Shah Capital pushes for Novavax sale, warns of proxy fight

By Sneha S K and Sriparna Roy

(Reuters) -Shah Capital, Novavax’s second-largest shareholder, is pressing the biotech’s board to pursue strategic changes, including a potential sale, and warned it could launch a proxy fight if no progress is made in the next four months.

In a second letter to Novavax’s board in less than a month, shared exclusively with Reuters on Wednesday, Shah Capital said it has become "increasingly disenchanted" with the company’s weak COVID-19 vaccine sales.

"If I don’t see changes happening, and if the company doesn’t follow through in the next four months, then I think that is definitely a potential for a proxy fight," the hedge fund’s founder Himanshu Shah said in an interview.

Shah Capital said it still believes in Novavax’s science and has increased its stake to about 8.3%, up from 7.2% in October.

"The Board firmly believes that continuing to execute our corporate strategy is the best path forward, while remaining open to other credible pathways that would maximize shareholder value," Novavax said in a statement.

DISCONNECT BETWEEN POTENTIAL AND EXECUTION

The activist investor has pushed for change again after it withdrew a campaign against three board directors last year, following Novavax’s licensing deal with Sanofi.

Shah Capital said it remains "at a complete loss" over the disappointing sales of Novavax’s protein-based COVID-19 vaccine and is frustrated by its negligible market share.

"It is reasonable to question whether Novavax and its partner are exhibiting a profound lack of competence or intentionally underperforming," the hedge fund said in its letter.

Novavax’s vaccine sold about 120,000 doses as of October 31, during the 2025-26 season that started in August, versus 14.5 million doses sold in the same period by two competitors, leaving Novavax’s market share at about 0.8%, the letter said.

"Despite strong underlying science and evident market need, the disconnect between potential and execution is striking," the letter said. 

Earlier this month, Novavax pushed back its profitability target by a year to 2028.

Novavax has a high cost base, needs to be operationally profitable next year and should run more comprehensive trials, Shah said.

Shah values the company at $5 billion to $10 billion. Novavax’s market capitalization is about $1.21 billion, according to data compiled by LSEG.

The fund urged the board to immediately form a committee to evaluate a sale and hire a qualified investment bank.

Shah has previously named Sanofi, Merck, GSK and AstraZeneca as potential buyers, but said he has not contacted them.