Sanofi: Novavax Licensing Agreement Opens the Door to Developing a Covid-Flu Combination Vaccine

We are holding steady to our fair value for wide-moat Sanofi following the firm’s covid vaccine licensing agreement with Novavax. We view the deal as an incremental positive for Sanofi and worth the $500 million upfront payment followed by milestones and royalty payments. For the deal to make a major impact, we believe Sanofi’s leading flu vaccine technology would need to be successfully combined with Novavax’s covid vaccine technology. Sanofi is planning the development of this combination, but early-stage data is not likely until early 2025. Based on how the technologies work independently, the combination should work, but we are waiting for early-stage data before significantly adding combination vaccine sales into Sanofi’s valuation model. However, we like how Sanofi is leveraging its vaccine competitive advantages (part of its moat) to expand into the covid vaccine market, an area largely absent in the firm’s current portfolio.