Investor seeks sale of Novavax after poor COVID jab sales
Novavax CEO John Jacobs and Sah Capital's founder Himanshu Shah.
Activist investor Shah Capital has called on the board of directors at Novavax to put the company up for sale, citing a "litany of missteps" at the company.
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.
Shah, which said it is the second-largest investor in Novavax with a 7.2% stake, has been critical of the company's governance for some time and last year attempted to block the re-election of three directors and executive pay packages, saying it was being held back by "an overly conservative board and management that clings to failed strategies."
That criticism was reined back after Novavax announced a partnership with Sanofi, but the rhetoric has gone up a notch again in the latest letter, in which founder and managing partner Himanshu Shah argues that Gaithersburg, Maryland-based Novavax's vaccine platform would have "far greater potential in the hands of a large capable pharma entity."
It accuses the company of "persistent underperformance, Nuvoxovid's rollout slipups, […] timid/ineffective marketing, extremely poor capital market actions, and tremendous lack of accountability."
Previously, Shah Capital has argued that, faced with a decline in the size of the COVID-19 market (which only looks set to worsen further under the Trump administration), Novavax should now be targeting its vaccine at the over-60s age bracket using a Direct-To-Consumer (DTC) strategy.
In the latest letter, it points to missed FDA timelines that held up Nuvaxovid's approval in the US until last year, as well as other issues like a quality issue that led to an inadequate shelf-life for the shot in the 2024 COVID-19 season, that have pegged its market share to a lowly 2%.
"Shah Capital finds it unfathomable why Nuvaxovid's market share once again is non-existent given the scientific superiority [of the vaccine] and positive regulatory tailwinds," alluding to a US regulatory system that, under HHS Secretary Robert F Kennedy Jr, has been moving to discourage the use of mRNA-based COVID-19 jabs.
"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," writes Shah in the letter.
Despite the headwinds for the mRNA shots, as of 2nd October Novavax had distributed around 7,000 doses of Nuvaxovid compared to around 6 million of the Moderna and Pfizer/BioNTech vaccines.
Novavax had not responded to the allegations made by Shah at the time of writing.
