Reuters, May 10 In order to allay concerns about its sustainability, Novavax (NVAX.O), opens new tab on Friday announced a $1.2 billion license agreement with Sanofi (SASY.PA), opens new tab for COVID-19 vaccines in return for a stake that more than doubles the market value of the American biotech.
For $70 million, Sanofi will purchase a 4.9% share in the US pharmaceutical company. Novavax’s market capitalization as of Thursday was around $628 million, so it puts its worth at about $1.4 billion, over double what it was at its high of $20 billion in 2021.
Under the terms of the agreement, Novavax will get $500 million in upfront cash, milestone payments, and revenues from the sale of its equity investment. Prior to the opening bell, shares of the Gaithersburg, Maryland-based business had increased by 55.5% to $6.95.
The injection of capital is anticipated to fortify the vaccine manufacturer’s balance sheet, since its shares have experienced a decline of more than 98% in value from their high during the early stages of the pandemic due to the company’s difficulties in bringing its COVID-19 vaccine to market on time.
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Sanofi, on the other hand, will be granted permission to co-commercialize the COVID-19 vaccine by Novavax in the majority of nations and to combine the COVID shot with its existing flu shots to create a combination flu shot.
The partnership may support the French pharmaceutical company’s flu vaccine business as competitors like Moderna (MRNA.O) and Pfizer (PFE.N) create combo vaccinations that can be taken in addition to COVID-19 doses.
“Our sense is the angle here really is on having the option to provide a future flu (plus) COVID combo vaccine as Sanofi seeks to build out the moat around its high-dose flu vaccine,” the analysts at Barclays stated in a research note.
Following the transaction, Novavax said that it was lifting the “going concern” warning it had issued in February of last year due to issues with COVID-19 shot production and regulatory delays.
Separately, Novavax reduced its revenue projection from $800 million to $1 billion to between $400 million and $600 million for 2024 (excluding contributions from the Sanofi transaction).
Additionally, Novavax revealed a net loss for the first quarter of $148 million as opposed to $294 million in the same period last year.
