What happened

Shares of Novavax (NVAX -1.89%) dropped 12.8% today after the company announced its third-quarter results following the market close on Monday.

Novavax reported Q3 revenue of $157 million, well under the average analyst estimate of $230.6 million. It posted a net loss of $197.3 million, or $3.21 per share, a much worse result than the consensus analyst estimate of earnings of $1.73 per share.

Gloved hands holding vaccine vial and syringe

Image source: Getty Images.

So what

Should investors be concerned about Novavax's Q3 revenue and earnings misses? Not at all. These misses simply weren't a big deal. At this point, the company's revenue consists of money received from external entities to help fund its COVID-19 vaccine program. Novavax's net loss reflects its significant spending to advance its pipeline candidates, particularly its experimental coronavirus vaccine NVX-CoV2373.

The main financial metric for investors to focus on for Novavax is its cash position -- and the company is well positioned on that front. Novavax reported cash, cash equivalents, marketable securities, and restricted cash totaling $571.6 million as of Sept. 30. This puts the biotech in great shape to continue funding its pipeline efforts.

What really matters for Novavax is its pipeline progress. If the company has positive results for NVX-CoV2373 in late-stage testing, its Q3 results will be quickly forgotten.

Now what

We shouldn't have to wait very long for news about how the late-stage studies of NVX-CoV2373 are going. Novavax already has a phase 3 study of the vaccine candidate in progress in the U.K. and hopes to begin a late-stage U.S. study later in November. The company expects to announce initial efficacy results early next year.

There's also another potential catalyst for the biotech stock: the regulatory filing for influenza vaccine candidate NanoFlu. Novavax plans to provide updates about its progress in filing for regulatory approval of NanoFlu once a team established to guide the process finalizes its strategy.