Friday, Novavax Inc ( NVAX ) entered a co-exclusive licensing agreement with Sanofi SA ( SNY ) for COVID-19 and flu-COVID-19 combination vaccines.

The terms of the agreement include:

A co-exclusive license to co-commercialize Novavax’s current stand-alone adjuvanted COVID-19 vaccine worldwide (except in countries with existing Advance Purchase Agreements and India, Japan, and South Korea where Novavax ( NVAX ) has existing partnership agreements).

Novavax ( NVAX ) has a sole license to its adjuvanted COVID-19 vaccine for use in combination with Sanofi’s flu vaccines, while Novavax ( NVAX ) retains the right to and is developing its own COVID-19-Influenza Combination vaccine candidate.

A non-exclusive license to use Novavax’s adjuvanted COVID-19 vaccine in combination with non-flu vaccines.

A non-exclusive license to use the Matrix-M adjuvant in vaccine products.

Novavax ( NVAX ) will receive an upfront payment of $500 million and up to $700 million in development, regulatory, and launch milestones, up to $1.2 billion.

Starting in 2025, Sanofi ( SNY ) will book sales of Novavax’s adjuvanted COVID-19 vaccine and will support certain R&D, regulatory, and commercial expenses.

Novavax ( NVAX ) will receive tiered double-digit percentage royalty payments on sales by Sanofi ( SNY ).

Sanofi ( SNY ) will be responsible for developing and commercializing any novel flu-COVID-19 combination vaccine containing a Sanofi ( SNY ) flu vaccine.

Outside of the collaboration, each party may develop and commercialize their own flu-COVID-19 vaccines and adjuvanted products at their own cost.

Novavax ( NVAX ) is entitled to additional launch and sales milestones opportunities of up to $200 million plus mid-single digit royalties for each additional Sanofi ( SNY ) vaccine product developed under a non-exclusive license with Novavax’s Matrix-M adjuvant technology.

In addition, Sanofi ( SNY ) will take a minority (less than 5%) of approximately $70 million equity investment in Novavax ( NVAX ).

Novavax ( NVAX ) reported a first-quarter EPS loss of $(1.05), down from a loss of $(3.41) a year ago, beating the consensus of $(1.06) 

The company reported sales of $93.86 million, up from $80.95 million a year ago, missing the consensus of $101.16 million.

Novavax ( NVAX ) removes the going concern notice.

Novavax ( NVAX ) is prepared to initiate an additional cost reduction program to reduce 2025 R&D and SG&A expenses to below $500 million, a portion of which it expects to be reimbursed by Sanofi ( SNY ) under the agreement, reflecting over $225 million reduction beyond prior stated targets.

Guidance: Novavax ( NVAX ) updates 2024 combined revenue and Sanofi Agreement Payments Of $970 million-$1.17 billion versus prior guidance of $800 million-$1 billion.

Price Action: NVAX shares are up 121% at $9.88 during the premarket session at last check Friday.