By Sneha S K and Bhanvi Satija
(Reuters) -Shah Capital has urged Novavax’s board to pursue a sale of the biotech, citing a third consecutive year of poor rollout of its COVID-19 vaccine, the hedge fund said on Tuesday.
In its letter, shared exclusively with Reuters, the second largest shareholder in Novavax suggested that the vaccine maker’s capabilities will “have far greater potential in the hands of a large capable pharma entity.”
Novavax in response said that its board remains open to “other credible options” that maximize shareholder value.
Shah Capital, which owns 7.2% of Novavax, is making a second push for change at the company after withdrawing a previous campaign against three board directors last year, following Novavax’s licensing deal with Sanofi.
Himanshu Shah, founder of the fund, told Reuters that Novavax could get a valuation of “at least $5 billion” based on the commercial potential of its vaccines. The company has a market valuation of about $1.4 billion, as per LSEG data.
Novavax’s protein-based COVID-19 shot, Nuvaxovid, took only 2% of market share last season, Shah said, blaming a series of critical marketing missteps at the company.
“The problem has been the sales,” he said, adding that Novavax has rolled out about 7,000 shots, while its mRNA rivals Pfizer and Moderna had rolled out nearly 6 million shots as of October 2.
Shah sees Sanofi, Merck, GSK and AstraZeneca among potential buyers, but said he has not been in touch with any of these companies.
Novavax’s vaccine was approved in May, but the U.S. FDA has limited its use to older adults and at-risk people over the age of 12.
U.S. Health Secretary Robert F. Kennedy Jr., a long-time vaccine skeptic, also raised concerns about the efficacy of the shot in a CBS interview earlier this year.
(Reporting by Sneha S K in Bengaluru and Bhanvi Satija in London, additional reporting by Christy Santhosh; Editing by Shailesh Kuber and Shinjini Ganguli)
