What happened

Shares of Novavax (NVAX 22.61%) are sinking today, down 18.7% as of 11:47 a.m. EST. The drop came after the initial excitement faded about the biotech's prospects in the wake of the spread of a deadly coronavirus that has infected hundreds of people in China and at least one person in the U.S.

So what

Novavax stock skyrocketed yesterday as news outlets across the world reported on the coronavirus that's causing concerns about a potential pandemic. The company focuses on developing vaccines for infectious diseases and has worked on promising vaccines for coronaviruses in the past.

Female wearing a white coat holding a syringe and vaccine vial

Image source: Getty Images.

But bidding the biotech stock up by more than 46% was definitely putting the cart before the horse. Novavax doesn't have any approved products yet. It would take years (at least) for the company to win regulatory approval for a vaccine that could potentially target the coronavirus that's making headlines.

Now what

Investing in biotech stocks like Novavax comes with big up-and-down swings, as we've seen over the last couple of days. However, it's better for investors to ignore the noise and instead focus on the company's long-term prospects.

For Novavax, those prospects hinge largely on the success of the biotech's nanoparticle-based influenza vaccine, NanoFlu. The company anticipates announcing preliminary results from a late-stage study of NanoFlu later in the first quarter. If those results are positive, the vaccine could be on track to become Novavax's first approved product.