Novavax Inc. (NASDAQ:NVAX) experienced a dramatic rise in its stock price, climbing up to 120% on Friday, propelled by a significant new agreement with Sanofi (SNY), a leading global pharmaceutical and vaccine company. The deal, valued at $1.2 billion, involves Sanofi taking a minority stake in Novavax and promises a substantial cash infusion for the biotech firm, which had been grappling with financial challenges post-pandemic.
Novavax has faced numerous hurdles since its COVID-19 vaccine was delayed by manufacturing issues, causing it to miss the early heights of the pandemic vaccine demand that benefitted competitors like Pfizer/BioNTech (PFE/BNTX) and Moderna (MRNA). The vaccine eventually launched in mid-2022, targeting the booster market, but Novavax continued to struggle under the weight of $1.7 billion in liabilities for promised COVID-19 doses globally.
The agreement with Sanofi not only provides immediate financial relief with a $500 million upfront payment but also includes up to $700 million in potential milestone payments. These funds are tied to the co-commercialization of the COVID-19 vaccine, the development of a combined COVID-19 vaccine, and subsequent royalties. Furthermore, Sanofi has committed to investing up to $200 million for each new vaccine developed using Novavax’s technology, signaling a potentially lucrative future for the biotech company.
Novavax’s new CEO, John Jacobs, who took over from Stanley Erck in January 2023, has made significant strides in reducing the company’s liabilities and operational costs. This strategic partnership marks a pivotal shift for Novavax, which Jacobs described as a move towards a future focused on growth based on the company’s biotechnological strengths and a platform-based growth strategy.
Sanofi, renowned for its extensive vaccine portfolio including successful flu vaccines like Flublok and Fluzone, brings valuable expertise and a complementary platform to the partnership. This alliance is particularly strategic as both companies utilize recombinant protein technology, known for providing long-lasting protection, which aligns well with Sanofi’s robust flu vaccine operations.
Despite the transformative deal, Novavax reported mixed financial results for the first quarter. While it surpassed earnings expectations with earnings per share of $1.08 against a consensus of $1.05, it fell short of revenue projections, posting $98.3 million versus expectations of over $101 million.
This partnership could significantly reshape Novavax’s trajectory, providing the necessary resources to stabilize and expand its vaccine development capabilities, thereby enhancing its position in the competitive vaccine market.
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