The Zhitong Finance App learned that the stock price of Novavax (NVAX.US), which once fell into “business difficulties” after the COVID-19 vaccine faded away, had risen nearly 50% as of Monday's closing, with a cumulative increase of nearly 200% over the two trading days since last Friday. Wall Street investors are happy and encouraged that the company has reached a new deal of over 1 billion US dollars with French pharmaceutical giant, SNY.US, and they are buying Novavax in the secondary market with real money. This vaccine manufacturer, which was once in trouble and was difficult to maintain normal operations, ushered in a dramatic turning point.

Novavax shares almost doubled at the close of trading last Friday after Novavax announced a licensing agreement with Sanofi. The company said on Friday that the deal enabled the company to lift its “going to operate” warning, which was first issued in February 2023 due to significant management concerns about the company's ability to maintain normal continuing operations.

Novavax and Sanofi have signed a licensing agreement worth about 1.2 billion US dollars, which includes the joint commercialization of Novavax Pharmaceuticals' COVID-19 vaccine starting next year and the joint commercialization of the novel coronavirus and influenza combination vaccine. The move boosted the company's share price, which fell about 99% from its peak in 2021 before trading, mainly due to a sharp drop in market demand for its COVID-19 vaccine. Novavax Pharmaceuticals said that in the cooperation agreement with Sanofi, Sanofi will use Novavax Pharmaceuticals' COVID-19 vaccine and the flagship vaccine technology Matrix-M adjuvant to develop new vaccine products.

For Novavax, this “timely rain” cash injection is expected to strengthen the vaccine manufacturer's balance sheet. For Sanofi, the agreement could help strengthen its influenza vaccine franchise, as companies such as Pfizer and Moderna are developing competing products, including a combination vaccine to be used with the COVID-19 vaccine.

“This has really helped our business.” In an interview with the media, Novavax CEO John Jacobs said, “This allows us to maintain sufficient capital, get rid of the difficulties of continuing operations before, and gives us an opportunity to shift our strategy more towards what we do best and bring added value to all stakeholders, including shareholders.”

According to the agreement between the two parties, Sanofi will also hold less than 5% of Novavax's shares. Under the agreement, Novavax will receive an advance payment of $500 million, and future payments will depend on certain important milestones, as well as royalties.

Sanofi is one of the largest vaccine manufacturers in the world. According to the agreement, they will jointly sell Novavax's COVID-19 vaccine in most countries starting in 2025. The agreement also allows Sanofi to use Novavax's Covid-SHOT and flagship vaccine technology Matrix-M adjuvants to develop new vaccine products. These vaccines include combination vaccine products for COVID-19 and influenza.

Roger Song, an analyst at Wall Street firm Jefferies (Jefferies), said in a Sunday report that the deal would provide significant capital to Novavax and support the company's growth. “Economically, this deal was very profitable and had a profound impact.”

The analyst said that the advance payment helped dispel investors' concerns about Novavax's continuing operations warning, and that the landmark payments were “significant and relatively short-term” for the company because they had nothing to do with sales. Meanwhile, royalties will provide a steady source of revenue each year, Roger Song said. He added that the deal will provide significant funding to Novavax and validate the company's protein-based vaccine platform.

According to information, the Novavax vaccine is the first COVID-19 vaccine using protein technology. Protein technology is a traditional vaccine method for fighting the virus with decades of history, and is used to routinely administer hepatitis B and shingles vaccines. Health officials generally agree that this vaccine is a valuable choice for those who do not want to receive Pfizer and Moderna's mRNA-based COVID-19 vaccine.

In a Sunday report, Leerink Partners analyst David Risinger said he is interested in how effective Sanofi is in raising consumer awareness. Compared with competing vaccines from Pfizer and Moderna, the side effects of the Novavax COVID-19 vaccine are easier for patients to endure.

Risinger pointed out that some consumers are hesitant about the COVID-19 vaccine due in part to concerns about drastic side effects such as fatigue and discomfort caused by the Pfizer and Moderna vaccines.

The company expects Sanofi to “drive greater commercial success for the Novavax vaccine starting in 2025, thanks to its commercial scale and contracting capacity, but it is difficult to predict the extent of the impact,” analyst Risinger wrote.

He added that if Sanofi and Novavax develop a COVID-19 and influenza combination vaccine that is superior to the mRNA combination vaccine developed by Pfizer and Moderna, then they may have “room for further stock price increases.”

According to Tipranks data, Wall Street analysts are still divided in their views on the stock — three analysts gave a “buy” rating, and three analysts recommended “hold,” but none recommended investors “sell.” Among them, the target price of $19 given by HC Wainwright & Co. (Novavax's stock price closed at $13.110 by Monday's close) means that the stock price will rise by about 50% over the next 12 months from the current level.