Novavax inventory jumps on Sanofi Covid vaccine deal
A vial labelled “Novavax V COVID-19 Vaccine” is seen on this illustration taken January 16, 2022.
Dado Ruvic | Reuters
Shares of Novavax closed practically 50% greater on Monday as Wall Avenue cheered the corporate’s new multibillion-dollar deal with French drugmaker Sanofi that sparked a dramatic turnaround for the struggling vaccine maker.
Novavax’s inventory nearly doubled on Friday after it introduced the licensing settlement with Sanofi. Novavax on Friday mentioned the deal permits the corporate to take away its “going concern” warning, which it first issued in February 2023 because of main doubts about its means to remain afloat.
“It actually does assist our enterprise. It retains us nicely capitalized, it takes the going concern off, it provides us the possibility to pivot our technique extra in direction of what we’re finest at — to convey extra worth to all of our stakeholders, together with our shareholders,” Novavax CEO John Jacobs instructed CNBC in an interview.
Below the settlement, Sanofi will take a lower than 5% stake in Novavax. The deal additionally entitles Novavax to an upfront money fee of $500 million and future funds contingent on sure milestones, in addition to royalties.
Sanofi, one of many world’s largest vaccine makers, will co-market Novavax’s Covid vaccine in most international locations beginning in 2025. The deal additionally permits Sanofi to make use of Novavax’s Covid shot and flagship vaccine expertise, Matrix-M adjuvant, to develop new vaccine merchandise. The pictures embody mixture jabs concentrating on Covid and the flu.
A emblem on the Sanofi exhibition house on the Viva Expertise convention devoted to innovation and startups at Porte de Versailles exhibition heart in Paris, France June 15, 2022.
Benoit Tessier | Reuters
In a observe Sunday, Jefferies analyst Roger Tune mentioned the deal will present vital capital to Novavax and help the corporate’s progress.
“Economically, the deal is extremely profitable and impactful,” Tune wrote.
He mentioned the upfront fee helps take away investor fear about Novavax’s going concern warning, and that milestone funds are “vital and comparatively near-term” for the corporate since they aren’t tied to gross sales. In the meantime, royalties will present a gradual income stream every year, Tune mentioned.
He added that the deal “validates” the corporate’s protein-based vaccine platform.
Novavax’s shot is the primary Covid vaccine to make use of protein expertise, a decades-old technique for preventing viruses utilized in routine pictures towards Hepatitis B and shingles. Well being officers view the vaccine as a precious different for individuals who do not wish to take messenger RNA jabs from Pfizer and Moderna.
In a observe on Sunday, Leerink Companions analyst David Risinger mentioned he’s to see how efficient Sanofi is at elevating client consciousness about how the unwanted side effects of Novavax’s Covid vaccine are simpler for sufferers to tolerate in comparison with competing pictures from Pfizer and Moderna.
Risinger famous that client hesitancy round Covid boosters has come partly from fears concerning the fatigue and discomfort related to Pfizer’s and Moderna’s pictures.
The agency expects Sanofi “to drive larger industrial success of [Novavax’s] vaccine beginning in 2025, because of its industrial scale and contracting talents, however it’s troublesome to foretell the magnitude of impression,” Risinger wrote.
He added that there could possibly be “additional upside” for Sanofi and Novavax in the event that they develop a mix Covid and flu vaccine that has benefits over the mRNA combo pictures being developed by Pfizer and Moderna.
