8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) March 31, 2009

NOVAVAX, INC.

(Exact name of Registrant as specified in its charter)

Delaware	0-26770	22-2816046
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)
9920 Belward Campus Drive
Rockville, Maryland		20850
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (240) 268-2000

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into Material Definitive Agreement

On March 31, 2009, Novavax, Inc. (“Novavax” or the “Company”) and Cadila Pharmaceuticals Ltd., a company incorporated under the laws of India (“Cadila”) entered into a Joint Venture Agreement (the “JVA”) pursuant to which the Company and Cadila formed CPL Biologicals Limited, a joint venture (the “JV”), of which 80% will be owned by Cadila and 20% will be owned by the Company. The JV must obtain approval from India’s Foreign Investment Promotion Board (the “FIPB”) prior to issuing shares to Novavax. The JV will develop and commercialize the Company’s seasonal influenza virus-like-particle (VLP)-based vaccine candidate and Cadila’s therapeutic vaccine candidates against cancer as well as its adjuvants, biogeneric products and other diagnostic products for the territory of India. Novavax will also contribute to the JV technology for the development of several other VLP vaccine candidates against diseases of public health concern in the territory, such as hepatitis E and chikungunya fever. Cadila will contribute approximately $8 million over three years to support the JV’s operations. The JV will be responsible for clinical testing and registration of products that will be marketed and sold in India.

The board of directors of the JV consists of five members, three of whom (including the Chairman of the board) are nominated by Cadila and two of whom are nominated by Novavax. If the board is not in unanimous agreement on an issue, the CEOs of the Company and Cadila will work to resolve the issue. If the CEOs cannot resolve the issue in five business days, a vote by the majority of the board will decide. However, the approval of the Company and Cadila, as shareholders of the JV, and the board of directors of the JV is required for (1) the sale of all or most of the assets of the JV, (2) a change in control of the JV, (3) the liquidation, dissolution, or winding up of the JV, (4) any occurrence of indebtedness that results in the JV having a debt-to-equity ratio of 3-to-1 or greater, or (5) most amendments of the JVA or the JV’s Articles of Association.

The JV has the right to negotiate a definitive agreement for rights to for certain future Novavax products (other than RSV) and certain future Cadila products in India prior to Novavax or Cadila licensing such rights to a third party. Novavax has the right to negotiate the licensing of vaccines developed by the joint venture using Novavax’s technology for commercialization in every country except for India and vaccines developed by the joint venture using Cadila’s technology for commercialization in certain other countries, including the United States.

In connection with the JVA, on March 31, 2009, the Company also entered into license agreement, an option to enter into a license agreement, a technical services agreement and a supply agreement with the JV.

Pursuant to a Seasonal and Other Vaccines License (the “Seasonal License”), the Company granted the JV an exclusive, fully paid-up, royalty-free, non-transferable, right and license to its seasonal influenza vaccine and several other VLP vaccine candidates in India. The JV has sole responsibility for development and commercialization of the licensed products in India and cannot promote development or commercialization of any influenza vaccines outside of India. The JV will present development and commercialization plans for the seasonal influenza licensed product to Novavax for approval. Novavax may request reasonable adjustments to the plans. All clinical trial protocols for seasonal influenza licensed product by the JV require approval of Novavax. The Seasonal License will become effective upon approval of the FIPB and will continue until the JV gives 60 days notice of termination to Novavax, the parties mutually agree to terminate or Novavax terminates the JVA because Cadila has not satisfied its funding obligations. If the JV (1) materially alters a development or commercialization plan for seasonal influenza without Novavax’s consent or (2) initiates a clinical trial or deviates from an approved clinical trial protocol for seasonal influenza licensed product without Novavax’s consent, then Novavax will have the right to seek injunctive relief in any court with competent jurisdiction.

