After striking out in the pandemic phase of COVID-19 with its belated vaccine, Novavax seeks to recover in the endemic phase. And a big part of the company's plan centers around enhancing its partnership with SK Bioscience.
The South Korean manufacturer has acquired a 7% stake in Novavax, paying $85 million for 6.5 million shares. The $13 price per share is a 59% premium over Novavax's volume-weighted average price over the previous 90 days.
In addition, SK gains exclusive commercial rights to the updated Novavax COVID vaccine in South Korea until February 2029 and nonexclusive rights in Thailand and Vietnam until June 2028. The deal also provides a $4 million milestone payment to Novavax, plus royalties on future product sales.
The agreement also settles $195 million in Novavax's manufacturing liabilities to SK. Overall this year, Novavax has reduced its liabilities by more than $1 billion, the company said Tuesday in presenting its second-quarter financials.
Novavax surprised analysts by reporting $424 million in revenues in the second quarter and net income of $0.58 per share. The consensus projection among analysts was a $1.39 loss per share.
It’s a long way from earlier this year, when CEO John Jacobs—in his fifth week on the job—warned that Novavax might not survive 2023.
“My goodness, what a difference these last months have made as we further strengthen our financial position as a company,” Novavax Chief Financial Officer Jim Kelly said on a conference call.
The Maryland-based company, however, cut its 2023 COVID vaccine sales guidance from a prior window of $1.4 billion to $1.6 billion. The company now expects the shot to generate between $1.3 billion and $1.5 billion.
As Novavax enters the commercial phase for its vaccine launch, the company said it will charge $130 per dose. It has initiated a submission for approval of its updated shot to the FDA and expects to reach the market in September. The company also expects to complete submissions in Europe and Canada in the “coming weeks.”
“We are confident in our readiness to deliver an updated, differentiated and competitive vaccine for this fall season,” Jacobs said during the call. “In most of our key target markets, including the U.S., our vaccine, if authorized, would be the only non-mRNA protein-based option available, and we’re excited about the potential to offer our vaccine as an important alternative.”
In early 2021—when Novavax appeared poised to become a major COVID vaccine player—its share price peaked at $290. But a series of manufacturing snafus delayed the arrival of the vaccine until last year when demand had already plummeted.
As for SK Bioscience, the company said it will continue in the endemic phase with a two-pronged strategy—to produce shots for global players and to develop its own vaccines.
“We believe that the strategic equity investment and the continuous cooperation between SK bioscience and Novavax will create powerful synergy,” CEO Jaeyong Ahn said in a release. “SK bioscience is focused on developing a successful global cooperative model in terms of company growth, health promotion, and response to the next pandemic.”