NEW YORK, Nov 5 (Reuters) - Pfizer Inc's stunning data https://www.reuters.com/business/healthcare-pharmaceuticals/pfizer-says-antiviral-pill-cuts-risk-severe-covid-19-by-89-2021-11-05 for an experimental pill to fight COVID-19 rippled through the healthcare sector on Friday, boosting shares of the pharmaceutical giant while slamming the stocks of vaccine makers and other competitors.
A trial of Pfizer's experimental antiviral pill was stopped early after it was shown to cut by 89% the chances of hospitalization or death for adults at risk of developing severe disease.
“The market was certainly not pricing in Pfizer’s data readout this early and probably not this high” in terms of effectiveness, said Kevin Gade, a portfolio manager specializing in healthcare at Bahl & Gaynor.
In the wake of the Pfizer data, Gade said, “the durability of the vaccine revenue stream is coming more into question.”
Shares of Pfizer, the third-biggest S&P 500 healthcare company by market value, soared on the news, rising as much as 11.3%.
Conversely, shares of developers of COVID-19 vaccines such as Moderna Inc and Novavax Inc tumbled, falling by 22.7% and 14.8%, respectively. Shares of makers of competing therapeutics, such as Merck & Co Inc, Eli Lilly and Regeneron, also slid.
The news was the latest blow for shares of Moderna, which had been the best-performing S&P 500 stock earlier in the year but have lost more than half their value in the past three months.
On Thursday, Moderna shares fell 17.9% after the company slashed the 2021 sales forecast https://www.reuters.com/business/healthcare-pharmaceuticals/moderna-cuts-full-year-forecast-covid-19-vaccine-sales-2021-11-04 for its COVID-19 vaccine by as much as $5 billion. On Friday, the shares again tumbled, sinking as low as $218, after rising as high as $497.49 on Aug. 10.
"We see the advent of a highly effective antiviral agent ... as a major contributor to a global exit from the pandemic – a transition that strikes at the heart of the MRNA investment thesis that relies on future waves of COVID cases motivating governments to be cost-insensitive in acquiring vaccine supply," SVB Leerink analyst Mani Foroohar said in a note.
The steep declines for vaccine stocks were similar to the market reaction when positive results for Merck's antiviral pill were unveiled last month. That data showed that Merck's experimental drug could halve the chances of dying or being hospitalized for those most at risk of contracting severe COVID-19.
After surging on that news, Merck shares dropped more than 9% on Friday. While full data for the two pills has yet to be released, Pfizer's drug "may have the advantage of showing a greater relative reduction in hospitalizations ... and potentially fewer safety questions since the drug has a well established mechanism of action," Vamil Divan, an analyst at Mizuho, said in a note.
Healthcare was the only one of 11 S&P 500 sectors in negative territory in midday trading, falling 1.2%. Stocks broadly were benefiting from hopes that the Pfizer pill would help the economy emerge from the pandemic as well as from a strong monthly U.S. jobs report.
Elsewhere in the healthcare sector, shares of Thermo Fisher Scientific and Danaher, which make diagnostic tests for COVID-19, were both down about 6%.
Shares of companies that would benefit from a broader reopening of the economy, such as airlines, cruise ships and casinos, were soaring.
“It’s an extreme reopening trade,” said Jeff Jonas, a portfolio manager at Gabelli Funds. (Reporting by Lewis Krauskopf in New York Additional reporting by Ankur Banerjee in Bengaluru Editing by Ira Iosebashvili and Matthew Lewis)
