Pfizer Stock Is Soaring Because Its Covid Antiviral Appears to Work Really, Really Well

The results are scrambling investors’ expectations about the future of the Covid-19 oral antiviral market, which analysts expect to be worth tens of billions of dollars in annual sales. Merck had been expected to be the market leader, and molnupiravir received its first authorization from U.K. health authorities earlier this week. It is set to be considered by an FDA advisory committee at the end of this month.

Now, the data on Pfizer’s antiviral, known as Paxlovid, could disrupt those assumptions.

“At first glance, we think PFE’s data looks better than MRK’s molnupiravir,” Cantor Fitzgerald analyst Louise Chen wrote early Friday.

Merck’s initial data, released in early October, showed that molnupiravir had reduced the risk of hospitalization and death by 50.3% in a similar at-risk, non-hospitalized population. Neither the Pfizer nor the Merck trials included vaccinated people.

Inferior efficacy data could leave molnupiravir particularly vulnerable to competition, given safety concerns raised by some scientists, who argue that the method it uses to kill the virus carries potential dangers. In lab tests, molnupiravir has been shown to cause mutations in mammalian cells. Merck says its own tests show that molnupiravir doesn’t cause mutations in live animals.

Pfizer’s drug works differently, and doesn’t raise the same concerns. One line of thinking had been that if the efficacy of Merck and Pfizer’s antivirals turned out to be similar, Pfizer’s Paxlovid might win out over those safety worries. That’s the case that Pfizer CEO Albert Boula made to Barron’s early this week.

“We are waiting to see the efficacy,” Bourla said at the time. “I know we have the advantage on the safety profile. It’s the efficacy that will make the difference here.”

Now, Pfizer’s drug’s efficacy seems, at least initially, to have blown that of Merck’s drug out of the water.

However, initial responses to the Pfizer data from Wall Street analysts made the case that the Merck selloff was overblown. “We see room for multiple oral antivirals for Covid-19 treatment,” wrote Mizuho analyst Mara Goldstein, who covers Merck. Vamil Divan, who covers Pfizer for Mizuho, wrote that he sees “a large commercial opportunity for both products in the near-term at least.”

The implications of such startlingly positive data quickly sent reverberations across the market, slamming shares of Covid-19 vaccine and therapeutic makers alike. Effective oral antivirals pose a particular threat to monoclonal antibody therapies for Covid-19, which, while effective, are inconvenient to administer. Shares of Regeneron Pharmaceuticals (REGN), which sells the most popular monoclonal antibody therapy for Covid-19, were down 7.4%, while Vir Biotechnology (VIR), which sells a similar drug in partnership with GlaxoSmithKline (GSK), was down 5.8%.

Investors sold off shares of Covid-19 vaccine makers as well, though it’s far less clear how oral antivirals would affect vaccine sales in the short term. Moderna (MRNA) slid 10.9%, BioNTech fell 10.5%, and Novavax (NVAX), which has a Covid-19 vaccine on the way, was down 9.6%.

Shares of Atea Pharmaceuticals (AVIR) fell 2.4% in premarket trading on Friday, after already dropping 71.8% this year. Its Covid-19 oral antiviral program fell flat in mid-October, when the company delivered a disappointing failure in a Phase 2 trial and pushed out the timeline for the completion of its Phase 3 trial.

Pfizer said that an independent data monitoring committee had recommended that enrollment in a Phase 2/3 trial of its oral antiviral be paused due to the overwhelming efficacy seen in the early results.

The trial had enrolled 1,219 non-hospitalized patients with Covid-19 at high risk of progressing to severe illness when the interim analysis was conducted. In patients treated within three days of the onset of Covid-19 symptoms, 0.8% of patients who received Paxlovid were hospitalized, compared with 7% who received the placebo. None of the Paxlovid patients died, while seven of the 27 hospitalized patients who received placebo died.

For patients treated within five days of symptom onset, 1% of patients who received Paxlovid—or six out of 607—were hospitalized, and none died. In the placebo group, 6.7%—or 41 out of 612—were hospitalized, and 10 ultimately died.

Pfizer said it would submit the data to the FDA as soon as possible.

“Today’s news is a real game-changer in the global efforts to halt the devastation of this pandemic,” Bourla said. “These data suggest that our oral antiviral candidate, if approved or authorized by regulatory authorities, has the potential to save patients’ lives, reduce the severity of COVID-19 infections, and eliminate up to nine out of ten hospitalizations.”

The company pulled something of a head-fake earlier this week during its quarterly earnings presentation, when it seemed to push out the timeline for initial data on the trial. The company had said that initial data would be available either in the fourth quarter of this year or the first quarter of next year, after previously saying it would come in the fourth quarter this year—leading to a number of analyst questions about whether the program had hit delays.

Pfizer is running a number of other trials of Paxlovid, including one in Covid-19 patient not at high risk, and one in people not yet sick with Covid-19 who have been exposed to the virus by a member of their household. Those studies are expected to read out early next year.

Merck said last week that it could sell between $5 billion and $7 billion worth of molnupiravir through the end of next year, and some analysts have said that the figure could be much higher. In a note out last week, SVB Leerink analyst Daina Graybosch said she saw a possible upside scenario in which Merck sold $10.3 billion worth of the drug in 2022 alone.

Those figures are now in question.

Merck has made efforts to make molnupiravir widely available in low-income countries through a range of manufacturers, signing a voluntary licensing agreement with a United Nations-backed group called the Medicines Patent Pool, which in turn will license the drug to manufacturers in low- and middle-income countries. Merck will receive no royalties through the agreement.

Pfizer said it planned to make Paxlovid available through a “tiered pricing approach,” with high-income countries paying more than low-income countries. It said it is “exploring potential contract manufacturing options to help ensure access across low- and middle-income countries,” though has announced no deal similar to Merck’s.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com