Pursuant to an option to obtain a license (the “Option”) Novavax has granted the JV an option to obtain in the future an exclusive, fully paid-up, royalty-free, non-transferable, right and license to the Company’s pandemic influenza vaccine. This Option is exercisable for two years following the termination or expiration of a third party agreement to which a portion of the technology that is the subject of the Option is subject.

Pursuant to a Technical Services Agreement (the “Technical Services Agreement”), the Company has agreed to provide certain services to the JV. Novavax will provide to the JV certain manufacturing know-how necessary for the JV to establish a manufacturing facility for VLP influenza vaccines. Novavax will provide training and supervision to help the JV implement the manufacturing know-how and, at the request of the JV, will provide any improvements to the manufacturing know-how. Novavax will also advise the JV in the clinical development and regulatory approval process for the influenza vaccines in India. Finally, Novavax may provide to the JV, at the JV’s request, consulting services in the areas of biologics, preclinical development, process development, manufacturing scale up, and general manufacturing related services. The JV will reimburse Novavax for reasonable out-of-pocket expenses in connection with performing services for the JV, including travel. The Technical Services Agreement will become effective upon approval of the FIPB. The initial term of the Technical Services Agreement is four years, but will automatically renew for successive one year periods unless either party gives 30 days written notice prior to the end of the then current term. The Technical Services Agreement may be terminated by Novavax if the JV owes Novavax a payment that is 30 days past due, the JV is in material breach which is not cured within 90 days, notice is given of a JV bankruptcy event or if Novavax terminates the JVA because Cadila has not satisfied its funding obligations. The JV can terminate the Technical Services Agreement if Novavax is in material breach which is not cured within 90 days.

Pursuant to a Supply Agreement (the “Supply Agreement”), Novavax will provide to the JV certain clinical and pre-clinical testing supplies at a price equal to the fully loaded actual costs (including escalated costs, if any) plus ten percent. The Supply Agreement will become effective upon approval of the FIPB and terminates upon the earlier of the first commercial sale of products by the JV or upon the first day of operation of the JV’s manufacturing facility. The Supply Agreement may be terminated earlier by Novavax if the JV owes a payment that is 30 days past due, the JV is in material breach which is not cured within 90 days, notice is given of a JV bankruptcy event or the JVA is terminated. The JV can terminate the Supply Agreement for any reason or no reason upon 60 days prior written notice to Novavax.

Also on March 31, 2009, Novavax entered into a Stock Purchase Agreement (the “SPA”) with Satellite Overseas (Holdings) Limited (“SOHL”), a subsidiary of Cadila, pursuant to which SOHL has agreed to purchase 12.5 million shares of Company common stock, par value $0.01 (the “Common Stock”) at $0.88 per share. Novavax expects to deliver the shares of Common Stock on April 1, 2009. The Company expects to raise gross proceeds of $11 million in the offering. The net proceeds to the Company from the sale of the Common Stock, after deducting estimated offering expenses payable by the Company, are expected to be approximately $10.65 million.

The SPA provides that, as long as SOHL owns more than 5% of the Company’s then-outstanding Common Stock, SOHL may purchase a pro-rata portion of any Company Common Stock sale or issuance. Under the SPA, certain issuances are exempt from SOHL’s pre-emptive right, including shares issued (1) as stock dividends, stock splits, or otherwise payable pro rata to all holders of Common Stock; (2) to employees, officers, directors or consultants of the Company pursuant to an employee benefit program; (3) upon the conversion or exercise of any options, warrants or other rights to purchase Common Stock; and (4) as consideration for a merger, consolidation, purchase of assets, or in connection with a joint venture or strategic partnership. However, any issuances pursuant to (4) above, must be approved by a majority of the full board and, if the transaction exceeds 5% of the Company’s then issued and outstanding shares of Common Stock, the per share purchase price cannot be less than $0.88.

Under the SPA, for so long as SOHL owns 5% of the Company’s Common Stock, SOHL may designate one member of the Company’s board of directors.

