As of 2:04 p.m. EST Friday, shares of the clinical-stage vaccine-maker Novavax (NASDAQ:NVAX) were up by about 14.5% on more than double the normal daily volume. What's all the fuss about?
Investors appear to be piling into this small-cap biotech's stock ahead of its forthcoming NanoFlu data release, expected some time this month.
If the early-stage data is positive, Novavax will sport two blockbuster candidates in its clinical lineup -- the other being the company's much-maligned respiratory syncytial virus vaccine candidate, which is currently in a late-stage trial for pregnant women.
While Novavax's stock is certainly behaving as if a news release is imminent, investors should bear in mind that this sudden price spike could just as easily be the work of day traders looking for a quick profit. Novavax, after all, doesn't have an exceptionally large institutional shareholder base, making it prone to wild intra-day price swings.
Having said that, the company's own timeline, offered up last December, gives it less than two weeks more to unveil NanoFlu's latest data points. Whether these early to mid-stage results will ultimately warrant the vaccine's further development, however, is another question altogether.
At the end of the day, I think it's hard to justify jumping into this stock ahead of this key clinical readout. Even if the data is positive, the company will need to issue a sizable secondary offering to fund its clinical activities, which will almost certainly result in a significant drop in share price. Novavax, at that point, would arguably be a far more attractive buy than it is today, as the company would be better capitalized and it would have two high-value clinical candidates in late-stage development. That's why I'm content to watch this speculative biotech from the safety of the sidelines for now.