly reduce the coverage of the patents owned by or licensed to us and limit our ability to obtain meaningful patent protection. Litigation or any other proceedings could result in substantial costs to and diversion of effort by us, and an adverse outcome in a court or patent office could subject us to significant liabilities, require disputed rights to be licensed from other parties, or require us to cease using some of our technology. We may not prevail in these actions or proceedings if they arise.
In addition, other parties may duplicate, design around or independently develop similar or alternative technologies to ours or our licensors.
The risks and uncertainties that we face with respect to our patents and other proprietary rights include the following:
•we may not receive an issued patent for any of our patent applications or for any patent applications that we may have exclusively licensed, now or in the future;
•the pending patent applications we have filed or to which we have exclusive rights may take longer than we expect to result in issued patents;
•the claims of any patents that are issued may not provide meaningful protection or may not be valid or enforceable;
•we might not be able to develop additional proprietary technologies that are patentable;
•the patents licensed or issued to us or our collaborators may not provide a competitive advantage;
•patents issued to other parties may limit our intellectual property protection or harm our ability to do business;
•other parties may independently develop similar or alternative technologies or duplicate our technologies and commercialize discoveries that we attempt to patent;
•other parties may design around technologies we have licensed, patented or developed;
•pending patent applications or issued patents may be challenged by third parties in litigation or other proceedings, such as inter partes reviews, pre- and post-grant oppositions, reexaminations, derivation proceedings and post-grant review, in the U.S or abroad;
•we may be subject to claims that our employees or consultants have used or disclosed trade secrets or other proprietary information of their former employers or clients, thus putting our intellectual property at risk;
•our reliance on trade secret protection and confidentiality and other agreements may not be sufficient to protect our interests and proprietary know-how related to our products and processes; and
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•it may be found that we or our collaborators have not complied with various procedural, document submission, fee payment and other requirements imposed by patent offices, and our patent protection could be reduced or eliminated.
We also rely on trade secret protection and confidentiality agreements to protect our interests in proprietary know-how that may not be directed to what is considered to be patentable subject matter, and for processes for which patents are difficult to enforce. We cannot be certain that we will be able to protect our trade secrets or other proprietary know-how adequately. Any disclosure of confidential data in the public domain or to third parties could allow our competitors to learn our trade secrets. If we are unable to adequately obtain or enforce proprietary rights, we may be unable to commercialize or continue to commercialize our products, enter into or maintain collaborations, generate revenues or maintain any advantage we may have with respect to existing or potential competitors.
We have in the past, and may in the future, rely on licenses to intellectual property from third parties. Impairment of these licenses or our inability to obtain or maintain them could severely harm our business.
Our current or future research and development efforts may depend in part upon our license arrangements for certain intellectual property owned by or co-owned with third parties. Our dependence on these licenses could subject us to numerous risks, such as disputes regarding the use of the licensed intellectual property and the creation and ownership of new discoveries under such license agreements. In addition, these license arrangements could require us to make timely payments to maintain our licenses and typically contain diligence or milestone-based termination provisions. Our failure to meet any obligations pursuant to such agreements could allow licensors to terminate our agreements or undertake other remedies such as converting exclusive to non-exclusive licenses if we are unable to cure or obtain waivers for such failures or amend such agreements on terms acceptable to us or at all. In addition, license agreements may be terminated or may expire by their terms, and we may not be able to maintain the exclusivity of these licenses or any rights to the underlying intellectual property. If we cannot obtain and maintain licenses that are advantageous or necessary to the development or the commercialization of our products or product candidates, we may be required to expend significant time and resources to develop or license similar technology or to find other alternatives to maintaining the competitive position of our products or product candidates. If such alternatives are not available to us in a timely manner or on acceptable terms, we may be unable to develop or commercialize certain of our products or product candidates. In the absence of a current license, we may be required to redesign our technology so it does not infringe a third-party’s intellectual property (including patents), which may not be possible or could require substantial funds and time.
We may be subject to claims that we or our employees or consultants have wrongfully used or disclosed alleged trade secrets of our employees’ or consultants’ former employers or their clients. These claims may be costly to defend and if we do not successfully do so, we may be required to pay monetary damages and may lose valuable intellectual property rights or personnel.
Many of our employees or consultants may have been previously employed in other biopharmaceutical companies, including our competitors or potential competitors. Some of these individuals executed proprietary rights, non-disclosure and non-competition agreements in connection with such previous employment or engagements. Although no claims against us are currently pending, we may be subject to claims that these employees or consultants or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers or clients. Litigation may be necessary to defend against these claims. If we fail in defending such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. A loss of key research personnel or their work product could hamper our ability to develop and ultimately commercialize, or prevent us from developing and commercializing, our product candidates, which could severely harm our business. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.
