New data on an oral antiviral treatment could have significant impact on the COVID treatment landscape. What’s next for treatments, booster shots and child vaccines.----- Transcript -----Andrew Sheets Welcome to Thoughts on the Market. I'm Andrew Sheets, chief cross asset strategist for Morgan Stanley Research.Matthew Harrison And I'm Matthew Harrison, Biotechnology Analyst.Andrew Sheets And on this special edition of the podcast, we'll be talking about several new developments in the fight against COVID 19. It's Tuesday, October 5th at 3 p.m. in London,Matthew Harrison and it's 10:00 a.m. in New YorkAndrew Sheets So Matt. I really wanted to catch up with you today because there are a number of different storylines involving COVID 19 going on at the moment, from child vaccines to the situation with booster shots. But I suppose the headline story that's getting the most attention is data released last Friday on Merck's new oral COVID treatment pill Molnupiravir or I think I said that right. I'm sure I didn't. So maybe let's start there. What is this treatment and why does it matter?Matthew Harrison Yes. Thanks, Andrew. So Molnupiravir is an oral antiviral against COVID. The way it works is that it stops the virus from replicating effectively, and that reduces the amount of virus in someone's body. It was studied here in patients that were recently diagnosed with COVID 19. And it cut the rate of hospitalization in those patients by 50%. So those that didn't get treated with the drug went to hospital at a rate of 14%, and those that did get treated went to hospital rate of 7%. I think the thing I would want to highlight is that this is something you obviously take after you get infection and vaccines remain the primary way to prevent infection.Andrew Sheets So this is kind of one of the things I felt that was so fascinating when that news was announced. Because on the one hand, this seems like very good news, another treatment that appears highly effective against COVID 19. And yet the market reaction was actually to really punish many of the makers of the current COVID vaccines, so how much do you think this could influence the COVID treatment landscape? And do you think the market or people might be overreacting to some of the impact on whether or not people will still get vaccines or vaccines will remain important?Matthew Harrison Vaccines, their primary measure is prevention. Right? This is a drug to treat people once you get disease. But the hope is, and the way we get out of the pandemic, is still by vaccinating everybody to prevent disease from happening and disease from spreading. So, I think of this drug, along with antibodies as drugs that you use to treat people who either have breakthrough infections or those that aren't vaccinated. But you also have antibodies for people that are at higher risk, patients that might not be compliant with taking oral drugs. Or, you know, a whole another segment of the market that we haven't talked about is those that need to be protected either because they can't get a good response to the vaccine, because they're perhaps immunocompromised or otherwise, and those that need some sort of preventative treatment. Where Merck is studying this pill as a preventative treatment, but the antibodies are already authorized as preventative treatments. So, there's a different section of the landscape, I would say, for each of these drugs.Andrew Sheets So, Matt, what impact do these potentially positive results on a pill mean for vaccine hesitancy in the outlook for vaccinations?Matthew Harrison I think that's one of the things that the market is is struggling a lot with, and I think that's part of the reason you saw many of the vaccine stocks under pressure, right? There's definitely one segment of the market that thinks, if you have effective treatments, especially easy to use treatments like orals, that could give people another reason who don't want to have the vaccine to say, "Look, even if I d