Moderna Stock Falls 18% After Cancer Vaccine Data Posted Early

Moderna shares closed down 17.6% on Thursday after detailed results from its melanoma vaccine trial with Merck surfaced ahead of a scheduled conference presentation.

The numbers themselves were good. Adding the vaccine, intismeran autogene, to Merck's cancer drug Keytruda lowered the risk that melanoma would return or spread, compared with Keytruda alone. They were not as good as many investors had assumed, and the stock reacted accordingly.

What the trial showed

INTerpath-001 enrolled 1,137 patients whose melanoma, stages IIB to IV, had been completely removed by surgery. They were randomly assigned, two to one, to receive either intismeran plus Keytruda or a placebo plus Keytruda. Intismeran is a personalized mRNA vaccine, made from the genetic profile of each patient's own tumor, and the trial tests whether it helps the immune system stop cancer coming back after surgery.

Merck's October 22 release gave these results:

A hazard ratio of 0.58 means a 42% lower risk of recurrence or death at any given point. The distant metastasis figure, 0.62, is a 38% reduction in the risk of the cancer spreading to other organs or of death.

Overall survival, the measure that ultimately counts, is not yet mature enough to report. Treatment-related adverse events were slightly more common with the vaccine, at 95.8% against 90.0%. Serious events, grade 3 to 5, were close: 14.2% and 13.4%. The companies reported no new safety signals.

Why the numbers disappointed investors

Two comparisons pulled the stock down.

The first was the earlier Phase 2 trial. In August, when Merck and Moderna announced that the Phase 3 trial had met its primary endpoint without publishing figures, they pointed to the Phase 2b results: a 49% reduction in recurrence or death, and a 59% reduction in distant metastasis or death. Fierce Biotech reported that the Phase 2 primary analysis had shown a 65% reduction in distant metastasis, so the Phase 3 result of 38% is a visible step down. Phase 2 trials are smaller, and their results often shrink in larger studies. That is the usual caution, not a sign that the Phase 3 result is weak.

The second was what analysts had expected. According to Fierce Biotech, some analysts had hoped for a recurrence hazard ratio as low as 0.5, while Moderna itself had said a range from 0.5 to 0.8 could be meaningful. The 0.58 result sits inside that range. An unnamed TD Cowen analyst said commercial enthusiasm would depend on the totality of the evidence. An unnamed physician quoted by Guggenheim said the distant metastasis figure was "more interesting" because it relates to metastatic disease and mortality, and that a roughly 10% absolute reduction in metastases would look compelling to most oncologists. The trial's absolute DMFS gap at two years is 8.3 percentage points.

A rally of about 290% in two months

Forbes reported that Moderna's shares rose about 290% between August 18 and October 21. A move that size leaves little room for a result that merely meets expectations.

Coinpaper said the stock fell by as much as 26% during Thursday's session. Forbes, reporting at about 2 p.m. Eastern, put the decline at roughly 25% with shares at $181.14. Closing prices from the two reports are consistent with a Wednesday close near $246, a figure derived from the reported close and percentage rather than stated by either outlet. Forbes estimated the day's loss in market value at nearly $20 billion at its low point, while Coinpaper put the loss at more than $17 billion by the close. Merck fell about 2% in Forbes' report.

The valuation question predates Thursday. Citigroup analyst Geoff Meacham downgraded Moderna to sell in September, Forbes reported, arguing that the price was well beyond what realistic commercial cash flows could justify. Citi's model, according to Forbes, suggested Moderna would need about $13 billion in annual oncology revenue to support the pre-drop price. Moderna's second-quarter revenue was $145 million with a net loss of $782 million, according to 24/7 Wall St, which also reported projected year-end cash of $4.7 billion to $5.2 billion. Those are figures from the company's earnings call and not new.

How the data got out

The early release is not fully explained. Forbes and Coinpaper said the results appeared briefly on the medical news site Oncology Central before being removed. Fierce Biotech instead reported that STAT posted some of the data before the embargo lifted, and said ESMO confirmed the embargo breach. No article reviewed here explains how the information reached either outlet, and neither Merck nor Moderna has commented on how it happened in anything reviewed for this report.

What is clear is the sequence afterward. The companies published the full results on Thursday afternoon, and ESMO said the whole dataset had been released. Merck's release carries a 2:59 p.m. Eastern timestamp. Forbes' report was first published at 2:10 p.m. with the stock already sharply lower.

In its release, Moderna chief executive Stéphane Bancel said the results "reinforce our conviction that mRNA has the potential to fundamentally change how we treat cancer."

What happens at ESMO on Saturday

The formal presentation is still planned as Presidential Symposium I, session LBA1, at the European Society for Medical Oncology congress in Madrid. Two outlets place it on Saturday, October 24. 24/7 Wall St reported that a Moderna investor webcast follows it.

The open questions are the ones the stock is now pricing. Overall survival has not matured. Merck and Moderna said in August they would talk to regulators about filing, but no submission or approval timeline has been published in the sources reviewed here. The company has said on its earnings call that the Phase 3 study requires at least 18 months of follow-up, and that it is building a dedicated manufacturing facility in Massachusetts to support a launch, according to 24/7 Wall St.

This article is not investment advice.