Novavax Inc. (NASDAQ:NVAX) experienced a significant uptick in its stock price following the announcement of a $1.2 billion licensing deal with Sanofi (NASDAQ:SNY). The agreement focuses on the commercialization of a combined Covid-19 and flu vaccine, promising to reshape the landscape of vaccine offerings.
Under the terms of the deal, Novavax will receive $500 million upfront and could gain an additional $700 million if it meets certain development, regulatory, and launch milestones. The agreement also includes tiered royalties on vaccine sales and sees Sanofi acquiring a 5% minority equity stake in Novavax.
Shares of Novavax soared up to 146% in early trading in New York, marking what could be its largest single-day gain to date. Despite this surge, the stock’s price of $10.30 remains far below its early 2021 peak of approximately $320.
The partnership between Novavax and Sanofi comes after both companies experienced setbacks in the initial rush to develop Covid-19 vaccines, losing potential billions in revenue to faster-moving competitors like Pfizer-BioNTech (NYSE:PFE, NASDAQ:BNTX) and Moderna Inc. (NASDAQ:MRNA).
Sanofi has secured exclusive rights to promote Novavax’s Covid-19 vaccine globally starting next year, with exceptions in India, Japan, and South Korea, where Novavax has pre-existing agreements. Additionally, Sanofi will have the sole license to integrate Novavax’s protein-based Covid vaccine with its own flu vaccine, offering dual protection against both viruses.
Furthermore, Sanofi will hold a non-exclusive license to use Novavax’s Matrix-M adjuvant in other vaccine formulations. Meanwhile, Novavax retains the ability to develop and market its own combined Covid-flu vaccine independently.
Early trading in Paris saw a slight rise in Sanofi’s shares, although they had declined about 5% over the previous 12 months.
This strategic deal comes at a crucial time for Novavax, which is in the process of restructuring its operations following a challenging year that included a “going concern” warning about its future viability. Novavax recently reported a first-quarter net loss of $148 million, showing improvement from a $294 million loss in the same period last year.
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