In connection with the offering, the Company also entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with SOHL on March 31, 2009. The Registration Rights Agreement provides that SOHL has resale registration rights for the shares purchased pursuant to the SPA. SOHL is entitled to one demand registration right for each three year period and the Company and SOHL will split the costs associated with each demand registration, provided however that SOHL’s share of the expenses cannot exceed $20,000 for each requested registration statement.

Finally, on March 31, 2009, Novavax and Cadila entered into a Master Services Agreement (the “Master Services Agreement”) pursuant to which Novavax may request services from Cadila in the areas of biologics research, preclinical development, clinical development, process development, manufacturing scale up, and general manufacturing related services in India. If, at the third anniversary of the Master Services Agreement, the amount of services provided by Cadila is less than $7.5 million, Novavax will pay Cadila a portion of the shortfall. Novavax will have to pay Cadila the portion of the shortfall amount that is less than or equal to $2.0 million and 50% of the portion of the shortfall amount that exceeds $2.0 million. When calculating the shortfall, the amount of services provided by Cadila includes amounts that have been paid under all project plans, the amounts that will be paid under ongoing executed project plans and amounts for services that had been offered to Cadila, that Cadila was capable of performing, but exercised its right not to accept such project. The term of the Master Services Agreement is five years, but may be terminated by either party if there is a material breach that is not cured within 30 days of notice or, at any time after three years, provided that 90 days prior notice is given to the other party.

On March 31, 2009, Novavax issued a press release regarding the transactions described herein. The foregoing is a brief description of the material terms of the JVA, the Seasonal License, the Option, the Technical Services Agreement, the Supply Agreement, the SPA, the Registration Rights Agreement and the Master Services Agreement and does not purport to be a complete description of the rights and obligations of the parties thereunder.

Item 2.02. Results of Operations and Financial Condition

On March 31, 2009, Novavax issued a press release announcing its financial results for the fourth quarter and year ended December 31, 2008 and will conduct a previously announced, publicly available conference call to discuss those results as well as to provide an update on the status of the Company’s business operations.

A copy of the press release is furnished as Exhibit 99.2 to this Current Report on Form 8-K. The information furnished in this Item 2.02 of Current Report on Form 8-K and Exhibit 99.2 attached hereto shall not be deemed “filed” for purpose of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

     (d) Exhibits

Exhibits	Description
99.1	Press release issued by Novavax, Inc., dated March 31, 2009 regarding joint venture and stock offering
99.2	Press release issued by Novavax, Inc., dated March 31, 2009 regarding financial results

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized

	Novavax, Inc. (Registrant)
March 31, 2009	By:	/s/ Rahul Singhvi
		Name:	Rahul Singhvi
		Title:	President and CEO

EX-99.1

Exhibit 99.1

Contact: Tricia J. Richardson
Novavax, Inc.
1 240-268-2031

Novavax Announces New Capital Infusion through a
Strategic Alliance with Cadila Pharmaceuticals of India

Joint Venture to be funded by Cadila Pharmaceuticals and Revenues from Sales of Biogenerics;
Deal Includes $11 Million Capital Investment in Novavax

Rockville, MD — March 31, 2009 — Novavax Inc. (Nasdaq: NVAX) announced today it has formed a joint venture with Cadila Pharmaceuticals Ltd. (Ahmedabad, India) to develop, manufacture and market vaccines, pharmaceuticals and diagnostic products in India. The joint venture will develop and commercialize Novavax’s seasonal influenza virus-like-particle (VLP)-based vaccine candidate and Cadila’s therapeutic vaccine candidates against cancer as well as its adjuvants, biogeneric and biological diagnostic products for the Indian territory. Novavax will also contribute technology to the joint venture for the development of several other VLP vaccine candidates against diseases of public health concern in that region, such as hepatitis E and Dengue fever. Cadila will contribute approximately $8 million over three years to support the joint venture operations. The joint venture will be responsible for clinical testing and registration of products that will be marketed and sold in India by the joint venture, which will be owned 80 percent by Cadila and 20 percent by Novavax once approval of India Foreign Investment Promotion Board is obtained. Novavax will have the right to negotiate license arrangements of certain vaccines developed by the joint venture for commercialization worldwide outside of India while also having rights to negotiate for other vaccines for commercialization in the US and several other territories outside India.

