As Novavax works to endure uncertain demand for its COVID-19 vaccine, the company's close relationship with Canada is taking a new form.
The country has canceled some COVID-19 vaccine deliveries from the Maryland-based vaccine maker and will pay the company $349.6 million to fully compensate for those unused doses, Novavax said in a securities filing Friday.
The payment will come in two batches, with the second installment contingent upon Novavax’s delivery of the remaining contracted doses in the second half of 2023.
For Novavax, the money offers a much-needed financial injection as the company’s cash dwindles. In February, Novavax management warned that the company may not survive 2023 because of uncertain demand for its COVID vaccine, especially in the U.S. The firm ended March with $637 million in cash, down from $1.3 billion at the end of 2022.
Canadian authorities approved Novavax’s recombinant protein vaccine, Nuvaxovid, first as a primary series and then as a booster in 2022. Through a deal signed in early 2021, Novavax is working with the Canadian government to make the vaccine locally at the National Research Council of Canada’s Biologics Manufacturing Centre (BMC) in Montreal.
Under the new deal, signed June 30, Canada may terminate the advanced purchase agreement if Novavax fails to obtain production approval for BMC by the end of 2024. The deal requires Novavax to produce bulk antigen for vaccine doses in 2024 and 2025.
To ensure its long-term position in Canada, Novavax said it will work to expand its commitment to the country to further “provide health, economic, and future pandemic preparedness benefits to Canada.” This includes potentially signing a 15-year memorandum of understanding that’s worth at least the remaining amount to be paid under Canada's existing COVID vaccine orders, Novavax said in the filing.
Demand for COVID vaccines has declined in Canada, as it has in other parts of the world. Reports a year ago revealed that the country was set to throw out about 13.6 million doses of AstraZeneca’s vaccine after failing to find any takers either at home or abroad.
In addition, Canadian company and plant-based vaccine developer Medicago went bankrupt after its home-grown COVID shot Covifenz couldn’t find a market as the pandemic eased.
To cut costs, Novavax in May unveiled a plan to lay off 25% of its staffers, or around 500 people. At the time, Novavax CEO John Jacobs warned that more reductions may be coming.
Novavax’s survival now depends on the successful delivery of an updated COVID shot this fall. And the COVID vaccine market could get more challenging for a small company like Novavax as the U.S. transitions to a commercial market.
While planning to launch its fall doses under the emergency use authorization pathway, Novavax is planning to file for a normal approval in the second half of the year, Chief Commercial Officer John Trizzino told investors during an investor call in May.