We may rely, in some circumstances, on trade secrets and confidentiality agreements to protect our technology. Although trade secrets are difficult to protect, wherever possible, we use confidential disclosure agreements to protect the proprietary nature of our technology. Our standard practice is to require each of our collaborators, commercial partners, employees, consultants, contractors and advisors to enter into an agreement before beginning their employment, consulting or advisory relationship with us that in general provides that the individuals must keep confidential and not disclose to other parties any of our confidential information developed or learned by the individuals during the course of their relationship with us except in limited circumstances. These agreements with employees, consultants and contractors also generally provide that we own all inventions conceived by the individuals in the course of rendering their employment or services to us. However, there can be no assurance that these agreements will not be breached, that we will have adequate remedies for any breach, or that our trade secrets and/or proprietary information will not otherwise become known or be independently discovered by competitors. To the extent that our employees, consultants or contractors use
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intellectual property owned by others in their work for us, disputes may also arise as to the rights in related or resulting know-how and inventions, which could result in substantial costs which could severely harm our business.
As part of our strategy, we have obtained rights to vaccine candidates or technology from other parties, and we may acquire or obtain rights to other vaccine candidates or technology in the future. Any such agreements or transactions may not result in any of the benefits anticipated from such arrangements, which could adversely affect our ability to develop and commercialize potential future products.*
From time to time, we may acquire rights to, or enter into collaboration or other license agreements with respect to, new vaccine candidates programs to add to our clinical pipeline or obtain access to vaccine delivery or other technologies that we view as complementary to our business. For example, we entered into the Vaxart Agreement with Vaxart in November 2025. Such transactions or arrangements can be costly, complex and time-consuming to negotiate, document, implement and maintain. Any current or future transactions or arrangements, including the Vaxart Agreement, that we enter into may not be successful. Such transactions or arrangements may involve numerous risks and challenges, including but not limited to the following:
•integrating new vaccine candidates or technology into our business may require significant time, capital investment, and resources, and our efforts to achieve such integration may not be successful;
•new vaccine candidates or technology may require clinical and other development in compliance with strict regulatory standards before approval, and such development efforts may not be successful;
•we or our collaborators may not be successful in conducting or completing clinical and other development activities necessary to apply for regulatory approval required for commercialization;
•the results of clinical trials of new vaccine candidates or of preclinical studies and clinical trials of new vaccine candidates may not be sufficient to obtain regulatory approvals required for commercialization;
•our collaborators may delay, stop or provide insufficient funding or resources for clinical trials (whether as a result of a business decision or necessitated by financial difficulties of such collaborator) or may fail to perform other contractual obligations to us;
•we may be required to commit substantial additional resources to the development of additional vaccine candidates;
•even if a product is approved, it may not be commercially successful due to market competition, pricing pressures, or difficulties in commercial scaling and distribution;
•our failure to meet our obligations under collaboration or license agreements, such as payment of development, regulatory or commercial milestone payments or future royalties, could result in the termination of our rights;
•disputes may arise between us and our collaborators with respect to the ownership of intellectual property developed pursuant to our collaborations;
•our collaborators may infringe the intellectual property rights of third parties, exposing us to potential litigation and liability;
•third parties may challenge the validity, enforceability, or scope of patents claiming new vaccine candidates or technology, which may result in such patents being narrowed, invalidated or held unenforceable;
•the third-party licensor may fail to obtain or lose patent protection for new vaccine candidates or technology or issued patents claiming the vaccine candidates or technology may expire, which could impact our competitive position; or
•we may not be able to realize the anticipated benefits of or successfully integrate with our existing business any new vaccine candidates or technology.
If we are unable to successfully develop, obtain regulatory approval for, or commercialize new vaccine candidates, or if any related agreements are terminated, our business, financial condition, and results of operations could be materially and adversely affected.
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We cannot ensure that we will be successful in selecting, executing and integrating any programs or technologies. Failure to manage and successfully develop these programs or technologies could materially harm our business and operating results. In addition, if stock market analysts or our stockholders do not support or believe in the value of the transactions or arrangements that we choose to undertake, or the vaccine candidates or technologies we choose to pursue, our stock price may decline.
In connection with these strategic arrangements, we could make investments to further our strategic objectives and support our key business initiatives. For example, as part of our license agreement with Vaxart we have made a strategic investment in Vaxart’s common stock. If any company in which we invest fails, we could lose all or part of our investment in that company. If we determine that an other-than-temporary decline in the fair value exists for an equity or debt investment in a public or private company in which we have invested, we will have to write down the investment to its fair value and recognize the related write-down as an investment loss. The performance of any of these investments could result in significant impairment charges and gains (losses) on other equity investments.
We must also analyze accounting and legal issues when making these investments. Such transactions or arrangements may result in complex accounting and disclosure requirements. These requirements could include the potential consolidation of another party’s financial results into our own. Such consolidation or other intricate accounting treatments may increase the complexity of our financial statements, making them more difficult for investors and other stakeholders to analyze and interpret. If we fail to accurately apply these requirements or effectively communicate the resulting impacts, we could face regulatory scrutiny, restatements, or reputational harm, which may adversely affect our financial condition and the market price of our securities.
