Novavax investor withdraws proxy fight after Sanofi deal

Shah Capital Management has withdrawn a proxy campaign against the re-election of directors at vaccines firm Novavax in the wake of its $1.2 billion alliance with Sanofi.

The top-three investor in Novavax – which has been steadily raising its stake in the company in recent weeks and now holds around 7.9% – said it welcomed the Sanofi deal, but warned that “does not mean our engagement is at an end” and it still believes Novavax would benefit from a stockholder on its board of directors.

Shah Capital also claimed a slice of credit for the deal, saying it had emerged after months of urging the company to explore strategic partnership opportunities and is “a long-awaited step in the right direction.”

Earlier this month, Sanofi licensed joint commercial rights to Novavax’s COVID-19 vaccine for $500 million upfront and said it will work with the biotech on the development of combined flu/COVID shots and take a non-exclusive license to its Matrix-M adjuvant technology.

That was seen as going a long way to answer Shah Capital’s criticisms that Novavax had not made the most of its vaccines platform, and came on the day that Novavax also revealed that the first doses of the much-anticipated R21 malaria vaccine – which uses its Matrix-M adjuvant – had been shipped by partner Serum Institute of India to Africa.

The deal with Sanofi includes up to $700 million in development, regulatory, and launch milestones, as well as double-digit percentage royalties on sales of COVID and flu-COVID combination vaccines.

In a letter to shareholders announcing its intention to drop the proxy fight, Shah Capital reiterated claims that Novavax’s board had “presided over numerous enormous strategic errors, including colossal marketing failures in the 2023-2024 season, no clear understanding of AI technology to effectively improve vaccine research efforts both on time and money, questionable regulatory management, and ongoing operating losses, plus the massive dilutive share issuance at low price in 2023.”

It also said the company had taken too long to introduce a cost-cutting campaign “that we asked for back in March 2023, taking them a year to follow through on the cuts.”

The letter ends on a positive note, however, pointing to the potential of Novavax’s “scientifically proven protein-based vaccine franchise” to play a major role globally and deliver sustained profitable growth.

In its recent first-quarter results update, Novavax said it is planning to add a standalone flu vaccine to its phase 3 COVID-19-flu combination vaccine trial, which is on track to start in the second half of 2024, with a potential 2026 launch for both shots.