What happened

Shares of the clinical-stage vaccine maker Novavax (NASDAQ:NVAX) rose by as much as 27.6% today on over three times the average daily trading volume. Although the biotech's stock has cooled off in the interim, Novavax's shares are still up by a healthy 7% as of 2:44 p.m. EST. 

The catalyst? Before the opening bell, the company reported positive top-line results for its experimental flu vaccine, NanoFlu, in a combined phase 1/2 trial in older adults. The headline item is that NanoFlu reportedly outperformed Sanofi's market-leading Fluzone High-Dose by generating higher hemagglutination inhibition (HAI) antibody responses against both the H1N1 and H3N2 influenza strains. 

A man in a suit drawing a positive growth curve with his index finger.

Image source: Getty Images.

So what

After an unusually severe flu season in which Sanofi and other vaccine makers were largely unable to adequately control the outbreak, the multibillion dollar flu vaccine market is arguably ripe for the picking by a newcomer like Novavax's NanoFlu. 

Now what

According to its press release, Novavax said it plans on initiating another midstage trial for NanoFlu by the third quarter of this year. That's the good news.

The bad news is that company is going to have to raise a significant sum of capital soon in order to carry out another trial for NanoFlu and advance its other clinical candidates at the same time. Novavax, after all, only had around $172 million in cash remaining at the end of the last quarter, but an annual burn rate of about $168 million. With additional trials in the works, Novavax's burn rate probably won't taper off anytime soon.

All told, Novavax's initial NanoFlu data are certainly intriguing from a value proposition standpoint. But the company arguably needs to address its long-term financial needs. Until then, this small-cap biotech stock will continue to be an exceptionally volatile equity.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.