Novavax and Gavi Reach Settlement on 2021 COVID-19 Vaccine Advance Purchase Agreement
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Insights
The settlement between Novavax and Gavi signifies a resolution to a dispute that could have had significant financial implications for both parties. The initial payment of $75 million from Novavax to Gavi, followed by deferred payments totaling $400 million through 2028, represents a substantial cash outflow for Novavax. However, the provision to offset annual cash obligations with an $80 million annual vaccine credit introduces a strategic financial mechanism that can mitigate the impact on Novavax's cash reserves.
The arrangement also reflects a commitment to maintaining supply chains for low-income and lower-middle-income countries, which could have long-term benefits for Novavax in terms of market penetration and brand reputation. The additional vaccine credit of up to $225 million indicates a potential increase in demand, which could positively affect Novavax's revenue streams. Investors should note that while this agreement stabilizes Novavax's financial outlook, it also commits the company to a long-term financial obligation that will need to be managed alongside its operational expenses and investment in research and development.
The settlement between Novavax and Gavi underscores the importance of equitable access to vaccines, particularly in lower-income countries. The agreement not only resolves the arbitration but also reinforces the commitment of both organizations to global immunization efforts. The terms of the settlement, which prioritize vaccine access through financial and product credits, suggest a model of collaboration that could be influential in how vaccine manufacturers and international health organizations negotiate future agreements.
It is essential to recognize that such agreements can have far-reaching implications for public health. By ensuring a supply of vaccines to vulnerable populations, Novavax and Gavi are contributing to global health security. This approach could serve as a blueprint for other vaccine manufacturers, potentially leading to more sustainable immunization programs and a more resilient response to future pandemics. The emphasis on a non-mRNA vaccine also diversifies the types of vaccines available to these countries, which may be critical in addressing vaccine hesitancy and logistical challenges in certain regions.
"Novavax is pleased to have reached this agreement with Gavi as it gives us the ability to continue to work together toward our shared mission of ensuring equitable access to safe and effective vaccines," said John C. Jacobs, President and Chief Executive Officer, Novavax. "We look forward to a long-term partnership with Gavi to provide continued access to our protein-based non-mRNA COVID-19 vaccine."
"Gavi welcomes this agreement, which allows us to maintain focus on our core programmatic goals, including providing access to COVID-19 vaccines for vulnerable people in lower income countries. It is good for global immunisation, for countries and for healthy manufacturing markets," said David Marlow, Chief Executive Officer (ad int) of Gavi, the Vaccine Alliance.
With the goal of furthering a joint commitment to public health, Novavax and Gavi have agreed to terms that will prioritize Gavi's and Novavax's shared mission to save lives and protect people's health by increasing equitable and sustainable use of vaccines. Under the terms, Novavax has made an initial payment of
About Novavax
Novavax, Inc. (Nasdaq: NVAX) promotes improved health by discovering, developing and commercializing innovative vaccines to help protect against serious infectious diseases. Novavax, a global company based in
About Gavi, the Vaccine Alliance
Gavi, the Vaccine Alliance is a public-private partnership that helps vaccinate more than half the world's children against some of the world's deadliest diseases. The Vaccine Alliance brings together developing country and donor governments, the World Health Organization, UNICEF, the World Bank, the vaccine industry, technical agencies, civil society, the Bill & Melinda Gates Foundation and other private sector partners. View the full list of donor governments and other leading organisations that fund Gavi's work here.
Since its inception in 2000, Gavi has helped to immunise a whole generation – over 1 billion children – and prevented more than 17.3 million future deaths, helping to halve child mortality in 78 lower-income countries. Gavi also plays a key role in improving global health security by supporting health systems as well as funding global stockpiles for Ebola, cholera, meningococcal and yellow fever vaccines. After two decades of progress, Gavi is now focused on protecting the next generation, above all the zero-dose children who have not received even a single vaccine shot. The Vaccine Alliance employs innovative finance and the latest technology – from drones to biometrics – to save lives, prevent outbreaks before they can spread and help countries on the road to self-sufficiency. Learn more at www.gavi.org and connect with us on Facebook and Twitter.
Forward-Looking Statements
Statements herein relating to the future of Novavax, its operating plans and prospects, its mission, its coordination with Gavi, and the occurrence and timing of certain payments to Gavi are forward-looking statements. Novavax cautions that these forward-looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. These risks and uncertainties include, without limitation, Novavax's ability to successfully manufacture, distribute, or market its updated COVID-19 vaccine, challenges satisfying, alone or together with partners, various safety, efficacy, and product characterization requirements, including those related to process qualification, assay validation and stability testing, necessary to satisfy applicable regulatory authorities; difficulty obtaining scarce raw materials and supplies; resource constraints, including human capital and manufacturing capacity, and constraints on Novavax's ability to pursue planned regulatory pathways, alone or with partners, in multiple jurisdictions simultaneously, leading to staggered regulatory filings and potential regulatory actions; challenges or delays in conducting clinical trials; challenges or delays in obtaining regulatory authorization for its product candidates, including for future COVID-19 variant strain changes; manufacturing, distribution or export delays or challenges; Novavax's significant dependence on Serum Institute of India Pvt. Ltd. and Serum Life Sciences Limited for co-formulation and filling and PCI Pharma Services for finishing Novavax's COVID-19 vaccines and the impact of any delays or disruptions in their operations on the delivery of customer orders; challenges in implementing its global restructuring and cost reduction plan; Novavax's ability to timely deliver doses; challenges in obtaining commercial adoption and market acceptance of its updated COVID-19 vaccine, NVX-CoV2373 or any COVID-19 variant strain-containing formulation; challenges meeting contractual requirements under agreements with multiple commercial, governmental, and other entities including requirements to deliver doses that may require Novavax to refund portions of upfront and other payments previously received or result in reduced future payments pursuant to such agreements; challenges related to the seasonality of vaccinations against COVID-19; and those other risk factors identified in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of Novavax's Annual Report on Form 10-K for the year ended December 31, 2022 and subsequent Quarterly Reports on Form 10-Q, as filed with the Securities and Exchange Commission (SEC). Novavax cautions investors not to place considerable reliance on forward-looking statements contained in this press release. Novavax encourages you to read its filings with the SEC, available at www.sec.gov and www.novavax.com, for a discussion of these and other risks and uncertainties. The forward-looking statements in this press release speak only as of the date of this document, and we undertake no obligation to update or revise any of the statements. Novavax's business is subject to substantial risks and uncertainties, including those referenced above. Investors, potential investors, and others should give careful consideration to these risks and uncertainties.
Contacts:
Investors
Erika Schultz
240-268-2022
ir@novavax.com
Media
Ali Chartan, Novavax
240-720-7804
media@novavax.com
Meg Sharafudeen, Gavi
+41 79 711 55 54
msharafudeen@gavi.org
Annette Wangong'u, Gavi
awangongu@gavi.org
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