Novavax, Inc. (NVAX): Insider Buying News You Can Use

It was a light week for insider buying activity to start February. The number of companies dropped to 31. Hopefully, it is not a sign of boardroom confidence in the economy. But a small pool to choose from doesn't deter iStock from finding an idea worth further examination.

Novavax, Inc. (NASDAQ:NVAX) had five insider announce purchases on January 31, 2014. The handful of executives had some AMAZING timing. They bought the stock at $2.29 a share – look where it is today, more than $5.60 and up 5.9% as we type for the day. A select group of insiders has bought the stock since April 2012 when the NVAXwas trading for as little as $1.21.

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Novavax is a clinical-stage biopharmaceutical company, focuses on developing recombinant protein nanoparticle vaccines to address a range of infectious diseases. The company's technology platform is based on proprietary recombinant vaccine technology that includes virus-like particles (VLPs) and recombinant protein micelle vaccines. Its vaccine candidates target seasonal influenza, pandemic (H5N1) influenza "bird flu", and respiratory syncytial virus (RSV) (Bronchiolitis).

The small-cap biotech has been smoking hot recently; shares were less than $3 early in November 2013 and hit a 52-week high of $6.50 in mid-January. The stock has cooled since then.  Let's see what's ahead for NVAX.

The influenza market is roughly a $3 billion a year business with 40% of sales in the gold ole' US of A.  Management believes the end of phase 2 for seasonal flu with close in mid-2014 with phase 3 trials commencing later in the year. The company also expects Pandemic H7N9 (bird flu) Matrix-M trial – data in the fourth quarter of 2014.

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Additionally, RSV treatments have 2014 and early 2015 milestones ahead, as well.

RSV Women-of-childbearing-age Trial – Data 2Q 2014 Combo RSV/Flu trial – Data 4Q 2014 Pediatric RSV Phase 1 - Data 1Q 2015

It could be a exceptionally active for Novavax shareholders, regulatory news-wise, in the next 6-12 months.

Trying to determine where there homerun or strikeout biotechs will end up based on fundamental is guesswork at best. At the moment, Wall Street has placed a $1.18 billion market-cap on a company that's on pace for roughly $16 million in revenue for the year 2013, which means NVAX trades lose to 70 times sales. As you can see, fundamentals schmundamentals – they don't come into play with Adam Dunn stocks (homerun or strikeout).

Overall: News flow will be the driving force behind Novavax, Inc. (NASDAQ:NVAX) shares in the next year. Considering there is low institutional ownership at 44.9% of shares outstanding, and a healthy dose of the float (share available for trading) sold short (24.70%), positive announcements could result in disproportionate responses as institutional investors and short sellers rush to buy NVAX in the wake of good news. On the other hand, disappointing news will beat the stock downward but should be limited relative to upside sensitivity.