Novavax Stock Doubles on $1.2B Sanofi Deal for COVID-19, Flu Vaccines – Investopedia

Key Takeaways

Novavax (NVAX) shares more than doubled in intraday trading Friday after announcing a $1.2 billion deal to license its vaccine technology to French drugmaker Sanofi (SNY).

Novavax agreed to license its vaccine technology for COVID-19 and other possible future vaccines to Sanofi, as well as co-develop a combination vaccine designed to prevent both COVID-19 and the flu. Sanofi agreed to pay Novavax $500 million upfront, with another $700 million in possible payments depending on developmental and regulatory milestones.

"Together, we can broaden access to both our COVID-19 vaccine and our adjuvant to ensure more individuals can benefit from the protection vaccines can provide," Novavax Chief Executive Officer (CEO) John C. Jacobs said in a statement. "Novavax is now in a stronger position to refocus our efforts on leveraging our technology platform and novel adjuvant in R&D and pipeline expansion to help advance our mission of developing life-saving vaccines to fight infectious diseases."

The deal will allow Novavax to lift its "going concern" warning, Jacobs told CNBC. The company first issued the warning in early 2023 over concerns that it may not be able to financially survive as demand for COVID-19 vaccines waned.

As part of the deal, Sanofi is also taking a less than 5% equity stake in Novavax, and Novavax will receive royalty payments for future sales of its COVID-19 vaccine and the future combination COVID-19 and flu vaccine.

Alongside the Sanofi deal, Novavax also reported first-quarter results Friday morning that missed analyst estimates.

Novavax reported revenue for the first quarter of $93.9 million, shy of the $101.3 million analysts expected, according to estimates compiled by Visible Alpha. Novavax posted a loss of $147.6 million, or $1.05 per share, wider than the loss of $127.4 million, or 90 cents per share, that analysts projected.

Revenue increased by about $13 million from last year's first quarter, while it effectively cut its net loss in half from last year's mark of $293.9 million.

For the full fiscal year, Novavax lowered its projected revenue to $400 million to $600 million, down from the previous range of $800 million to $1 billion. However, the estimated $570 million the company expects to receive from Sanofi this year pushed its combined revenue and payments projections higher, to $970 million to $1.17 billion.

The company also said it is prepared to introduce a cost-cutting program over the next year, with goals of reducing its combined costs of research and development (R&D) and selling, general, and administrative expenses (SG&A) to below $500 million by the end of fiscal 2025. For fiscal 2024, Novavax projects that those expenses will be within a range of $700 million to $750 million.

Novavax shares were up over 120% by 10:30 a.m. ET Friday to $9.90.

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Novavax Stock Doubles on $1.2B Sanofi Deal for COVID-19, Flu Vaccines - Investopedia