Dive Brief:

• Sanofi will pay vaccine maker Novavax $500 million and take a small equity stake in the Maryland-based company as part of a broad COVID-19 shot alliance, the companies announced Friday.
• Through the deal, Sanofi will gain rights to co-market Novavax’s protein-based COVID vaccine globally, excepting certain countries, and a license to combine it with Sanofi’s existing influenza shots. Sanofi will also hold a non-exclusive right to use Novavax’s soap bark tree-derived adjuvant in other products it develops.
• Starting next year, Sanofi will book sales of Novavax’s COVID shot and pay Novavax double-digit percentage royalties. The French pharmaceutical company will also support certain R&D, regulatory and commercial expenses.

Dive Insight:

Allying with Sanofi is a boost for Novavax, which has seen its share price crumble and come under activist investor pressure as it struggles to sell its COVID shot.

The company pitched the vaccine as an alternative to the dominant messenger RNA-based products sold by Pfizer and Moderna, one that is easier to ship and distribute to harder-to-reach areas. But that message hasn’t quite caught on and sales totaled only about $1 billion last year, a period during which Novavax swapped CEOs and laid off hundreds of staff.

Novavax had forecast sales between $800 million and $1 billion in 2024 but on Friday cut that guidance nearly in half, to between $400 million and $600 million. Part of the shift was due to a delay from 2024 of expected vaccine dose deliveries under prior advanced purchase agreements.

Novavax warned Friday it may still cut costs further. But the incoming cash from Sanofi means the company will have more money coming in this year, leading it to remove a “going concern” warning for its business. 

Sanofi’s sales heft and vaccine market experience could also help Novavax, especially as it and rival companies work to develop combination COVID and flu products. In a statement, Novavax CEO John Jacobs called the deal an “exciting new chapter” for the company. 

Shah Capital, the activist investor that has pressed Novavax for change, called it a “step in the right direction for shareholders” in a Friday statement. 

The deal allows Sanofi and Novavax to work on their own combination shots. Novavax plans to start a Phase 3 trial of its dual vaccine in the second half of this year, with a goal of readying it for approval in 2026.

Sanofi didn’t detail its plans in announcing its partnership with Novavax Friday, but highlighted the combination opportunity as an important factor in the deal.

“With flu and COVID-19 hospital admission rates now closely mirroring each other, we have an opportunity to develop non-mRNA flu-COVID-19 combination vaccines, offering patients both enhanced convenience and protection against two serious respiratory viruses,” said Jean-Francois Toussaint, head of Sanofi’s vaccine R&D.

Sanofi sells two flu vaccines currently, and is developing a messenger RNA shot as well.

Under terms of the deal, Sanofi could pay Novavax up to $700 million more if certain development, regulatory and launch milestones are met. If Sanofi develops additional vaccine products using Novavax’s adjuvant, the biotech could receive up to $200 million in launch and sales milestones.

Sanofi’s equity investment totals roughly $70 million, equating to a 4.9% stake in Novavax.

Novavax’s COVID shot is currently cleared in the U.S. under an emergency use authorization. The company has also won regulatory approvals in other countries, where its vaccine is sold as Nuvaxovid. It’s submitted an application the Food and Drug Administration for a full approval.