PARIS, May 10 (Reuters) - Sanofi on Friday

announced it has reached a licensing agreement with Novavax ( NVAX )

to sell a stand-alone COVID-19 vaccine and develop new

flu-COVID-19 combination vaccines while also taking an equity

stake in its US peer.

"We're excited by the prospect of combining Novavax's ( NVAX )

adjuvanted COVID-19 vaccine that has shown high efficacy and

favorable tolerability, with our rich portfolio of

differentiated flu vaccines (...)", Sanofi's head of vaccines

R&D, Jean-Francois Toussaint, said in a statement.

Under the agreement, Novavax ( NVAX ) will receive an upfront payment

of $500 million and could receive up to $700 million in

development, regulatory and launch milestones, totalling up to

$1.2 billion, Sanofi said.

Novavax ( NVAX ) will also receive double-digit percentage

royalty payments on sales of its COVID-19 jab and flu-COVID-19

combination vaccines under the deal.

Sanofi also said it would take a minority equity stake

below 5% in Novavax ( NVAX ).

Novavax ( NVAX ) missed out on the

COVID-19 vaccine windfall

, which benefited mRNA rivals, due to manufacturing issues

that delayed its filing for regulatory approval during the peak

of the pandemic.

Its original COVID shot received U.S. authorization in

July 2022, long after Pfizer ( PFE ) and Moderna ( MRNA ) were

in use.