Shares of Novavax jumped 60% on Tuesday after the drugmaker said it is working on a vaccine for the deadly.
Novavax touted its experience developing vaccine candidates for coronaviruses, including vaccines to protect againstand .
"In response to the emergence of the Wuhan-version of the coronavirus seen recently in China, Novavax has initiated development of a vaccine candidate," the company said in a statement to CBS MoneyWatch.
Novavax's stock gave nearly half of the gains on Wednesday, falling 27% to $7.19.
Coronaviruses are a large group of viruses that can cause illnesses as minor as a cold, or as serious MERS and SARS, according to the World Health Organization. They often cause pneumonia-like symptoms.
The viruses are transmitted from animals to humans — the virus that causes SARS, for example, was transmitted to humans from a cat-like animal called a civet. But in some instances, as appears to be the case with this new strain of coronavirus, they can also be transmitted between humans.
Novavax said it will use "recombinant nanoparticle" technology to develop a vaccine candidate to combat the virus, which appears to have started in the city of Wuhan in central China.
The Wuhan version of the virusduring China's peak travel season around the Lunar New Year festival, sparking fear that the virus could depress tourism and economic activity.
Other companies that develop vaccines, including Aethlon Medical, Inovio Pharmaceuticals and BioCryst Phramaceuticals, also saw their shares rise as the coronavirus spread.