Vaccine stocks shed $84bn as Merck pill adds to rough week

Bloomberg

For the world’s leading Covid-19 vaccine makers, news that Merck & Co’s experimental pill cuts the risk of hospitalisation and death in half was the latest blow in a very bad week.
Stocks including Moderna Inc and BioNTech SE have shed about $84 billion in combined value this week in the aftermath of a stock market slump that sent the two companies to their lowest level since July.
Selling accelerated, with BioNTech and Moderna each declining as much as 16% in New York as Merck delivered the news on its experimental pill that Wall Street called a “game changer.” The drug, called molnupiravir, reduced the risk of hospitalisation or death by 50% in a study, raising concerns about the long-term revenues for the companies
providing inoculations.
“You have news of a new player coming into the market with a much less rigorous treatment and that alone has to dampen the day for the rest of the field whether they’re vaccines or drugs administered in the hospital for Covid-19,” said Jared Holz, managing director of healthcare equities at Oppenheimer & Co. “The vaccine revenue numbers over the next few years would have to come down.”
Wall Street analysts had forecast Moderna’s Covid-19 vaccines will bring in more than $20 billion in sales this year, before dropping to $6.1 billion by 2025.

Not Over Yet
In spite of this week’s selloff, vaccine stocks remain among biotech’s top performers since the start of the pandemic. Moderna shares are up 1,590% since the start of 2020, while BioNTech and peer Novavax Inc have seen similarly eye-popping gains of 600% and 4,000%, respectively.
Not all investors see Merck’s Covid-19 breakthrough as a reason to shun all vaccine makers. The pandemic is far from over, argues Brad Loncar, chief executive officer of Loncar
Investments.
“Time and time again we’ve seen that a quick take to positive news thinking that this means the pandemic is over has been wrong every single time,” he said by phone. “I don’t think this is going to hurt the vaccine companies as much as maybe a quick reaction would infer.”
Selling spread beyond vaccine stocks and biotechnology companies. Companies that have developed or are working on antibody treatments for Covid-19 and closely-watched exchange-traded funds like the iShares Biotechnology ETF,
also falls.
BioNTech and Moderna each crashed as much as 16% to the lowest since July and Novavax tumbled as much as 26% while vaccine peers sank: CureVac drops 16%, Arcturus Therapeutics falls 10%, and Inovio Pharmaceuticals Inc also drops as much as 8.9%
Companies with antibody treatments for Covid-19: Adagio Therapeutics Inc dropped 42%, Vir Biotechnology Inc also falls 24%, AbCellera Biologics Inc slumps 14% and Regeneron Pharmaceuticals Inc also drops by as much as 8.1%.
The broader health-care sector falls for the fifth time in the past six sessions, with life sciences toolmakers and medical device companies underperforming the broader market. The S&P 500 Health Care Index’s 5% drop this week is the group’s worst week since October 2020.