What happened?

Shares of Novavax (NASDAQ:NVAX) are down by 13.2% as of 2:58 p.m. EDT on Wednesday, despite the company not reporting any news. However, it seems likely that the market is reacting to the comments made yesterday by Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases (NIAID), regarding the "durability" of a potential vaccine for the novel coronavirus. 

So what

Novavax has been one of the leaders in the race to develop a vaccine for COVID-19. The company recently announced the initiation of a phase 1/2 clinical trial to investigate the efficacy of its potential vaccine for COVID-19 -- NVX-CoV2373. The phase 1 part of this trial, to be conducted in Australia, will enroll 130 healthy adult volunteers and will test the vaccine's safety and its immunogenicity.

Preliminary results from the phase 1 part are expected in July. The phase 2 part of the trial will be held in the U.S. and several other countries. It will test the vaccine's safety, its ability to enhance immune responses, and its disease-reduction capabilities in a wider pool of participants.

Man standing in front of a board holding his head, looking at at downward pointing graph.

Image Source: Getty Images.

Investors have high hopes for Novavax's NVX-CoV2373, but Dr. Anthony Fauci gave us all a reality check when he said the following in an interview with JAMA editor Howard Bauchner:

When you look at the history of coronaviruses, the common coronaviruses that cause the common cold, the reports in the literature are that the durability of immunity that's protective ranges from three to six months to almost always less than a year.

In short, Dr. Fauci believes a potential vaccine for COVID-19 "may not provide long-term immunity."

Now what

Even with today's drop, shares of Novavax are up by a whopping 995% since the year started. But investors should remember that this biotech stock will continue to be volatile, and if Novavax loses the race to market a vaccine for COVID-19, its shares will probably implode.