(Bloomberg) -- Merck & Co. is discontinuing development of its two experimental Covid-19 vaccines after early trial data showed they failed to generate immune responses comparable to a natural infection or existing vaccines.The U.S. drug giant, which has a history of successfully developing vaccines, had adopted a different strategy from rivals Pfizer Inc., Moderna Inc. and Johnson & Johnson, using a more traditional approach of focusing on shots based on weakened viruses. One, called V590, borrowed technology from Merck’s Ebola inoculation, while the other, V591, is based on a measles vaccine used in Europe.Both were laggards in the vaccine-development race. Merck finished recruiting the first participants for early-stage safety studies near the end of 2020, when front-runners Pfizer and Moderna were preparing to report late-stage data on their shots’ effectiveness. Merck received interim results from its trials this month.The results were “disappointing, and a bit of a surprise,” said Nick Kartsonis, senior vice president of clinical research for infectious diseases and vaccines at Merck Research Laboratories. Both shots generated fewer neutralizing antibodies to halt infection than other Covid-19 vaccines, and produced inferior immune responses compared with people who had naturally contracted the coronavirus.“We didn’t have what we needed to be able to move forward,” Kartsonis said in an interview Sunday. After evaluating the data, Merck’s senior leadership decided to discontinue the programs and divert resources to the company’s efforts to develop Covid-19 treatments.Merck fell as much as 1.1% as of 9:50 a.m. Monday in New York. The shares lost 9.7% over the past 12 months through Friday’s close.Vaccine AnxietyWhile Merck’s vaccines weren’t expected to be part of the initial immunization push in the U.S., the development comes amid heightened anxiety over vaccine supplies and a sluggish pace of injections. The emergence of new variants of the coronavirus has also raised questions about whether the shots that have been cleared will lose effectiveness as the pathogen mutates.The failure of Merck’s candidates will also leave it locked out of a market that could eventually be dominated by two of its historic U.S. rivals. Pfizer was the first drugmaker to gain authorization for a Covid vaccine in the U.S., followed closely by Moderna. Johnson & Johnson is expected to publish data in the coming weeks on its vaccine’s efficacy and apply for an emergency-use authorization.Neither of Merck’s candidates was among the six vaccines in the U.S.’s Operation Warp Speed portfolio, though its leadership watched them closely. The drugmaker and its development partner on V590, the International AIDS Vaccine Initiative, did receive some research funding from the government. Its second candidate, V591, relies on technology first developed by France’s Institut Pasteur. Both of the single-dose candidates were well tolerated in early human studies.Kenilworth, New Jersey-based Merck will record a charge for the fourth quarter of 2020 for costs related to halting the programs. It didn’t disclose the amount of the charge Monday. The early-stage trial results will be submitted to a peer-reviewed medical journal.What Bloomberg Intelligence Says“Merck’s decision to stop the development of its two Covid-19 vaccine candidates may be bad news to a world hungry for doses, but will have limited impact on the company’s prospects, as consensus had nothing penciled in.”\--Sam Fazeli, Pharmaceutical AnalystClick here to read the research.Therapeutic FocusA continuing surge in infections has highlighted the need for more treatment options. Merck will steer resources toward two drugs it has in late-stage development to combat the disease, according to Kartsonis.Read More: Merck-U.S. Deal for Covid Drug Shows Need for Therapies Persist“In the world of pharmaceutical development, a quick kill is not a bad thing because it allows you to reposition and repurpose your assets,” he said.Several of Merck’s vaccine manufacturing facilities are being re-tooled to produce one of its Covid-19 drug candidates, MK-7110, which is complex and difficult to manufacture at mass scale. In an interim study, the intravenous therapy significantly improved the likelihood and speed of recovery for severe and critical Covid-19 patients needing oxygen, reducing the risks of respiratory failure and death by more than 50%. Full study results are expected in the first quarter.Merck’s executives expect U.S. regulators will grant an emergency-use authorization for the drug following those results, and Kartsonis said it could reach sick patients by the middle of the year. The U.S. has already agreed to pay $365 million for 60,000 to 100,000 doses.Antiviral PillMerck is also working on a pill for Covid-19 patients at earlier stages of the disease. Known as molnupiravir, the antiviral therapy was discovered by scientists at Emory University and is being studied in late-stage trials in both hospital and outpatient settings. Merck and partner Ridgeback Biotherapeutics LP expect to have initial data on the drug’s effectiveness in the first quarter, and to wrap up studies in May, the company said in a statement.Chief Marketing Officer Michael Nally said in December that Merck expects a regulatory clearance shortly after the company reports data, should it prove successful.Read More: Single Rolodex Helps Operation Warp Speed Live Up to Its NameThe antiviral is intended to be taken twice a day over five days, for a total of ten capsules. Merck anticipates it will be able to produce more than 20 million courses of the treatment, or 200 million capsules, in 2021, Nally said.The slow vaccine rollout shows that a need for therapeutics will persist, Kartsonis said, and the drugs could work against future viruses.(Updates shares in sixth paragraph. Due to incorrect information provided by the company, a previous version of this article corrected the 10th paragraph to say that Merck’s charge for closing the vaccine program will be after-tax.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.