Novavax Major Shareholder Calls For Sale Of Company To Larger Pharma Entity

Novavax (NVAX) shares traded 1% higher in the pre-market session on Tuesday after its second-largest shareholder, Shah Capital, called for the sale of the company, citing persistent underperformance.

Shah Capital currently owns 11.8 million shares or 7.2% of Novavax. The firm said in a letter to the Novavax board of directors that since March 2023, its concerns have accelerated with “Nuvoxovid’s rollout slipups including this fall, timid/ineffective marketing, extremely poor capital market actions, and tremendous lack of accountability.”

“Novavax’s IP and scientific capabilities will have far greater upside potential in the hands of large capable pharma entity,” Shah Capital said, while recommending an immediate formal strategic review for the sale of the company.

The investor recapped several alleged missteps that have damaged the company, including critical marketing slips resulting in a small 2% Covid vaccine market share in the 2024 season for Novavax’s protein-based Nuvaxovid vaccine.

Shah Capital also expressed surprise at Nuvaxovid’s market share, noting that the increasing criticism for mRNA vaccines made by Novavax’s peers should benefit Novavax’s protein-based vaccine.

“With more states becoming increasingly averse to mRNA vaccines including Florida, Texas, Minnesota, Idaho, Iowa, Montana, South Carolina, Tennessee & Kentucky; some of which are trying to ban mRNA altogether, we find it inconceivable as to how management has been unsuccessful gaining meaningful share given the tens of millions of senior citizens/high risk/immunocompromised individuals in just those 9 states alone. Sales are miserable for the third consecutive year,” it said.

The investor also noted that awareness regarding Nuvaxovid continues to be “alarmingly low.” Shah further alleged that the “execution failure and ineffective leadership” have taken their toll on investor confidence and trust.

Last year, Shah Capital waged a proxy campaign against the re-election of some directors on the company board at Novavax’s 2024 Annual Meeting, but withdrew it after the company struck a licensing agreement with Sanofi.

Sanofi is Novavax’s biggest partner. In the second quarter (Q2), the $199 million received from Sanofi accounted for over 83% of Novavax’s total revenue of $239 million.

NVAX stock is up by 7% this year but down by about 32% over the past 12 months. 

Read also: Wells Fargo Appoints CEO Charlie Scharf As Chairman After Q3 Earnings Beat Estimates

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