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Moderna Crash Wipes Out $22 Billion In Value After Merck’s Covid Pill Triggers Vaccine Stock Plunge

Topline

Shares of Covid-19 vaccine-makers collapsed Friday morning after pharmaceutical giant Merck announced it would seek regulatory approval for a first-of-its-kind treatment against the disease, sparking more than $30 billion in losses for a slew of stocks that headed up much of the market’s pandemic rally.

Key Facts

Shares of Moderna plunged as much as 15% Friday morning by 11 a.m. EDT, wiping out more than $22 billion in market value and making it the day’s worst-performing stock in the S&P, which instead ticked up 0.1%. 

Meanwhile, Pfizer-partner BioNTech and Novavax (whose Covid-19 vaccine is still not approved in the United States) plummeted 13% and 18%, respectively, representing another $12 billion in combined market value lost. 

Even shares of Pfizer and Johnson & Johnson, which are both much larger businesses less sensitive to Covid-19 developments given their wide product offerings, dipped as much as 3% Friday morning.

The rout started in pre-market trading immediately after Merck announced it would ask U.S. regulators for emergency authorization of its antiviral pill to treat Covid-19, Molnupiravir, setting the stage for what could become the market’s first oral antiviral treatment for the disease.

Merck also disclosed interim research has shown the pill halved the risks of hospitalization or death when given to patients at risk of severe illness, helping shares surge 9% after the announcement to add nearly $18 billion in market value.

Key Background

Thus far, Covid-19 vaccines have proven to be highly effective in preventing serious illness and the market’s best defense against the virus—making them a massive boon to a slew of businesses heading up their development. Moderna forecasts about $19 billion in sales from Covid-19 vaccines this year, while Pfizer expects the shots will help pull in about $33.5 billion. However, that still hasn’t stopped critics from lashing out against the long-term viability of such gains. Last month, Bank of America sparked one of the biggest selloffs in Moderna’s history after saying future sales expectations don’t justify the company’s current valuation, wiping out about $20 billion in market value. In its note, Bank of America warned more intense competition as Covid-19 research advances marked one of the biggest risks to Moderna stock prices.

Surprising Fact

Despite the Friday plunge, Moderna is still the S&P’s best-performing stock this year, having skyrocketed nearly 270% as the company’s Covid-19 vaccines became widely available across the world. Still, shares down about 30% from a peak set just last month.

What To Watch For

There are several other antiviral treatments in development for use against Covid-19. Pfizer is testing one, as are Swiss pharma giant Roche and Boston-based Atea Pharmaceuticals.   

Further Reading

Merck Says Its Antiviral Pill Cuts Risk Of Covid Hospitalizations, Deaths By Half (Forbes)

Moderna Crash Wipes Out Over $20 Billion In Market Value After Concerns Stock Is Overhyped (Forbes)

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