Novavax, a U.S. biotech company, secured a licensing agreement with Sanofi worth up to $1.2 billion for COVID-19 vaccines, dispelling concerns about its financial stability. As part of the deal, Sanofi will acquire a 4.9% stake in Novavax for $70 million, doubling the biotech company’s market value to about $1.4 billion. This marks a significant increase from its market capitalization of $628 million just a day before the agreement, although it remains lower than its peak of $20 billion in 2021.
The licensing agreement with Sanofi includes an upfront cash payment of $500 million, milestone-based payments, and proceeds from the equity stake sale. This financial boost is expected to improve Novavax’s balance sheet, which has been hindered by challenges in getting its COVID-19 vaccine to market promptly, resulting in a decline of over 98% in stock value since its peak. Sanofi will be able to co-commercialize Novavax’s COVID-19 vaccine in most countries and combine it with its own flu vaccines to create a flu and COVID-19 shot.
The agreement is seen as an opportunity for Sanofi to strengthen its flu vaccine franchise as competitors like Pfizer and Moderna develop similar products. Novavax has withdrawn a “going concern” notice put in place in February 2021 following issues with manufacturing and regulatory delays related to its COVID-19 vaccine. The company also revised its 2024 sales forecast, excluding contributions from the Sanofi deal, to between $400 million and $600 million.
In the first quarter of 2022, Novavax reported a net loss of $148 million, down from $294 million in the same period a year ago. Analysts anticipate that the licensing agreement with Sanofi will pave the way for a potential combination flu and COVID-19 vaccine in the future.