Positive clinical trial results for Merck & Co.’s experimental COVID-19 antiviral pill reverberated through the healthcare sector on Friday, sending the drugmaker’s share price skyrocketing while soaring stocks of vaccine companies and manufacturers of other coronavirus therapies were depressed.
Merck stock rose as much as 12.3%, hitting its highest level since February 2020 after data showed the company’s pill, molnupiravir, increased the likelihood of dying or being hospitalized for those on at greatest risk of developing severe COVID-19, could be halved. Experts hailed the news as a potentially major step forward in the fight against COVID-19.
At the same time, stocks were hit by vaccine makers like Moderna Inc., Pfizer Inc. and partner BioNTech SE, with some analysts saying the promise of an oral drug that can be taken at home could change public perceptions of the risks associated with COVID -19.
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“We see a modest perceived headwind for vaccine stocks like MRNA (Moderna) when the market believes people are less afraid of COVID-19 and less inclined to get vaccines when there is a simple pill called COVID-19 Jefferies said analyst Michael Yee on a customer note.
Moderna stock plunged 13% in midday trading, while Pfizer, which is developing its own COVID-19 pill, fell 1.3%. BioNTech’s US stocks fell 11%.
For Moderna investors, the Merck-Nachrichten offered the opportunity to make a profit after an already impressive run. Moderna shares, which entered the S&P 500 in mid-July, remain up around 220% in 2021 despite declines on Friday. BioNTech’s share also rose by around 200% over the course of the year, despite the decline on Friday.
The Merck News is a “great reason for people to take profits off the table” in Moderna and BioNTech stocks, said Sahak Manuelian, head of stocks at Wedbush Securities. “These movements can worsen downwards given the momentum they had upwards.”
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Shares of other companies with COVID-19 vaccines also fell, with AstraZeneca (AZN.L) down 2% and Novavax down 16%.
Companies with other COVID-19 therapies given intravenously or by injection also traded lower, with Regeneron Pharmaceuticals In down nearly 5% and Gilead Sciences Inc down about 2%.
Healthcare was the only one of the 11 S&P 500 sectors in negative territory in midday trading, down 0.5%.
“We see molnupiravir with its oral format as a clear game changer that is likely not only to significantly influence the treatment paradigm for COVID-19, but also has a potential benefit in prevention,” said Piper Sandler analyst Christopher Raymond in a research note.
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Merck is conducting a late-stage study to see if its antiviral pill can prevent COVID-19 infection, in addition to the study that has shown it can significantly reduce hospital stays and deaths in those already infected.
Merck, whose shares recently rose about 9%, is leading the race in developing the first oral antiviral drug for COVID-19. Rivals like Pfizer and Swiss drug maker Roche Holding AG (ROG.S) with partner Atea Pharmaceuticals Inc are conducting late-stage studies on their pills. Atea shares rose 19%. Continue reading
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Merck, which had discontinued its own COVID-19 vaccine program, had lost about 4% of its shares over the year through Thursday, before sliding into positive territory for 2021 on Friday.
“Merck has been dead in the water for investors for the past few quarters,” said Kevin Gade, portfolio manager at Bahl & Gaynor, who owns Merck shares. “This shows that their R&D engine is not dead, and they were the first … in a potentially billion-dollar opportunity.”