Novavax just isn’t in a very good monetary place to refund cash to prospects because it has undergone a cost-cutting restructuring amid declining gross sales of the Covid-19 vaccine, its solely revenue-generating product. However arbitration is unsure, so fairly than roll the cube and threat an enormous payout if dispute decision fails, the corporate has agreed to pay Gavi, the Vaccine Alliance, as a lot as $475 million over the following 5 years to to achieve a settlement. a row over a $700 million buy settlement.

Like different Covid-19 vaccine makers, Gaithersburg, Maryland-based Novavax is supplying its vaccine beneath advance buy agreements. Authorities companies and well being organizations reminiscent of Gavi pay prematurely to safe vaccine provides. Novavax is utilizing that cash to help the manufacturing and distribution of its vaccine. The Firm considers these advance funds to be non-refundable.

In response to the vaccine producer's monetary studies, Gavi paid $350 million upfront beneath its 2021 pre-purchase settlement with Novavax. After the vaccine acquired an emergency use license from the World Well being Group in early 2022, Gavi paid Novavax a further $350 million.

As a protein-based vaccine that may be saved at customary fridge temperatures, Novavax's vaccine, marketed in some areas as Nuvaxovid, is a extra viable selection for components of the world that lack the infrastructure to the ultra-cold chain necessities of messenger RNA-based vaccines. The Gavi settlement lined the acquisition of 350 million vaccine doses. As of mid-November 2022, Gavi had solely ordered about 2 million doses, Novavax stated. The corporate despatched Gavi a termination discover.

Gavi responded by sending Novavax a written discover terminating the settlement, arguing that the corporate had breached the deal. As well as, Gavi stated it’s entitled to a refund, minus what has been credited for binding orders positioned for Gavi's Covid-19 Vaccines Advance Market Dedication (COVAX), which was established to safe Covid-19 vaccines for low- and middle-income earners . to land.

Early final 12 months, Gavi filed a request for arbitration. A listening to on the Worldwide Court docket of Arbitration was scheduled for July. The settlement introduced Thursday terminates the unique buy settlement and places an finish to the arbitration. The brand new settlement requires Novavax to pay Gavi an preliminary quantity of $75 million. As well as, Novavax should pay $80 million annually by 2028, deferred funds that may complete $400 million. Nevertheless, the quantity Novavax pays out annually could possibly be diminished by Gavi purchases of vaccines for provide to low- and middle-income nations. Within the occasion that demand for vaccines will increase, the settlement grants Gavi a further vaccine credit score of as much as $225 million that may be utilized to gross sales of Novavax vaccines for supply to low- and middle-income nations in extra of the deferred cost quantity of $80 million . within the years lined by the pact.

Within the joint press launch saying the settlement, John Jaocbs, president and CEO of Novavax, stated the settlement offers each events “the chance to proceed working collectively on our shared mission to make sure equitable entry to protected and efficient vaccines.” In the meantime, Gavi CEO David Marlow stated the settlement permits his group to proceed specializing in targets reminiscent of offering entry to Covid-19 vaccines to individuals in decrease revenue nations.

“It's good for world immunization, for nations and for wholesome manufacturing markets,” Marlow stated.

All Covid-19 vaccine makers are experiencing declining demand for his or her vaccines, however as a latecomer to the market, Novavax by no means skilled the excessive gross sales that makers of the messenger RNA-based vaccines achieved. Within the 9 months ended September 30, 2023, the corporate reported $279.9 million in product gross sales, down almost 78% from the identical interval in 2022. Of that complete quantity, $218.3 million got here from outdoors the US and Europe.

On February 28, Novavax will report 2023 monetary outcomes for the fourth quarter and full 12 months.

Photograph: Nathan Howard/Bloomberg, through Getty Photographs