Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Novavax Inc. (NASDAQ:NVAX), a clinical-stage biopharmaceutical company focused on treating infectious diseases through the use of recombinant protein nanoparticle vaccines, shed as much as 10% after reporting disappointing second-quarter results.

So what: For the quarter, Novavax delivered a 51% decline in overall revenue to $3.5 million and loss per share that widened to $0.08 from $0.05 in the year-ago period. Wall Street, on the other hand, had expected the small-cap biotech to deliver a smaller loss of just $0.06 per share on $4.6 million in sales. The reduction in revenue, according to the company, related to the seasonality of BARDA-funding as pertaining to its influenza vaccine research. The company has used $18.2 million in cash thus far this year and had $40.6 million in cash and cash equivalents left on its balance sheet at the end of the quarter.

Now what: Normally, investors will give small-cap biotechs like Novavax a free pass when it comes to earnings time, but this company is a unique case. Because its vaccines can be researched and manufactured in such a short period of time, the real struggle is getting governments and hospitals to buy its product. Most serious infectious diseases -- save for the flu -- tend to not get passed to more than a few dozen persons, meaning the cost of developing an infectious disease vaccine never winds up being recouped by the company. With Novavax burning through its remaining cash on hand, I can't help but figure that another dilutive share offering, and many more quarters of losses, may be on the way.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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