Moderna shares fell about 12% in pre-market trading on Thursday, one day after the stock jumped 177%. The drop came even after Moderna and Merck announced a major success in their cancer vaccine trial.
Moderna and Merck said their personalized , intismeran, met the main goal of a Phase 3 trial. The vaccine was tested in melanoma patients who had already had surgery to remove their tumors.
The trial found that adding intismeran to Merck’s cancer drug Keytruda helped patients stay longer without their cancer coming back or spreading. But after the huge jump in Moderna’s stock, investors are now looking at what this success could mean for the company’s business and future earnings.
Moderna cancer vaccine trial results
The Phase 3 trial compared two groups of patients. One group received intismeran along with Keytruda. The second group received Keytruda alone. Patients who received the combination had a meaningful improvement in the time they lived without their cancer returning or spreading.
The results were widely seen as an important moment for Moderna because the company is trying to expand beyond its COVID-19 vaccine business. Dr. Ezekiel Emanuel called the results “a home run, maybe even a grand slam” in an interview with Yahoo Finance. The strong trial result also gave investors more confidence that Moderna’s mRNA technology could have a role in cancer treatment.
Why is Moderna stock falling?
The biggest reason is that the stock had already jumped 177% on Wednesday. Investors had rushed into Moderna after the positive trial news, pushing the stock sharply higher. After such a huge one-day rally, some investors are now taking profits. The Thursday decline therefore does not necessarily mean that the cancer vaccine results have failed. Instead, the market is reassessing how much future growth is already reflected in Moderna’s stock price.
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What Wall Street analysts say
Analysts covering Moderna broadly viewed the Phase 3 result as positive. However, they also pointed to several questions, including how large the cancer business can become, how widely the vaccine can be used and whether the results can be repeated in other types of cancer.
Jefferies analyst Tycho Peterson said the latest update is an important proof point for the mRNA technology beyond Moderna’s older COVID business, according to Yahoo Finance. Peterson also said the potential winners could include companies involved in the bioprocessing and life sciences tools industries. His view suggests that the impact of the Moderna-Merck result could extend beyond Moderna itself if mRNA-based cancer treatments become more important.
Questions about cancer drug demand
BofA analyst Alex Stranahan described the intismeran result as a major turning point for Moderna, as reported by Yahoo Finance. He said the development could help the company diversify away from infectious diseases and reduce some of the pressure that has surrounded its business. Stranahan said is fundamentally better than it was 12 months ago, with potential growth in both infectious diseases and oncology.
Stranahan said investors still need to watch label expansions and market uptake. In simple terms, the key question is how many patients will eventually be eligible for the treatment and how quickly doctors and patients adopt it. That will determine how much money the cancer vaccine can actually generate for Moderna.
Citigroup analyst Geoff Meacham said the trial meeting its key measure was encouraging, especially because there were no new safety signals, according to Yahoo Finance. However, he said Moderna’s cancer platform still needs to be validated through the full set of trial data. Meacham pointed to the possibility of more detailed results being presented at ESMO in Madrid from October 23 to October 27.
Why other cancer trials matter
Meacham said the success in melanoma alone does not answer all questions about Moderna’s oncology platform. Investors still need to see whether the vaccine can produce similar results across different tumor types. He also said questions remain around the treatment’s differentiation, commercial uptake and what the melanoma result means for Moderna’s wider cancer platform.
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JPMorgan analyst Jessica Fye said the launch of intismeran for melanoma could be important for Moderna’s return to profitability, according to Yahoo Finance. However, she noted that the melanoma opportunity is a partnered asset and targets a relatively small market compared with some other cancer treatments. Fye also said JPMorgan had already assigned an 85% probability of success to the melanoma program before the latest announcement.
Fye said the melanoma success was already partly reflected in Moderna’s valuation before the announcement. Moderna had a market value of around $25 billion before the news, according to her analysis. Removing some of the risk from the melanoma program could add only about 3% to JPMorgan’s valuation, which shows why the analyst believes the market may have already expected a positive result.
is now on whether the Moderna-Merck partnership can succeed in other cancer indications. Fye said the read-across to other indications will be critical for determining how much value the partnership can ultimately create for Moderna. JPMorgan’s current valuation already includes about $15 per share of risk-adjusted value for other potential cancer indications.
What investors will watch next
The next major focus will be the full Phase 3 data and more details about the results. Investors will also watch future trials testing the cancer vaccine outside melanoma. Success in other cancers could make the Moderna-Merck partnership much more valuable. But weaker results in other indications could limit the size of the opportunity.
Moderna’s cancer vaccine result is a major scientific and business win, but the stock’s 12% pre-market fall after a 177% surge shows the difference between a good clinical result and expectations already built into a stock price. The immediate question is no longer simply whether intismeran works in melanoma.
Investors now want to know how big the cancer business can become, how quickly the treatment will be adopted and whether Moderna’s mRNA technology can succeed across other cancers. That is why Moderna can have a major cancer breakthrough and still see its stock fall the next day.
