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Indian-American led hedge fund urges Novavax shareholders to vote against three directors

Shah Capital had expressed concerns over mismanagement at the Maryland-based biotech last month

A Novavax logo is reflected in a drop on a syringe needle in this illustration taken November 9, 2020. / REUTERS/Dado Ruvic/Illustration

By Bhanvi Satija

(Reuters) -Hedge fund Shah Capital on May.6 urged Novavax shareholders to vote against the re-election of three directors and opposed proposals related to executive compensation, weeks after pushing for a board shakeup at the COVID-19 vaccine maker.

Shah Capital, the biotech's third-largest shareholder with a near 7.5 percent stake, reiterated the company was "undervalued and continues to suffer from poor profitability".

The hedge fund had previously said it planned to put forward two of its own candidates for Novavax's board, but was unable to meet the requirements to do so on time. 

"I could not get the shares transferred to a transfer agent on time and on that technicality, the company refused to nominate my two candidates, which is very unfortunate because I think they are extremely qualified and what this board needs is a fresh perspective," Himanshu Shah, founder and chief investment officer of Shah Capital Management, told Reuters.

Novavax said in a proxy filing last week it had not received any valid nominations from stockholders for its 2024 annual shareholder meeting, scheduled to take place on Jun.13.

The company had raised doubts about its ability to remain in business, hurt by manufacturing snags and regulatory hurdles that delayed the entry of its protein-based vaccine to the market.

Last month, Shah Capital had expressed concerns over mismanagement at the Maryland-based biotech and urged it to adopt a marketing strategy that targets consumers who are hesitant to receive mRNA vaccines.

"They really have done a terrible job marketing this vaccine," Shah said, adding he believes there is an unmet market for Novavax's protein-based vaccine among people who are hesitant to take one of the mRNA vaccines for COVID-19. 

"Ultimately, I think this company may be better off in the hands of a larger pharma player," he said.

The hedge fund said on Monday it plans to vote against directors Richard Douglas, Margaret McGlynn and David Mott at Novavax's shareholder meeting in June.

McGlynn and Mott have served on Novavax's board since 2020 and Douglas since 2010.

Novavax said it welcomes the perspectives of its shareholders and values their input.

"We believe we have the right board in place to oversee Novavax's strategy," the company said in its response.

Shah Capital also plans to vote against three other proposals, including one related to the compensation of some of Novavax's executives.
 

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