(Adds share movement in paragraph 3, analyst comment in paragraph 7; background throughout)

May 10 (Reuters) - Novavax on Friday removed doubts about its ability to remain in business and struck a licensing deal worth up to $1.2 billion with Sanofi for COVID-19 vaccines in exchange for a stake that doubles the U.S. biotech's market value.

Sanofi will take a 4.9% stake in the U.S. drugmaker for $70 million. That values Novavax at about $1.4 billion, nearly double its market capitalization of about $628 million as of Thursday, but a far cry from its peak of $20 billion in 2021.

The deal, which entitles Novavax to an upfront cash payment of $500 million, milestone-based payments and proceeds from the equity stake sale, lifted shares of the Gaithersburg, Maryland-based company 55.5% to $6.95 before the opening bell.

The cash infusion is expected to strengthen the balance sheet of the vaccine maker, shares of which have lost over 98% of their value since their peak early in the pandemic as the company struggled to get its COVID-19 vaccine to the market in a timely manner.

Sanofi, on the other hand, will gain a license to co-commercialize Novavax's COVID-19 vaccine in most countries and use the COVID shot along with its own flu vaccines as a combination flu shot.

For the French drugmaker, the agreement could help bolster its flu vaccine franchise as companies such as Pfizer and Moderna develop rivals, including combination vaccines to be used along with COVID-19 shots.

"Our sense is the angle here really is on having the option to provide a future flu (plus) COVID combo vaccine as Sanofi seeks to build out the moat around its high-dose flu vaccine," Barclays analysts said in a research note.

After the deal, Novavax said it was withdrawing a "going concern" notice that was put in place in February last year after it faced manufacturing snags and regulatory delays with the COVID shot.

Separately, Novavax cut its sales forecast for 2024, excluding contributions from the Sanofi deal, to between $400 million and $600 million from $800 million to $1 billion previously.

Novavax also reported a net loss that narrowed to $148 million in the first quarter from $294 million in the year-ago period.

(Reporting by Tassilo Hummel in Paris, Shubham Kalia, Utkarsh Shetti and Manas Mishra in Bengaluru; Editing by Benoit Van Overstraeten, Savio D'Souza and Shinjini Ganguli)