Diamonds and Dogs

10/1/21

Merck (MRK) is the clear diamond today. Merck is up 10% to a yearly high on positive data for their oral Covid-19 antiviral pill that could cut the risk of hospitalization or death from COVID-19 by approximately 50%. The pill is being called a game-changer. If the FDA issues an emergency use authorization for the drug, the U.S. government has already agreed to buy 1.7 million 5-day treatment courses of the drug for $1.2 billion. Merck executives believe the pill could unlock over $10b in near-term orders. The Merck data is also lifting the stocks that will benefit from the reopening of the economy.

Good news for Merck is bad news for Moderna (MRNA). Moderna is down 13% to a three month low following the Merck news. Moderna did have a market cap of $175 billion. It trades at about 8.6 times 2021 potential sales of $20 billion. That's not bad if it was growing. But we'll just have to wait and see how long we'll need the boosters, and then how much competition like Merck eat into their sales.