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Vaccine Stocks Down Following Merck's COVID-19 Pill Success

Stocks of some COVID-19 vaccine makers like Novavax ( NVAX - Free Report) , BioNTech ( BNTX - Free Report) and Moderna ( MRNA - Free Report) declined sharply on Monday as Merck ( MRK - Free Report) and partner Ridgeback Biotherapeutics announced positive interim data from a phase III study on their oral antiviral medicine, molnupiravir.

Data from the interim analysis showed that the medicine reduced the risk of hospitalization or death by approximately 50% in non-hospitalized adult patients with mild or moderate COVID-19. Interim data from the phase III MOVe-OUT study showed that 7.3% of patients treated with molnupiravir were hospitalized or died through Day 29, versus 14.1% of placebo-treated patients. There were no deaths reported in patients treated with molnupiravir versus eight deaths in placebo-treated patients

Following the compelling data, Merck stopped recruitment in the study at the recommendation of an independent Data Monitoring Committee. Merck plans to file an application for Emergency Use Authorization (EUA) to the FDA soon based on its encouraging phase III study results.

Merck’s stock has risen 5.7% this year so far compared with an increase of 8.9% for the industry.

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If authorized by the FDA, molnupiravir will become the first oral antiviral medicine to be approved in the United States. Until now treatments available for COVID-19 are monoclonal antibody medicines of Eli Lilly, Regeneron, and Vir Biotech/GlaxoSmithKline and Gilead’s Veklury (remdesivir) injection.

However, most of the abovementioned medicines require access to a healthcare facility or can be given to patients with severe disease. Oral antiviral pills can be taken at home by patients who are moderately infected without the need to go to a hospital and can thus reach a much larger number of people. Some doctors and analysts believe Merck’s data is “game-changing” and the drug, if approved, could prove to be the turning point in the efforts to bring the pandemic under control. Atea Pharmaceuticals , Roche and Pfizer are also developing antiviral pills. Atea’s stock was up almost 20% in response to Merck’s successful data.

Merck already has a deal with the U.S. government to supply approximately 1.7 million courses of molnupiravir, once it gets EUA from the FDA. It has been producing the pills at-risk and can produce 10 million courses of treatment by the end of 2021.

Vaccine stocks declined in response to the positive data on molnupiravir on the apprehension that widespread availability of an effective COVID medicine like molnupiravir may reduce the demand for vaccines. While Moderna declined 11.4% on Friday, BioNTech and Novavax declined 6.7% and 12.4%, respectively. Stocks of Pfizer ( PFE - Free Report) , AstraZeneca and JJ ( JNJ - Free Report) , which market COVID-19 vaccines, declined less than 1% on Friday. If people can get their infection cured by taking a simple oral pill, they may be less interested in taking a vaccine.

However, a group of investors believe the sell off in vaccine stocks was an overreaction as they believe there can be enough use of vaccines despite potential approval of COVID pills. The general public should always try to get protection against being infected, which a vaccine can do. Both the pills and vaccine can survive together and maybe bring an end to the pandemic.

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