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(Bloomberg) – The first pill to treat Covid-19 is on its way, and vaccine producers are rolling out booster shots in wealthy countries. For investors, the next stage of the pandemic means a more difficult landscape for stock selection.
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The success of Merck & Co.’s oral antiviral therapy in a clinical trial changed stock market dynamics, weighing on the stocks of the companies that developed the most effective vaccines, Moderna Inc. and the duo of Pfizer Inc. and BioNTech SE.
Nineteen months after the start of the pandemic, a successful deployment of a Covid-19 pill could accelerate and broaden the global recovery, opening up a plethora of investment opportunities in the stock markets.
Here are some stocks that traders see as possible winners and losers:
Pill manufacturers
Dozens of companies around the world have said they are trying to do what Merck appears to have succeeded in doing: develop an easy-to-administer treatment that reduces the risk of serious illness or death for people infected with the coronavirus. For most of them, the effort came to naught, and after brief stock spikes, their stocks plummeted.
Some of the largest companies still working on antivirals include Pfizer, Shionogi & Co. and Roche Holding AG along with its partner Atea Pharmaceuticals Inc. All plan to release results of advanced clinical trials by the end of the year. Shionogi’s pill could be a $ 2 billion drug, the Japanese company said on Friday.
A small Israeli biotech, RedHill Biopharma Ltd., said on October 4 that its experimental oral therapy showed promise in helping hospital patients. The study consisted of only 251 people; weeks earlier, RedHill had said the drug had not shown an effect in a larger group of patients. The company is discussing next steps with regulators.
“Covid pills are really a supplement to vaccines,” said Shane Oliver, head of investment strategy at AMP Capital Investors Ltd. in Sydney. They could reduce the demand for more expensive treatments such as intravenous drugs, he added.
Another small company, Synairgen Plc from the UK, was one of last year’s investor favorites, climbing to 2,520% on optimism for its inhalation treatment for Covid-19. The stock has fallen 2% this year. He also expects advanced stage testing data to be given by the end of the year.
Vaccines
The possible arrival of Merck’s molnupiravir pill, coupled with the prospect of further decline in the pandemic, is already weighing on valuations of jab makers.
Moderna’s share price nearly tripled in 2021 after jumping 434% last year. The stock’s inclusion in the S&P 500 in July took it to another all-time high and skyrocketed beyond analysts’ price targets.
Still, it’s now valued at 11 times estimated earnings, up from 147 times in July 2020. The recent sell-off finally brought the stock back to analysts’ 12-month forecast for the first time in more than four months.
The share price of Pfizer’s German partner BioNTech is even cheaper at 5.9 times earnings, although it has tripled this year.
“Vaccines remain the number one preventive measure and the biggest market opportunity,” Morgan Stanley analyst Matthew Harrison wrote in an Oct. 5 note.
Still, it’s unclear how big this market will be: Harrison’s forecast for annual long-term coronavirus vaccine sales ranges from $ 3 billion to $ 30 billion. It has equal odds on Pfizer and Moderna.
The vaccine leaders could also lose market share if new inoculations from Sanofi, Novavax Inc. or Valneva SE are successful and if the mix-and-match boost appears to be effective. The US FDA is reviewing the results of a study of adults who received booster doses of different vaccines from their initial injections.
Pfizer and BioNTech are seeking US approval for the use of their injections on children aged 5 to 11, while Moderna is also testing its injections in children.
In Asia, watch companies such as Shanghai Fosun Pharmaceutical Group Co., which has an agreement to distribute the BioNTech and Pfizer vaccine in greater China, and South Korean SK Bioscience Co., local production partner of AstraZeneca Plc.
Intravenous treatments
The convenience of a pill for Covid could take market share over expensive infusions that have to be done in a clinic, namely monoclonal antibody treatments from Eli Lilly & Co., Regeneron Pharmaceuticals Inc., Gilead Sciences Inc. , GlaxoSmithKline Plc and its partner Vir Biotechnologie inc.
New oral antivirals “could open up a wider population to Covid-19 treatments in a true outpatient setting,” wrote Goldman Sachs Group Inc. analyst Chris Shibutani in an Oct. 1 research note.
Covid test
Continued vaccination and possible therapy could also curb the need for Covid test kits.
“Fewer hospitalizations as a result of Covid (which will surely be helped by molnupiravir and similar treatments) will result in a recalled pandemic response, which should then lead to less demand for asymptomatic tests – especially for rapid tests,” he said. said Tycho Peterson, analyst at JPMorgan Chase & Co.
Goldman analysts are more pessimistic, saying the Covid rapid test market will “collapse” in 2022 to less than $ 200 million outside of symptomatic and PCR testing. The companies performing these rapid diagnostics, known as antigen tests, namely Qiagen NV, DiaSorin SpA and Abbott Laboratories, all fell from their recent peaks in September.
Quidel Corp., Orasure Technologies Inc. and Abbott will be US-focused Sugentech Inc., Biolidics Ltd., Metropolis Heathcare Ltd., Thyrocare Technologies Ltd. and Dr Lal PathLabs Ltd. are on the radar of traders in Asia.
Other actions to watch include laboratory operator Eurofins Scientific SE and laboratory equipment suppliers such as Fluidigm Corp., Sartorius AG, Sartorius Stedim Biotech and Tecan Group AG.
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