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) January 31, 2011
NOVAVAX,
INC.
(Exact
name of Registrant as specified in its charter)
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Delaware
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0-26770
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22-2816046
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(State
or other jurisdiction of
incorporation
or organization)
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(Commission
File Number)
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(I.R.S.
Employer Identification No.)
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9920
Belward Campus Drive
Rockville,
Maryland
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20850
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code:
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(240)
268-2000
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(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):
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o
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Written communications pursuant
to Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting material pursuant to
Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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o
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Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item 8.01 Other Events.
On
December 21, 2010, Novavax, Inc. (the “Company”) received a comment letter from
the staff (the “Staff”) of the Division of Corporation Finance of the Securities
and Exchange Commission (the “SEC”) with respect to the Company’s Annual Report
on Form 10-K for the year ended December 31, 2009. In the letter, the Staff
suggested (1) that the Company could enhance its disclosures about research and
development expenses related to major projects, and (2) that the Company should
evaluate the appropriate accounting classification of the warrants sold in it
registered offering of common stock and warrants on July 31,
2008. The Company responded to these issues in a letter to the SEC
dated January 21, 2011.
In its
response with respect to the first issue, the Company proposed to improve its
disclosure of research and development expenses by providing additional detail
in its Annual Report on Form 10-K for the year ended December 31, 2010. The
Company also proposed to clarify the development phase of each of its major
projects.
In its
response with respect to the second issue, the Company acknowledged that the
warrants, which the Company has classified under stockholders’ equity, should
have been classified as liabilities in its financial statements. The Company
concluded that management’s decision to utilize equity treatment for the
warrants beginning in 2008 was likely based on the fact the warrants were issued
pursuant to a shelf registration statement with ample shares under such
registration statement to cover their exercise. The Company reviewed the impact
of reclassifying these warrants as liabilities on its financial statements and
determined that adjusting to appropriate accounting treatment would not be
material to its investors and, therefore, informed the Staff that the Company
did not intend to restate its previously filed financial statements (those for
the years ended December 31, 2008 and 2009, and each interim period, including
through September 30, 2010). The Company proposed instead to disclose the
classification error and to correct this classification and accounting treatment
in its consolidated financial statements in its Annual Report on Form 10-K for
the year ended December 31, 2010. Additionally, the Company proposed that the
unaudited quarterly financial information footnote in its Annual Report on Form
10-K for the year ended December 31, 2010 reflect the impact of marking the
warrant liability to fair value for each interim period included in the
footnote.
In
determining whether the reclassification of these warrants as liabilities would
have materially impacted its past financial statements, the Company performed
the following computations:
Table 1
below illustrates the significant assumptions used to determine the fair value
of these warrants at each reporting period and the change in fair value from
period to period.
2
Table
1: Data Assumptions and Determination of Fair Value of
Warrants
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Q3
2008
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Q4
2008
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Q1
2009
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Q2
2009
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Q3
2009
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Q4
2009
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Q1
2010
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Q2
2010
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Q3
2010
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Closing
Stock Price
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$2.90
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$1.89
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$1.02
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$3.28
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$3.96
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$2.66
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$2.31
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$2.17
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$2.19
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Discount
(risk-free) rate
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2.98%
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1.55%
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1.67%
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2.54%
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1.45%
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1.70%
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1.60%
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1.00%
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0.64%
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Volatility
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67.54%
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71.37%
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78.92%
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83.17%
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81.91%
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81.36%
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81.79%
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83.92%
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86.31%
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Term
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4.83
years
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4.58
years
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4.33
years
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4.08
years
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3.83
years
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3.58
years
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3.33
years
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3.08
years
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2.83
years
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Fair
value per share
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$1.52
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$0.80
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$0.34
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$1.97
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$2.40
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$1.34
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$1.05
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$0.93
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$0.92
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Aggregate
fair value of Warrants (in thousands)
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$5,082
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$2,675
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$1,137
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$6,586
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$8,024
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$4,480
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$3,510
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$3,109
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$3,076
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Change
in fair value of Warrants (in thousands)
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$936*
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$(2,407)
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$(1,538)
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$5,449
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$1,438
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$(3,544)
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$(970)
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$(401)
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$(33)
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*The
change in the fair value in Q3 2008 represents the change in fair value of the
warrants from the date of issuance (approximately $4.1 million).
