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Novavax (NVAX) Cancels COVID Jab Supply Deal With GAVI

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Novavax (NVAX - Free Report) announced that it sent a written notice to GAVI Alliance on Nov 18, to terminate the advance purchase agreement (APA) entered between the two organizations last year for the supply of 350 million doses of its COVID vaccine.

Per Novavax, GAVI has breached the APA since it failed to procure the required vaccine doses from the company for the COVAX facility. The COVAX facility is a joint program between GAVI, the World Health Organization (WHO) and the Coalition for Epidemic Preparedness Innovations (CEPI) for the equitable distribution of COVID vaccines in poorer countries.

Though the termination of APA has not resulted in any penalties from Novavax’s side, management has stated that GAVI has no right to recover any advance payment made by it to the company under the APA.

Novavax claims that it has received a non-refundable advance payment of $350 million from GAVI in 2021 and another non-refundable advance of $350 million earlier this year after WHO granted emergency use listing (EUL) to the company’s protein-based COVID vaccine.

Per a Reuters’ article, GAVI rejected Novavax’s claim stating that Novavax was unable to make delivery of a single dose of the protein-based COVID vaccine to COVAX. The company also stated that it would recover the advanced payments made to Novavax made under the APA. A legal battle is most likely to ensue between Novavax and GAVI as both contradict each other’s claims.

Shares of Novavax were down 10.7% on Nov 22 following this news. In fact, the stock has slumped 88.2% so far this year compared with the industry’s 19.9% decline.

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With the pandemic approaching the endemic phase, Novavax has been facing several headwinds with product demand. The company already slashed its revenue guidance for the full year 2022 twice. This has resulted in a fall from total revenue projections to around $2 billion from the earlier projections in the range of $4-$5 billion.

Currently, Novavax’s COVID vaccine is approved for use in adults and adolescents aged 12 years and older as a primary two-dose regimen. Last month, it was also authorized for use as a booster dose in adults aged 18 years and older.

Although only a handful of vaccines have been approved /authorized in the United States, Novavax’s COVID vaccine sales severely lag when compared to product sales generated by Moderna (MRNA - Free Report) and Pfizer (PFE - Free Report) /BioNTech (BNTX - Free Report) . from their COVID vaccine product sales.

The Pfizer/BioNTech and Moderna vaccines have received full approval for use in adults in the United States. While Moderna’s vaccine is approved for adults aged 18 years and older, the Pfizer/BioNTech vaccine is approved for use in individuals aged 12 years and older. Both these vaccines are also authorized for use in individuals aged six months and above in the United States.

With regard to booster doses, Moderna and Pfizer/BioNTech have also secured authorization from the FDA for using their respective Omicron BA.4/BA.5-adapted bivalent vaccines in individuals as young as five years of age and older.


Zacks Rank

Novavax currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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