Furthermore, we may seek to dispose of an investment from time to time. If our equity investments are not liquid, we may not be able to dispose of these investments on favorable terms or at all. The occurrence of any of these events could harm our results. Gains or losses from equity securities could vary from expectations.
Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications are due to be paid to the U.S. Patent and Trademark Office and various governmental patent agencies outside of the U.S. in several stages over the lifetime of the patents and/or applications. We employ reputable law firms and other professionals to help us comply, and in many cases an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. However, there are situations in which non-compliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdictions, and in such an event, our competitors might be able to enter the market.
We may not be able to protect our intellectual property rights throughout the world.
The biopharmaceutical patent environment outside the U.S. is also uncertain. We may be particularly affected by this uncertainty since several of our product candidates or our collaborators’ vaccine candidates may initially address market opportunities outside the U.S., where we may only be able to obtain limited patent protection, if any at all. For example, while many countries such as the U.S. permit method of use patents or patent claims relating to the use of drug products, in some countries the law relating to patentability of such use claims is evolving, or may prohibit certain activities, and may be unfavorably interpreted to prevent us from successfully prosecuting some or all of our pending patent applications. There are some countries that currently do not allow such method of use patents or patent claims, or that significantly limit the types of uses, claims or subject matter that are patentable.
Patents are of national or regional effect. Filing, prosecuting and defending patents on all of our products and product candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the U.S. can be less extensive than those in the U.S. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the U.S. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the U.S. or from selling or importing products made using our inventions in and into the U.S. or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the U.S. These competitor products may compete with our products and product candidates, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.
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Geo-political actions in the U.S. and in foreign countries could increase the uncertainties and costs surrounding the prosecution or maintenance of our patent applications or those of any current or future licensors and the maintenance, enforcement or defense of our issued patents or those of any current or future licensors.
Various companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of many countries do not favor the enforcement of patents and other intellectual property protection, particularly those relating to pharmaceuticals, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights.
Various countries outside the U.S. have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, many countries limit the enforceability of patents against government agencies or government contractors. As a result, a patent owner may have limited remedies in certain circumstances, which could materially diminish the value of such patent. If we are forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and our business, financial condition, results of operations and prospects may be adversely affected. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.
Further, the standards applied by the USPTO, foreign patent offices and other adjudicating bodies in granting and/or adjudicating patents are not always applied uniformly or predictably. As such, we do not know the degree of future protection that we will have on our products and product candidates.
Changes in U.S. patent law or the patent law of other countries or jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our products.
Changes in either the patent laws or interpretation of the patent laws in the U.S. or in other jurisdictions could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents. In the U.S., numerous recent changes to the patent laws and proposed changes to the rules of the USPTO may have a significant impact on our ability to protect our technology and enforce our intellectual property rights.
For example, the America Invents Act, involved significant changes in patent legislation. Additionally, the U.S. Supreme Court has ruled on several patent cases in recent years, some of which cases either narrow the scope of patent protection available in certain circumstances or weaken the rights of patent owners in certain situations.
For example, in Europe, a new unitary patent system took effect June 1, 2023, which will significantly impact European patents, including those granted before the introduction of such a system. Under the unitary patent system, European applications have the option, upon grant of a patent, of becoming a Unitary Patent which will be subject to the jurisdiction of the Unitary Patent Court ("UPC"). As the UPC is a new court system, there is no precedent for the court, increasing the uncertainty of any litigation. Patents granted before the implementation of the UPC will have the option of opting out of the jurisdiction of the UPC and remaining as national patents in the UPC countries. Patents that remain under the jurisdiction of the UPC will be potentially vulnerable to a single UPC-based revocation challenge that, if successful, could invalidate the patent in all countries who are signatories to the UPC. We cannot predict with certainty the long-term effects of any potential changes.
Risks Related to our Common Stock
Our stock price is subject to volatility, and your investment may suffer a decline in value.
The market prices for securities of biopharmaceutical companies have in the past been, and are likely to continue in the future to be, very volatile. The market price of our common stock is subject to substantial volatility depending upon many factors, many of which are beyond our control, including:
•our ability to expand or retain our HEPLISAV-B vaccine market share;
•impact of COVID-19 or other respiratory or seasonal vaccination initiatives on our HEPLISAV-B vaccine, CpG 1018 adjuvant, or other product revenue;
•progress or results of any of our clinical trials or regulatory or manufacturing efforts, in particular any announcements regarding the progress or results of our planned trials and BLA filing and communications, from the FDA or other regulatory authorities;
•announcements related to any collaborations or licensing arrangements;
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•our ability to receive timely regulatory approval for our product candidates;
•our ability to establish and maintain collaborations for the development and commercialization of our product candidates;
•our ability to raise additional capital to fund our operations, to the extent needed;
•technological innovations, new commercial products or drug discovery efforts and preclinical and clinical activities by us or our competitors;
•changes in our intellectual property portfolio or developments or disputes concerning the proprietary rights of our products or product candidates;
•our ability to obtain component materials and successfully enter into manufacturing relationships for our products or product candidates or establish manufacturing capacity on our own;
•our ability to establish and maintain licensing agreements for intellectual property necessary for the development of our product candidates;
•changes in government regulations, general economic conditions or industry announcements;
•changes in the structure of healthcare payment systems;
•issuance of new or changed securities analysts’ reports or recommendations;
•accumulations of our common stock or other public actions by our stockholders and related market or investor perceptions and expectations, some of which may be speculative or short term in nature;
•actual or anticipated fluctuations in our quarterly financial and operating results;
•the volume of trading in our common stock;
•investor perceptions or negative announcements by our customers, competitors or suppliers regarding their own performance; and
•industry conditions and general financial, economic and political instability.