Table 2
shows the impact of recording these warrants as a liability on net loss and loss
per share, and stockholders’ equity for fiscal years 2008 and 2009 and for the
first nine months of fiscal year 2010 (quarterly numbers are also presented
beginning Q3 2008, the quarter in which these warrants were
issued).
Table
2: Impact on 2008 and 2009 Financial Statements (in thousands except
per share amount)
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Q3
2008
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Q4
2008
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Fiscal
2008
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Q1
2009
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Q2
2009
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Q3
2009
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Q4
2009
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Fiscal
2009
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Net
loss (reported)
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$(7,842)
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$(11,080)
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$(36,049)
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$(8,349)
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$(8,540)
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$(7,530)
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$(13,955)
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$(38,374)
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Net
loss (adjusted)
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$(8,778)
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$(8,673)
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$(34,578)
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$(6,811)
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$(13,989)
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$(8,968)
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$(10,411)
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$(40,179)
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Impact
on net loss (increase) decrease
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$(936)
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$2,407
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$1,471
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$1,538
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$(5,449)
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$(1,438)
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$3,544
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$(1,805)
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Percent
(increase) decrease to net loss
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(11.9%)
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21.7%
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4.1%
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18.4%
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(63.8%)
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(19.1%)
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25.4%
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(4.7%)
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Loss
per share (reported)
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$(0.12)
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$(0.15)
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$(0.53)
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$(0.12)
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$(0.10)
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$(0.08)
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$(0.15)
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$(0.45)
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Loss
per share (adjusted)
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$(0.13)
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$(0.13)
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$(0.51)
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$(0.10)
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$(0.16)
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$(0.10)
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$(0.11)
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$(0.47)
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Stockholders’
equity (reported)
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$56,132
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$45,489
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$45,489
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$37,794
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$59,721
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$67,017
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$74,465
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$74,465
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Stockholders’
equity (adjusted)
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$51,050
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$42,814
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$42,814
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$36,657
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$53,135
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$58,993
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$69,985
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$69,985
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Percent
impact to stockholders’ equity
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(9.1%)
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(5.9%)
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(5.9%)
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(3.0%)
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(11.0%)
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(12.0%)
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(6.0%)
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(6.0%)
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3
Table
2 (cont.): Impact to 2010 Financial Statements (in thousands except
per share amount)
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Q1
2010
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Q2
2010
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Q3
2010
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YTD
9/30/10
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Net
loss (reported)
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$(11,412)
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$(9,426)
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$(10,335)
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$(31,194)
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Net
loss (adjusted)
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$(10,442)
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$(9,025)
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$(10,302)
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$(29,790)
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Impact
on net loss (increase) decrease
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$970
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$401
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$33
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$1,404
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Percent
(increase) decrease to net loss
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8.5%
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4.3%
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0.3%
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4.5%
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Loss
per share (reported)
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$(0.11)
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$(0.09)
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$(0.10)
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$(0.30)
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Loss
per share (adjusted)
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$(0.10)
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$(0.09)
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$(0.10)
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$(0.29)
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Stockholders’
equity (reported)
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$63,139
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$57,523
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$66,993
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$66,993
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Stockholders’
equity (adjusted)
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$59,629
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$54,414
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$63,917
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$63,917
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Percentage
impact to stockholders’ equity
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(5.6%)
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(5.4%)
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(4.6%)
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(4.6%)
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The Staff
has not yet commented on the Company’s proposals in response to the Staff’s
comments. The Staff may disagree with the Company’s proposals; for
example, the Staff may suggest that the Company should restate prior financial
statements. The Company expects that the SEC will respond to its proposal in
February.
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
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Novavax, Inc.
(Registrant)
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January 31,
2011
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By:
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/s/ John A. Herrmann
III
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Name:
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John A. Herrmann
III
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Title:
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Executive Director, Legal Affairs
and Corporate Secretary
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