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corresp

October 31, 2005

Via Facsimile and U.S. Mail

Jim B. Rosenberg, Senior Assistant Chief Accountant

Joel Parker, Accounting Branch Chief

Dana Hartz, Staff Accountant

Securities and Exchange Commission

Division of Corporation Finance

450 Fifth Street, N.W.

Washington, D.C. 20549

    Re:

    Novavax, Inc.

Form 10-K/A for the Fiscal Year Ended December 31, 2004

Filed March 15, 2005

File No. 000-26770

Dear Messrs. Rosenberg and Parker and Ms. Hartz:

          On behalf of Novavax, Inc. (the “Company”), I am writing to provide additional background
information to help you understand the accounting for the Novavax-King transactions in July 2004
that we discussed by telephone on September 8, 2005 and that were the subject of the second comment
in your letter dated July 12, 2005 with respect to the above referenced filing (the “Filing”). In
addition, we note our concurrence with your request for expanded detail regarding sales returns
that was the subject of the third comment in your letter. This letter supplements our response
letter dated July 26, 2005.

1. Additional Information for Comment 2

          In your letter dated July 12, 2005 you asked: Please provide us with the detailed calculation
supporting the $2,514,000 intangible asset recorded. In addition tell us how this amount qualifies
as an intangible asset. Please include the specific authoritative literature used in arriving at
your conclusions. In our subsequent teleconference on September 8, 2005, you asked us to clarify
our initial response to this question.

          In July 2004, Novavax and King Pharmaceuticals, Inc. terminated their business relationship.
The related agreements entered into to effect this termination resulted in:

    •

    Redemption of Novavax convertible notes held by King,

    •

    Issuance of Novavax common stock and cash to King, and

Mr. Jim Rosenberg, Mr. Joel Parker and Ms. Dana Hartz

Securities and Exchange Commission

October 31, 2005

Page 2

    •

    Return to Novavax of all worldwide rights for the jointly-owned estrogen replacement
product marketed as ESTRASORB and the worldwide rights for a product in development called
ANDROSORB.

          The rights returned to Novavax, which were previously licensed by the Company to King in a
series of co-promotion and license agreements and amendments, essentially consisted of: 1) the
right to share equally in revenues for ESTRASORB in the United States and Puerto Rico, 2) an
exclusive license for sales of ESTRASORB in all countries outside the United States and Puerto
Rico, and 3) the right to share equally in revenues in the United States and Puerto Rico for
ANDROSORB.

          After our discussions with the Staff in September, we reexamined the accounting treatment for
the intangible rights you asked about and determined that a more appropriate way to account for
this was to record the fair value of such reacquired rights, unless the cost of reacquiring the
rights was less than fair value, in which case the rights would be recorded at cost. The cost of
the reacquired rights was determined based on the fair value of the elements exchanged. The
relevant authoritative literature used to arrive at this conclusion is FAS No. 142 Paragraph 9 and
FAS No. 141 Paragraph 6. In addition, the Company looked to EITF 04-1 Paragraph 6. While EITF
04-1 Paragraph 6 applies to business combinations, the Company believes that the concept of
recording reacquired rights outside of a business combination is reasonable and has merit in this
situation.

          The consideration exchanged in this transaction was as follows:

    Consideration Given by Novavax

    •

    Cash payments to King, net of cash received

    $
    13,998,866

    •

    Common stock issued to King at fair market value

    $
    18,123,000

    •

    Net payable to King forgiven

    $
    (85,608
    )

    Total Consideration Given

    $
    32,036,258

    Consideration Received from King

    •

    Fair value of notes payable

    $
    29,637,767

    •

    Reacquired rights, at cost

    $
    2,398,491

    Total Consideration Received

    $
    32,036,258

          In addition to the $2.4 million allocated to the reacquired rights, the Company incurred
transaction costs related to reacquiring such rights. We have allocated approximately $500,000 of
such costs to the reacquired rights. Therefore, the lower of cost or fair value of the reacquired
rights would be approximately $2.9 million.

Mr. Jim Rosenberg, Mr. Joel Parker and Ms. Dana Hartz

Securities and Exchange Commission

October 31, 2005

Page 3

          In order to determine the fair value of the consideration received, we engaged Baker-Meekins,
an independent business valuation firm, to assess the value of the King convertible notes and
utilized the appraiser’s valuation of $29,637,767, based on the reputation and competency of the
appraiser, for the purpose of accounting for the redemption of the notes. With respect to the
reacquired rights, we estimated relative fair values of the rights using market studies, discounted
cash flow models and stage of completion of the underlying products in each market.

