Novavax to settle Gavi arbitration over canceled Covid shot buy

Novavax on Thursday mentioned it can settle a bitter arbitration dispute with Gavi, a nongovernmental world vaccine group, over a canceled Covid vaccine buy settlement. 

Novavax may pay as much as $475 million to the group, however the whole quantity could also be much less if Gavi decides to order extra photographs from the cash-strapped firm over the following 5 years.

Nonetheless, the settlement eliminates what some analysts thought of one of many largest uncertainties across the Covid shot maker, which is cutting costs amid doubts about its means to stay in enterprise and plummeting demand for Covid merchandise worldwide.

Shares of Novavax fell greater than 50% final 12 months and are down 17% in 2024, placing the corporate’s market worth at roughly $470 million. 

In 2022, Novavax terminated a purchase order settlement with Geneva-based Gavi. The corporate cited Gavi’s failure to acquire the 350 million vaccine doses it agreed to buy in Could 2021 on behalf of the COVAX Facility, a worldwide program that goals to distribute Covid vaccines extra equitably in lower-income nations.   

Gavi sought a refund for the $700 million it spent on advance funds for Novavax’s photographs. Novavax has mentioned that these funds have been non-refundable. 

Below the settlement, Novavax has paid an preliminary $75 million to Gavi and can make deferred funds of $80 million annually by way of Dec. 31. 2028. These annual funds could be due in quarterly installments. 

However Novavax’s funds might be offset by an annual $80 million “vaccine credit” possibility below the settlement, which Gavi can use to order any of the corporate’s Gavi-funded photographs for low and lower-middle revenue nations.

For instance, if Gavi decides to order $50 million price of photographs from Novavax in 2025, the corporate would solely need to pay the group $30 million that 12 months. 

Novavax mentioned it is usually providing a vaccine credit score of as much as $225 million that Gavi can use to order further vaccine doses all through the five-year settlement window “should there be additional demand.” 

The phrases of the settlement may bode nicely for Novavax’s enterprise. Analysts had beforehand instructed CNBC that Novavax may “be in trouble” if the arbitration compelled it to pay the complete $700 million to Gavi in 2023. 

“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,” Gavi CEO David Marlow mentioned in a launch Thursday.