Novavax shares spike over 100% on Sanofi deal to commercialize Covid vaccine, develop combination shots

Novavax on Friday said it has signed a multibillion-dollar deal with French drugmaker Sanofi to co-commercialize the company's Covid vaccine starting next year and develop combination shots targeting the coronavirus and the flu, among other efforts. 

Shares of Novavax spiked more than 130% on Friday from their previous day close of $4.47 apiece.

The licensing agreement will allow Novavax to lift its "going concern" warning, which it first issued in February 2023 due to having doubts about its ability to continue operating, Novavax CEO John Jacobs told CNBC in an interview. 

It marks a turning point for the struggling vaccine maker and its protein-based Covid shot. Health officials view the vaccine as a valuable alternative for people who don't want to take messenger RNA jabs from Pfizer and Moderna. 

Part of the deal allows Sanofi to use Novavax's Covid shot and flagship vaccine technology, Matrix-M adjuvant, to develop new vaccine products. Sanofi will pay Novavax an upfront payment of $500 million and up to $700 million in payments for development, regulatory and launch milestones.

Novavax is also entitled to royalty payments on Sanofi's sales of its Covid vaccine and combination shots targeting coronavirus and the flu. Novavax will also receive additional launch and sales milestone payments of up to $200 million, along with royalties, for each product Sanofi develops with Matrix-M adjuvant.

Under the deal, Sanofi will also take a less than 5% stake in Novavax. 

"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 — to bring additional value to all of our stakeholders, including our shareholders," Jacobs