Novavax inventory jumps on Sanofi Covid vaccine deal

Shares of Novavax closed almost 50% greater on Monday as Wall Road 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 virtually 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 major doubts about its skill to remain afloat.

“It actually does assist our enterprise. It retains us effectively capitalized, it takes the going concern off, it offers us the prospect to pivot our technique extra towards what we’re greatest at — to convey extra worth to all of our stakeholders, together with our shareholders,” Novavax CEO John Jacobs informed CNBC in an interview. 

Underneath the settlement, Sanofi will take a lower than 5% stake in Novavax. The deal additionally entitles Novavax to an upfront money cost 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 know-how, Matrix-M adjuvant, to develop new vaccine merchandise. The pictures embody mixture jabs concentrating on Covid and the flu. 

In a observe Sunday, Jefferies analyst Roger Track mentioned the deal will present vital capital to Novavax and help the corporate’s progress. 

“Economically, the deal is very profitable and impactful,” Track wrote. 

He mentioned the upfront cost 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 don’t seem to be tied to gross sales. In the meantime, royalties will present a gradual income stream every year, Track 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 know-how, a decades-old technique for preventing viruses utilized in routine pictures in opposition to Hepatitis B and shingles. Well being officers view the vaccine as a useful various for individuals who don’t need 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 shopper consciousness about how the uncomfortable 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 shopper 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 affect,” Risinger wrote. 

He added that there could possibly be “additional upside” for Sanofi and Novavax in the event that they develop a mixture Covid and flu vaccine that has benefits over the mRNA combo pictures being developed by Pfizer and Moderna.