Pharmaceutical stocks are trailing the market this year. So far in 2023, the Dow Jones U.S. Select Pharmaceuticals Index is down 5.4% while all three major indices are positive on the year. The declining investor interest in pharma stocks is a sharp reversal from the pandemic when the shares of many leading drugmakers were sitting at all-time highs.

As Covid-19 slid into our collective rearview mirror, pharma stocks have declined sharply. Companies with multiple best-selling medications and strong pipelines are faring better, but on the whole, most are in the red this year.

With small investors as well as insiders selling pharma stocks, here are three pharma stocks to avoid.

Moderna (MRNA)

Shares of Moderna (NASDAQ:MRNA) continue to trend in the wrong direction. So far in 2023, the stock is down 33% compared with a 13% advance for the benchmark S&P 500 index. What’s more, the stock has plummeted nearly 74% since topping out around $460 a share in September 2021.

The sell-off in Moderna stock has accelerated as global sales of its Covid-19 vaccine waned. The company is struggling to bring new drugs to market, with its Covid-19 vaccine its only commercially available product.

The decline in MRNA stock is particularly concerning given the amount of insider selling that has been happening.

Moderna Chief Executive Officer (CEO) Stephane Bancel has been reducing his stake in the company at an aggressive rate since the Covid-19 pandemic began. Between January 2020 and March 2022, Bancel sold more than $400 million worth of MRNA stock. More recently, Bancel sold $1.6 million worth of Moderna shares for around $160 apiece. Currently, the stock sits 25% below that level.

It’s never good to see a CEO dumping their stake in the company they lead, especially one that is struggling to bring new products to market.

Novavax (NVAX)

Another pharmaceutical stock that investors large and small have been selling hand over fist is Novavax (NASDAQ:NVAX). The Covid-19 vaccine maker was late in getting its shot to market, and the company recently warned about its ability to continue as a going concern.

After reporting a net loss of $182 million, or $2.28 per share, for the final quarter of 2022, management said there was significant uncertainty around its revenue for 2023 amid doubts about funding from the U.S. government. However, cost-cutting measures and some promising vaccine trial data now have management forecasting full-year revenue of between $1.4 billion to $1.6 billion.

While the stock briefly popped on the news, it is down 31% this year and 96% over the past two years. Meanwhile, while institutional investors were net buyers in the first quarter, adding 1.5 million shares, their interest has clearly waned over the past few years.

While executives insist they’re hanging on and planning for a Covid-19 vaccine campaign this fall, doubts remain about the company’s future viability. Recent news that Novavax is slashing costs and laying off staff only seem to confirm the worst assumptions about the pharma firm.

Pfizer (PFE)

By now you might have noticed a theme with today’s pharma stocks to avoid: They are all Covid-19 vaccine makers, including Pfizer (NYSE:PFE).

Pfizer is the global leader when it comes to the manufacturing and sale of Covid-19 vaccines. In 2022, the company sold $37.8 billion worth of Covid-19 shots worldwide. That drove Pfizer’s annual revenue to a record $100 billion in 2022. Too bad the success hasn’t helped Pfizer’s stock any. Year to date, shares are down 29%. Over the past five years, the company’s share price is up just 6%.

Hedge funds, in particular, have been hitting the sell button on PFE stock. In this year’s first quarter, hedge funds were net sellers of Pfizer stock, decreasing their holdings by 3.16 million shares. This shows that institutional investors have lost confidence in the pharma giant as its Covid-19 vaccine sales decline.

The company has forecast that its revenue from Covid-19 vaccine sales will plummet 64% this year. That hedge funds and other big investors see Pfizer as a pharma stock to sell should be taken as a warning.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.