By Sneha S K and Bhanvi Satija

Oct 14 (Reuters) - Shah Capital has urged Novavax's ( NVAX )

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 ( NVAX )

capabilities will "have far greater potential in the hands of a

large capable pharma entity."

Shah Capital owns a 7.2% stake in Novavax ( NVAX ).

Himanshu Shah, founder and chief investment officer of the

fund, told Reuters that Novavax ( NVAX ) 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 ( NVAX ) favor.

Novavax ( NVAX ) 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 Last year, Shah Capital had withdrawn its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 ( NVAX )

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 ( NVAX ) has rolled out about 7,000 shots,

while its mRNA rivals Pfizer ( PFE ) and Moderna ( MRNA ) had

rolled out nearly 6 million shots, Shah said.

He sees Sanofi, Merck ( MRK ), GSK, and AstraZeneca ( AZN )

among the potential buyers for Novavax ( NVAX ), adding that he

has not been in touch with any of these drugmakers.

Novavax's ( NVAX ) 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.