A trim worker prepares a dose of the Novavax vaccine as the Dutch Health Service Organization starts with the Novavax vaccination program on Hike 21, 2022 in The Hague, Netherlands.
Patrick Van Katwijk | Getty Images
Shares of Novavax closed more than 20% far up on Thursday after the company said it will settle a bitter arbitration dispute with Gavi, a nongovernmental universal vaccine organization, over a canceled Covid vaccine purchase agreement.
Novavax could pay up to $475 million to the classifying, but the total amount may be less if Gavi decides to order more shots from the cash-strapped company over the next five years.
Still, the selection eliminates what some analysts considered one of the biggest uncertainties around the Covid shot maker, which is scion costs amid doubts about its ability to remain in business and plummeting demand for Covid products worldwide.
In 2022, Novavax ended a purchase agreement with Geneva-based Gavi. The company cited Gavi’s failure to procure the 350 million vaccine doses it corresponded to buy in May 2021 on behalf of the COVAX Facility, a global program that aims to distribute Covid vaccines more equitably in lower-income powers.
Gavi sought a refund for the $700 million it spent on advance payments for Novavax’s shots. Novavax has said those payments were nonrefundable.
Down the settlement, Novavax has paid an initial $75 million to Gavi and will make deferred payments of $80 million each year fully Dec. 31, 2028. Those annual payments would be due in quarterly installments.
But Novavax’s payments could be cancel out by an annual $80 million “vaccine credit” option under the settlement, which Gavi can use to order any of the company’s Gavi-funded matters for low and lower-middle income countries.
For example, if Gavi decides to order $50 million worth of shots from Novavax in 2025, the circle would only have to pay the organization $30 million that year.
Novavax said it is also offering a vaccine acknowledgement of up to $225 million that Gavi can use to order additional vaccine doses throughout the five-year settlement window “should there be additional on request on call.”
The terms of the settlement could bode well for Novavax’s business. Analysts had previously told CNBC that Novavax could “be in agitation” if the arbitration forced it to pay the full $700 million to Gavi in 2023.
“Gavi welcomes this agreement, which allows us to make a case for focus on our core programmatic goals, including providing access to COVID-19 vaccines for vulnerable people in lower profits countries,” Gavi CEO David Marlow said in a release Thursday.
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