Novavax inventory jumps after firm settles dispute over canceled Covid vaccine buy


A well being employee prepares a dose of the Novavax vaccine because the Dutch Well being Service Group begins with the Novavax vaccination program on March 21, 2022 in The Hague, Netherlands.

Patrick Van Katwijk | Getty Photographs

Shares of Novavax jumped about 20% on Thursday after the corporate mentioned it’ll settle a bitter arbitration dispute with Gavi, a nongovernmental world vaccine group, over a canceled Covid vaccine buy settlement. 

Novavax might pay as much as $475 million to the group, however the complete quantity could also be much less if Gavi decides to order extra photographs from the cash-strapped firm over the following 5 years.

Nonetheless, the settlement eliminates what some analysts thought-about one of many greatest uncertainties across the Covid shot maker, which is chopping prices amid doubts about its capability to stay in enterprise and plummeting demand for Covid merchandise worldwide.

In 2022, Novavax terminated a purchase order settlement with Geneva-based Gavi. The corporate cited Gavi’s failure to acquire the 350 million vaccine doses it agreed to purchase in Might 2021 on behalf of the COVAX Facility, a worldwide program that goals to distribute Covid vaccines extra equitably in lower-income international locations.   

Gavi sought a refund for the $700 million it spent on advance funds for Novavax’s photographs. Novavax has mentioned these funds have been nonrefundable. 

Below the settlement, Novavax has paid an preliminary $75 million to Gavi and can make deferred funds of $80 million every year via Dec. 31, 2028. These annual funds can be due in quarterly installments. 

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However Novavax’s funds could possibly be offset by an annual $80 million “vaccine credit score” choice underneath the settlement, which Gavi can use to order any of the corporate’s Gavi-funded photographs for low and lower-middle revenue international locations.

For instance, if Gavi decides to order $50 million price of photographs from Novavax in 2025, the corporate would solely should pay the group $30 million that 12 months. 

Novavax mentioned it is usually providing a vaccine credit score of as much as $225 million that Gavi can use to order extra vaccine doses all through the five-year settlement window “ought to there be extra demand.” 

The phrases of the settlement might bode effectively for Novavax’s enterprise. Analysts had beforehand advised CNBC that Novavax might “be in bother” if the arbitration pressured it to pay the total $700 million to Gavi in 2023. 

“Gavi welcomes this settlement, which permits us to keep up deal with our core programmatic targets, together with offering entry to COVID-19 vaccines for weak folks in decrease revenue international locations,” Gavi CEO David Marlow mentioned in a launch Thursday. 

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