Novavax Inc. (NASDAQ:NVAX) witnessed a significant surge in its stock price following the announcement of a lucrative $1.2 billion licensing agreement with Sanofi (NASDAQ:SNY). The deal, pivotal for both companies, involves the development and commercialization of a novel combined Covid-19 and flu vaccine.
Under the terms of the agreement, Novavax will receive an upfront payment of $500 million, with the potential to gain an additional $700 million contingent upon achieving specified development, regulatory, and launch milestones. Furthermore, Novavax will earn tiered royalties on vaccine sales and Sanofi will acquire approximately a 5% minority stake in the American biotechnology firm.
The partnership marks a substantial opportunity for both entities, which had previously missed early chances in the Covid-19 vaccine market, losing potential billions in revenue to faster-moving mRNA vaccine developers like Pfizer-BioNTech (NYSE:PFE, NASDAQ:BNTX) and Moderna Inc. (NASDAQ:MRNA).
This strategic alliance allows Sanofi exclusive rights to sell Novavax’s Covid-19 vaccine globally starting next year, with exceptions in India, Japan, and South Korea where Novavax has existing agreements. Sanofi also gains exclusive rights to integrate Novavax’s protein-based Covid vaccine with its flu vaccine, offering a dual-protection solution to patients against two significant respiratory viruses.
Additionally, Sanofi will hold a non-exclusive license to utilize Novavax’s Matrix-M adjuvant in other vaccine formulations, though Novavax retains the right to pursue its own combined Covid-flu vaccine independently.
Following the announcement, Novavax shares skyrocketed by as much as 146% in early New York trading, marking potentially the largest single-day gain in the company’s history, despite trading well below its peak price of around $320 in early 2021. Meanwhile, Sanofi shares experienced a modest increase in early trading on the Paris stock exchange.
This agreement provides a critical boost to Novavax, particularly after a challenging 2023 that necessitated a restructuring of its operations and a warning about its ongoing viability. For its most recent quarter, Novavax reported a net loss of $148 million, an improvement over the previous year’s $294 million loss.
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