Moderna (MRNA) and Merck (MRK) just released trial results for their joint vaccine against melanoma, the deadliest form of skin cancer. The results were positive, and even doctors praised the news. However, investors reacted differently to the news. On October 22, MRNA dropped by 17.4% (close to the stock’s worst trading day in its history), and MRK also fell 1.8%. One of the reasons behind the drop was that the trial results had leaked hours before the companies were set to present them at a major cancer conference in Madrid. But that wasn’t the only reason. Here’s what the vaccine does and why investors got nervous. Inside the Moderna-Merck melanoma result The vaccine tested is intismeran autogene, a custom-made treatment specifically made for each patient. After surgically removing a cancerous tumor, scientists take a sample, read its genetic errors, and then design an mRNA shot that trains the immune system to attack any leftover cancer cells. Patients also received Keytruda alongside the shot in the trials. Keytruda is Merck’s multibillion-dollar blockbuster immunotherapy, already the standard treatment for melanoma. Also read: Morgan Stanley flags Amgen’s edge after heart-drug rival stumbles In the Phase 3 trial for the vaccine, called INTerpath-001, 1,137 high-risk patients were studied. The results showed that the two-drug combination reduced the risk of melanoma coming back or killing the patient by 42% compared with taking Keytruda alone, according to Merck. It also cut the risk of cancer spreading to other parts of the body by 38%. Dr. Marco Gerlinger, an oncologist at London’s Barts Cancer Institute, called the result “proof of principle that personalized cancer vaccines work,” according to The i Paper. Moderna and Merck’s intismeran autogene cancer vaccine met both endpoints in a Phase 3 trial of 1,137 high-risk melanoma patients. Boston Globe / Getty Images Why Moderna stock fell even with the good news The main reason the stock dropped was that investors already knew from an August announcement that the trial was successful, which raised their hopes. In fact, MRNA had nearly quadrupled between August and October because of that, Reuters reported. So by the time the data actually arrived, some investors were expecting bigger numbers. And the 38% figure for stopping the spread of cancer was below what some analysts had expected. Related: A drugmaker is gaining from the side effects of weight-loss drugs Jessica Fye, a biotech analyst at JPMorgan who has covered Moderna since the Covid-19 period, warned about this risk back in August. She wrote that, “we see success in adj melanoma as priced in with the stock sitting at ~$25bn market cap prior to the news,” Yahoo Finance reported. The online leak of the study before the official reveal didn’t help matters, triggering a round of panic selling among those seeking better results. What it means for Moderna and Merck shareholders Moderna makes most of its money from Covid-19, flu, and RSV shots. However, those sales have fallen sharply since the pandemic, and the new cancer vaccine is meant to replace that lost revenue. The trial results showing a 42% drop in melanoma recurrence give Moderna’s management something to show regulators, and the company expects to launch commercially in 2027, if it gets FDA approval. The pullback in its share price was mainly due to already high expectations. The science still works. Alec Stranahan, a biotech analyst at Bank of America who tracks mRNA companies, called the result “a watershed moment for Moderna, in our view, effectively allowing the company to diversify away from infectious disease.” More Health Stocks: BofA thinks Wall Street is underestimating one J&J drug Jazz Pharmaceuticals gets Cramer’s vote of confidence A kidney transplant milestone has Wall Street excited about Biogen The trial results also bode well for Merck. Keytruda is the top-selling cancer immunotherapy in the world, but its patent protection runs out at the end of this decade. Investors normally worry about that, but a combined Keytruda-plus-vaccine treatment could keep revenue strong even after Merck loses patent rights. What investors should watch next Since every dose of the vaccine must be custom-made from a patient’s own tumor, several processes are involved. That can be slow and costly, and insurance coverage is still unclear. Investors should consider that FDA approval isn’t guaranteed, and even if granted, it could be a while before revenue from this treatment becomes meaningful. Still, the companies are running separate trials for other cancers, and if those succeed, the total addressable market could be much broader than only melanoma. For now, Moderna still looks like a volatile stock affected by single-trial results. Merck seems the steadier option because Keytruda is already generating real profit today. More Stocks News Boeing CEO admits 737 ramp taking longer than hoped Down 82% from all-time highs, can PayPal stock finally recover in 2027? Analyst revamps SK Hynix stock price target after blockbuster earnings Oracle has a spending question its new chip deals can’t answer
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