Biotech
Thursday, February 22nd, 2024 6:40 pm EDT
Key Points
- Novavax settles arbitration dispute with Gavi, a global vaccine organization, over canceled Covid vaccine purchase agreement, leading to a 20% surge in its shares.
- The settlement involves Novavax potentially paying up to $475 million to Gavi, with payments spread over the next five years and potentially offset by vaccine credits.
- Analysts view the settlement positively, as it removes uncertainties surrounding Novavax’s financial stability amidst declining demand for Covid products, and Gavi welcomes the agreement to maintain focus on providing vaccines to lower-income countries.
Novavax experienced a significant surge of approximately 20% in its shares following the announcement of a settlement with Gavi, a global vaccine organization, regarding a dispute over a canceled Covid vaccine purchase agreement. As part of the settlement, Novavax could potentially pay up to $475 million to Gavi, although the actual amount may vary depending on future orders from the organization over the next five years. This resolution alleviates a major uncertainty surrounding Novavax, which has been grappling with cost-cutting measures amidst concerns about its financial stability and dwindling demand for Covid products worldwide. The dispute stemmed from Novavax’s termination of a purchase agreement with Gavi in 2022, citing the organization’s failure to procure the agreed-upon 350 million vaccine doses for the COVAX Facility. Gavi sought a refund for the $700 million it had advanced for Novavax’s shots, which the company argued were nonrefundable. Under the settlement terms, Novavax has made an initial payment of $75 million to Gavi and will make deferred payments of $80 million annually until December 31, 2028. These payments could potentially be offset by an annual $80 million “vaccine credit” option, allowing Gavi to order Novavax-funded shots for low and lower-middle-income countries. Additionally, Novavax has offered a vaccine credit of up to $225 million for Gavi to order additional doses over the settlement period based on demand. Analysts view this settlement favorably for Novavax, as it eliminates the risk of a substantial immediate payment to Gavi, which could have posed significant financial challenges for the company. Gavi CEO David Marlow expressed satisfaction with the agreement, emphasizing its alignment with the organization’s mission of providing access to Covid vaccines for vulnerable populations in lower-income countries.
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
