• A tiny biotech called Novavax has secured the largest deal yet from the US government to support its coronavirus vaccine program. 
  • Novavax landed a $1.6 billion funding deal that will help test its vaccine candidate in large clinical trials and ramp up manufacturing, the company said Tuesday. 
  • The Gaithersburg, Maryland-based biotech has never brought a vaccine to market in its 33-year history. Its vaccine started early human testing in late-May and is set to produce results in July.
  • Novavax didn’t make any pledges on pricing or exclusive US future access to get the money, CEO Stanley Erck told Business Insider. 
  • “All this contract covers is a delivery of 100 million doses of vaccine,” Erck said, with delivery starting in the fourth quarter of 2020 and finishing in the first quarter of 2021. 
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Novavax started this year in a precarious position.

Entering its 33rd year in business, the company had racked up a deficit of $1.4 billion and had yet to bring any vaccines to market, putting it at risk of going bankrupt in 2020. 

The coronavirus pandemic gave the small, Gaithersburg, Maryland-based company the chance to turn it all around. And it has seized the opportunity, landing a $1.6 billion funding deal from the US government on Tuesday to support its experimental coronavirus vaccine that has yet to produce any human data.

Among more than 145 coronavirus vaccine research efforts, Novavax has been an unlikely leader from the start, shooting for ambitious timelines that compete with Big Pharma rivals like Pfizer, Johnson & Johnson, and AstraZeneca, which all dwarf the company in size and resources. Through the deal, Novavax will deliver 100 million doses of its vaccine to the US government by early 2021.

Read more: Dozens of drugmakers are racing to develop coronavirus vaccines. Here’s how they see 2020 playing out and when the first vaccines might be available.

Tuesday’s announcement shows Novavax is not being left behind. Its coronavirus vaccine will be prioritized for large-scale testing to see if the vaccine can prevent infections or disease alongside candidates backed by much larger drugmakers. The vaccine is now in early-stage human testing with results expected in July. 

“It does level the playing field a bit,” Novavax CEO Stanley Erck told Business Insider.

The $1.6 billion deal follows previous grants that Novavax secured, including $60 million from the Defense Department and up to $388 million from the Coalition for Epidemic Preparedness Innovations

It’s a stark contrast from where the company was less than a year ago, as a cash-starved biotech that was forced to sell off manufacturing assets to raise money

“What I always remind people is that our business is all about science and biology, so money will always follow if you’re doing the right work on the science side,” Mayank Mamtani, a biotech analyst at B. Riley FBR who covers the company with a buy rating told Business Insider. “That’s what we are seeing with Novavax.”

The biotech’s stock surged 30% Tuesday, reaching a company valuation of $6 billion. The gains add to a remarkable six-month run for Novavax, a company that started the year trading at less than $5 per share and is now trading above $100.

Read more: How 13 top drugmakers are sprinting to develop a coronavirus vaccine or treatment that can halt this pandemic

Two-thirds of the funding will pay for clinical trials, Erck says

Scientists from the US National Institutes of Health’s infectious disease unit will run the large-scale efficacy trial, called a phase 3 study, Erck said. They will aim to enroll volunteers in viral hotspots around the globe, which will help determine faster if the vaccine works or not.

About two-thirds of the $1.6 billion will pay for clinical testing, Erck estimated. This main efficacy trial, which could enroll up to 30,000 people, will be the most expensive to run, costing about $400 million to $500 million, he said. The company also plans to run another clinical trial focused just on children. That will likely cost an additional $200 million to $300 million.

Erck said the 30,000-volunteer size is an estimate of what may be needed to show efficacy. He said a trial may need significantly less volunteers if it enrolls people located in hot spots and the vaccine works well enough to demonstrate a clear signal.

“The 30,000 is a guess,” he added. “Everybody else is doing 30,000, so that seems to be the magic number.”

Moderna, AstraZeneca, and Pfizer have all said they are planning 30,000-volunteer phase 3 trials as well. 

Novavax is planning to start its late-stage trial this fall — slightly behind other leading vaccine developers. Moderna and Pfizer are both aiming to start their efficacy studies in July, and AstraZeneca’s US-based trial is expected to start in August. 

Being right behind the leading program may wind up helping companies like Novavax, Mamtani said.

Particularly as Moderna, which is leading the vaccine race, has reportedly clashed with government scientists about how to design and run these trials — resulting in a minor delay to the start date. By the time Novavax begins late-stage trials, many of those technical issues will likely have been sorted out, the analyst added. 

All of this planning and funding comes without any human data for its vaccine. Preliminary safety data will be released sometime this month, Erck said, coming from a study started in late-May

The other third of the government’s funding will support ramping up manufacturing. Erck said Novavax is now talking with contract manufacturers about installing cell lines at their plants to make its vaccine. Novavax uses a unique protein-based platform, which differs from traditional approaches to developing vaccines.

Read more: Dozens of drugmakers are racing to develop coronavirus vaccines. Here’s how they see 2020 playing out and when the first vaccines might be available.

Novavax’s CEO said the $1.6 billion deal doesn’t include controls on the vaccine’s price

Asked on commitments or pledges that Novavax made to get the $1.6 billion funding deal, Erck said it did not include any price controls.

“All this contract covers is a delivery of 100 million doses of vaccine,” Erck said. Delivery is expected to start in the fourth quarter of 2020 and finish in the first quarter of 2021. 

The US government will have to reach separate purchase agreements to get more vaccine, Erck said.

It’s still not clear how early Novavax’s vaccine could be widely used, if it is successful in trials. 

“There’s been no decision made about emergency use,” Erck said, on the potential for the US Food and Drug Administration, the agency in charge of approving vaccines,  to OK a vaccine early. 

Several companies, including Moderna, Pfizer, and AstraZeneca, have said they are aiming to be ready this fall for potential emergency use. It’s unclear how much human data regulators would need to see to allow a limited approval.

Read more: Scientists are racing to create a coronavirus vaccine that can halt the pandemic in its tracks. Here are the top 3 candidates aiming to be ready this fall.

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