Sanofi vaccine deal kicks off Novavax's 'new chapter': Analyst

Novavax (NVAX) shares are skyrocketing after the company announced a $1.2 billion deal with French drugmaker Sanofi (SNY). B. Riley Securities Managing Director & Group Head of Healthcare Research Mayank Mamtani joins Market Domination to break down the deal.

The co-exclusive licensing agreement between the two pharmaceutical companies includes co-commercializing Novavax's COVID-19 vaccine and developing a combination vaccine for the flu and COVID-19.

Mamtani highlights that the perception of Sanofi as rescuing Novavax during a post-pandemic struggle is "absolutely true, and it makes the company and the stock investable." He adds that the deal will mark a "new chapter" for Novavax.

However, he warns of some of the realities the two companies will have to overcome to be successful. "In the past couple of years, we have completely misread how the vaccination uptake rates would look like," the analyst explains.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Melanie Riehl

Video transcript

Nova shares are skyrocketing up nearly 100%.

The move higher comes after company announced a multi billion dollar deal with French drug makers of the terms of that co exclusive licensing agreement include co commercializing Novavax, COVID-19 vaccine, as well as developing a COVID-19 influenza combination.

Seen here with more on the new chapter for the biotech company.

We've got my young mom to be Riley Securities managing director and Group head of health care.

An interesting situation today that seems to have effectively brought back Novavax from the brink.

There were cash concerns around this company.

Is that how you would characterize that announcement today?

Yeah, tha thanks for having me.

Yeah, I think that going concern status on their balance sheet.

That coming away is is a big deal.

Uh Obviously having a conglomerate of Bell vaccine, Bell weather like Sanofi uh choosing to partner with a company like Novavax, which does have this adjuvanted next generation recombinant protein platform uh obviously uh is is a a validation from a platform technology standpoint.

But the the big takeaway from uh what what headlines have been about, you know, French conglomerate, rescuing a US pharmaceutical company that was struggling in a post Pande era.

Uh that, that is absolutely true and, and it makes the uh the company and the stock investable for many investors today, you know, more investable me, it was interesting just to hear some of the language your colleagues were kinda using on the street today to describe this.

You know, I I saw one analyst um say this was transformative for the company in his words.

Um Do you think that's true transformative or is that overstating it?

II, I think I, how I look at it is, is more like the next chapter to be written in the Novak story.

Um Again, II, I don't want to be in any way, not, not be honest about an objective about the realities of what needs to still happen about the uh execution on the COVID market as a whole.

Obviously, uh you know, in the past couple of years, uh we have completely misread how the vaccination uptake rates would look like.

And then in terms of Neova being able to come to the market in a, in a timely way, uh like uh in line with when we saw vaccines in the in the pharmacy stores in the physician offices, how we saw from pfizer and Moderna that, that was just not the case.

But, but from what today's deal is telling us that, you know, under this new management regime which has seen, uh I think what's transformative here is the relationship that they built with their partners in, in including in the FDA, who are allowing them to have a path, you know, which is very streamlined when it comes to having a variant based vaccine.

But I think uh I'm sure you are interested in also understanding the COVID influenza combination vaccine that uh the the regulatory path for the late stage vaccine.

Uh There has also been an alignment with the FDA uh on uh that becoming available for the public in 2026.

Only a year after we, we could see shots from Moderna and pfizer which which is projected to be next year and, and we'll learn in short order some data on those on that combination product uh in in the coming months.

And Mayan our, our health care reporter Angelique Kamlani had the chance to talk to uh Novavax co John Jacobs and this is what he told her.

He says what this does is in and of itself, it doesn't save Novavax.

But what it does is now put us toward a future of growth back on our biotech strength, back on a platform based growth strategy that allows us to drive growth.

Now, as you just mentioned, there are potentially other products or at least other combinations coming down the pike here.

But you know what does the future growth trajectory look like for Nova backs?

Yeah, I mean, if you, if you take a step back on, on the size of the market, of the opportunity we are talking about.

And if you just look at flu and, and take out the pandemic from the picture, you know, we were vaccinating roughly uh north of, you know, 50 to 60 million uh adults every year and a large majority of them were and elderly, right, the vaccination rates tend to be higher on that.

So if you think about that market is at least what you would look to protect.

And um there is obviously a data, you know, as, as you might, as you guys are aware that Nova was working on a a flu vaccine before COVID even came long and they had positive phase three results.

So what today's uh update and development does is actually bring that back almost from the uh uh ashes to be able to develop as a stand alone vaccine, a flu vaccine.

Uh And then uh the combination ends up uh vaccine would be in addition to that stand alone flu vaccine.

So again, it's it's a little unclear how the market would segment out which uh parts of the population would only prefer flu and not uh you know, take a COVID combination.

But I think we'll see the guidelines in the medical professional bodies.

You know, the recommendations around uh having protection for both and and if safety and efficacy and importantly, immunogenicity, which we've seen already on a stand alone basis from the COVID vaccine for Nova and also from the flu vaccine.

Uh there's a very high likelihood of success for them to hit on this phase three trial, they're looking to execute.

And then in terms of the market opportunity, uh and especially in a premium segment market or elderly market where it's a little unclear how the MRN A companies would pan out in terms of their profile.

You know, you're looking at them tapping into a, you know, multibillion dollar uh uh uh market opportunity that um they could, you know, share have a, you know, anywhere between 20 to 30% market share.

So that, that I think is, is the work that needs to happen for people to get comfortable in the story again.

And my final question here, you know, this company has been under activist pressure sha capital.

I'm just curious um how if at all, you think the news today kind of impacts that dynamic?

Yeah, we, we, we try not to comment on activist uh situations, but I think just at the highest level, it, it, it was, I think directionally uh pointing to the things that the management was already working on.

And today's deal actually confirms that, right, like one of the uh uh recommendations are uh you know, ask for the, for the management was to engage in a process or engage with a credible partner that we have in Sanofi uh that they are, you know, they've been working on for several months.

Deals like these don't come together as, you know, overnight.

So I think that maybe that urgency to act or deliberation was, uh, you know, catalyzed by having an activist uh uh interfere.

But clearly management had been, uh, you know, we looking at some of these strategic options for a little while and, and as, you know, over the past year they've uh cut cost, uh you know, right size the organization and they continue to do that into the, into next year.

So um getting that balance sheet, uh situ uh you know, uh issue that they had to uh get over was already in the works and, and um and, and execution related issues that were, I think also pointed out uh from regulatory standpoint, from a commercial standpoint.

Those were already things they, they were uh you know, on track, on track with and hence, you know, you saw a partner like Sanofi buy into uh their, their strategic operational plan and, and how I, I think everyone uh it's a win win for everyone including the activist investor who was uh uh vocal about, about the company in the past few days.

Mayan.

Thank you so much for joining the show today, helping us navigate, make sense of this news.

We appreciate it.

No problem.