In a transformative move for the struggling vaccine maker Novavax, French pharmaceutical giant Sanofi has entered into a multibillion-dollar licensing agreement to co-commercialize Novavax's Covid vaccine and develop combination shots targeting both the coronavirus and the flu. The deal, announced on Friday, sent Novavax shares soaring over 100% in premarket trading, marking a significant turnaround for the company that had previously issued a "going concern" warning about its ability to continue operating.
Under the terms of the agreement, Sanofi will pay Novavax an upfront payment of $500 million, with the potential for an additional $700 million in development, regulatory, and launch milestone payments. Novavax CEO John Jacobs told CNBC in an interview that the deal will allow the company to lift its "going concern" warning and provide a much-needed capital infusion. "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 towards what we're best at," Jacobs said.
The partnership will see Novavax lead the commercialization of its Covid vaccine for the remainder of 2023, with Sanofi taking over most of the responsibility in 2025. Sanofi will not oversee commercialization in countries where Novavax has existing partnership agreements, such as India, Japan, and South Korea. Jacobs emphasized that Sanofi's global presence and resources could significantly increase the market share and patient access to Novavax's protein-based Covid shot, which health officials view as a valuable alternative to the mRNA vaccines developed by Pfizer and Moderna.
In addition to the commercialization of the Covid vaccine, the deal allows Sanofi to develop combination products that incorporate its flu shot or other in-house vaccines with Novavax's Covid jab. Sanofi will have the sole license to use Novavax's protein-based Covid shot in combination with its flu shot, offering patients "enhanced convenience and protection against two serious respiratory viruses," according to a statement from Sanofi. The French drugmaker can also use Novavax's Matrix-M adjuvant to develop new vaccine products.
Mila Bankovskaia, a Bloomberg Intelligence analyst, noted that while the partnership may seem surprising at first glance, it is likely a strategic move for Sanofi. "Moderna and Pfizer are both assessing mRNA-based combination vaccines, and though Sanofi believes its non mRNA-based flu product won't be improved, the potential to offer a non-mRNA-based combination as an alternative looks a sensible move," she said.
The deal marks a significant boost for Novavax, which reported a first-quarter net loss of $148 million compared to a $294 million loss a year earlier. The company had been struggling to compete with the rapid development and commercialization of Covid vaccines by companies like Pfizer and Moderna. CEO Jacobs acknowledged that the partnership with Sanofi will help Novavax fulfill its mission of improving global public health with its vaccine technology platform "at a pace and a scale that we could have never done if we kept it all to ourselves" due to a lack of resources, capital, and scope.
Outside of the Sanofi deal, Novavax expects to start a late-stage trial on its own combination vaccine targeting Covid and the flu, as well as its stand-alone flu shot, later this year. "Now our phase three trial, that we're on track to initiate in the second half of this year, won't just have one potential licensable vaccine should we succeed, but it will have two," Jacobs said, noting that the deal "frees up costs" and "opens up our own organic pipeline."
