Canada will pay $350 million to Novavax for unused COVID shots
The American vaccine manufacturer's stock price jumped 30% following the announcement.
The Canadian government has agreed to pay the American vaccine maker Novavax $349.6 million in order to settle a dispute over forfeited COVID vaccines that were scheduled for delivery.
The original value of the contract remains unchanged, reported Reuters, with the payment to be made in two equal installments in 2023. It is unclear exactly how many Novavax doses have gone unused, with demand for COVID vaccines declining globally.
Novavax's stock price jumped 30% following the $350 million announcement. The COVID vaccine is Novavax's only marketed product, and the decline in demand had raised doubts about its ability to stay in the black.
Back in March, Novavax said that it might not be able to stay in business for another year, which was considered a failure in the Trudeau government's COVID-19 vaccine procurement strategy. The Canadian government had promised to produce Novavax's vaccine at the National Research Council (NRC) Royalmount facility in Montreal.
In 2020, Prime Minister Justin Trudeau promised that Canada would be producing its own COVID vaccines by the end of the year at the Royalmount site, which never came to be.
Under the amended agreement between the manufacturer and the Canadian government, Novavax will now deliver less doses of the vaccine on a revised schedule. However, Canada will be able to terminate the new agreement if Novavax does not receive regulatory approval for vaccine production at the Biologics Manufacturing Centre at the Royalmount site by December 31, 2024.
Despite losing more than 90% of its value in 2022, Novavax announced positive stats in May, stating that the company expects 2023 revenue of between $1.4 billion and $1.6 billion. Of that amount, $800 million is from "locked-in" overseas purchase contracts for the COVID shot that it has committed to ship this year.
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