Novavax's stock price soars, with aggressive investors driving boardroom changes

Investing.com – Novavax Pharmaceuticals shares rose 7.6% on Wednesday, after activist investor Shah Capital announced a plan to vote against the board’s nominees and the executive compensation package at the vaccine maker’s upcoming annual general meeting.

Shah Capital holds 9% of Novavax Pharmaceuticals’ shares and is the company’s second-largest shareholder. The firm sent a letter to the company, again pressing for strategic change. The hedge fund urged management to implement aggressive cost-cutting measures and, when the opportunity arises, to repurchase 10 million to 20 million shares.

In a letter shared with Reuters, hedge fund founder Himanshu Shah called for cutting the senior management team by 30% and reducing the board’s members from 8 to 5. The firm also wants to bring in a strategic long-term investor with 10% to 20% ownership to reshape the company.

Shah Capital criticized the company’s partnership with Sanofi (EPA:SASY), saying it has not benefited Novavax Pharmaceuticals. Shah said it was disappointed by Sanofi’s continued delays in releasing the results of the late-stage trial for its COVID/flu combination vaccine, whose market value exceeds $5 billion.

The activist investor has been pushing Novavax Pharmaceuticals’ board to pursue strategic change, including potential sale options. Shah told Reuters that the letter represents a “charge against the leadership.”

Although Shah had said in November that, if there were no progress, he might launch a proxy contest, he said on Wednesday he would not take that route, “because it would put him in a minority position in front of the deeply entrenched 8-person board.”

The firm also urged proxy advisory firms ISS and Glass Lewis to reexamine their recommendations supporting the company’s proposals.

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