May 10 (Reuters) - Novavax on Friday struck a licensing deal of up to $1.2 billion with Sanofi for COVID-19 vaccines in exchange for a stake that valued the U.S. biotech firm at double its current market capitalization.
Shares of the company more than doubled before the bell to $10.11 following the deal as Novavax removed a warning notice from February last year that raised doubts about it being in business.
Sanofi will take a 4.9% stake in the U.S. drugmaker for $70 million. That values Novavax at about $1.4 billion, nearly double its market capitalization of about $628 million as of Thursday, but a far cry from its peak of $20 billion in 2021.
The deal also entitles Novavax to an upfront cash payment of $500 million and future payments contingent on certain milestones, as well as royalties.
The cash infusion is expected to strengthen the balance sheet of the vaccine maker, whose shares have lost more than 98% of their value since the early days of pandemic as the company struggled to get its vaccine to the market in a timely manner.
Sanofi, on the other hand, will gain a license to co-sell Novavax's vaccine in most countries and use the COVID shot along with its own flu vaccines as a combination shot.
For the French drugmaker, the agreement could help bolster its flu vaccine franchise as companies such as Pfizer and Moderna develop rivals, including combination vaccines to be used along with COVID-19 shots.
"Our sense is the angle here really is on having the option to provide a future flu (plus) COVID combo vaccine as Sanofi seeks to build out the moat around its high-dose flu vaccine," Barclays analysts said in a research note.
Separately, Novavax cut its 2024 sales forecast, excluding contributions from the Sanofi deal, to between $400 million and $600 million from $800 million to $1 billion previously.
It also reported a net loss that narrowed to $148 million in the first quarter from $294 million a year ago.
Reporting by Tassilo Hummel in Paris, Shubham Kalia, Utkarsh Shetti and Manas Mishra in Bengaluru; Editing by Savio D'Souza, Shinjini Ganguli and Arun Koyyur
Source: Reuters