As part of this strategic alliance, pursuant to a stock purchase agreement dated March 31, 2009, a wholly-owned subsidiary of Cadila will purchase 12.5 million shares of Novavax’s common stock at the market price of $0.88 per share, for an aggregate of $11 million. Novavax intends to use this investment to pay a portion of its 4.75% senior convertible notes due in July, 2009 and for a variety of other corporate purposes, including internal research and development programs, working capital, and other general corporate purposes. Novavax expects to close this transaction on April 1, 2009. Dr. Rajiv I. Modi, Managing Director of Cadila, will join the Novavax Board of Directors effective immediately.

This strategic alliance will allow Novavax to utilize Cadila’s world-class research, clinical development, and manufacturing expertise and infrastructure to support development of current and future vaccine candidates. Through a $7.5 million service contract over three years, Novavax will have the opportunity to take advantage of Cadila’s low-cost, high-quality

1

infrastructure to undertake part of the development of its novel vaccines in India to reduce its cash burn and ultimately extend its cash runway.

Dr. Rahul Singhvi, President and Chief Executive Officer of Novavax, stated: “We are excited to announce this first of several contemplated alliances, validating the regional approach to commercializing our vaccine technology around the world. Partnering with Cadila, one of India’s leading pharmaceutical companies, and leveraging its substantial clinical and financial support along with low-cost infrastructure, has created a unique opportunity for us. This alliance offers us the potential to accelerate the development of our product candidates, explore promising new vaccine candidates, and introduce these products to one of the world’s fastest-growing medical markets. Cadila’s significant equity investment in Novavax has strengthened us financially and the services agreement with them will be supportive of our ongoing efforts to reduce the cost of developing our pipeline of products.”

Dr. Rajiv Modi, Managing Director, Cadila Pharmaceuticals, stated: “We are delighted to have the opportunity to partner with Novavax and support the delivery of medically important vaccines for the Indian population. We have been looking for a vaccine partner in the United States with advanced vaccine technology for some time, and in Novavax, we believe that we have found the best combination of an advanced and proven technology platform for creating next generation vaccines. We are impressed with Novavax’s management team and its track record and we anticipate a long and successful relationship with Novavax.”

Dr. Singhvi concluded, “This strategic agreement with Cadila demonstrates an innovative way to build our business internationally and penetrate emerging markets. It is consistent with our strategy to establish regional alliances and work with pharmaceutical industry leaders to develop novel vaccines against influenza and other infectious diseases within the region and globally.”

About VLPs

Using its proprietary virus-like particle (VLP) technology, Novavax scientists have created vaccines without the use of an adjuvant by using a structure similar to a virus but without the genetic material required for viral replication. Once injected into the body, VLPs attach to cells and trigger an immune response sufficient to protect a person if they are exposed to the virus.

VLPs may have a number of advantages over traditional vaccines. Because they more closely match an individual viral strain, VLPs can trigger a more robust immune response. In addition, live virus is not needed to produce a VLP vaccine. Rather, Novavax scientists need only the genetic sequence of a virus to quickly create a VLP vaccine against it. Because VLPs do not contain viral nucleic acids (DNA or RNA), they cannot replicate, and therefore they present no threat of infection to a person being vaccinated.

