In this photo taken on January 16, 2022, you can see a vial labeled “Novavax V Covid-19 Vaccine.”
Ruvic’s bones | Reuters
Shares Novavax on Monday closed nearly 50% higher as Wall Street cheered the company’s recent multibillion-dollar deal with the French drugmaker Sanofi this resulted in a dramatic turnaround for the struggling vaccine maker.
Novavax shares nearly doubled on Friday after it announced a licensing deal with Sanofi. Novavax on Friday said the deal allows the company to withdraw a going concern warning it first issued in February 2023 due to stern doubts about the company’s ability to stay afloat.
“It really helps our company. “It provides us with good capital, it takes us away from further operations, it gives us the opportunity to direct our strategy towards what we do best – to provide additional value to all of our stakeholders, including our shareholders,” Novavax CEO John Jacobs told CNBC.
According to the agreement, Sanofi will acquire less than 5% of shares in Novavax. The transaction also entitles Novavax to an upfront cash payment of $500 million, with future payments contingent on certain key achievements as well as royalties.
Sanofi, one of the world’s largest vaccine producers, will co-launch Novavax’s Covid vaccine in most countries from 2025. The deal also enables Sanofi to employ Novavax’s Covid vaccine and its flagship vaccine technology, the Matrix-M adjuvant, to develop recent vaccine products. Shots include combination vaccines targeting Covid and flu.
Logo on the Sanofi exhibition space during the Viva Technology conference on innovation and start-ups at the Porte de Versailles exhibition center in Paris, France, June 15, 2022.
Benoit Tessier | Reuters
In a note Sunday, Jefferies analyst Roger Song said the deal would provide Novavax with significant capital and support the company’s growth.
“From an economic perspective, the transaction is very lucrative and impactful,” Song wrote.
He said the upfront payment helps allay investor concerns about Novavax’s going concern warning and that milestone payments are “significant and relatively short-term” for the company because they are not tied to sales. Meanwhile, licensing fees will provide a steady stream of revenue each year, Song said.
He added that the deal “validates” the company’s protein vaccine platform.
The Novavax shot is the first Covid vaccine to employ protein technology – a decades-old virus-fighting method used in routine shots against hepatitis B and shingles. Health officials consider the vaccine a valuable alternative for people who do not want to receive messenger RNA injections Pfizer AND Newfangled.
In a Sunday note, Leerink Partners analyst David Risinger expressed interest in Sanofi’s effectiveness in raising consumer awareness about how side effects of Novavax’s Covid vaccine are easier for patients to tolerate compared to competing vaccines from Pfizer and Moderna.
Risinger noted that consumer hesitancy toward Covid boosters is partly due to concerns about fatigue and discomfort associated with the Pfizer and Moderna shots.
The company expects Sanofi “to be more commercially successful [Novavax’s] vaccine will begin in 2025 due to its commercial scale and contracting opportunities, but it is hard to predict the scale of its impact,” Risinger wrote.
He added that Sanofi and Novavax could see “further benefits” if they develop a combination Covid and flu vaccine that has advantages over the mRNA shots being developed by Pfizer and Moderna.
