What happened

Shares of Novavax, Inc. (NASDAQ:NVAX), a clinical-stage biotech developing new vaccines, are rising again despite a lack of significant news. Last week the stock popped in response to the CEO and CFO purchasing shares of the company, and more recent purchases from board members are the likely reason for today's gain of 11% as of 11:40 a.m. EDT Monday.

So what

Insiders often sell their shares to supplement their incomes, but their purchases are usually worthy of attention. Last Thursday, Novavax stock rose after SEC filings showed the CEO and CFO made some modest purchases.

Hand drawing an upward-sloping chart.

Image source: Getty Images.

On Friday, similar filings from a couple board members showed further buying. The larger of the two was from Richard Douglas. He scooped up 200,000 shares at about $0.93 each, which brought his total Novavax holdings up to 550,000 shares.

Now what

Generally, insider buying signals confidence from up on high. Unfortunately, the minuscule purchases by a handful of insiders we've seen since Novavax posted first-quarter earnings aren't large enough to convince investors to overlook some big challenges ahead.

Last September, the stock was hammered when the company's lead candidate failed to protect older adults from infection with the respiratory syncytial virus (RSV). Novavax's argument that the trial measured infection rates during a season with the lowest RSV attack rate ever recorded holds water. Unfortunately, the vaccine didn't just fail to reach statistical significance. The RSV infection rate was higher in the vaccine group than in the placebo control group.

A new trial with older adults could solve issues that may have led to the big failure, but it's going to take an awfully long time to find out if this is the case. The company could also be saved by an ongoing study with pregnant women to see if the vaccine can protect newborns from RSV infection. In the meantime, though, Novavax continues to burn through its $211.2 million cash cushion without a means to replenish it, besides diluting shareholder value to raise equity.

Cory Renauer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.