The stock markets in general, and the markets for biotechnology and pharmaceutical stocks in particular, have historically experienced significant volatility that has often been unrelated or disproportionate to the operating performance of particular companies. Changes in the broader macroeconomic condition, including historically high inflation, changes in interest rates, government policies, impact of pandemics or endemics and instances of geopolitical instability, such as that resulting from the conflicts in the Middle East and Ukraine, can and have caused changes in market prices, notwithstanding a lack of fundamental change in the underlying business models or prospects of companies. These broad market fluctuations have adversely affected and may in the future adversely affect the market price of our common stock, regardless of our actual operating performance.
One or more of these factors could cause a substantial decline in the price of our common stock. In addition, securities class action and shareholder derivative litigation have often been brought against a company following a decline in the market price of its securities. We have in the past been, and we may in the future be, the target of such litigation. Securities and shareholder derivative litigation could result in substantial costs, and divert management’s attention and resources, which could harm our business, operating results and financial condition.
Future sales of our common stock or the perception that such sales may occur in the public market could cause our stock price to fall.
Sales of a substantial number of shares of our common stock in the public market, or the perception that these sales might occur, could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities.
Under our universal shelf registration statement, we may sell any combination of common stock, preferred stock, debt securities and warrants in one or more offerings, including pursuant to our sales agreement with Cowen & Company, LLC, under which we can offer and sell our common stock from time to time up to aggregate sales proceeds of $120.0 million. As of September 30, 2025, we had $120.0 million of our common stock remaining available for future issuance under our sales agreement with Cowen & Company, LLC. The sale or issuance of our securities, as well as the existence of outstanding options and shares of common stock reserved for issuance under our option and equity incentive plans also may adversely affect the terms upon which we are able to obtain additional capital through the sale of equity securities.
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There can be no assurance with respect to the number of shares of our common stock repurchased under the share repurchase program or that our share repurchase program will provide the benefits anticipated.*
In October 2025, our Board of Directors authorized a share repurchase program (the "New Repurchase Program") to repurchase up to $100.0 million worth of our common stock, subject to market conditions. We can provide no assurance with respect to the final number of shares of our common stock that might be repurchased under the New Repurchase Program or that our New Repurchase Program or our capital allocation strategy in general will provide the benefits anticipated, and it may not prove to be the best use of our cash. The New Repurchase Program could affect the trading price of our stock and increase volatility, and any announcement of a termination of this program may result in a decrease in the trading price of our stock. In addition, this program will reduce our cash reserves.
The anti-takeover provisions of our certificate of incorporation, our bylaws, and Delaware law may prevent or frustrate a change in control, even if an acquisition would be beneficial to our stockholders, which could affect our stock price adversely and prevent attempts by our stockholders to replace or remove our current management.*
Provisions of our certificate of incorporation and bylaws may delay or prevent a change in control, discourage bids at a premium over the market price of our common stock and adversely affect the market price of our common stock and the voting or other rights of the holders of our common stock. These provisions include:
•authorizing our Board of Directors to issue additional preferred stock with voting rights to be determined by the Board of Directors;
•limiting the persons who can call special meetings of stockholders;
•prohibiting stockholder actions by written consent;
•a classified Board of Directors pursuant to which our directors are currently elected for staggered terms (until our 2026 Annual Meeting of Stockholders, at and after which directors will be elected to one-year terms);
•providing that a supermajority vote of our stockholders is required for amendment to certain provisions of our certificate of incorporation and bylaws; and
•establishing advance notice requirements for nominations for election to our Board of Directors or for proposing matters that can be acted on by stockholders at stockholder meetings.