The VLP platform is well suited to the development of vaccines against diseases endemic to India and the surrounding regions, including hepatitis E, chikungunya fever, dengue fever, and rabies. Hepatitis E is a principal cause of hepatitis among adults under 40 years of age, associated with fulminant hepatitis and a mortality rate of up to 20% in infected pregnant women. Dengue fever is a mosquito-borne disease, which has re-emerged in India. Dengue fever is characterized by severe pain in the eyes, head and extremities. It has a very high

2

mortality rate. There is no vaccine or definitive treatment for Dengue fever currently. In 2006, dengue fever swept through the country and many hospitals were overwhelmed. Rabies is responsible for 25,000 to 30,000 deaths annually in India.

About Novavax

Novavax, Inc. is a clinical-stage biotechnology company creating novel vaccines to address a broad range of infectious diseases worldwide using advanced proprietary virus-like-particle (VLP) technology. The company produces these VLP-based, potent, recombinant vaccines utilizing new and efficient manufacturing approaches. Additional information about Novavax is available at www.novavax.com and in the company’s various filings with the Securities and Exchange Commission.

About Cadila (www.cadilapharma.com)

Cadila Pharmaceuticals Ltd. is one of the largest privately held pharmaceutical companies in India, headquartered at Ahmedabad, in the state of Gujarat. Over the last five decades, it has been developing and manufacturing pharmaceutical products and selling and distributing these in India and in over fifty countries around the world. Cadila Pharmaceuticals is an integrated healthcare solutions provider with a pharmaceutical product basket in therapeutic areas that include cardiovascular, gastrointestinal, analgesics, haematinics, anti-infectives and antibiotics, respiratory agents, antidiabetics and immunologicals. The state-of-the-art research and development facility at Cadila Pharmaceuticals is manned by more than three hundred and fifty scientists and engineers from various disciplines including biology, pharmacology, clinical research, chemistry, toxicology, phytochemistry and different disciplines of engineering. The company also participates in public-private partnerships for developing preventive and curative pharmaceutical and diagnostic products. Over the last decade Cadila Pharmaceuticals has focused on novel approaches to cancer management and is the first Indian company to get multiple investigational new drug applications (INDs) approved by U.S. Food and Drug Administration. The company has state-of-the-art manufacturing facilities conforming to the most stringent international norms at various locations in India and in Addis Ababa in Ethiopia.

Forward Looking Statement

Statements herein relating to future development results and performance, conditions or strategies and other matters, including expectations regarding the strategic partnership with Cadila, the establishment of a manufacturing facility in India and the development and commercialization of VLP vaccines in India, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Novavax cautions that these forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Factors that may cause actual results to differ materially from the results discussed in the forward-looking statements or historical experience include risks relating to whether all regulatory hurdles in India for transferring the Novavax intellectual property to the joint venture in exchange for equity in the joint venture, and gaining approvals to manufacture and commercialize any product in India can be achieved; whether the joint venture will have sufficient funding to achieve its goals; whether commercialization of any product that does achieve regulatory approval would be successful in India; and whether competitive products or technologies would hamper the joint venture’s ability to achieve its goals and be successful. Further information on the factors and risks that could affect Novavax’s business, financial

3

conditions and results of operations is contained in Novavax’s filings with the U.S. Securities and Exchange Commission, which are available at http://www.sec.gov. These forward-looking statements speak only as of the date of this press release, and Novavax assumes no duty to update forward-looking statements.

###

4

EX-99.2

Exhibit 99.2

Contact: Tricia J. Richardson
Novavax, Inc.
1 240-268-2031

NOVAVAX REPORTS FOURTH QUARTER AND 2008 YEAR-END
FINANCIAL RESULTS

ROCKVILLE, MD (March 31, 2009) - /PRNewswire-FirstCall/ — Novavax Inc. (NASDAQ: NVAX) today announced financial results for the fourth quarter and year ended December 31, 2008. Novavax reported a net loss of $11.0 million, or $0.15 per share, for the fourth quarter of 2008 compared to a net loss of $9.2 million, or $0.16 per share, in the fourth quarter of 2007. For the year ended December 31, 2008, the Company reported a net loss of $36.0 million, or $0.53 per share, compared to a net loss of $34.8 million, or $0.57 per share, for the year ended December 31, 2007. Novavax ended 2008 with $33.9 million in cash and investments compared to $46.5 million as of December 31, 2007.

