Stock of Novavax, Inc. ( NASDAQ : NVAX, NVAX message board ) surged yesterday as the company announced ROVI Pharmaceuticals will be using their anti-flu technology to produce pandemic and seasonal flu vaccines. In addition to the licensing agreement, which grants ROVI exclusive rights to sell the vaccines in Spain and Portugal, Rovi will be making a $3 million equity investment in Novavax, as well as funding for any additional development needed.
As a result ROVI will own 1% of Novavax, and is committed to the $3 million stock-purchase agreement, buying shares at $2.74 each, a 10 percent premium to the closing price on June 29. Novavax told The Associated Press yesterday that the deal ''will bring the company development funding needed now and will be worth tens of millions of dollars in future royalty and milestone payments once the vaccines are approved and marketed.''
Novavax will also receive royalties from ROVI's sale of their products, and will retain exclusive rights to the vaccine in North America, Asia and Australia. Those involved with the deal expect the manufacturing plants and approval of the vaccine to be completed by 2012.
The agreement carries significantly positive weight for Novavax, who just as many other pharmaceutical companies are struggling through the cash downturn and have been searching out partners to provide relief. Novavax had been trading largely down until early June when the company announced their progress in the development of a vaccine for the H1N1 swine-flu strain, alongside a cooperative deal with the Division of Microbiology and Infectious Disease. An announcement which saw their share price rally more than 50% ( they are currently in the mid-stage testing of this vaccine ).
The announcement Tuesday saw Novavax stocks rise significantly in afternoon trading, from an open of $2.50 to a close of $3.28.
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