Actions of activist stockholders against us have been and could be disruptive and costly, cause uncertainty about the strategic direction of our business, result in litigation, divert management’s and the Board of Director’s attention and resources, and have an adverse effect on our business and stock price.*
From time to time, we may be subject to proposals by activist stockholders urging us to take certain corporate actions or to nominate certain individuals to our Board of Directors. For example, we were recently engaged in a proxy contest in connection with our 2025 Annual Meeting of Stockholders. Stakeholder perception of our performance or stock price may attract future stockholder activism. Future activist stockholder matters, including any proxy contest and/or potential related litigation, could have a material adverse effect on us for the following reasons:
•Such stockholders may attempt to effect changes in our governance and strategic direction or to acquire control over the Board of Directors or our company;
•While we welcome the opinions of all stockholders, responding to proxy contests and related litigation by activist stockholders could be costly and time-consuming, and could disrupt our operations, and divert the attention of our Board of Directors, management team and other employees away from their regular duties and the pursuit of business opportunities to enhance stockholder value;
•Perceived uncertainties as to our future direction and control, our ability to execute on our strategy, or changes to the composition of our Board of Directors or senior management team arising from a proxy contest could lead to the perception of a change in the direction of our business, instability or lack of continuity, which may be exploited by our competitors and cause concern to our existing or potential collaboration partners, employees and stockholders; make it more difficult to pursue our strategic initiatives, limit our ability to attract and retain qualified personnel and business partners or harm our ability to attract investors, any of which could adversely affect our business and operating results and cause our stock price to experience periods of volatility or stagnation based on such factors that do not necessarily reflect the underlying fundamentals and prospects of our business; and
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•If nominees advanced by an activist stockholder were to be elected to our Board of Directors with a specific agenda, it could adversely affect our ability to effectively and timely run our business or to drive long-term stockholder value, and this could in turn have an adverse effect on our business and on our results of operations and financial condition.
Risks Related to Our Outstanding Convertible Notes
Servicing our Convertible Notes requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.
Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, including the $265.2 million in Convertible Notes, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not continue to generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.
We may not have the ability to generate or raise the funds necessary to settle conversions of the Convertible Notes in cash or to repurchase the Convertible Notes for cash upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the Convertible Notes.
Holders of each series of the Convertible Notes will have the right, subject to certain conditions and limited exceptions, to require us to repurchase all or a portion of their Convertible Notes upon the occurrence of a fundamental change (as defined in the applicable indenture governing the Convertible Notes), in each case, at a fundamental change repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. In addition, upon conversion of the Convertible Notes, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the Convertible Notes being converted. Moreover, we will be required to repay the Convertible Notes in cash at their maturity unless earlier converted, redeemed or repurchased. However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of Convertible Notes surrendered therefore or pay cash with respect to Convertible Notes being converted. In addition, our ability to repurchase the Convertible Notes or to pay cash upon conversions of the Convertible Notes may be limited by law, by regulatory authority or by agreements governing our future indebtedness. Our failure to repurchase Convertible Notes at a time when the repurchase is required by the indenture governing the Convertible Notes or to pay any cash payable on future conversions of the Convertible Notes as required by the indenture governing the Convertible Notes would constitute a default under the relevant indenture. A default under either indenture governing the Convertible Notes or the occurrence of a fundamental change itself could also lead to a default under agreements governing our future indebtedness. Moreover, the occurrence of a fundamental change under the indenture governing the Convertible Notes could constitute an event of default under any agreements governing our future indebtedness. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the Convertible Notes or make cash payments upon conversions thereof.
The conditional conversion feature of the Convertible Notes may adversely affect our financial condition and operating results.*
From July 1 through September 30, 2025, the conditions allowing holders to convert all or any portion of their Convertible Notes were not met. In the event the conditional conversion feature of the Convertible Notes is triggered, holders of Convertible Notes will be entitled to convert their Convertible Notes at any time during specified periods at their option. If one or more holders elect to convert their Convertible Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity. In addition, even if holders do not elect to convert their Convertible Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the 2030 Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.
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Conversion of the Convertible Notes may dilute the ownership interest of our stockholders or may otherwise depress the price of our common stock.*
From July 1 through September 30, 2025, the conditions allowing holders to convert all or any portion of their Convertible Notes were not met. In the event the conditional conversion feature of the Convertible Notes is triggered, the conversion of some or all of the Convertible Notes to shares of common stock may dilute the ownership interests of our stockholders. Upon conversion of either series of Convertible Notes, we have the option to pay or deliver, as the case may be, cash, shares of our common stock, or a combination of cash and shares of our common stock. If we elect to settle our conversion obligation in shares of our common stock or a combination of cash and shares of our common stock, any sales in the public market of our common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock. In addition, the existence of the Convertible Notes may encourage short selling by market participants because the conversion of the Convertible Notes could be used to satisfy short positions, or anticipated conversion of the Convertible Notes into shares of our common stock could depress the price of our common stock.
Certain provisions in the indentures governing the Convertible Notes may delay or prevent an otherwise beneficial takeover attempt of us.
Certain provisions in the indentures governing the Convertible Notes may make it more difficult or expensive for a third party to acquire us. For example, the indentures governing the Convertible Notes will each require us, subject to certain exceptions, to repurchase such Convertible Notes for cash upon the occurrence of a fundamental change (as defined in the applicable indenture governing the Convertible Notes) and, in certain circumstances, to increase the conversion rate of the applicable series of Convertible Notes for a holder that converts such Convertible Notes in connection with a make-whole fundamental change (as defined in the applicable indenture governing the Convertible Notes). A takeover of us may trigger the requirement that we repurchase the Convertible Notes and/or increase the conversion rate, which could make it more costly for a potential acquirer to engage in such takeover. Such additional costs may have the effect of delaying or preventing a takeover of us that would otherwise be beneficial to investors.
