Activist investor renews its criticism of Novavax

 Hedge fund Shah Capital has fired another broadside at vaccine developer Novavax, saying it intends to vote against the re-election of the board and executive pay packages at its forthcoming annual meeting.

The activist investor, which holds a 9% stake in Novavax and last year called for the company to be put up for sale, said it was taking a stand against the current board and management, accusing them of overseeing a destruction in shareholder value.

It is not starting a proxy fight, however, as it will be in a minority against "an entrenched eight-member board," but is looking for support from other shareholders in the company, including ISS and Glass Lewis.

Chief among its criticisms is Novavax's failure to build sales of its protein-based COVID-19 vaccine Nuvaxovid/Covovax, a latecomer in the market, which has struggled to gain traction against mRNA-based rivals from Moderna and Pfizer/BioNTech, despite negative sentiment toward the latter technology emanating from the US.

Shah has also tried to block the re-election of the board and executive compensation in previous years, saying Novavax's management was "clinging" to a failed strategy, although, its criticisms quietened in the wake of the company signing a $1.2 billion alliance with Sanofi in 2024 and a $530 million non-exclusive licensing deal with Pfizer for its Matrix-M vaccine adjuvant.

Its latest letter to the board notes that the Sanofi partnership is not benefitting Novavax yet, adding "for Nuvaxovid to achieve only ~1% share or ~$22 million in revenues in 2025 is completely unfathomable and frankly unacceptable for the best-in-class covid vaccine on efficacy and safety which is non-mRNA."

Shah is also unhappy about delays to phase 3 trials of a combination COVID-19/influenza vaccine that lies at the centre of their agreement, "even with better clinical results compared to competition for a lucrative ~$5+ billion combo vaccine category."

The criticism comes despite Gaithersburg, Maryland-based Novavax receiving $225 million in milestone payments from Sanofi in relation to the alliance last year.

Overall sales of Nuvaxovid fell in the fourth quarter, but vaccines' total sales in 2025 rose to $625 million from $190 million in 2024, according to Novavax's recent fourth-quarter results update. Novavax only books sales in territories where it is the commercial lead, as Sanofi has taken over commercialisation and distribution of the shot in most global markets. The company is predicting revenues of $35-$45 million from Nuvaxovid this year.

Shah's concerns also relate to the predicted market share for Nuvaxovid of less than 10% this year, arguing it should be around 30%, as well as "continuing massive R&D expenses" totalling $1.35 billion in 2023 to 2025, inadequate cost-cutting, and "cash hoarding" by management that the hedge fund says "is not prudence, but a lack of strategic conviction."

It wants the company to trim back R&D spending, retire a $225 million convertible bond that is tied to high interest, undertake a share buyback, and slash the management team by a third, whilst reducing the board from eight to five and appointing new members "with emphasis on pragmatic entrepreneurial experience" to turn Novavax around.

"We would like to see a like-minded strategic long-term investor taking 10-20% ownership position to reshape Novavax entirely," says the investor in a letter sent to the company today, which is signed by founder and managing partner Himanshu Shah.

So far, Novavax has not responded to the letter.

https://pharmaphorum.com/news/activist-investor-renews-its-criticism-novavax