Amid low vaccine demand, Novavax pulls out of Fujifilm manufacturing deal and inks $185M settlement

Novavax has been suffering from lower-than-expected demand for its COVID-19 vaccine after an FDA authorization this summer. Now, the company is paying up to a manufacturing partner to terminate a supply agreement.

In a securities filing, Novavax said it will pay Fujifilm Diosynth Biotechnologies up to $185 million in a settlement tied to the "termination of manufacturing activity" at its CDMO partner. Novavax will pay the sum in four quarterly installments of $34.3 million starting on March 31, 2023, the company said.

But the settlement isn't guaranteed to reach that total. As part of the deal, Fujifilm's subsidiary will be required to “use commercially reasonable efforts” to find manufacturing business and offset the losses that it would incur from the vacant capacity. The last two Novavax quarterly payments could end up being offset by any work that Fujifilm Diosynth Biotechnologies is able to land.

Novavax finally won its COVID-19 vaccine authorization in the U.S. this July after numerous delays. But uptake has been slow, with CDC data showing just 32,992 doses administered so far out of around 841,000 delivered.

For comparison, more than 230 million Moderna doses have been administered in the U.S. For Pfizer, the number is around 370 million.

The partnership between Novavax and Fujifilm Diosynth Biotechnologies dates back to July 2020, when Novavax used part of the $1.6 billion grant it got from the Trump administration’s Operation Warp Speed to secure trial supplies. 

At times, Novavax's vaccine had been hailed as a potential alternative to mRNA shots that dominated the market. But the company suffered from several delays and has been unable to capture meaningful U.S. market share.