Novavax stock jumps 50% as Sanofi deal kicks off turning point for struggling vaccine maker

Shares
of


Novavax
closed
nearly
50%
higher
on
Monday
as
Wall
Street
cheered
the
company’s
new

multibillion-dollar
deal
with
French
drugmaker


Sanofi
that
sparked
a
dramatic
turnaround
for
the
struggling
vaccine
maker.

Novavax’s
stock
almost

doubled
on
Friday
after
it
announced
the
licensing
agreement
with
Sanofi.
Novavax
on
Friday
said
the
deal
allows
the
company
to
remove
its “going
concern”
warning,
which
it
first
issued
in
February
2023
due
to

major
doubts
about
its
ability
to
stay
afloat.

“It
really
does
help
our
business.
It
keeps
us
well
capitalized,
it
takes
the
going
concern
off,
it
gives
us
the
chance
to
pivot
our
strategy
more
toward
what
we’re
best
at
—
to
bring
additional
value
to
all
of
our
stakeholders,
including
our
shareholders,”
Novavax
CEO
John
Jacobs
told
CNBC
in
an
interview. 

Under
the
agreement,
Sanofi
will
take
a
less
than
5%
stake
in
Novavax.
The
deal
also
entitles
Novavax
to
an
upfront
cash
payment
of
$500
million
and
future
payments
contingent
on
certain
milestones,
as
well
as
royalties. 

Sanofi,
one
of
the
world’s
largest
vaccine
makers,
will
co-market
Novavax’s
Covid
vaccine
in
most
countries
starting
in
2025.
The
deal
also
allows
Sanofi
to
use
Novavax’s
Covid
shot
and
flagship
vaccine
technology,
Matrix-M
adjuvant,
to
develop
new
vaccine
products.
The
shots
include
combination
jabs
targeting
Covid
and
the
flu. 

In
a
note
Sunday,
Jefferies
analyst
Roger
Song
said
the
deal
will
provide
significant
capital
to
Novavax
and
support
the
company’s
growth. 

“Economically,
the
deal
is
highly
lucrative
and
impactful,”
Song
wrote. 

He
said
the
upfront
payment
helps
remove
investor
worry
about
Novavax’s
going
concern
warning,
and
that
milestone
payments
are “significant
and
relatively
near-term”
for
the
company
since
they
are
not
tied
to
sales.
Meanwhile,
royalties
will
provide
a
steady
revenue
stream
each
year,
Song
said. 

He
added
that
the
deal “validates”
the
company’s
protein-based
vaccine
platform. 

Novavax’s
shot
is
the
first
Covid
vaccine
to
use
protein
technology,
a
decades-old
method
for
fighting
viruses
used
in
routine
shots
against
Hepatitis
B
and
shingles.
Health
officials
view
the
vaccine
as
a
valuable
alternative
for
people
who
do
not
want
to
take
messenger
RNA
jabs
from


Pfizer
and


Moderna.

In
a
note
on
Sunday,
Leerink
Partners
analyst
David
Risinger
said
he
is
interested
to
see
how
effective
Sanofi
is
at
raising
consumer
awareness
about
how
the
side
effects
of
Novavax’s
Covid
vaccine
are
easier
for
patients
to
tolerate
compared
to
competing
shots
from
Pfizer
and
Moderna.

Risinger
noted
that
consumer
hesitancy
around
Covid
boosters
has
come
in
part
from
fears
about
the
fatigue
and
discomfort
associated
with
Pfizer’s
and
Moderna’s
shots. 

The
firm
expects
Sanofi “to
drive
greater
commercial
success
of
[Novavax’s]
vaccine
starting
in
2025,
due
to
its
commercial
scale
and
contracting
abilities,
but
it
is
difficult
to
predict
the
magnitude
of
impact,”
Risinger
wrote. 

He
added
that
there
could
be “further
upside”
for
Sanofi
and
Novavax
if
they
develop
a
combination
Covid
and
flu
vaccine
that
has
advantages
over
the
mRNA
combo
shots
being
developed
by
Pfizer
and
Moderna.