Novavax (NASDAQ:NVAX) shares gained about 7.6% on Wednesday after activist investor Shah Capital said it plans to oppose the company’s board nominees and executive compensation proposals at the vaccine maker’s upcoming annual meeting.
Shah Capital, which holds roughly a 9% stake in Novavax and is the company’s second-largest shareholder, sent a letter urging management to pursue major strategic changes. The hedge fund called for aggressive cost reductions and suggested the company consider buying back between 10 million and 20 million shares.
In the letter obtained by Reuters, Shah Capital founder Himanshu Shah proposed cutting the senior leadership team by about 30% and reducing the board’s size from eight members to five. He also recommended bringing in a long-term strategic investor with a 10–20% stake to help reshape the company’s direction.
The investor also criticized Novavax’s collaboration with Sanofi (EPA:SASY), arguing that the partnership has not delivered meaningful benefits for Novavax. Shah expressed concern about delays in releasing late-stage data for the COVID/influenza combination vaccine, a market he described as being worth more than $5 billion.
Shah Capital has been pressing Novavax’s leadership to consider strategic alternatives, including the possibility of a sale. Shah told Reuters that the latest letter represents “an indictment of the leadership.”
Although Shah previously warned in November that he could initiate a proxy contest if the company failed to make progress, he said Wednesday that he is not pursuing that option “as it will be in the minority against an entrenched eight-member board.”
The hedge fund also called on proxy advisory firms ISS and Glass Lewis to reconsider their recommendations supporting Novavax’s proposals.