Sanofi licensing deal doubles value of vaccine group Novavax

Shares in Novavax almost doubled after Sanofi struck a licensing deal worth up to $1.2bn to commercialise the struggling Covid-19 vaccine maker’s coronavirus jab and use the technology to develop its own combined shot with flu.

Novavax shares closed 98.7 per cent higher on Friday in New York at $8.88, moderating from a gain of as much as 146 per cent earlier in the session, following the announcement. The agreement also prompted the US biotech company to remove a “going concern” notice that was issued a year ago and had put pressure on the stock.

The partnership strengthens Sanofi, one of the world’s largest vaccine makers by sales, in the post-pandemic Covid jab market, where pharmaceutical groups are increasingly focused on combined shots against two or more infectious diseases.

Under the agreement, Paris-based Sanofi would lead the sales push of Novavax’s Covid jab from next year in most countries and have the rights to combine the US biotech’s protein-based vaccine technology with its flu shots and other infectious disease jabs, the companies said on Friday.

Novavax will receive an upfront payment of $500mn in cash and an equity investment, and will stand to receive the remaining $700mn upon the completion of certain regulatory and development milestones.

Sanofi will take a roughly 5 per cent stake in Novavax. The US biotech group will also benefit from a double-digit percentage of royalties from the sales of its Covid jab as well as any combined shot using its technology, but the French company will take the majority of revenues.

Jean-François Toussaint, who heads Sanofi’s vaccine research and development, said: “We’re excited by the prospect of combining Novavax’s adjuvanted Covid-19 vaccine that has shown high efficacy and favourable tolerability, with our rich portfolio of differentiated flu vaccines that have demonstrated superior protection against flu and its serious complications.”

Touissant said the combined shot would offer patients “enhanced convenience and protection against two serious respiratory viruses”. Sanofi had a Covid booster vaccine approved by the European Medicines Agency in 2022 but it has struggled to make a dent in the market.

The licensing agreement caps a tumultuous period for Novavax, whose market value boomed to more than $40bn at the height of the pandemic, propelled by investor excitement over its Covid shot. But it has since had most of its value wiped out.

The vaccine maker has undertaken a $1.1bn cost-cutting drive in the past year to stave off a possible bankruptcy and has faced pressure from an activist investor for a board shake-up.

Novavax suffered from mis-steps with the launch of its Covid vaccine, which was late to market because of a sluggish approval process. It then faced collapsing demand as governments withdrew from procurement deals.

Its vaccine, a more traditional protein-based formulation combined with an adjuvant to boost its effectiveness, has been pitched to patients as a counterpoint to mRNA jabs from BioNTech/Pfizer and Moderna that have inspired vaccine scepticism over rare side effects. But sales have lagged.

“Novavax is now in a stronger position to refocus our efforts on leveraging our technology platform and novel adjuvant,” said John Jacobs, Novavax chief executive.

Novavax will still be allowed to press ahead with the development of its combined Covid-flu shot, which is set to enter late-stage trials in the second half of this year.