Why the Novavax share jumped today

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What happened

Actions of Novavax (NASDAQ: NVAX) jumped on Tuesday on the announcement of a major supply deal with the Japanese government. At the close of trading, the biotech company’s share price was up 7.6%.

So what

Japan’s Ministry of Health, Labor and Welfare will purchase 150 million doses of the COVID-19 vaccine candidate from Novavax, subject to regulatory approval. Financial terms of the deal were not disclosed.

Novavax has entered into a major coronavirus vaccine supply agreement with Japanese health authorities. Image source: Getty Images.

Pharmaceutical Takeda (NYSE: TAK) will license Novavax’s formula and technology and manufacture the vaccine in Japan. The health giant plans to start distributing the drug early next year.

Now what

Novavax’s vaccine is currently in clinical trials in Japan. Meanwhile, quality control issues and other production challenges forced the company to postpone its emergency use clearance application with the U.S. Food and Drug Administration (FDA) until ‘in the fourth quarter.

The delay angered investors, who were understandably troubled by the potential loss of billions of dollars in COVID-19 vaccine sales that went to rival drugmakers instead. However, Novavax’s new agreement with Japan suggests that its promising vaccine candidate could enjoy strong demand from governments around the world if it receives the necessary regulatory approvals.

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Joe Tenebruso has no position in the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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