The following outlines key achievements completed since our last update:

• On March 31, Novavax announced a strategic alliance with Cadila Pharmaceutical Limited (“Cadila”) of India. This alliance has three elements:

1.	A capital infusion into Novavax through an equity investment of $11.0 million by a wholly-owned subsidiary of Cadila to purchase 12.5 million shares of Novavax’s common stock at the market price of $0.88 per share.
2.	Formation of a joint venture between Cadila and Novavax in India, which will be owned 80 percent by Cadila and 20 percent by Novavax once approval of the India Foreign Investment Promotion Board is obtained, to develop and commercialize Novavax’s seasonal influenza virus-like-particle (“VLP”)-based vaccine candidate and Cadila’s therapeutic vaccine candidates against cancer as well as its adjuvants, biogeneric and biological diagnostic products within the Indian territory.
3.	The ability for Novavax to reduce its cash burn rate by utilizing Cadila’s world-class research, clinical development, and manufacturing expertise and infrastructure to support development of current and future vaccine candidates through a $7.5 million service contract spanning the next three years.

• The Company achieved additional favorable results from the second stage of a Phase IIa clinical trial of its pandemic flu VLP vaccine candidate. As reported previously, the vaccine demonstrated strong neutralizing antibody titers across all three doses tested, exhibiting increasing antibody titers with the escalation of the dose. The new data showed that the vaccine also induced strong hemagglutination inhibition (“HAI”) responses and was well tolerated with no reports of serious adverse events.

• The Company announced favorable safety and immunogenicity results in December 2008 from its Phase IIa seasonal flu VLP vaccine dose-ranging study that started in September 2008. The Phase IIa randomized, placebo controlled clinical trial evaluated the safety and immunogenicity of different doses of its trivalent seasonal flu VLP vaccine in healthy adults, who received a single injection of either a placebo or a VLP vaccine dose of 5 mcg, 15 mcg or 30 mcg per strain.

• The Company announced favorable results from a preclinical study, conducted in collaboration with the University of Massachusetts, evaluating the immunogenicity and efficacy of a Respiratory Syncitial Virus (“RSV”) vaccine candidate in mice directed against the surface glycoprotein (or “G” protein). The vaccine induced strong antibody responses against RSV and protected mice against RSV replication in the lungs on challenge.

• The Company announced favorable results from a preclinical study in mice evaluating an RSV vaccine directed against the viral fusion (“F”) protein, which fuses with cells in the respiratory tract and causes illness.

• The Company took significant measures, including a reduction in force early this year, to reduce its expenses and thereby the yearly burn rate.

“We made significant progress in 2008 in advancing our VLP based vaccine pipeline. We demonstrated in Phase II clinical studies that our VLP based flu vaccines are not only well tolerated and immunogenic in humans, but they have the potential to differentiate themselves from currently available alternatives. We also demonstrated that our VLP technology has the potential to create a much needed vaccine against RSV. These advances continue to reinforce that our strategy of using the VLP vaccine platform coupled with our innovative manufacturing solution is working,” said Novavax Chief Executive Officer Dr. Rahul Singhvi. “By the second half of 2009, we want to translate these scientific advances into partnerships with private and public entities to leverage capabilities of our partners to accelerate our progress, as we have shown today with the Cadila partnership.”

2008 Financial Results

Revenue from continuing operations, for the fourth quarter ended December 31, 2008, related to the government contracts was $100,000 compared to $400,000 for the same period in 2007. Revenue for the full year of 2008 was $1.1 million as compared to $1.5 million in 2007. The reduction in our revenue was due to the timing of our completing these contracts.

