The results gave an 'extra bounce' to shares of several drugmakers, according to one analyst

A Merck employee works in a vaccine plant in Durham, N.C., that opened last year.

The stocks of five of the world's largest drugmakers all closed at record highs on Wednesday.

That's shares of AbbVie $(ABBV)$, Amgen $(AMGN)$, Eli Lilly $(LLY)$, Johnson & Johnson $(JNJ)$, and Merck $(MRK)$.

The broader biopharmaceutical sector has struggled with a prolonged downturn in recent years but has been on an upswing of late. Investors have increasingly turned to healthcare and biopharma stocks this summer as part of a rotation away from the fluctuating performance of tech and semiconductor stocks.

This week, however, brought hopes for an innovation breakthrough that is specific to the sector.

Early on Wednesday, Moderna and Merck surprised investors when the two companies announced that their experimental therapeutic vaccine, which pairs Moderna's intismeran autogene with Merck's Keytruda, helped prevent the recurrence of melanoma in certain patients. Both companies saw their stocks soar on the Phase 3 results for the first-of-its-kind vaccine that was described by Leerink Partners' Daina Graybosch as "historic."

Moderna's shares (MRNA) skyrocketed 138% in trading on Wednesday afternoon as investors reassessed the biotech company's future after years of disappointment - and companies like BioNTech $(BNTX)$ that are doing similar mRNA work also benefitted from the readout.

Moderna and Merck's promising new cancer vaccine signals the arrival of an exciting new treatment modality. It is also validates Moderna's strategy as it tries to bounce back in the post-pandemic era. Moderna's stock soared in the period when its COVID vaccine was in high demand, but the stock has been trading at a fraction of what it did at its peak in 2021.

RBC Capital Markets analyst Trung Huynh believes most of the biopharma stock swings are due to the AI rotation, but noted that the "extra bounce" on Wednesday is likely the result of excitement around Moderna and Merck's cancer-vaccine trial.

Another factor is President Donald Trump's nomination on Wednesday afternoon of a new Food and Drug Administration commissioner, which grants some certainty to investors who have been unsure about the future direction of the regulator.

Trump nominated Heidi Overton, a physician described by the Atlantic as "one of the most powerful public-health officials in Trump's orbit who has little public profile," as the new commissioner. That role has been vacant since mid-May, when Marty Makary stepped down.

The industry's indexes are also within reach of all-time highs. The State Street Health Care Select Sector SPDR Exchange-Traded Fund XLV also closed at an all-time high of $175.68.

-Jaimy Lee