The Capped Calls may affect the value of the Convertible Notes and our common stock.*
In connection with the issuance of the 2026 Notes, we entered into capped call options with the option counterparties totaling $27.2 million (the "Capped Calls") in 2021. The Capped Calls cover, subject to customary adjustments under the terms of the Capped Calls, the number of shares of common stock that initially underlie the Capped Calls. The Capped Calls are expected to offset the potential dilution to our common stock as a result of any conversion of the 2026 Notes, subject to a cap based on the cap price. As part of the Refinancing Transaction completed in March 2025, we unwound a portion of the Capped Calls and received $46.6 million in cash. Following the partial unwind, Capped Calls covering approximately 3,841,222 shares of common stock remain outstanding as of September 30, 2025.
In connection with establishing their initial hedges of the Capped Calls, we have been advised that the option counterparties and/or their respective affiliates entered into various derivative transactions with respect to our common stock concurrently with or shortly after the pricing of the 2026 Notes and/or purchased shares of our common stock concurrently with or shortly after the pricing of the 2026 Notes. In addition, the option counterparties and/or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions following the pricing of the 2026 Notes and prior to the maturity of the 2026 Notes (and are likely to do so on each exercise date of the Capped Calls, which are expected to occur during the 30 trading day period beginning on the 31st scheduled trading day prior to the maturity date of the 2026 Notes, or following any termination of any portion of the Capped Calls in connection with any repurchase, redemption or early conversion of the 2026 Notes). This activity could also cause or avoid an increase or a decrease in the market price of our common stock or the 2026 Notes.
We are subject to counterparty risk with respect to the capped call options.
The option counterparties are financial institutions, and we will be subject to the risk that any or all of them might default under the Capped Calls. Our exposure to the credit risk of the option counterparties will not be secured by any collateral.
If an option counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under the Capped Calls with such option counterparty. Our exposure will depend on many factors but, generally, an increase in our exposure will be correlated to an increase in the market price and in the volatility of our common stock. In addition, upon a default by an option counterparty, we may suffer adverse tax consequences and more dilution than we currently anticipate with respect to our common stock. We can provide no assurances as to the financial stability or viability of the option counterparties.
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General Risk Factors
The loss of key personnel could delay or prevent achieving our objectives. In addition, our continued growth to support commercialization may result in difficulties in managing our growth and expanding our operations successfully.
We depend on our senior executive officers, as well as other key scientific personnel. Our commercial and business efforts could be adversely affected by the loss of one or more key members of our commercial or management staff, including our senior executive officers. We currently have no key person insurance on any of our employees.
As our operations expand, we expect that we will need to manage additional relationships with various vendors, partners, suppliers and other third parties. Future growth will impose significant added responsibilities on members of management. Our future financial performance and our ability to successfully commercialize HEPLISAV-B, or other future products we may attempt to commercialize, and to compete effectively will depend, in part, on our ability to manage any future growth effectively. To that end, we must be able to effectively manage our commercialization efforts, research efforts and clinical trials and hire, train and integrate additional regulatory, manufacturing, administrative, and sales and marketing personnel. We may not be able to accomplish these tasks, and our failure to accomplish any of them could prevent us from successfully growing and achieving profitability.
Our business operations are vulnerable to interruptions by natural disasters, health epidemics and other catastrophic events beyond our control, the occurrence of which could materially harm our manufacturing, distribution, sales, business operations and financial results.
Our business operations are subject to interruption by natural disasters and other catastrophic events beyond our control, including, but not limited to, earthquakes, hurricanes, fires, droughts, tornadoes, tsunamis, electrical blackouts, public health crises and pandemics, war, terrorism, bank failures and geo-political unrest and uncertainties. We have not undertaken a systematic analysis of the potential consequences to our business that might result from any such natural disaster or other catastrophic event and have limited recovery plans in place. If any of these events occur, our manufacturing and supply chain, distribution, sales and marketing efforts and other business operations could be subject to business shutdowns or disruptions and financial results could be adversely affected. We cannot presently predict the scope and severity of any potential business shutdowns or disruptions resulting from these events, but if we or any of the third parties with whom we engage, including the suppliers, contract manufacturers, distributors and other third parties with whom we conduct business, were to experience shutdowns or other business disruptions, our ability to conduct our business in the manner and on the timelines presently planned could be materially and adversely affected in a number of ways, some of which are not predicable.