Research and development costs for the fourth quarter of 2008 were $5.9 million compared to $4.2 million in the fourth quarter of 2007. For the full year, research and development costs increased 38 percent to $24.3 million in 2008 from $17.6 million in 2007. The increases in both the fourth quarter of 2008 and the year ended December 31, 2008 compared to 2007 were due to higher research and development spending to support the Company’s strategic focus on creating differentiated, value-added vaccines that leverage our proprietary VLP technology. These increases were primarily for increased personnel, facility costs and outside expenses (including sponsored research, clinical research organization costs and consulting agreements) associated with expanded preclinical studies, human trial study costs, process development, manufacturing and quality-assurance and quality-control related activities.

General and administrative costs were $3.4 million in the fourth quarter of 2008 as compared to $2.9 million in the prior year. General and administrative costs for the full year of 2008 were $11.1 million compared to $13.9 million in 2007. General and administrative expenses for the year ended December 31, 2008 decreased by $2.8 million primarily due to a $1.2 million credit recorded to the allowance established for two notes receivable from former directors. General and administrative expenses for the year ended December 31, 2008 were also impacted by lower facility costs and lower employee costs. These decreases were offset by an impairment charge related to the Company’s MNP assets.

As a result, total losses from continuing operations before interest was $11.0 million and $36.3 million for the fourth quarter and full year of 2008, respectively.

Our interest and other expense was $1.4 million in the fourth quarter of 2008 and $2.0 million for the full year as compared to net interest income of $0.3 million in the fourth quarter of 2007 and $1.7 million for the full year of 2007. The decrease in net interest and other income in the fourth quarter 2008 when compared to the fourth quarter of 2007 resulted from an impairment of the Company’s auction rate securities. There has been insufficient demand at auction for the Company’s auction rate securities and, in December 2008, the Company recorded another than temporary impairment charge of $1.2 million on these investments due primarily to their illiquidity. Interest income for the year ended December 31, 2008 includes a $500,000 adjustment to related to the correction of the Company’s accounting for the notes receivable with two former directors.

The loss from continuing operations was $10.6 million and $36.3 million for the fourth quarter and full year of 2008, respectively.

Income and losses from discontinued operations are a result of the Company’s decision to discontinue manufacturing of Estrasorb. The Company recorded a loss from discontinued operations of $0.5 million in the fourth quarter of 2008 as compared to a loss of $2.8 million in the fourth quarter of 2007. The decreased loss of $2.3 million was principally due to the completion of the Graceway agreements. The Company recorded income from discontinued operations for the year ended December 31, 2008 of $0.3 million compared to a loss from discontinued operations of $6.2 million for 2007. In February 2008, the Company entered into an asset purchase agreement with Graceway, LLC providing for the sale of certain assets related to Estrasorb. The Company also entered into a supply agreement with Graceway which required the Company to manufacture additional units of Estrasorb. The Company delivered the additional units of Estrasorb and exited the facility in August 2008.

The total net loss when combining the loss from continuing and discontinued operations was $11.0 million and $36.0 million for the fourth quarter and full year of 2008, respectively.

As of December 31, 2008, the Company had $33.9 million in cash and investments (consisting of auction rate securities at their fair value) as compared to $46.5 million for the same period last year. The decrease of $12.6 million was principally due to operating losses incurred in 2008, partially offset by our equity financing of $17.5 million. Additionally, cash and short-term investments as of December 31, 2008 are net of the $1.2 million impairment recorded for the Company’s auction rate securities. Based on the amount of cash and investments on hand, the $11.0 million received from the sale of common stock to Cadila on March 31, 2009, the Company’s intention to pay 50% of its outstanding convertible notes with common stock, the Company believes it has sufficient funds to execute its current business plans for at least the next twelve months. Novavax expects that it will have to raise additional funds through sale of equity and/or through non-dilutive financing.

