NEW YORK: Novavax has agreed to pay back international vaccine group Gavi at least $475 million in cash or vaccines by the end of 2028, settling a dispute over canceled orders that created financial uncertainty for the US maker of COVID-19 shots.

Shares of the company rose 23.2% to $4.91 on Thursday. Its stock has dropped nearly 60% since the company last year raised doubts about its ability to remain in business. Nearly half of Novavax’s free float shares were in short position, as of Jan. 31.

Gavi, an alliance that co-finances vaccine purchases with low-income countries, paid Novavax $700 million over 2021 and 2022 for up to 350 million doses of its COVID vaccine.

Novavax, which launched its vaccine after several competitors due to manufacturing and regulatory delays, did not deliver any doses before the contract’s deadline at the end of 2022.

The settlement “really clears the deck of the most significant single uncertainty and liability that we had on our books,” Novavax Chief Executive John Jacobs said in an interview.

“Removing it absolutely gives us more flexibility and it makes us more attractive as a future business partner to do deals,” he added.

Novavax has said that pending arbitration with Gavi was one of the main overhangs on the company. The vaccine alliance had filed a demand for arbitration with the International Court of Arbitration, a hearing that had been scheduled for later this year.

Under terms of the settlement, Novavax has made an initial payment of $75 million to Gavi and will pay another $80 million a year in quarterly installments through 2028.

That amount could be reduced if Gavi chooses to receive vaccines instead. If demand for vaccines exceeds $80 million a year, Novavax will provide an additional vaccine credit of up to $225 million through the five-year term of the settlement.