Novavax rises with $1.2 billion Sanofi vaccine licensing deal

(Bloomberg) — Novavax Inc. shares rose. After the company signed a $1.2 billion licensing agreement with Sanofi that includes marketing a joint vaccine against the Corona virus and influenza.

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Novavax will receive $500 million in upfront payments plus $700 million if all development, regulatory and launch phases are met, according to a statement on Friday. Novavax, which will receive tiered royalties on any vaccine sales, said Sanofi is also taking a minority stake of about 5% in the US company.

Novavax shares rose as much as 217% in premarket trading before paring those gains to about 130%. If the jumps continue during Friday’s trading session, it will be the stock’s largest single-day increase on record.

The agreement links two big players in the vaccine world, both of which missed the rush to quickly develop and market Covid vaccines during the pandemic. Amid various setbacks, Sanofi and Novavax have ceded tens of billions of dollars in sales to more nimble messenger-RNA developers, including the Pfizer-BioNTech alliance and Moderna Inc.

Now, Sanofi will have the right to increase sales of the Novavax Covid-19 vaccine worldwide from next year, except for India, Japan and South Korea, where Novavax already has advance purchase agreements. The French pharmaceutical company also has the sole license to use Novavax’s protein-based Covid vaccine in combination with its influenza vaccine, which it said will provide patients with “enhanced comfort and protection against two dangerous respiratory viruses.”

Sanofi will also have a non-exclusive license to use Novavax’s Matrix-M adjuvant in other vaccine products. Novavax will still have the right to jointly develop its own COVID-19 vaccine at its own expense.

Sanofi shares rose slightly in early trading in Paris. The stock is down about 5% over the past 12 months through Thursday’s close.

The deal represents a boost for Novavax, which is in the midst of restructuring its business after a difficult 2023 when it was forced to issue a business continuity warning on its ability to continue operating. Novavax reported a net loss of $148 million in the first quarter, compared to a loss of $294 million a year earlier.

Read more: Novavax falls after warning of high uncertainty about future

At first glance, the deal seems surprising for Sanofi, but it is likely a strategic move, said Mila Bankovskaya, a Bloomberg Intelligence analyst.

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“Both Moderna and Pfizer are evaluating mRNA-based combination vaccines, and although Sanofi believes a non-mRNA-based influenza product will not be improved, the possibility of offering a non-mRNA-based formulation as an alternative seems a reasonable step.” She said.

(Updates with more pre-market trading, more deal context, and analyst comments)

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