What happened

Shares of Novavax (NASDAQ:NVAX) had soared 9.2% higher as of 3:26 p.m. EST on Wednesday after rising more than 11% earlier in the day. The biotech didn't report any news of its own, but three factors were potentially behind the big jump.

First, Federal Reserve Chairman Jerome Powell's dovish remarks boosted the overall stock market. Also, FiercePharma reported that flu vaccine supplies were lower in China despite a severe flu season. And Swedish healthcare-focused newspaper Dagens Medisin published an article in which a GlaxoSmithKline executive stated that he expects the next major vaccine breakthrough to be for respiratory syncytial virus (RSV). 

Why would the latter two stories generate higher interest among investors in Novavax? The biotech is developing promising flu and RSV vaccines. 

Gloved hands holding a syringe and a vaccine bottle

Image source: Getty Images.

So what

The comments by Powell were likely the most important catalyst for Novavax. Powell's statements seemed to hint that there could be fewer interest rate hikes in the coming months. That's great news for stocks, since higher interest rates can lead to lower customer spending.

Granted, as a clinical-stage biotech, Novavax isn't really hurt if customers spend less. But the old saying that a rising tide lifts all boats is often right. Powell's comments sparked a stock market rally on Wednesday, and it helped Novavax, as it did most other stocks.

That FiercePharma report about a reduced supply of flu shots in China also doesn't have a direct impact on Novavax at this point. However, one key reason behind this reduced supply was a scandal that caused Chinese drugmaker Changchun Changsheng Life Sciences to essentially go belly-up. Another factor was Sanofi's voluntary flu-vaccine recall and delayed start-up for production in 2018. Both issues highlight the opportunity for a highly effective new flu vaccine, which Novavax hopes to have in the not-too-distant future with its experimental NanoFlu vaccine.

GlaxoSmithKline's head of pre-clinical research and development, Yannick Vanloubbeeck, might not have had Novavax in mind when he told Dagens Medisin that the next big vaccine breakthrough could be in RSV. But investors hearing his prediction can't be blamed for thinking about Novavax. Market research company EvaluatePharma views Novavax's ResVax RSV vaccine as one of the most promising vaccines currently in development.

Now what

None of these news stories really matter all that much for Novavax. What does matter is its pipeline progress. 

The company expects to announce top-line results from its pivotal study of ResVax in the first quarter of 2019. If those results are positive, the biotech should file for U.S. regulatory approval of the RSV vaccine by early 2020. Novavax also plans to report results from a phase 2 clinical study of NanoFlu in Q1 2019. 

The stock is likely to remain volatile, with big swings up and down, until these results are known. The risks are definitely high for Novavax. But with the huge potential for its experimental vaccines, it could also be one of the best small-cap stocks to buy for aggressive investors.

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