Tricia Richardson – Senior Manager, IR John Lambert – Chairman Rahul Singhvi – President and CEO Penny Heaton – VP of Clinical Development and Chief Medical Officer Len Stigliano – VP, CFO and Treasurer

Kevin DeGeeter – Oppenheimer Vernon Bernardino – Rodman & Renshaw Ken Trbovich – RBC Capital Markets

Good morning, ladies and gentlemen, and welcome to the Novavax 2008 second quarter results conference call. My name is Dillon and I will be your conference coordinator for today. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. On today's call, we will be having Mr. John Lambert, Chairman of the Board; Dr. Rahul Singhvi, the President and Chief Executive Officer; Penny Heaton, the VP of Clinical Development and Chief Medical Officer; and also Len Stigliano, the Chief Financial Officer. At this time, you may proceed.

Good morning. We remind you that during this call, management will make forward-looking statements within the meaning of the Private Securities Litigation Reform Act, which involves risks and uncertainties inherent in our business. Actual results may differ materially from our expectations and you should consider all of the cautionary statements made in our SEC filings and in this morning's press release, including risks relating to our product development, clinical trials, and results from clinical trials, and the company's ability to obtain adequate financing for a complete statement of these risks, please refer to today's press release. This conference call will be available for replay after the conclusion of the call. Mr. Lambert, please proceed with your call.

Thank you, Tricia. Good morning and welcome to the Novavax conference call for our 2008 second quarter financial results and business update. I continue to be pleased with the progress we make on multiple fronts, our advancement of our vaccine candidates in preclinical and clinical trials, our ongoing relationship with GE Healthcare, and our recent successful equity financing. To tell you more about the business updates, I would like to introduce the Novavax management team on the call today. First our President and Chief Executive Officer, Dr. Rahul Singhvi; second, our Chief Medical officer, Dr. Penny Heaton; and finally, Len Stigliano, our Chief Financial Officer. I will now turn over the program to Rahul for his opening comments.

Thank you John and good morning everyone. We had a solid second quarter during which we made progress on all our core objectives for the year. On the product development front, we completed enrollment in the Phase II clinical study of our H5N1 pandemic influenza vaccine candidate. We remain on plan to report topline data on immunogenicity and safety from this trial during this quarter as planned. You will recall that this trial is a continuation of the same study of our pandemic flu vaccine candidate for which we reported favorable interim results in December 2007. These interim results indicated that our VLP vaccine at the 45-microgram dose was well tolerated and appeared to elicit an immune response similar to the only FDA-approved H5N1 vaccine at 90 micrograms per dose. I make this comparison with caution because it is generally difficult to compare vaccines in two separate clinical trials, but the results do suggest that our VLP vaccine is more potent than the FDA-approved vaccine that is produced with the egg-based technology. We will certainly have more clarity on this when we report immunogenicity results from the full dose range of 15, 45, and 90-microgram doses later this quarter. We are on track to begin a Phase II study this quarter of our second vaccine candidate, which is again seasonal influenza. We benefited from the synergy between the H5N1 VLP vaccine and our seasonal vaccine in that the safety data from our H5N1 flu trials counted towards the seasonal flu vaccine safety. This has allowed us to accelerate our seasonal flu vaccine program and commence as clinical development in Phase II through a randomized dose ranging trial. The synergy between these programs demonstrates the utility of our platform VLP technology on which both these product candidates are based as well as the similar manufacturing processes that are used to produce them. Penny will provide more detail regarding our clinical plans for both these candidates later in the call. In addition to our lead influenza program, we made solid progress on our discovery vaccine candidate and Penny will provide a more detailed update on these as well later in the call. In addition to product development, we made significant progress on the corporate front as well. We strengthened our cash position by completing an $18 million equity financing which generated net proceeds of $17.6 million. I am pleased that we were able to attract several strong long-term investors in this financing and many insiders participated as well. We were able to complete this offering in a difficult equity market without an underwriter or placement agent, which demonstrates that the Novavax business plan is attractive and resonating well with our investors. The funds from this offering strengthens our balance sheet and will provide sufficient cash to execute our critical seasonal flu clinical trials as well as advance our discovery candidates into late preclinical studies over the next six to nine months. We also amended our existing lease at our corporate headquarters in late June. This arrangement extends our lease at this facility to 2017 and provides us with $3 million to pay for leasehold improvements that are required for our GMP pilot plant facility and commercial launch facility. The construction phase of this facility was completed in late April 2008 and we were able to finish this work in less than four months at a cost of under $5 million. This price deck [ph] includes the purchase of manufacturing equipment as well. This facility is expected to have an annual capacity of 10 million doses of flu vaccine at a traditional seasonal flu dose. We are excited that this facility would serve as a working prototype of a vaccine manufacturing facility that can be implemented without substantial capital expenditure and infrastructure necessary for traditional vaccine manufacturing facilities. As you know, an inexpensive manufacturing capacity is a critical component of the in border pandemic vaccine solution we are offering to international countries in collaboration with our partner, GE Healthcare. Speaking of GE Healthcare, our collaboration with them is continuing nicely with meetings under way or planned with several targeted countries for the in border solution for pandemic flu. The GE Healthcare team is fully engaged with Novavax on multiple fronts including process development, process engineering, and marketing of our vaccine solution to select countries. As a final note, we have successfully completed our manufacturing obligations on Estrasorb pursuant to the agreement with Graceway Pharmaceuticals that we signed in the first quarter of this year. As a result, we will be closing down our manufacturing operations in northern Philadelphia's plant later this month. Now I would like to turn it over to Penny Heaton to provide you with an update on our vaccine candidate development programs.

