Moderna Falls 25% on Strong Cancer Vaccine Data

Moderna shares fell as much as 25% on Thursday after partial data leaked on its cancer vaccine developed with Merck — even though the full results beat Wall Street expectations.

The numbers were strong. The personalized vaccine, called intismeran autogene, paired with Merck's immunotherapy Keytruda, cut the risk of recurrence or death by 42% in certain melanoma patients compared with Keytruda alone. The combination also reduced the risk of the cancer spreading to distant parts of the body or death by 38% versus the immunotherapy on its own.

Merck's stock dropped about 1% on the same day.

Why did shares fall on positive news?

The answer is expectations. Moderna's stock had spiked more than 530% year-to-date as of Thursday afternoon, driven largely by anticipation around this vaccine. Merck shares have climbed nearly 41% this year.

Several analysts acknowledged that investors had priced in a breakthrough before seeing the data. They still judged the results as positive overall.

"We assert this relative reduction in recurrence/death is clinically meaningful," BMO Capital Markets analyst Evan Seigerman said in a research note on Thursday. "Such a reaction likely reflects inflated expectations into the full data release, rather than a true indictment on the efficacy of the combo therapy."

UBS analysts took the same view. In their Thursday note they called the results "this is overall a strong data set" and said the numbers increase confidence in upcoming studies of the vaccine in kidney and bladder cancers. They added the stock reaction may stem more from massive expectations than from disappointing data.

The full dataset had been scheduled for release later Thursday, with the detailed phase 3 trial results set to be presented at the European Society for Medical Oncology conference this weekend. The early leak moved markets before investors could digest the complete picture.

What did the trial actually show?

The trial followed melanoma patients receiving either the vaccine plus Keytruda or Keytruda alone. The headline survival figures:

• 82% of patients who received the personalized cancer vaccine alongside Keytruda were alive without their melanoma returning at two years.
• 70% of patients on Keytruda alone reached the same milestone.

The 12-point gap in two-year recurrence-free survival is the figure investors were weighing when the stock sold off. A 42% relative reduction in recurrence or death is a large effect by oncology standards, but traders had apparently hoped for more.

Why does this vaccine matter commercially?

Investors see the targeted vaccine as a possible breakthrough treatment with potential use in other forms of cancer. For Moderna, it would be a critical additional commercial product in a pipeline that already includes vaccines for Covid-19, the flu and respiratory syncytial virus.

The manufacturing question remains the bottleneck. Because the vaccine is personalized for each patient, the complicated production process can take six weeks. Merck CEO Robert Davis told CNBC last week that the company believes it can shorten that timeline in the future, potentially allowing the shot to reach more patients more quickly.

The weekend presentation at the European Society for Medical Oncology conference will give analysts the full dataset — and may determine whether Thursday's selloff holds or reverses once expectations reset against the actual trial numbers.