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Novavax secures a licensing deal worth up to $1.2 billion with Sanofi for its COVID-19 vaccine, entailing a stake in Novavax valued at double its current market capitalization.
After the announcement, Novavax’s stock more than doubled, reaching $9.29 before market opening, as investor sentiment rallied in response to the deal and removing previous business uncertainty.
Financial Implications:
Sanofi acquires a 4.9% stake in Novavax for $70 million, alongside an upfront cash payment of $500 million and additional future payments contingent on milestones and royalties, bolstering Novavax’s balance sheet.
Hedge fund Shah Capital views the deal positively, considering it a step forward for shareholders and potentially validating their push for a board shake-up at Novavax.
Strategic Benefits for Sanofi:
Sanofi is licensed to co-sell Novavax’s COVID-19 vaccine in most countries, enhancing its flu vaccine franchise and potentially enabling the development of combination vaccines with COVID-19 shots.
Novavax revises its 2024 sales forecast, excluding contributions from the Sanofi deal, to $400 million to $600 million, down from the previous estimate of $800 million to $1 billion.
Financial Performance:
Despite narrowing its net loss to $148 million in the first quarter from $294 million a year ago, Novavax faces ongoing challenges in navigating the competitive landscape and efficiently delivering its vaccine to the market.
