Moderna's market value evaporates by about $24 billion as cancer vaccine data triggers a "good news fully priced in" sell-off.

Kamal Choudhury

Reuters, Oct 22 - On Thursday, Moderna MRNA.O shares plummeted over 25% after the release of late-stage clinical trial data for a personalized melanoma vaccine co-developed with Merck MRK.N, marking what analysts described as a classic "sell the news" reaction following months of share price surges.

The selloff erased around $24 billion from the pharmaceutical company's market capitalization, ending the strong rally that had driven the share price up by over 500% earlier this year.

Moderna last traded at $183.88, down 25.2%, poised for its largest one-day drop ever, while Merck's share price fell nearly 1%.

In August, the two companies released interim data (link) showing the experimental vaccine intismeran reduced the risk of recurrence and cancer spread in a late-stage trial with over 1,100 high-risk melanoma patients.

The detailed results of the trial released Thursday (link) showed that, compared with Merck’s immunotherapy ‘Keytruda’ alone, combining intismeran with ‘Keytruda’ reduced the risk of cancer recurrence or death (link) by 42%, and reduced the risk of distant metastasis or death by 38%.

Moderna and Merck released the data after early leaks of the results on an oncology website triggered the share price decline earlier in the day.

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“Solid data”

UBS analyst Michael Yee said the recurrence-free survival data was “solid”, and that the share price correction was an expected “‘sell the news’ event”—the strategy of buying on rumors and selling when the news materializes.

He noted that prior “upbeat commentary from the two companies” had fueled the share price uptrend and expectations were high.

William Blair analyst Myles Minter described the trial data as “exceptional” and agreed the share price drop appeared to be a ‘sell the news’ reaction.

But Minter said investors may now be questioning whether the therapy can prove equally effective for other types of cancer—which is needed to justify its high valuation.

TD Cowen analysts also said the 42% reduction in recurrence rates was “highly persuasive,” fitting squarely into the “excellent range” as defined by medical experts.

Merck and Moderna said overall survival data is not yet mature but shows a “positive trend,” and stated they are in discussions with regulators.

The results are based on data from the first two years after treatment and are set to be presented on Saturday at the European Society for Medical Oncology annual meeting in Madrid.

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