Our business could be adversely affected by health epidemics in regions where we have manufacturing facilities, sales activities or other business operations. For example, outbreaks of epidemic or pandemic diseases, such as COVID-19, or the fear of such events, have and could again in the future cause restrictions on supply chains, restrict access to workplaces and affect employee health and availability. Furthermore, during the peak of the COVID-19 pandemic there was a significantly reduced utilization of all adult vaccines (other than COVID-19 vaccines), including a reduced utilization of HEPLISAV-B.
Although we maintain inventories of HEPLISAV-B and its components, our ability and those of our contractors and distributors to produce and distribute HEPLISAV-B could be adversely affected. A pandemic or similar health challenge could severely impact the U.S. healthcare system, which may have an adverse effect on usage and sales of HEPLISAV-B. In addition, any such event could result in widespread global health crisis that could adversely affect global economies and financial markets resulting in an economic downturn that could affect the demand for HEPLISAV-B and future revenue and operating results and our ability to raise additional capital when needed on acceptable terms, if at all.
Additionally, our corporate headquarters in Emeryville, California, is located in a seismically active region that also is subject to possible electrical shutdowns and wildfires. Because we do not carry earthquake insurance for earthquake-related losses and significant recovery time could be required to resume operations, our financial condition and operating results could be materially adversely affected in the event of a major earthquake or catastrophic event. We carry only limited business interruption insurance that would compensate us for actual losses from interruption of our business that may occur, and any losses or damages incurred by us in excess of insured amounts could adversely affect our business and operations.
If our information technology systems or those of third parties upon which we rely, or our data are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to
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regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse consequences.
Our business is increasingly dependent on critical, complex and interdependent information technology systems, including internet-based systems, to support business processes as well as internal and external communications. In addition, our dependence on information technology systems has intensified because many of our critical business activities are now being conducted remotely in our remote-first work environment. The size and complexity of our computer systems make them potentially vulnerable to breakdown, malicious intrusion and computer viruses that may result in the impairment of key business processes.
In addition, our systems, along with those of our customers, suppliers, or third-party service providers which operate critical business systems to process sensitive information in a variety of contexts are potentially vulnerable to a variety of evolving threats and data security breaches—whether by employees or others—that may expose sensitive data to unauthorized persons. Such threats could include, but not be limited to social-engineering attacks (including through phishing attacks), online and offline fraud, malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks, access attacks (such as credential stuffing or credential harvesting), personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, earthquakes, fires, floods, and other similar threats. Such threats are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources, including traditional computer “hackers,” threat actors, “hacktivists,” organized criminal threat actors, personnel (such as through theft or misuse), sophisticated nation states, and nation-state-supported actors.
Ransomware attacks, including by organized criminal threat actors, nation-states, and nation-state-supported actors, are becoming increasingly prevalent and severe and can lead to significant interruptions in our operations, loss of data and income, reputational harm, and diversion of funds. Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments. Similarly, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties and infrastructure in our supply chain or our third-party partners’ supply chains have not been compromised or that they do not contain exploitable flaws or bugs that could result in a breach of or disruption to our information technology systems (including our products or the third-party information technology systems that support us and our goods). We rely on third parties to operate critical business systems to process sensitive information in a variety of contexts. Our ability to monitor these third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place. If our third-party service providers experience a security incident or other interruption, we could experience adverse consequences. While we may be entitled to damages if our third-party service providers fail to satisfy their privacy or security-related obligations to us, any award may be insufficient to cover our damages, or we may be unable to recover such award.
It may be difficult and/or costly to detect, investigate, mitigate, contain, and remediate a security incident. Our efforts to do so may not be successful. Actions taken by us or the third parties with whom we work to detect, investigate, mitigate, contain, and remediate a security incident could result in outages, data losses, and disruptions of our business. Threat actors may also gain access to other networks and systems after a compromise of our networks and systems.
The potential liability and associated consequences we could suffer as a result of any such cyber events could be catastrophic and result in irreparable harm including (a) the loss of trade secrets or other intellectual property, or (b) the public exposure of personally identifiable information (including sensitive personal information) of our employees, collaborators, clinical trial patients, and others, (c) extortion and other monetary damages due to malware or business email compromise, (d) significant interruptions in our operations, or (e) other significant damages. A data security breach or privacy violation that leads to disclosure or modification of or prevents access to patient information, including personally identifiable information or protected health information, could harm our reputation, compel us to comply with federal, state and/or international data breach notification laws, subject us to mandatory corrective action, require us to verify the correctness of database contents and otherwise subject us to liability under laws and regulations that protect personal data, including, but not limited to, HIPAA, similar state data protection regulations, and the EU GDPR and UK GDPR, resulting in significant penalties; increased costs; loss of revenue; expenses of computer or forensic investigations; material fines and penalties; compensatory, special, punitive or statutory damages; litigation; consent orders regarding our privacy and security practices; requirements that we provide notices, credit monitoring services and/or credit restoration services or other relevant services to impacted individuals; adverse actions against our licenses to do business; or injunctive relief.