Thank you, Rahul, and good morning, everyone. It is my pleasure this morning to update you on the progress that we have made on our various discovery preclinical and clinical candidate vaccine programs. I would like to start with our discovery projects. First, we continued to develop our Varicella Zoster vaccine candidates. Our objective is to find an optimized vaccine candidate for prevention of shingles and its associated complications and to move this candidate forward into advanced preclinical studies. We have made significant progress in the development of several different vaccine constructs and we are now evaluating these candidates according to pre-specified criteria to determine which candidate has the optimal properties for further development. We have also made considerable progress on our unannounced discovery vaccine candidate. We have been working in conjunction with collaborators at the University of Massachusetts and have developed several promising vaccine candidates for this yet to be announced disease target. We will be announcing the disease target after we have further evaluated the potential vaccine constructs and we have demonstrated the desired immune response in an animal model. Based on our progress to date, we anticipate we will be able to say more about this vaccine program later this year. Now let me turn to our influenza vaccine programs. First, our pandemic influenza vaccine program. As Rahul stated, we will announce topline results from the Phase IIa study of our pandemic influenza vaccine candidate this quarter as we planned. We will be announcing the immunogenicity data for the three doses that we studied including 15 micrograms, 45 micrograms, and 90 micrograms. We have evaluated in this placebo-controlled dose ranging study and we will provide an update on the safety profile of the pandemic influenza vaccine candidate. We will be selecting a dose for later phase studies by the end of the year when we get the final safety data and the supplementary immunogenicity data. You may recall that since the virus-like particle vaccine is novel with respect to prevention of influenza, the subjects in this study are being followed for safety for a period of six months after the final dose is administered. Accordingly, we anticipate that the entire study will be completed by the end of the year with the final study report being available in the first quarter of 2009. Consistent with our plans and as we have previously disclosed, we are not planning to perform any additional studies of our pandemic influenza vaccine candidate without funding from a partner or a government or non-government agency. As you may recall from our previous communications, the safety data being generated in the ongoing pandemic influenza vaccine trial will be useful in supporting the safety database for our seasonal influenza vaccine candidate, since both of these programs use our VLP platform and are manufactured using essentially an identical process. As a result, we plan to begin the seasonal influenza vaccine program with a Phase IIa study later this quarter. The study will evaluate the safety and immunogenicity of different doses of the trivalent seasonal influenza vaccine in healthy adults 18 to 49 years of age. Topline safety and immunogenicity results from this Phase IIa study are anticipated in the fourth quarter of this year. We are also planning an additional Phase IIa study of our seasonal influenza vaccine candidate that is targeted to begin in fourth quarter. This study will evaluate the safety and immunogenicity of different doses of the vaccine in adults who are 65 years of age and older. This study will also include a group of subjects who will receive an existing seasonal influenza vaccine. Including this group will permit us to compare the safety and immunogenicity of our VLP vaccine candidate with those of a vaccine that is already licensed by FDA. This study is important because it will provide the first data to support differentiation of the VLP seasonal influenza vaccine candidate from that of other marketed vaccines in older adults. As most of you know, the immune response to vaccines that are currently available for this patient population is modest, leaving older adults susceptible to influenza and its associated morbidity and mortality. CDC estimates that influenza is responsible for 36,000 deaths and 200,000 hospitalizations in the US each year, the vast majority of which occur in the elderly. We have designed our VLP seasonal influenza vaccine candidates to induce a broad set of immune responses which we hope will address the need for better vaccines in the elderly population. We are very excited about our development programs, which are moving forward aggressively to accumulate additional human data on our VLP vaccine candidates. I am looking forward to updating you on our progress over the coming quarters. Now, I would like to turn over the agenda to Len Stigliano, our CFO.

