Novavax shares jump 40% on $1.2 billion licensing deal with Sanofi despite Q1 losses

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on May 10, 2024
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  • The licensing agreement has dispelled concerns regarding Novavax’s ability to remain in business.
  • Sanofi will pay Novavax $500 million upfront and up to $700 million.
  • Novavax will receive double-digit percentage royalties on sales of these vaccines.

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Novavax (NASDAQ:NVAX) shares rocketed 40% in premarket trading Friday, driven not only by the company’s fiscal Q1 2024 earnings report but more significantly, by a crucial multi-billion dollar deal with French pharmaceutical giant Sanofi SA.

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Despite reporting a first-quarter loss per share of $1.05, wider than the $0.92 anticipated by analysts, and revenue of $93.85 million which fell short of the consensus estimate of $141.16 million, the announcement of the partnership spurred a dramatic increase in Novavax’s stock value.

Novavax’s deal with Sanofi boosts investor confidence

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The licensing agreement, potentially worth up to $1.2 billion, has dispelled concerns regarding Novavax’s ability to remain in business.

It involves the co-commercialization of Novavax’s COVID-19 vaccine and the development of new COVID-19-influenza combination vaccines using Novavax’s Matrix-M adjuvant.

Sanofi will pay Novavax $500 million upfront and up to $700 million in development, regulatory, and launch milestones.

Furthermore, Novavax will receive double-digit percentage royalties on sales of these vaccines.

Sanofi acquires a stake in Novavax

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As part of the deal, Sanofi will take a 4.9% stake in Novavax for $70 million.

This investment values Novavax at about $1.4 billion, nearly double its market capitalization of about $628 million as of Thursday, though still far below its 2021 peak of $20 billion.

Sanofi faced manufacturing delays for Covid vax

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The strategic partnership with Sanofi marks a significant turnaround for Novavax, which had struggled with manufacturing issues and delays in regulatory approval for its COVID vaccine.

Sanofi’s head of vaccines R&D, Jean-Francois Toussaint, expressed enthusiasm about integrating Novavax’s high-efficacy COVID-19 vaccine with Sanofi’s flu vaccine portfolio.

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