Sanofi entered into a co-exclusive licensing agreement with Novavax to sell the biotech’s sell COVID-19 vaccine going forward and develop novel flu-COVID combination shots.

As part of the deal announced Friday morning, Novavax will receive an upfront payment of $500 million as well as up to $700 million in development, regulatory and launch milestone payments, totalling up to $1.2 billion.

The French drugmaker will take over booking sales of the COVID shot next year and the Maryland-based biotech will receive tiered double-digit percentage royalty payments.

Regarding the flu-COVID combo vaccine, Sanofi will be responsible for development and commercialization while Novavax will be entitled to additional launch and sales milestones payments up to $200 million, plus mid-single digit royalties for each additional Sanofi vaccine.

Finally, Sanofi will take a minority equity investment stake in Novavax.

Jean-Francois Toussaint, global head of vaccines R&D at Sanofi, said in a statement the company views the partnership as an opportunity to more effectively combat two widespread, seasonal respiratory illnesses.

“We’re excited by the prospect of combining Novavax’s adjuvanted COVID-19 vaccine that has shown high efficacy and favorable tolerability, with our rich portfolio of differentiated flu vaccines that have demonstrated superior protection against flu and its serious complications,” he stated. “Improved tolerability and thermostability, without compromise on efficacy, are what regulators, recommending bodies, and patients will demand.”

Sanofi teamed with Novavax a few weeks after reporting that its net income dropped due to increasing competition from generics but its net sales rose.

The Paris-based drugmaker’s net sales ticked up 2.4% to €10.4 billion, though its net income dropped 43% to €1.1 billion and its business operating income fell 14.7% to €2.8 billion.

The company also recently conducted an undisclosed number of layoffs related to a restructuring of its domestic vaccines commercial operations.

In light of the deal, Novavax shares skyrocketed 125% at the stock market’s open Friday morning, marking the company’s biggest gain since 2009.

This is a major development for Novavax, which long trailed rival drugmakers like Moderna, Pfizer as well as Johnson & Johnson in the COVID vaccine space. 

The Food and Drug Administration approved its vaccine, which is a more traditional protein adjuvant and injects a version of the spike protein directly into the body, for emergency use in the summer of 2022.

Though the federal government bought 1.5 million doses of the vaccine in early 2023, the company ultimately cut its revenue target due to lower demand leading to lower sales and cut 25% of its workforce.

After that, the FDA approved the company’s updated COVID booster shot, making it available alongside shots from Moderna and Pfizer. 

The Sanofi deal was announced a few months after Novavax reported Q4 2023 revenue and earnings that missed Wall Street’s estimates. The company noted that it expects full year sales to come in flat or lower than last year.

Novavax CEO John Jacobs said the collaboration is critical not only for the company’s future but also for public health as it leverages the company’s proprietary technology with Sanofi’s scale.

“Together, we can broaden access to both our COVID-19 vaccine and our adjuvant to ensure more individuals can benefit from the protection vaccines can provide,” he stated. “Novavax is now in a stronger position to refocus our efforts on leveraging our technology platform and novel adjuvant in research and development and pipeline expansion to help advance our mission of developing life-saving vaccines to fight infectious diseases.” 

For a May 2024 article about Novavax (briefly) becoming a meme stock following its Sanofi licensing deal, click here.