What happened

Shares of Novavax (NVAX -26.74%) were falling 12.7% lower as of 10:54 a.m. on Tuesday. There wasn't any real news driving Novavax's decline. Instead, investors appear to be taking profits off the table after the stock's big gains stemming from concerns about the spread of a deadly coronavirus strain.

So what

When a stock moves a lot higher in a short period of time on news that doesn't definitively translate to improved prospects, it's likely to be very volatile. That's the story in a nutshell for Novavax's big price swings.

Concerns about the coronavirus that first infected residents of Wuhan, China, are warranted. The virus has spread to the U.S. and other countries. It presents a serious health threat.

Masked healthcare professional holding a syringe and vaccine bottle

Image source: Getty Images.

Investors' interest in Novavax and other biotech stocks that have development programs that could target the coronavirus strain is also warranted. If the virus continues to spread, the first company to develop a safe and effective vaccine or antiviral drug for the virus could make a fortune.

However, there are some major assumptions that might not pan out. Novavax might be successful with its coronavirus program, but it might not. The virus might continue to spread, but it might not. Today's sell-off of Novavax shares reflects this uncertainty.

Now what

It makes sense for investors to closely watch the progress of biotechs like Novavax with their efforts to develop drugs and vaccines targeting the coronavirus. However, it's even more important to be on the lookout for other key milestones. The biggest upcoming catalyst for Novavax is its anticipated results from a late-stage study of nanoparticle-based flu vaccine NanoFlu that should be announced within the next couple of months.