Thank you, Penny, and good morning. I would like to give a brief synopsis of our second-quarter results, which are disclosed in this morning's press release and will be further detailed in our Form 10-Q which will be filed this Monday, August 11. Since we've decided to cease continued production of Estrasorb in the fourth quarter of 2007, for financial reporting purposes, all activities for Estrasorb have been classified as discontinued operations for fiscal 2008 as well as prior years, which have been restated for comparability purposes in our financial statements. The press release and Form 10-Q reflect this classification. Revenues for the second quarter were $342,000, consisting of principally contract research, an increase of $500,000 to the comparable 2007 period. Revenues for the second quarter of 2007 were actually a negative due to reserves established in that period for discontinuing the sale of Gynodiol. Total operating expenses for the second quarter were $8.5 million as compared to $7.5 million in 2007. The increase in operating expenses was principally due to higher expenses in research and development as we advanced our vaccines in preclinical and human studies. Total operating loss from continuing operations for the quarter were $8.3 million as compared to $7.1 million for the comparable 2007 quarter. The loss from discontinued operations was $1.1 million for the quarter, essentially the same as compared to the second quarter of 2007. The losses are associated with the production of Estrasorb. As Rahul mentioned, we have completed all the production of Estrasorb lots as required in the Graceway agreement and are in the process of shutting down our manufacturing operations as planned in Northeast Philadelphia. Total cash, cash equivalents, and short-term investments were $35.9 million at the end of June, as compared to $46.5 million at the end of fiscal 2007. The net burn rate for the six months ended June 30 was $10.6 million and are due to operating losses, capital expenses associated with our GMP pilot plant launch facility, which were partially offset by upfront cash related to the Graceway transaction and leasehold improvement funding from our current landlord at our Rockville headquarters in exchange for extending our lease term as Rahul mentioned previously. Our cash burn rate will accelerate in the second half of fiscal 2008 as we advance our seasonal influenza vaccine in human trials. In conjunction with the equity financing of $18 million, which was closed on July 31, the company believes we have sufficient cash to fund contemplated operations through the third quarter of 2009. The company also expects that it will raise additional capital in the future through several potential venues such as sale of equity securities, partnering transactions, lease financing, and/or non-dilutive funding. Now I would like to turn this over back to Rahul for his summary comments.

Thanks Len. In summary, we continued to accomplish key clinical milestones, strengthen our collaboration with GE Healthcare, and advance our discovery candidates. During this quarter, we expect to announce topline Phase IIa results for our pandemic influenza vaccine candidate and start our Phase II clinical trials for our seasonal flu program. In addition to advancing our vaccine product candidates in the clinic, we continue to make progress with our novel manufacturing approach with process development and scale up of bulk manufacturing. We expect to be able to scale up to a 1000 liter batch size by the end of this year and that will be our commercial lot size. This scale up is expected to add more manufacturing efficiency and yields to our process. We also anticipate that one of our discovery vaccine candidates will be in advanced preclinical trials by the end of this year. Our core VLP technology continues to demonstrate its potential to create effective and much-needed vaccines through a novel manufacturing solution thanks to a very talented team, our growing intellectual property estate, and the support of terrific investors. We are committed to moving forward our programs in an aggressive manner and to create sustainable value for patients, partners, shareholders, and our employees. This completes our prepared comments. Now we will turn it over to our investors for questions. Operator?

(Operator instructions) our first question comes from Kevin DeGeeter. Your question sir. Kevin DeGeeter – Oppenheimer: Thanks, guys. Good afternoon, great quarter. A couple of questions, maybe one for Penny off the top here, for the seasonal vaccine study that we are going to kick off in the fourth quarter, what is the comparator going to be for those elderly population, the comparator vaccine?

At this time, we are planning on using Fluzone. That is the Sanofi trivalent influenza vaccine. Kevin DeGeeter – Oppenheimer: Okay, terrific. And on the Zoster program, can you give us just a general sense, I recognize there are multiple potential candidates here, but are we going for a strategy that's more of a treatment vaccine, more of a prevention vaccine? Just a little more color there if you could.

Sure, we are looking at a preventative vaccine, a prophylactic vaccine, and there are several different approaches to obtain the right immune response and we're looking at a number of different candidates. And then we will choose a candidate based on the appropriateness of the immune response and also the ability to make it commercially. Kevin DeGeeter – Oppenheimer: Okay and maybe two more quick questions, then I will jump back in queue, on the pandemic here, the pandemic influenza vaccine, there are a number of other companies out there with product offerings in the pandemic area. From a product profile from a clinical profile perspective, how do you hope to differentiate the approach, the VLP vaccine that you guys have? I recognize from a scale up manufacturing perspective there are a number of benefits, but in terms of product profile, how do you see the product stacking up?

