Moderna Shares Fall 7.4% as Cancer Vaccine Hype Meets Reality

Moderna's stock dropped about 7.4% at Monday's market open as investors reassessed the Phase 3 data for intismeran, the experimental cancer vaccine the company is developing with Merck. Merck shares stayed flat.

The numbers themselves were solid. When patients with later-stage melanoma received intismeran alongside Merck's immunotherapy drug Keytruda, the combination cut the risk of cancer recurrence or death by 42%.

So why the selloff? The way the data arrived — and what it didn't answer.

What went wrong with the data release?

The results were published unexpectedly on Thursday because of a broken embargo, instead of being revealed during a planned presentation on Saturday at the European Society of Medical Oncology's conference in Madrid. The early leak drained the drama from the Saturday event, which likely underwhelmed investors who had built up expectations for weeks.

Two deeper concerns weighed on the crowd: the data weren't as strong as investors wanted, and the treatment may produce outcomes similar to simply giving an immunotherapy like Keytruda before surgery.

"Investors [are considering] uncertainties around commercial implementation amidst a backdrop of an ESMO reception that felt muted and incredibly high ingoing expectations," Leerink Partners analyst Daina Graybosch wrote in a note on Saturday.

How does the vaccine actually work?

Intismeran is a brand-new mRNA technology. It uses a patient's own cancer cells to create a custom treatment administered alongside Keytruda, which doctors commonly prescribe to melanoma patients after surgery. Investors see it as a platform that could treat several different cancer types — not just melanoma.

That platform thesis is the whole ballgame for valuation.

"While melanoma provides important proof of concept, it doesn't yet answer the critical question of whether the approach will translate effectively to other cancers, which is the key determinant of whether the platform can justify current valuation levels and investor expectations," BMO Capital Markets analyst Evan David Seigerman told investors.

When could approval and new data arrive?

The vaccine is expected to win approval next year. Analysts are watching studies of intismeran in patients with renal-cell carcinoma and muscle-invasive bladder cancer who have undergone surgery. Data from those trials should land in the first half of next year.

Those readouts will test whether the melanoma result was a one-off or the start of something bigger.

Is a cheaper existing approach just as good?

The second open question is whether an expensive, complicated new treatment like intismeran is even needed if neoadjuvant immunotherapy works just as well.

Neoadjuvant immunotherapy means treating patients with a drug like Keytruda, or Yervoy or Opdivo — both marketed by Bristol Myers Squibb — before surgery to remove their tumors. Results from several neoadjuvant studies showed this approach can significantly extend how long certain patients live before a cancer recurrence or death.

Oncologists caution that not all melanoma patients are the right fit for neoadjuvant immunotherapy. Analysts also argue it's unfair to compare trials that weren't designed the same way.

"With no head-to-head data, we expect the choice between approaches to be made physician by physician for now," Seigerman said.

How much has the stock actually moved?

Moderna's stock was near a five-year low at this point last year. It has surged since Aug. 19, when the companies first announced the intismeran trial had succeeded. The shares are up 548.4% so far this year — though they have declined 18.6% since Wednesday.

The takeaway: a 42% reduction in recurrence risk is real, but the next real test comes in the first half of next year, when the renal-cell and bladder cancer data show whether the platform story holds.