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By Lewis Krauskopf and Manojna Maddipatla
Oct 1 (Reuters) - Positive clinical trial results for Merck
& Co's experimental antiviral COVID-19 pill reverberated
through the healthcare 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 https://www.reuters.com/business/healthcare-pharmaceuticals/mercks-covid-19-pill-cuts-risk-death-hospitalization-by-50-study-2021-10-01
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.
"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."
Shares of other companies with COVID-19 vaccines also fell,
with AstraZeneca 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," Piper Sandler analyst Christopher
Raymond said in a research note.
Merck is conducting a late-stage trial to see if its
antiviral pill can prevent COVID-19 infection, in addition to
the study that showed it can significantly cut hospitalization
and death in those already infected.
Merck, whose shares were last up about 9%, leads the race in
developing the first oral antiviral medication for COVID-19.
Rivals such as Pfizer and Swiss drugmaker Roche Holding AG
with partner Atea Pharmaceuticals Inc are
running late-stage trials of their pills. Atea shares were up
19%.
Merck, which discontinued its own COVID-19 vaccine https://www.reuters.com/article/us-health-coronavirus-merck/merck-ends-covid-vaccine-program-cites-inferior-immune-responses-idUSKBN29U187program,
had seen its shares fall about 4% for the year through
Thursday, before they moved into positive territory for 2021 on
Friday.
"Merck has kind of been dead in the water to investors for
the past couple of quarters," said Kevin Gade, portfolio manager
with Bahl & Gaynor, which owns Merck shares. "This shows their
R&D engine is not dead and they were 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)
