Novavax (NASDAQ:NVAX) shares skyrocketed more than 120% in premarket trading Friday, driven by the company’s fiscal Q1 2024 report and more importantly, a vital, multi-billion dollar deal with French pharma giant Sanofi SA.
For the first quarter, Novavax reported a first-quarter loss per share of $1.05, wider than the $0.92 anticipated by analysts. The company's revenue was $93.85 million, significantly falling short of the consensus estimate of $141.16 million.
Novavax also offered revenue guidance for the fiscal 2024, expecting between $800 million and $1 billion, compared to the consensus estimate of $845.5 million.
Despite missing Q1 estimates, NVAX stock rose sharply after the company announced it has secured a multibillion-dollar agreement with Sanofi to jointly market its COVID-19 vaccine starting next year and collaborate on combination shots targeting both coronavirus and the flu.
According to Novavax CEO John Jacobs, the partnership will enable the company to lift its "going concern" warning, which was initially issued in February 2023 due to concerns about its operational viability.
This development signifies a significant turning point for Novavax and its protein-based Covid vaccine, which health authorities see as a vital alternative for those hesitant to receive Pfizer and Moderna's mRNA shots.
The deal will also grant Sanofi access to Novavax's Covid vaccine and its flagship Matrix-M adjuvant technology to create new vaccine products. Sanofi will make an upfront payment of $500 million to Novavax, with additional milestone payments of up to $700 million for product development, regulatory approvals, and launches. This figure is about twice Novavax's current market cap of $627 million.
Novavax will receive royalties from Sanofi's sales of its Covid and combination vaccines and up to $200 million in additional launch and sales milestone payments per product developed with the Matrix-M adjuvant.
Sanofi will also acquire a less than 5% equity stake in Novavax as part of the agreement.
"This collaboration is important for Novavax and for global public health,” Jacobs said.
"Novavax is now in a stronger position to refocus our efforts on leveraging our technology platform and novel adjuvant in R&D and pipeline expansion to help advance our mission of developing life-saving vaccines to fight infectious diseases."
Commenting on the partnership, analysts at B. Riley Securities said the deal "kicks off a new chapter" for NVAX, with the firm reiterating a Buy rating on the stock.
Analysts at B.Riley Securities said the Sanofi deal involves "attractive financial terms inclusive of several performance-related kickers that could be further value-enhancing."