Yes, there are two things that will allow our vaccine to be unique and differentiated from other vaccines. One is because of the way we make the vaccine starting with the gene sequence, we can actually match our vaccine directly to a pandemic strain, to what is circulating in among subjects. And so we don't have to adapt it to eggs etc. So we can have an exact genetic match. What we anticipate that that will result in is better efficacy, a broad immune response. The other thing to mention is our VLP vaccines, they contain three components, the HA, the NA, and M1. The HA, is there to prevent infection, the NA is there to actually reduce the severity of disease and then the M1 to induce a cell-mediated immune response. You might ask, well how is that different from other pandemic vaccines out there? Well, one of the big things is the neuraminidase. They typically do not have the neuraminidase stabilized, we do. So not only will we prevent invention with the HA, but we will reduce severity of disease with the NA, which of course is going to be really important in a pandemic. So that is from a clinical perspective. Now, from the manufacturing perspective, the way we will differentiate ourselves is speed. From the time we get the genetic sequence to the time that we can release vaccine launch is 10 to 12 weeks and this is not a dream. This is something that we've done several times here at Novavax. So we will be able to have vaccine released and also the manufacturing process consists of pre-sterilized disposable equipment that can be housed in a relatively small facility. So what that does, that provides the opportunity for us to produce the vaccine locally. In a small country we could set up a facility, it actually could be affordable and we could produce vaccine for them locally within 10 to 12 weeks of when the pandemic strain is known and it could be exactly matched to what is circulating in their population. That is really different than the other pandemic vaccines that are out there. Kevin DeGeeter – Oppenheimer: That is really, really helpful. Maybe one last question and let's go ahead and get Len in here. We recently completed the equity financing, which really puts the company in a strong position but what are your thoughts now on the convertible debt and when can we hope to get a little bit more clarity on the strategy with that?

You are persistent, Kevin, on that one, aren't you? Kevin DeGeeter – Oppenheimer: Yes.

Actually just for everyone on the phone call, the convertible debt is due next July of ‘09. It converts at a strike price of $4. We have a call at $7. So we know that there is an overhang, which I think is the reason Kevin asked, there is an overhang of the convertible and the short position to reflect that. But at this point, Kevin, we are kind of watching this to see where we are in terms of stock price and the timing when this expires. So we really haven't made a definitive decision. All I can tell you is that we are watching this carefully. We have had discussions on different options we may take, but we're not really ready to really talk about that in more detail. Kevin DeGeeter – Oppenheimer: Thanks so much, Len.

(Operator instructions) our next question comes from Vernon Bernardino. Question please. Vernon Bernardino – Rodman & Renshaw: Thanks for taking my question. Regarding the GE collaboration, the meetings that you have scheduled, what kind of entities have the meetings been scheduled with? Will they be visiting the Rockville GMP facility to evaluate the vaccine safety solution? What kind of preclinical work does still need to be done? And then lastly, will the solution offered by Novavax and GE Healthcare be managed by the foreign agency or by Novavax? Thank you.

Those were a lot of questions. So you will have to maybe come back to some of them. But the first question I believe was who are we talking to? So our customer there, the Ministry of Health, and are they going to come and visit our facilities? Yes, that is exactly one of the reasons why we built it is to show them what can be done in their own country. What was the next question? Vernon Bernardino – Rodman & Renshaw: What kind of preclinical work still needs be done before finally announcing the unannounced vaccine candidate?

Penny will maybe address that one.

Yes, you are talking about for the Varicella Zoster candidate or –? Vernon Bernardino – Rodman & Renshaw: The one you haven't announced yet.

Oh, the undisclosed one. Yes, basically we are in the process of evaluating the immune response of our early vaccine candidates and we want to demonstrate that that is indeed the protective immune response that we are looking for. So that is one piece of it. And then the other piece of it is we are also looking at yields of the different candidates to make sure that there is something that if we move forward with that we can produce at commercial scale. So both of those things, those evaluations are in progress right now and if we do indeed get the immune response that is appropriate, that we know is considered protective and we have a reasonable yield then we will go ahead and be announcing that candidate. Vernon Bernardino – Rodman & Renshaw: Penny, while I have you, what is the status of the HIV vaccine?

We are continuing to work with the government on this and it continues in preclinical studies as well. I think Rahul may have a little bit more information about that for you.

