Home Hedge Funds Novavax investor Shah Capital pushes for board shakeup

Novavax investor Shah Capital pushes for board shakeup

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By Michael Erman and Sriparna Roy

(Reuters) -A top shareholder of COVID-19 vaccine maker Novavax on Monday said the company has been badly mismanaged and nominated two candidates to serve on Novavax’s board.

Shah Capital, which owns a 6.7% stake in Novavax, said it had tried to engage with Novavax’s board for more than a year, but the company has not been receptive to its suggestions, spurring the decision to nominate the board candidates.

“It’s an arrogant leadership that has not shown performance,” Himanshu Shah, founder and chief investment officer of Shah Capital Management, told Reuters.

Novavax raised doubts about its ability to remain in business last year, after missing out on the pandemic windfall enjoyed by mRNA rivals due to manufacturing snags and regulatory delays that left it unable to get its vaccine to market in a timely manner.

As a result, Novavax, whose market capitalization had topped out at over $20 billion, has since lost over 98% of its value, bringing its market capitalization below $600 million.

“We are confident that the actions we are taking are the right ones to drive long-term sustainable growth and create value for all our stakeholders. We welcome the perspectives of our shareholders and value their input on our strategy,” Novavax said in a statement.

Novavax, whose shares are trading near a record low, is one of the most shorted stocks on the Nasdaq. The company’s shares fell 3.5% to $4.13 in early afternoon trading.

The hedge fund nominated Suresh Katta, founder and CEO of biotech firm Saama, and Venkat Peri, CEO of Quantiva Health, to Novavax’s eight-member board, saying the duo had the experience in setting the company’s strategic direction.

Maryland-based Novavax cut costs and worked to launch its vaccine commercially last year, but only managed a low-single-digit percentage market share.

Shah said in an interview that he believes Novavax could have $2 billion a year in revenue.

“This company needs to roll up the sleeves over here,” he said. “If not it should be sold to others.”

He said he gives Novavax CEO John Jacobs credit for cleaing up the company’s finances and settling a dispute with international vaccine group Gavi that had caused significant headwinds, and said he is not currently calling for a change in the CEO role.

The hedge fund has urged Novavax to adopt a marketing strategy going forward to target consumers who are hesitant to receive mRNA vaccines.

(Reporting by Michael Erman in New Jersey and Disha Mishra and Sriparna Roy in Bengaluru; Editing by Mrigank Dhaniwala, Ravi Prakash Kumar, Anil D’Silva and Leslie Adler)

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