What happened

Shares of the clinical-stage biotech Novavax (NASDAQ:NVAX) are up by 10.65% as of 10:34 a.m. EDT today. The biotech's shares have now rallied by an astounding 80.7% this week. The spark?

Novavax's shares have been bolting higher of late in response to a newly released clinical update for the company's experimental respiratory syncytial virus (RSV) vaccine known as ResVax. Specifically, the company reported that a new analysis revealed that infants immunized while still in the womb with ResVax exhibited a 56.9% reduction in the incidence rate of pneumonia over the first year of life. The analysis in question was presented at the 2019 IDSOG Annual Meeting held in Big Sky, Montana.

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So what

Based on how Novavax's stock has reacted to this clinical update, investors seem to be under the impression that the company may now be able to find a viable regulatory pathway for ResVax in either the U.S. or another high-value market abroad. Such a development would obviously be a huge win for the company and its shareholders, given that ResVax's target market represents a blockbuster commercial opportunity.

Now what

The bad news is that Novavax will probably have to conduct at least one additional late-stage trial to win over regulators in the U.S. and perhaps the EU as well. ResVax, after all, badly whiffed on its primary endpoint in this same late-stage trial last February. Put simply, Novavax may ultimately be able to salvage ResVax if this new analysis holds up to scrutiny, but investors shouldn't hold their collective breath that a major regulatory win is close at hand.