The stock market bounced back on Friday from weakness earlier in the week, but the Nasdaq Composite (^IXIC 0.19%) didn't come close to regaining all its lost ground. As of 2:30 p.m. EDT, the Nasdaq was up about two-thirds of a percent, trailing the performance of other major market benchmarks.

Some of what weighed on the Nasdaq was poor performance from the superstar COVID-19 vaccine stocks that have done so well over the past year. Moderna (MRNA 1.80%), BioNTech (BNTX -0.12%), and Novavax (NVAX 1.20%) were all sharply lower.

Yet even though good news from Merck (MRK 0.56%) could represent another turning point in the fight against COVID-19, it really doesn't make sense for investors to conclude that it's a bad thing for vaccine stocks. Here's why.

Medical professional administering a shot to a patient.

Image source: Getty Images.

Merck soars on treatment pill

Merck saw its stock rise almost 10% Friday afternoon in the wake of great news in its efforts to help patients suffering from COVID-19. The drugmaker released phase 3 trial interim analysis of its oral antiviral treatment molnupiravir, which gave the medical community new hope in fighting against the disease.

As of the interim analysis point 29 days into the study, patients who suffered from mild to moderate COVID-19 and received molnupiravir were almost 50% less likely to become hospitalized, compared to those receiving a placebo. Compared to a 14.1% rate of hospitalization or death among those in the study who didn't take molnupiravir, just 7.3% of those who did get the drug were hospitalized.

Merck expects to seek emergency-use authorization for molnupiravir as soon as possible within the U.S. and to look for approval for use worldwide from other regulatory agencies. CEO Robert Davis said that the antiviral treatment could represent another key tool to fight COVID-19.

Are losses for vaccine stocks justified?

As Merck rose, vaccine stocks plunged. Novavax was the hardest hit, falling nearly 16%. Moderna suffered a 10% drop, while BioNTech was down 6%.

For Novavax, the big challenge is that the company still doesn't have its vaccine candidate approved for use. Many investors have been optimistic about its prospects, but the Merck news seems to have people calling into question whether a new vaccine would even be necessary. Meanwhile, the drops in Moderna and BioNTech also seem to suggest that demand for vaccines is likely to fall as a result of Merck's pill.

Yet there's an obvious counterargument against the idea that vaccines will fall out of favor as a result of Merck's treatment. First and foremost, the candidate antiviral might reduce risk of hospitalization by almost half, but that doesn't come close to eliminating the risk entirely. Moreover, with no one knowing the long-term health impacts of having had COVID-19 at some point, it still makes more sense for the general public to try to protect against catching the disease in the first place. Vaccines still offer that kind of protection.

Long-term investors also might be forgetting about the value that Moderna and others have gotten from proving the concept of using messenger RNA to fight disease. In the long run, the value of future treatments using mRNA technology will dwarf even the considerable sales of COVID-19 vaccines.

Given how much vaccine stocks have risen, a correction isn't necessarily unwarranted. However, investors shouldn't conclude that Merck's pill will crush vaccine stocks for good. In the end, health experts will need both options to fight COVID-19 as effectively as possible.