          The resulting fair value of the reacquired rights was well in excess of the cost and,
therefore, we recorded the reacquired rights at the lower of cost or fair value. The Company
believes that, under the tenets of purchase accounting as defined in FAS No. 142 Paragraph 9 and
FAS No. 141 Paragraph 6, where the fair market value of the assets acquired is greater than the
purchase price, it is appropriate to record the reacquired rights at cost, which is less than fair
value.

          We determined that the cost of the reacquired rights of approximately $2.9 million should be
allocated to each of the rights reacquired based on the relative fair values of these rights.
There were essentially three rights reacquired: ESTRASORB rights in the United States and Puerto
Rico, ESTRASORB rights internationally, and the rights to ANDROSORB. We assessed the fair value of
the ESTRASORB rights in the United States and Puerto Rico using a discounted cash flow analysis
based on a marketing study prepared by the market research firm Campbell Alliance in late 2003 in
preparation for the launch of ESTRASORB in 2004. This analysis yielded a fair value for the
portion of the United States and Puerto Rico rights reacquired of approximately $15.9 million. We
assessed the fair value of the international rights to ESTRASORB based on market data indicating
that at the time of the transaction there were a number of significant barriers to enter the
international market, the most significant of which were identified as price, cost of regulatory
approval outside of the United States and cost to develop an international distribution
infrastructure. Therefore, the fair value was determined to be nominal. We determined that the
fair value at that time of ANDROSORB, a product still in Phase I development with significant
development effort remaining and an unproven market, to be zero. Therefore, substantially all of
the value of the reacquired rights is related to the ESTRASORB rights in the United States and
Puerto Rico, which would result in approximately $2.9 million in an intangible asset.

          We originally allocated approximately $2.5 million to the intangible asset. Upon reevaluation
of the accounting, we believe it may be more appropriate to allocate $2.9 million to the intangible
for ESTRASORB. If we were to allocate $2.9 million to the intangible, the resulting gain on the
transaction would be $11.6 million versus the $11.2 million that was originally recorded. We
believe that the differences resulting from the reevaluation of the accounting in these items are
clearly immaterial when compared to the Company’s total assets, total equity, and net loss at
December 31, 2004.

Mr. Jim Rosenberg, Mr. Joel Parker and Ms. Dana Hartz

Securities and Exchange Commission

October 31, 2005

Page 4

          Therefore, we believe that the amounts as recorded at December 31, 2004 are fairly presented.
The intangible asset of reacquired ESTRASORB rights in the United States and Puerto Rico is stated
at the lower of cost or fair value. This intangible asset is being reviewed periodically for
impairment and amortized over the remaining patent life. Additionally, as you may be aware based
on our recent Form 8-K filing, we sold such rights on October 18, 2005 for a minimum cash
consideration of $12.5 million ($2.0 million immediately, $8.0 million by year-end 2005, and the
remaining balance of $2.5 million on the first anniversary date of the agreement), plus a royalty
on all net sales of ESTRASORB and certain milestone payments based on specific pre-determined net
sales levels of ESTRASORB.

2. Concurrence with Comment 3

          Per our telephone conversation at the end of August of this year, you requested in future
filings that Novavax segregate its sales returns allowance provisions related to sales for the
current period from the provisions relating to sales from prior periods. The Company concurs with
that request and will initiate the requested level of detail and disclosure in future filings,
beginning with our quarterly report on Form 10-Q for the fiscal quarter ended September 30, 2005.
It was also our understanding following our telephone conversation that if the Company’s rebates
continue to be an insignificant amount or percentage of sales, the Company is permitted to simply
note the amount and/or percentage and not provide the roll-forward detail as required for sales
returns. The Company therefore will continue this practice in future filings.

          The Company acknowledges that (a) the Company is responsible for the adequacy and accuracy of
the disclosure in the Filing; (b) staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking action with respect to the Filing; and (c) the
Company may not assert staff comments as a defense in any proceeding initiated by the Commission or
any person under the federal securities laws of the United States.

          Please do not hesitate to call me at (484) 913-1203 if you have any additional comments or
questions.

Yours sincerely,

Dennis W. Genge

Chief Financial Officer