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Vaccine Stocks Down as Omicron May Not Be Too Severe

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Shares of vaccine makers declined on Monday as early reports suggested that COVID-19 infections related to the Omicron variant might be less severe than the previous variants.

While Moderna’s MRNA shares declined 13.5%, BioNTech BNTX was down 18.7% on Monday. Novavax NVAX went down 11.6%. Pfizer PFE, which has a much-diversified business, declined 5.1%.

While Moderna and Pfizer and BioNTech’s vaccines have already been launched in several countries, Novavax’s vaccine is yet to be approved in the United States or Europe. Novavax’s vaccine was approved in Indonesia and the Philippines last month.

Though the number of positive Omicron cases is sharply rising in South Africa, per recent data, most of these patients are not falling severely ill and not many are requiring hospitalizations. Separately, U.S. medical adviser Anthony Fauci said in an interview to CNN that the signals regarding the severity of the Omicron variant are encouraging. He said that so far it does not look like there is a great degree of severity to infections caused by Omicron.

The Omicron variant, which was first detected in South Africa and Botswana, has a large number of mutations. Some of these mutations are associated with a decrease in antibody protection and higher transmission, per the World Health Organization (WHO). The potential high risks of the Omicron variant led the WHO to add it to its “Variant of Concern” list on Nov 26. So far, more than 35 countries across the world have reported cases of the Omicron variant but there are no reported deaths so far from the variant.

The fear of the variant is high due to concerns that it is potentially more contagious than the highly transmissible Delta variant and also due to its ability to bypass the protections provided by the currently available vaccines. The Omicron variant has ignited fears that the currently available COVID-19 vaccines could be less effective against it.

The latest positive data about Omicron-induced severity, which otherwise pulled up the broader indices, sent the vaccine stocks down. The analysis suggests that if Omicron is not severe enough, people might refrain from getting COVID vaccine boosters. This can hurt demand for their vaccines.

Another reason for the decline of these stocks could be Moderna’s president Stephen Hoge comments in an interview to ABC's This Week on Sunday. In the interview, Stephen Hoge said that the presently available vaccines may be less effective against the Omicron variant. He went on to say that an “updated formulation” of the COVID vaccines may be needed in order to protect against Omicron.

While the vaccines’ effectiveness against Omicron is in question, new oral antiviral pills, Paxlovid and molnupiravir, respectively from Pfizer and Merck MRK, are soon expected to be authorized by the FDA. Both Pfizer and Merck have filed applications with the FDA for emergency use approval for the pills. Last week, the FDA’s Antimicrobial Drugs Advisory Committee (AMDAC) voted in favor of the FDA authorizing molnupiravir as it felt that the medicine’s potential benefits outweigh its risks.

Pfizer’s Paxlovid and Merck’s molnupiravir are expected to hold up well against the variant and help reduce the severity of infections, if authorized by the FDA. This could be another reason that pulled down the stocks of Moderna, BioNTech and Novavax on Monday.

In a more encouraging update for vaccine makers, Dr Fauci, in the same interview to CNN, said that the existing vaccines mat be able to provide a considerable degree of protection again the Omicron variant like they did for the Delta variant which the most dominant strain of the virus in the United States, at present. He said the booster doses of the vaccine will play a crucial role in how the United States handles the Omicron variant.

The makers of COVID-19 vaccines are already testing whether their vaccines provide protection against Omicron.

Moderna, BioNTech, Novavax, Merck and Pfizer all have a Zacks Rank #3 (Hold).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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