By Sneha S K and Bhanvi Satija
(Reuters) -Shah Capital has urged Novavax’s board to pursue a sale of the biotech, citing a third consecutive year of poor roll-out of its COVID-19 shot, the hedge fund said on Tuesday.
In its letter, shared exclusively with Reuters, the company’s second largest shareholder recommended that Novavax’s capabilities will “have far greater potential in the hands of a large capable pharma entity.”
Shah Capital owns a 7.2% stake in Novavax.
Himanshu Shah, founder and chief investment officer of the fund, told Reuters that Novavax could get a valuation of “at least $5 billion” based on the commercial potential of the company’s vaccines. He also believes that the “political picture” and scientific evidence were in Novavax’s favor.
Novavax has a market valuation of about $1.35 billion, as per LSEG data.
The fund’s latest move is its second attempt to push for change at the company. Last year, Shah Capital had withdrawn its campaign against the re-election of three directors on Novavax’s board, after the company struck a licensing deal with Sanofi.
“The problem has been the sales,” Shah told Reuters.
A series of critical marketing missteps have led to Nuvaxovid, the biotech’s protein-based COVID-19 shot, taking only 2% of market share last season, Shah said in his letter.
As of October 2, Novavax has rolled out about 7,000 shots, while its mRNA rivals Pfizer and Moderna had rolled out nearly 6 million shots, Shah said.
He sees Sanofi, Merck, GSK, and AstraZeneca among the potential buyers for Novavax, adding that he has not been in touch with any of these drugmakers.
Novavax’s protein-based vaccine was approved in May, but the US FDA limited its use to older adults and at-risk people over the age of 12. U.S. Health and Human Services Secretary Robert F. Kennedy Jr., a long-time vaccine skeptic, had also raised concerns about the efficacy of the shot in a CBS interview earlier this year.
(Reporting by Sneha S K in Bengaluru and Bhanvi Satija in London; Editing by Shailesh Kuber)
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