Merck COVID-19 Pill Success Slams Moderna Stocks, Shakes Healthcare Industry
Oct. 1 (Reuters) – Positive clinical trial results for Merck & Co’s (MRK.N) investigational antiviral pill COVID-19 spill over into the healthcare industry on Friday, pushing the drugmaker’s share price higher while deteriorating the high-profile stocks of companies and manufacturers of vaccines of other coronavirus therapies.
Merck shares jumped 12.3% and hit their highest level since February 2020 after data showed the company’s molnupiravir pill could halve the chances of dying or being hospitalized for those most at risk of contracting severe COVID-19. Experts hailed the news as potentially a huge leap forward in the fight against COVID-19.
At the same time, shares of vaccine makers such as Moderna Inc (MRNA.O), Pfizer Inc (PFE.N) and its partner BioNTech SE have been affected, with some analysts claiming that the promise of an oral drug can be taken at home could change the public’s perception of the risks associated with COVID-19.
“We see a perceived modest headwind for vaccine stocks such as MRNA (Moderna) if the market believes people will be less afraid of COVID-19 and less inclined to be vaccinated, if there is a simple pill that can dealing with COVID-19, ”Jefferies said analyst Michael Yee in a client note.
Moderna shares fell 13% by midday, while Pfizer, which is developing its own COVID-19 pill, fell 1.3%. US shares of BioNTech fell 11%.
For Moderna investors, the news from Merck presented an opportunity to lock in gains after an already breathtaking run. Shares of Moderna, which were added to the S&P 500 in mid-July, remain up around 220% in 2021 despite Friday’s declines. Shares of BioNTech were also still up around 200% for the year, even with Friday’s drop.
The news from Merck is a “great reason for people to take profit off the table” in Moderna and BioNTech stocks, said Sahak Manuelian, head of equity operations at Wedbush Securities. “These moves may be exacerbated on the downside given the momentum they’ve gained. Had in reverse.”
Shares of other companies with COVID-19 vaccines also fell, with AstraZeneca (AZN.L) down 2% and Novavax (NVAX.O) down 16%.
Companies with other COVID-19 therapies administered intravenously or by injection also saw a decline, with Regeneron Pharmaceuticals In (REGN.O) down nearly 5% and Gilead Sciences Inc (GILD.O) down about 2%.
Health Care (.SPXHC) was the only one of 11 S&P 500 sectors in negative territory at midday, down 0.5%.
“We see molnupiravir, with its oral format as a clear game changer that is likely to have a significant impact not only on the treatment paradigm for COVID-19, but also has potential utility in prevention.” Piper Sandler analyst Christopher Raymond said in a research note.
Merck is conducting an advanced stage trial to see if its antiviral pill can prevent COVID-19 infection, in addition to the study which has shown it can significantly reduce hospitalizations and deaths in people already infected.
Merck, whose shares last rose about 9%, is leading the race in the development of the first oral antiviral drug for COVID-19. Rivals such as Pfizer and Swiss drug maker Roche Holding AG (ROG.S) along with partner Atea Pharmaceuticals Inc (AVIR.O) are conducting late stage trials of their pills. Atea shares increased by 19%. Read more
Merck, which halted its own COVID-19 vaccination program, had seen its shares drop about 4% for the year until Thursday, before moving into positive territory for 2021 on Friday.
“Merck has kind of died in the water for investors over the past two quarters,” said Kevin Gade, portfolio manager at Bahl & Gaynor, which owns the shares of Merck. “It shows that their R&D engine is not dead and that they were the first … in what could be a multi-billion dollar opportunity.”
Reporting by Lewis Krauskopf in New York and Manojna Maddipatla in Bengaluru; Editing by Ira Iosebashvili and Bill Berkrot
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