So, we announced data last year on small animal work there, Vernon, and now the studies are ongoing in monkeys. So we expect that as those studies get completed hopefully by the later part of this year that our collaborators will probably present data from those studies in some scientific conference. Vernon Bernardino – Rodman & Renshaw: And it is mostly government funded, right?

It is all government funded. Vernon Bernardino – Rodman & Renshaw: Okay, then the last question I had is actually again back to GE Healthcare, will the solution be managed by the foreign entity or by Novavax?

It depends. It will depend on the agreement that we have with the government. Vernon Bernardino – Rodman & Renshaw: Okay, thank you for taking my questions.

Thank you.

Our next question comes from Ken Trbovich. Ken Trbovich – RBC Capital Markets: Good morning Rahul, how are you?

Hi Ken, how are you? Ken Trbovich – RBC Capital Markets: :

Sure, this is Penny. Yes, for the Varicella Zoster candidate, we're looking at more than one candidate where we are evaluating different immune responses, both humoral responses as well as cell-mediated immune responses, and then again looking at that in conjunction with yields and we put all of that together and then make a decision about what candidate we move forward with into advanced preclinical studies to support an IND. So, all of that work is still ongoing. With respect to the unannounced candidate, typically all of the preclinical studies start out in mice, so that is where we have started with that. To actually talk further about the animal models that we will be using beyond that would I think, it would be too close to disclosing the candidate. So I won't be able to share that with you right now, but hopefully very soon in the next few months we will be able to announce that. Ken Trbovich – RBC Capital Markets: Okay, just with regard to the pandemic studies that are ongoing, can you go over again the differences for example in the formulation in the current version of the study because I know obviously we are going to see 45 microgram data again and I am supposing that we won't – one would hope that we won't necessarily see the same results. I just want to make sure we understand those differences before we see the results.

Sure, absolutely. We are again looking at the 15 microgram and 45 microgram dose and the 90 microgram dose as well. But you are right, between the first stage of the study and the dose ranging portion of the study, we did optimize the formulation of the vaccine and probably [ph] the two most important things that were done, one was that we stabilized the neuraminidase in the vaccine. We changed the formulation to stabilize the neuraminidase, which as I stated earlier, we believe is a very important component and important in the immune response. The other thing that we did is we changed the inactivation procedure for baculovirus. As you know, our final product does not have any live baculovirus in it and so what we did is we optimized the procedure for inactivating the baculovirus to a milder procedure. And certainly in the animal studies we had improved immunogenicity with that change in procedure and our hope is that we will see that same improved immunogenicity in the clinic. Ken Trbovich – RBC Capital Markets: Okay and then finally in terms of the construct of the seasonal vaccine, you mentioned obviously some advantages that you see in the construction of the pandemic. Do you see similar advantages in the construction of your seasonal vaccine or do you use just purely the same strains at different doses?

We do see advantages also in the seasonal vaccine. Just as I was mentioning for the pandemic vaccine, we do not have to egg adapt the strains. So since we don't have to egg adapt the strains, the sequencing and the match of our vaccine can be much more similar to what is actually circulating in humans. We will be making a human vaccine for human strains that are circulating in humans rather than having to do the egg adaptation. So what we anticipate then is hopefully that will also translate into better immunogenicity and efficacy. So that is one important thing is the strain match. The other thing that is important that I've already alluded to as well is with the three components, the HA, the NA and the M1, we anticipate a broad immune response. Currently other licensed seasonal flu vaccines, the neuraminidase is not stabilized. There are varied amounts, sometimes little or none, no neuraminidase and we know that neuraminidase is important, as I indicated, for preventing severe disease and lessening the severity of disease, by having neuraminidase antibody, you can actually prevent the virus from spreading down in the respiratory tract and causing pneumonia. And of course pneumonia is the major complication that is associated with the flu in the elderly. And so by having the HA, the NA, the neuraminidase, and then the M1 for cell mediated immune responses, we are hoping that that all translates into a more efficacious vaccine particularly for those patients that are over 65. Ken Trbovich – RBC Capital Markets: Okay, then just one final question and I know it's not entirely fair because it's the first round of manufacturing really for seasonal vaccine at this point. But the fact that you are comparing to a current seasonal vaccine suggests that you are using the updated strains that were recommended earlier this year. Can you give us some idea as to how that process went in terms of growing those strains and obviously compare it to perhaps your experiences on the pandemic that you have been working on for a longer period of time?

You know, it has really gone well. Once the strains were announced, we got the sequences from CDC the same day and we had the clones made within just a few weeks. I believe it was between four and six weeks and the production is going very well. The yields look great and yes, we are right there with the 2008/2009 strains just like everyone else's is. Ken Trbovich – RBC Capital Markets: Okay, thank you.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.