<SEC-DOCUMENT>0001144204-12-058436.txt : 20121214
<SEC-HEADER>0001144204-12-058436.hdr.sgml : 20121214
<ACCEPTANCE-DATETIME>20121030161453
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001144204-12-058436
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20121030

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NOVAVAX INC
		CENTRAL INDEX KEY:			0001000694
		STANDARD INDUSTRIAL CLASSIFICATION:	BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836]
		IRS NUMBER:				222816046
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		9920 BELWARD CAMPUS DRIVE
		CITY:			ROCKVILLE
		STATE:			MD
		ZIP:			20850
		BUSINESS PHONE:		240-268-2000

	MAIL ADDRESS:	
		STREET 1:		9920 BELWARD CAMPUS DRIVE
		CITY:			ROCKVILLE
		STATE:			MD
		ZIP:			20850
</SEC-HEADER>
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<TYPE>CORRESP
<SEQUENCE>1
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>VIA EDGAR</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">October 30, 2012</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Securities and Exchange Commission</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Division of Corporate Finance</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">100 F Street, N.E.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Washington, D.C. 20549-7010</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<TD STYLE="width: 1in; text-align: left">Attention:</TD><TD STYLE="text-align: justify">Jim B. Rosenberg, Senior Assistant Chief Accountant<BR>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; margin-left: 0in; text-indent: 0in; text-align: justify">Joel
Parker, Accounting Branch Chief</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; margin-left: 0in; text-indent: 0in; text-align: justify">Mary
Mast, Senior Staff Accountant</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; margin-left: 0in; text-indent: 0in; text-align: justify">Vanessa
Robertson, Staff Accountant</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<TD STYLE="width: 0in"></TD><TD STYLE="width: 1in; text-align: left"><B>Re:</B></TD><TD STYLE="text-align: justify"><B>SEC Comment Letter dated August 9, 2012</B>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><B>Novavax, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><B>Form 10-K for the year ended December 31,
2011</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><B>Filed on March 14, 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><B>Form 10-Q for the quarterly period ended
March 31, 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><B>Filed on May 9, 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><B>(File No. 000-26770)</B></P>

