5/14/2024

Novavax shares soared: the reasons?

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Key points:

  • Novavax will give Sanofi the rights to its COVID-19 vaccine in exchange for a stake in its partner company.
  • Sanofi acquires 4.9% stake in Novavax for $70 million.
  • The deal could be a chance for Novavax to revive after losing 98% of its share price since the start of the COVID-19 pandemic.

Novavax has announced a licensing agreement with Sanofi worth at least $1.2 billion. Under the agreement, Novavax will give Sanofi the rights to its COVID-19 vaccine in exchange for a stake in Sanofi, which values the US biotech company at twice its current market value. capitalization.

The deal between Novavax and Sanofi

The deal led to a significant rise in Novavax shares, which more than doubled in Friday trading, reaching $8.97 per share. We note that at its peak in 2021, Novavax shares were trading at around $332 per share. Novavax’s market capitalization then reached $20 billion.

In turn, the French pharmaceutical company Sanofi entered into an agreement with the American vaccine manufacturer Novavax to acquire a 4.9% stake in the company for $70 million. This deal values Novavax at approximately $1.4 billion, which is almost double its market capitalization, which as of May 11 2024 was about $628 million.

In addition to acquiring the stake, Sanofi will also provide Novavax with an upfront payment of $500 million, as well as future payments contingent on achieving certain milestones. Novavax will also receive royalties from sales of Sanofi’s vaccines.

Sanofi, one of the world’s largest vaccine makers, will be licensed to co-market Novavax’s COVID-19 vaccine in most countries. Additionally, Sanofi plans to use Novavax’s COVID-19 vaccine in combination with its own flu vaccines to develop a combination vaccine.

Recovery after the end of the pandemic

For Sanofi, the deal could be a strategic move to strengthen its position in the influenza vaccine market. With growing competition from companies like Pfizer and Moderna developing combination flu and COVID-19 vaccines, Sanofi is looking to expand its franchise with the Novavax vaccine.

In 2023, Sanofi’s vaccine sales totaled nearly $7.5 billion. The acquisition of the Novavax vaccine could become a new growth driver for the company. Novavax’s CEO expressed confidence that the deal with Sanofi will bring the company several billion dollars in the future.

Novavax shares have lost more than 98% of their value since the start of the COVID-19 pandemic. This is due to a number of factors, including delays in bringing the vaccine to market, competition from other manufacturers and general market instability.

The deal with Sanofi could be a chance for a revival for Novavax. Additional funding and access to Sanofi’s distribution channels could help the company regain lost ground and regain investor confidence.

Importantly, Novavax has recently become a target for short traders. “Bears” bet on the fall of the company’s shares, and “activist traders” demanded changes in its management. A deal with Sanofi could be the answer to these challenges and demonstrate the viability of Novavax as a company.

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