Novavax to settle Gavi arbitration over canceled Covid shot purchase

Shares of Novavax jumped more than 20% 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.

Shares of Novavax fell more than 50% last year and are nearly flat for 2024, putting the company’s market value at roughly $580 million. 

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. 

But Novavax’s payments could be offset by an annual $80 million “vaccine credit” option under the settlement, which Gavi can use to order any of the company’s Gavi-funded shots for low and lower-middle income countries.

For example, if Gavi decides to order $50…