Conference Call

Novavax’s management will host its quarterly conference call at 4:00 p.m. Eastern time (1:00 p.m. Pacific time) today. The live conference call will be accessible via Novavax’s website at www.novavax.com under Investor/Events or by telephone USA and Canada: (866) 793-1341 International: (703) 639-1312. An archive of the conference call will be available on Novavax’s website approximately one hour after the event for 90 days. A replay of the conference call will also be available by telephone beginning March 31 at midnight. To access the replay, dial (888) 266-2081 and enter pass code 1334845.

About Novavax

Novavax, Inc. is a clinical stage biotechnology company, creating novel vaccines to address a broad range of infectious diseases worldwide using advanced proprietary virus-like particle (VLP) technology. The Company produces these VLP based, potent, recombinant vaccines utilizing new, and efficient manufacturing approaches. Additional information about Novavax is available at www.novavax.com and in the Company’s various filings with the Securities and Exchange Commission.

Forward Looking Statements

Statements herein relating to future development results and performance, conditions or strategies and other matters, including expectations regarding product and clinical developments, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Novavax cautions that these forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Factors that may cause actual results to differ materially from the results discussed in the forward-looking statements or historical experience include risks relating to the early stage of Novavax’s product candidates under development; current results may not be predictive of future pandemic results, results of our seasonal influenza vaccine or any other vaccine that we may develop; further testing is required before regulatory approval can be applied for and the FDA may not approve a vaccine even if further trial results are similar to those disclosed previously by the company; uncertainties relating to clinical trials, including possible delays initiating or completing the trials and safety and immunogenicity results; dependence on the efforts of third parties; competition for clinical resources and patient enrollment from drug candidates in development by other companies with greater resources and visibility; and risks that we may lack the financial resources and access to capital to fund our operations including further clinical trials. Further information on the factors and risks that could affect Novavax’s business, financial conditions and results of operations, is contained in Novavax’s filings with the U.S. Securities and Exchange Commission, which are available at http://www.sec.gov. These forward-looking statements speak only as of the date of this press release, and Novavax assumes no duty to update forward-looking statements.

NOVAVAX, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share and per share information)

	Unaudited
	Three-month ended						Year ended
							December 31,
	December 31,			December 31,			2008			December 31,
	2008			2007			(unaudited)			2007
Revenues:
Net product sales	$	—		$	—		$	—		$	—
Contract research and development		41			346			966			1,388
Royalities and milestone fees		29			37			98			125
Total revenues		70			383			1,064			1,513
Operating costs and expenses:
Cost of products sold		—			(13	)		—			221
Research and development		5,865			4,177			24,334			17,600
General and administrative		3,415			2,919			11,090			13,963
Total operating costs and expenses		9,280			7,083			35,424			31,784
Loss from continuing operations before interest		(9,210	)		(6,700	)		(34,360	)		(30,271	)
Interest income, (loss), net		(1,365	)		255			(1,962	)		1,681
Loss from continuing operations		(10,575	)		(6,445	)		(36,322	)		(28,590	)
Loss from discontinued operations		(505	)		(2,772	)		273			(6,175	)
Net loss		(11,080	)		(9,217	)		(36,049	)		(34,765	)
Basic and diluted weighted average number of		68,144,329			61,200,777			68,174,338			61,101,474
common shares used in computing basic net loss per share
Basic and diluted net loss per share
Loss per share from continuing operations	$	(0.11	)	$	(0.16	)	$	(0.53	)	$	(0.47	)
Loss per share from discontinued operations	$	(0.04	)	$	(0.01	)	$	—		$	(0.10	)
Net loss per share	$	(0.15	)	$	(0.16	)	$	(0.53	)	$	(0.57	)

SELECTED BALANCE SHEET DATA
(in thousands)

	As of		As of
	December 31, 2008		December 31, 2007
Cash and cash equivalents	$	26,938	$	4,350
Short-term investments		6,962		42,139
Total current assets		35,096		49,016
Working capital		7,379		42,810
Total assets		76,625		91,291
Long term debt		480		21,629
Stockholders’ equity		45,489		63,065

###