Money-strapped Novavax urges governments to abide by Covid jab offers

Novavax’s new chief government has urged governments to honor Covid-19 vaccine buy commitments because the once-high-flying US biotech struggles to remain afloat amid a collapse in demand for injections .

John Jacobs advised the Monetary Instances there was no assure that governments would honor all of their present commitments to the corporate, which embody $2.1bn upfront buy agreements signed with the US biotech group by 2025.

“We needed to make investments billions. . . to ship a vaccine that helped stem the tide of a world pandemic that was killing thousands and thousands of individuals,” mentioned Jacobs, who changed Stan Erck as Novavax chief government in January.

“After which hastily to say, ‘Effectively, you spent all of your cash, you made a dedication to guard our residents. Now we do not assume we want it a lot. Sorry, you are out of luck. That is in all probability not good for long-term relationships and that type of factor and to learn public well being,” she mentioned.

Novavax is without doubt one of the few vaccine producers, together with BioNTech/Pfizer and Moderna, which are authorised to provide Covid photographs within the US, EU and different Western nations. All suppliers are going through sharp gross sales declines as a result of weak demand, which is contributing to a glut that has left billions of vaccine doses unused.

john jacobs

John Jacobs mentioned there was no assure that governments would honor all of their present commitments to Novavax.

This has prompted governments to renegotiate billions of {dollars} in provide contracts with producers, a transfer that analysts warn may enhance stress on cash-strapped Novavax.

“The drive to renegotiate offers just isn’t distinctive to Novavax, however they’re extra pressed towards a wall due to their troublesome monetary scenario,” mentioned Brendan Smith, an analyst at Cowen, an funding financial institution.

Novavax mentioned in December it will reimburse the UK authorities $112.5 million following its resolution to not train an choice in its contract to purchase further doses of vaccines. The corporate can be going through a $700 million arbitration course of associated to the cancellation of a vaccine contract with Gavi, a global physique that gives vaccines to poor nations.

Novavax’s market capitalization soared previous $20 billion when it developed Nuvaxovid, a Covid shot made utilizing a standard protein-based vaccine course of as an alternative of the messenger RNA expertise utilized by BioNTech/Pfizer and Moderna. However the 36-year-old firm’s valuation has since tumbled under $1 billion, as a result of delays within the launch of the vaccine, stiff competitors from rivals and weak demand for Covid vaccines.

Novavax warned in February that there have been “substantial doubts” about its future and Jacobs lately detailed plans to chop prices by as much as 50 p.c and lower the corporate’s 2,000-person workforce by 1 / 4.

Novavax’s money reserves fell to $637 million as of March 31, down from $1.3 billion on the finish of December. Present liabilities quantity to virtually $2 billion, which incorporates the Gavi arbitration course of.

Jacobs mentioned he was prioritizing price discount, growing and releasing an up to date model of his jab in time for the autumn vaccination season and assembly a income forecast of $1.4-1.6 billion in 2023.

He mentioned a lot of the companions had been shifting to guard long-term relationships with the biotech trade realizing that the following pandemic could possibly be “simply across the nook.”

A healthcare worker administers a dose of the Novavax Covid-19 vaccine
Novavax’s valuation has plunged under $1 billion as a result of delays within the launch of its covid vaccine, stiff competitors from rivals and weak demand for coronavirus injections © Hannah Beier/Bloomberg

Jacobs mentioned Novavax anticipated to honor $800 million advance buy agreements with the EU, Australia, Canada and New Zealand, as a result of be delivered this yr. He added that the corporate was negotiating with some clients to amend the 2024 and 2025 buy agreements, which may end in modifications to supply schedules and, in some circumstances, accelerated advance funds to Novavax.

Roger Music, an analyst at Jefferies, mentioned any renegotiation sought by nations as a result of present glut of vaccines posed a danger to Novavax. Nevertheless it may additionally present some short-term advantages when it comes to money move, citing a $100 million cost made this quarter in reference to a renegotiated buy settlement.

“Nations can renegotiate, however they are going to in all probability must pay a portion of their contracts to compensate Novavax,” Music mentioned.

The EU is renegotiating its vaccine contract with BioNTech/Pfizer, elevating issues amongst rivals that it may drive them out of the profitable market. Particulars of a draft deal reported by the FT recommend that BioNTech/Pfizer may provide as much as 70 million doses a yr by 2026, leaving little room for Novavax, Moderna or Sanofi.

Jacobs mentioned that policymakers had a robust need to keep up variety within the Covid injection market by making certain there was an alternative choice to the mRNA injections supplied by BioNTech/Pfizer and Moderna. Novavax was working carefully with regulators to make sure market entry in order that it may replace its vaccine to assault new Covid strains in time for the autumn, he mentioned.

“Think about if we get a pathogen the place that [mRNA] the product in some way can’t carry out in addition to we might count on. And you do not have variety and instruments and never even sufficient quantity to assist folks in nations that do not have the cash that we’re fortunate to have in the USA and Western Europe,” he mentioned.

Jacobs mentioned he would not remorse becoming a member of Novavax at a time when he was struggling. “To me, it appeared like an excellent alternative for a change.”

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