Merck COVID-19 pill success slams Moderna shares, shakes up health

Positive clinical trial results for Merck & Co‘s experimental antiviral COVID-19 pill reverberated through the health care sector on Friday, sending the drugmaker’s stock price soaring while denting high-flying shares of vaccine companies and makers of other coronavirus therapies.

Merck shares jumped as much as 12.3% and hit their highest level since February 2020 after data showed the company’s pill molnupiravir 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 advance in the fight against COVID-19.

At the same time, shares of vaccine makers such as Moderna Inc., Pfizer Inc. and partner BioNTech SE were hit, with some analysts saying the promise of an oral drug that can be taken at home could change the public perception of risks associated with COVID-19.

Signage outside Merck & Co. headquarters in Kenilworth, New Jersey, on Monday, Jan. 25, 2021.  (Getty Images / Getty Images)

MERCK TO REQUEST EMERGENCY APPROVAL FOR COVID-19 ANTIVIRAL PILL

“We see modest perceived headwind to vaccine stocks such as MRNA (Moderna) if the market thinks people will be less afraid of COVID-19 and less inclined to get vaccines, if there is a simple pill that can treat COVID-19,” Jefferies analyst Michael Yee said in a client note.

Moderna shares tumbled 13% in midday trading, while Pfizer, which is developing a COVID-19 pill of its own, fell 1.3%. U.S. shares of BioNTech dropped 11%.

For Moderna investors, the Merck news presented an opportunity to lock in gains after an already stunning run. Shares of Moderna, which were added to the S&P 500 in mid July, remain up some 220% in 2021 despite Friday’s declines. BioNTech’s shares were also still up about 200% for the year, even with Friday’s fall.

The Merck news is a “great reason for folks to be taking profits off the table” in Moderna and BioNTech shares, said Sahak Manuelian, head of equity trading at Wedbush Securities. “These moves can get exacerbated to the downside given the momentum they have had to the upside.”

MERCK SAYS COVID-19 ANTIVIRAL PILL EFFECTIVE AGAINST VARIANTS

Shares of other companies with COVID-19 vaccines also fell, with AstraZeneca (AZN.L) down 2% and Novavax falling 16%.

Companies with other COVID-19 therapies that are administered intravenously or through injection also traded lower, with Regeneron Pharmaceuticals In down nearly 5% and Gilead Sciences Inc off about 2%.

Healthcare was the only one of the 11 S&P 500 sectors in negative territory in mid-day trading, falling 0.5%.

“We see molnupiravir, with its oral format as a clear game changer that is likely to meaningfully impact not just the treatment paradigm for COVID-19 but also has potential utility in the prevention setting,”…