Biotech
Friday, February 23rd, 2024 4:59 pm EDT
Key Points
- Novavax’s shares surged over 20% higher on Thursday after announcing a settlement with Gavi, resolving a bitter arbitration dispute over a canceled Covid vaccine purchase agreement.
- The settlement could involve Novavax paying up to $475 million to Gavi, but this amount may be reduced if Gavi orders more shots from Novavax over the next five years.
- The settlement removes a major uncertainty surrounding Novavax’s business, which has been facing challenges amid doubts about its financial stability and declining demand for Covid products worldwide.
Shares of Novavax surged over 20% higher on Thursday following the announcement of a settlement in a contentious arbitration dispute with Gavi, a global vaccine organization. The dispute arose after Novavax terminated a purchase agreement with Gavi in 2022, citing Gavi’s failure to procure the agreed-upon 350 million vaccine doses for the COVAX Facility. Gavi sought a refund of the $700 million it had advanced for the shots, which Novavax argued were nonrefundable. Under the settlement, Novavax will pay an initial $75 million to Gavi and make deferred payments of $80 million annually through December 31, 2028. However, these payments could be offset by an annual $80 million “vaccine credit” option, allowing Gavi to order Novavax shots for low-income countries. Novavax also offers up to $225 million in vaccine credits for additional orders over the five-year settlement period. The terms of the settlement alleviate concerns about Novavax’s financial stability, as analysts previously warned that paying the full $700 million could pose significant challenges. Gavi CEO David Marlow welcomed the agreement, emphasizing its importance in ensuring access to COVID-19 vaccines for vulnerable populations in lower-income countries. This settlement removes a major uncertainty for Novavax, which is striving to reduce costs amidst declining demand for COVID products worldwide.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/02/22/novavax-to-settle-gavi-arbitration-over-canceled-covid-shot-purchase.html
