Novavax stock jumps after company settles dispute over canceled Covid vaccine purchase
The total amount Novavax will pay depends on whether Gavi decides to order more Covid shots from the cash-strapped company over the next five years.
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A health worker prepares a dose of the Novavax vaccine as the Dutch Health Service Organization starts with the Novavax vaccination program on March 21, 2022 in The Hague, Netherlands.
Patrick Van Katwijk | Getty Images
Shares of Novavax closed more than 20% higher on Thursday after the company said it will settle a bitter arbitration dispute with Gavi, a nongovernmental global vaccine organization, over a canceled Covid vaccine purchase agreement.
Novavax could pay up to $475 million to the organization, 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 settlement eliminates what some analysts considered one of the biggest uncertainties around the Covid shot maker, which is cutting costs amid doubts about its ability to remain in business and plummeting demand for Covid products worldwide.
In 2022, Novavax terminated a purchase agreement with Geneva-based Gavi. The company cited Gavi's failure to procure the 350 million vaccine doses it agreed 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 countries.
Gavi sought a refund for the $700 million it spent on advance payments for Novavax's shots. Novavax has said those payments were nonrefundable.
Under the settlement, Novavax has paid an initial $75 million to Gavi and will make deferred payments of $80 million each year through Dec. 31, 2028. Those annual payments would be due in quarterly installments.
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