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

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 closed greater than 20% greater on Thursday after the corporate stated it’s going to settle a bitter arbitration dispute with Gavi, a nongovernmental international 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 subsequent 5 years.

Nonetheless, the settlement eliminates what some analysts thought-about one of many greatest uncertainties across the Covid shot maker, which is cutting costs amid doubts about its capacity 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 obtain the 350 million vaccine doses it agreed to buy in Might 2021 on behalf of the COVAX Facility, a world program that goals to distribute Covid vaccines extra equitably in lower-income nations.   

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

Beneath the settlement, Novavax has paid an preliminary $75 million to Gavi and can make deferred funds of $80 million annually by 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” possibility beneath the settlement, which Gavi can use to order any of the corporate’s Gavi-funded photographs for low and lower-middle revenue nations.

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 yr. 

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

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

“Gavi welcomes this settlement, which permits us to keep up give attention to our core programmatic objectives, together with offering entry to COVID-19 vaccines for susceptible individuals in decrease revenue nations,” Gavi CEO David Marlow stated in a launch Thursday. 

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