<B></B></TD>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Ladies and Gentlemen:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On behalf of Novavax, Inc., a Delaware corporation (the &ldquo;<B>Company</B>&rdquo;
or &ldquo;<B>we</B>&rdquo;), I am writing in response to the verbal comments we received on October 2, 2012 from the staff of the
Division of Corporation Finance (the &ldquo;<B>Staff</B>&rdquo;) of the Securities and Exchange Commission (the &ldquo;<B>Commission</B>&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For the convenience of the Staff&rsquo;s review, we have set
forth the Staff&rsquo;s verbal comments in italics followed by the response of the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Please refer to your response to comment 2. Please provide
us with proposed disclosure to be included in future periodic reports to expand your revenue recognition policy to include the
following:</I></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif"><I>Clarify that you recognize revenue as allowable costs are incurred;</I></FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif"><I>Disclose that in order for costs to be deemed allowable direct
costs it is required that the Company first obtain HHS BARDA pre-approval;</I></FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif"><I>Disclose that you believe that the costs incurred represent a reasonable
measurement of proportional performance of work; and</I></FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif"><I>Disclose that if HHS BARDA were to terminate the contract the costs
incurred through the effective date of termination would be allowable.</I></FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">We respectfully propose the following disclosure
to be included in future periodic reports to address your comments on our contract with HHS BARDA under our revenue recognition
policy for the paragraph related to cost reimbursable contracts (additions to the prior disclosure are in bold text and underlined;
deletions are marked with a strikethrough bar):</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Under cost reimbursable contracts, the Company
is reimbursed for allowable costs and paid a fixed-fee. Revenue on cost reimbursable contracts is recognized as <B><U>allowable</U></B>
costs are incurred plus a portion of the <B><U>fixed-</U></B>fee earned. <B><U>Costs incurred under cost reimbursable contracts
represent a reasonable measurement of proportional performance of the work. The Company considers fixed-fees under cost reimbursable
contracts to be earned in proportion to the allowable costs incurred in performance of the work as compared to total estimated
contract costs. Under its HHS BARDA contract, certain activities must be pre-approved by HHS BARDA in order for their costs to
be deemed allowable direct costs. The Company&rsquo;s government contracts, including its HHS BARDA contract, provide the U.S.
government (or agency) the ability to terminate the contract for convenience or to terminate for default if the Company fails to
meet its obligations as set forth in the statement of work. The Company believes that if the government were to terminate one of
its contracts for convenience, including the HHS BARDA contract, the costs incurred through the effective date of such termination
and any settlement costs resulting from such termination would be allowable costs. </U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Please confirm that once the audit has been performed by
HHS BARDA related to allowable costs you will disclose whether there were any adjustments to revenue that are material to net income.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Adjustments, if any, resulting from the audit performed by
HHS BARDA related to allowable costs will be recorded in the period in which they become known and, if material, the amount will
be disclosed in the corresponding periodic report. In addition, we respectfully propose to add the following disclosure to our
revenue recognition policy in future periodic reports: &ldquo;Payments to the Company under cost reimbursable contracts with agencies
of the U.S. Government, including its contract with HHS BARDA, are provisional payments subject to adjustment upon annual audit
by the government.&rdquo; To the extent any such annual audit has not yet occurred at the time a periodic report is filed, we
will add the following sentence: &ldquo;No such audit has been completed as of (date); however, management believes that revenue
for periods subject to audit has been recorded in amounts that are expected to be realized upon final audit and settlement.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Please refer to your response to comment 3. Please provide
us with proposed disclosure to be included in future periodic reports to describe each substantive milestone and the related contingent
consideration. Please refer to ASC 605-28-50-2b.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">After further review of the milestones under
the agreement pursuant to ASC 605-28, management has determined them to be nonsubstantive and, thus, that the milestone method
of accounting promulgated by ASC 605-28 to be not applicable to such milestones. Therefore, we will apply proportional performance
when recognizing revenue relating to the achievement of milestones under the agreement and we respectfully propose the following
amended disclosure in future periodic reports (additions to the disclosure provided in our letter dated September 7, 2012 response
are in bold text and underlined; deletions are marked with a strikethrough bar):</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>License Agreement with LG Life Sciences,
Ltd.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In February 2011, the Company entered into
a License Agreement with LG Life Sciences, Ltd. (&ldquo;LGLS&rdquo;) that allows LGLS to use the Company&rsquo;s VLP technology
to develop and commercially sell influenza vaccines exclusively in South Korea and non-exclusively in certain other specified countries.
At its own cost, LGLS is responsible for funding its clinical development of the influenza VLP vaccines and completing a manufacturing
facility in South Korea. Under the License Agreement, the Company is obligated to provide LGLS with information and materials related
to the manufacture of the licensed products, provide on-going project management and regulatory support and conduct clinical trials
of its influenza vaccines in order to obtain FDA approval in the U.S. The term of the License Agreement is expected to terminate
in 2027. Payments to the Company under the License Agreement include an upfront payment of $2.5 million, reimbursements of certain
development and product costs, payments related to the achievement of certain milestones and royalty payments between 10 and 20%
from LGLS&rsquo;s future commercial sales of influenza VLP vaccines, which royalty rate is subject to reduction if certain timelines
for regulatory licensure are not met. The upfront payment has been deferred and will be recognized when the previously mentioned
obligations in the agreement are satisfied, which may not occur until the end of the term of the agreement. <STRIKE>Payments related
to milestones deemed substantive under ASU 2010-17 will be recognized upon achievement of such events. </STRIKE>Payments for milestones
<B><U>under the agreement </U></B><STRIKE>not deemed substantive </STRIKE>will be recognized <B><U>on a straight-line basis</U></B>
over the remaining term of the research and development period upon achievement of such milestone. Any royalties under the agreement
will be recognized as earned.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We hope that the foregoing is responsive to the Staff&rsquo;s
verbal comments. Should you have any questions relating to any of the foregoing, please contact me at (240) 268-2096.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Sincerely,</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">/s/ John A. Herrmann III<BR>
<BR>
</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">John A. Herrmann III</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Vice President, General Counsel &amp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Corporate Secretary</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Novavax, Inc.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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    <TD STYLE="width: 48px; font-size: 10pt">cc:&nbsp;</TD>
    <TD STYLE="font-size: 10pt">Frederick W. Driscoll, VP, CFO &amp; Treasurer</TD></TR>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Paul M. Kinsella (Ropes &amp; Gray LLP)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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