Compliance with these and any other applicable privacy and data security laws and regulations is a rigorous and time-intensive process, and we may be required to put in place additional mechanisms ensuring compliance with the
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new data protection rules. If we fail to comply with any such laws or regulations, we may face significant fines and penalties that could adversely affect our business, financial condition and results of operations. Furthermore, the laws are not consistent, and compliance in the event of a widespread data breach is costly.
U.S. and equivalent foreign authorities and international authorities warned businesses of increased cybersecurity threats from actors seeking to exploit the COVID-19 pandemic. If we are unable to prevent data security breaches or privacy violations or implement satisfactory remedial measures, our operations could be disrupted, and we may suffer loss of reputation, financial loss and other regulatory penalties because of lost or misappropriated information, including sensitive patient data. Moreover, failure to maintain effective internal accounting controls related to data security breaches and cybersecurity in general could impact our ability to produce timely and accurate financial statements and could subject us to regulatory scrutiny. In addition, these breaches and other inappropriate access can be difficult to detect, and any delay in identifying them may lead to increased harm of the type described above. Moreover, the prevalent use of mobile devices that access confidential information increases the risk of data security breaches, which could lead to the loss of confidential information, trade secrets or other intellectual property. While we have implemented security measures that are intended to protect our data security and information technology systems, there can be no assurance that these measures will be effective. We take steps designed to detect, mitigate, and remediate vulnerabilities in our information systems (such as our hardware and/or software, including that of third parties upon which we rely). We may not, however, detect and remediate all such vulnerabilities including on a timely basis. Further, we may experience delays in deploying remedial measures and patches designed to address identified vulnerabilities.
Such disruptions and breaches of security could have a material adverse effect on our business, financial condition and results of operations. Our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our data privacy and security obligations. We cannot be sure that our insurance coverage will be adequate or sufficient to protect us from or to mitigate liabilities arising out of our privacy and security practices, that such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage will pay future claims.
Adverse developments affecting the financial services industry may have adverse consequences on our business, financial condition and stock price.
We regularly maintain cash balances at third-party financial institutions in excess of the FDIC insurance limit. Although we assess our banking relationships as we believe necessary or appropriate, our access to funding sources in amounts adequate to finance or capitalize our current and projected future business operations could be significantly impaired by factors that affect us, the financial institutions with which we have arrangements directly, or the financial services industry or economy in general. These factors could involve financial institutions or financial services industry companies with which we have financial or business relationships, but could also include factors involving financial markets or the financial services industry generally.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
During the three months ended September 30, 2025, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Item 408 of Regulation S-K.
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ITEM 6. EXHIBITS

|  | Incorporated by Reference |
Exhibit Number | Document | Exhibit Number | Filing | Filing Date | File No. | Filed Herewith
3.1 | Restated Certificate of Incorporation | 3.1 | 8-K | June 17, 2025 | 001-34207 |
3.2 | Amended and Restated Bylaws | 3.2 | 8-K | June 17, 2025 | 001-34207 |
4.1 | Reference is made to Exhibits 3.1 and 3.2 |  |  |  |  |
4.2 | Form of Specimen Common Stock Certificate | 4.2 | S-1/A | January 16, 2004 | 333-109965 |
4.3 | Indenture between Company and U.S. Bank National Association, as trustee, dated May 13, 2021 | 4.1 | 8-K | May 13, 2021 | 001-34207 |
4.4 | Form of Global Note, representing Dynavax Technologies Corporation’s 2.50% Convertible Senior Notes due 2026 | 4.2 | 8-K | May 13, 2021 | 001-34207 |
4.5 | Indenture, dated as of March 13, 2025, between Company and U.S. Bank Trust Company, National Association, as Trustee | 4.1 | 8-K | March 13, 2025 | 001-34207 |
4.6 | Form of 2.00% Convertible Senior Notes due 2030 (included as Exhibit A to Exhibit 4.6) | 4.2 | 8-K | March 13, 2025 | 001-34207 |
31.1 | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |  |  |  |  | X
31.2 | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |  |  |  |  | X
32.1* | Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |  |  |  |  | X
32.2* | Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |  |  |  |  | X

EX—101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
EX—101.SCH | Inline XBRL Taxonomy Extension Schema Document
EX—104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

____________________________________________
* The certifications attached as Exhibits 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q, are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of this Form 10-Q), irrespective of any general incorporation language contained in such filing.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Emeryville, State of California.

| DYNAVAX TECHNOLOGIES CORPORATION
Date: November 5, 2025 | By: |  | /s/ RYAN SPENCER
|  |  | Ryan Spencer
|  |  | Chief Executive Officer and Director
|  |  | (Principal Executive Officer)
Date: November 5, 2025 | By: |  | /s/ KELLY MACDONALD
|  |  | Kelly MacDonald
|  |  | Chief Financial Officer
|  |  | (Principal Financial Officer)
Date: November 5, 2025 | By: |  | /s/ JOSEPH A. METZINGER
|  |  | Joseph A. Metzinger
|  |  | Vice President, Chief Accounting Officer
|  |  | (Principal Accounting Officer)

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