Novavax will repay Gavi $475 million in cash or vaccines by 2028 to resolve canceled orders. The $700 million contract permits Novavax to pay $80 million annually in quarterly installments until 2028. The settlement may cost $300–$400 million.
Novavax has settled a dispute with Gavi over canceled orders that left the U.S. COVID-19 vaccine maker financially vulnerable. The company has
agreed to pay back Gavi at least $475 million in cash or vaccines by 2028.
Gavi paid Novavax $700 million over 2021 and 2022 for up to 350 million doses of its COVID vaccine.
Novavax launched their vaccine after many competitors due to manufacturing and regulatory delays, but it failed to provide any doses before the contract’s 2022 deadline.
The settlement “really clears the deck of the most significant single uncertainty and liability that we had on our books,” Novavax CEO John Jacobs said in an interview.
“Removing it absolutely gives us more flexibility and it makes us more attractive as a future business partner to do deals,” said.
Novavax indicated Gavi arbitration was a major issue. The vaccine alliance requested arbitration before the International Court of Arbitration later this year.
Novavax paid Gavi $75 million upfront and $80 million annually in quarterly installments through 2028 under the settlement. Gavi could minimize that number by receiving vaccines.
Novavax will provide a $225 million vaccine credit if vaccine demand reaches $80 million a year during the five-year settlement.
The settlement mechanism reduces the danger of a big one-time payment this year and helps Novavax manage cash and cash flow, Jacobs said. He assessed the settlement’s value at $300–$400 million.
Conclusion
Novavax will pay back Gavi at least $475 million by 2028 for canceled orders that caused financial instability for the US COVID-19 injection producer. Gavi paid Novavax $700 million over 2021 and 2022 for up to 350 million doses of its COVID vaccine. Novavax failed to supply doses before the 2022 contract deadline. Novavax can manage its cash flow and avoid a hefty one-time payment this year thanks to the settlement. Settlement value is estimated at $300–$400 million.
