What happened 

Shares of Moderna (MRNA 0.17%) fell 11.4% on Friday after rival drugmaker Merck (MRK 0.24%) released positive data for a new oral antiviral treatment for COVID-19. 

So what

Merck said an interim analysis of a phase 3 study showed its drug, known as molnupiravir, cut the risk of hospitalization or death by roughly 50% for patients with mild or moderate cases of the disease. The healthcare giant intends to request Emergency Use Authorization for the treatment from the Food and Drug Administration based on its encouraging clinical trials results.

"More tools and treatments are urgently needed to fight the COVID-19 pandemic, which has become a leading cause of death and continues to profoundly affect patients, families, and societies and strain healthcare systems all around the world," Merck CEO Robert Davis said in a press release. "With these compelling results, we are optimistic that molnupiravir can become an important medicine as part of the global effort to fight the pandemic."

A person is pointing to a stock chart that rises sharply and then falls.

Moderna's stock price sank on Friday. Image source: Getty Images.

Now what

Investors appear to be concerned that an effective new antiviral treatment could reduce demand for Moderna's COVID vaccine. But while that might be true for some people, health officials are unlikely to alter their vaccination recommendations based on Merck's news. The sell-off in Moderna's shares, therefore, might turn out to be an overreaction. And if the vaccine maker's stock price continues to decline in the coming days, it could present an intriguing buying opportunity for long-term investors.