SK bioscience said on Wednesday that it made an equity investment in Novavax, a U.S. vaccine maker, paying $85 million (approximately 112 billion won) to secure 6.5 million shares of common stock through a private placement, equating to a 7 percent stake in the company.

Due to weakening demand for its Covid vaccine, Novavax said in its second-half financial disclosure that it has reduced its manufacturing liabilities with SK bioscience to $154 million from $195 million, and will pay the remaining $65 million in cash to SK bioscience.

Despite the rough situation, both companies have decided to strengthen ties and together transition from a CMO/CDMO partnership formed during the pandemic to a long-term synergistic relationship in the endemic era.

As such, the current license agreement previously signed during the pandemic has been extended, adding Novavax’s updated Covid-19 vaccine, which is currently under development for annual vaccination. Accordingly, SK bioscience will obtain exclusive rights to Novavax’s Covid-19 variant vaccine in South Korea until February 2029 and non-exclusive rights in Thailand and Vietnam until June 2028 to supply and commercialize the vaccine.

In particular, SK bioscience will manufacture and commercialize drug substances (DS) and vaccine products including pre-filled syringe products at L House, its vaccine manufacturing plant in Andong, North Gyeongsang Province, utilizing Novavax’s proprietary variant strain antigens and Matrix-M adjuvant.

In exchange, Novavax will receive $4 million in milestones as well as royalties on future product sales.

“This agreement is grounded in a productive multiyear relationship through which the companies have come to know each other’s strengths well,” Novavax President and CEO John C. Jacobs said. “We look forward to evolving our relationship to focus on commercialization and identifying strategic future opportunities while we continue to pursue our shared goal of delivering life-saving vaccines in the region.”

“We believe that the strategic equity investment and the continuous cooperation will create powerful synergy,” said SK bioscience President and CEO Ahn Jae-yong. “Through the enhanced partnership, SK bioscience will explore potential future collaborations with Novavax such as utilizing the Novavax adjuvant, Matrix-M.”