Partial clinical trial data leaked! Moderna (MRNA.US) shares plunged as much as 25% as Wall Street says market expectations are too high

According to English Planet Daily, Moderna (MRNA.US) shares plunged by up to 25% on Thursday after partial clinical trial data of a personalized cancer vaccine co-developed with Merck (MRK.US) was leaked in advance, triggering investor sell-offs. Although the subsequently released full Phase 3 clinical trial data showed that the cancer vaccine significantly reduced the risk of recurrence or death in some melanoma patients, both pharmaceutical companies’ stocks continued to decline. Wall Street analysts believe the negative market reaction may stem more from investors’ previously high expectations for this highly anticipated cancer vaccine, rather than disappointment with the clinical data itself.

This personalized cancer vaccine, named intismeran autogene, is administered together with Merck’s immunotherapy Keytruda. In the Phase 3 trial targeting specific melanoma patients, the combination reduced the risk of cancer recurrence or death by 42% compared to using Keytruda alone.

Meanwhile, trial data showed the combination therapy reduces the risk of cancer spreading to distant parts of the body or patient death by 38%. After two years of treatment, about 82% of patients receiving the cancer vaccine combined with Keytruda were alive and free from melanoma recurrence, compared to 70% of those treated with Keytruda alone.

The two companies plan to formally present detailed results from this Phase 3 trial at the European Society for Medical Oncology (ESMO) conference this weekend. Despite the data showing clear clinical benefits of the combination therapy, investors seemed disappointed. Moderna shares dropped by up to 25% on Thursday, while Merck shares fell by more than 1%.

Evan Seigerman, analyst at BMO Capital Markets, stated in a research report released Thursday that the relative improvement in reducing cancer recurrence or death risk by combination therapy is clinically significant. He believes the sharp reaction in Moderna’s stock price likely reflects overly inflated investor expectations prior to the full data release, rather than the market denying the efficacy of the combination therapy.

UBS analysts also commented in a Thursday research report that the clinical trial results are overall strong and boost their confidence in the vaccine's future clinical research prospects in kidney cancer and bladder cancer. UBS similarly believes Moderna’s sharp stock drop is more related to previously lofty market expectations, rather than poor clinical performance.

The market has long viewed the personalized cancer vaccine jointly developed by Moderna and Merck as a potential breakthrough in cancer treatment. Unlike traditional vaccines, this product is designed based on individual patient tumor characteristics, aiming to help the immune system identify and attack cancer cells. Investors are hopeful that the technology could not only be used for melanoma treatment in the future but also expanded to other cancer types, opening a broader commercial market.

For Moderna, this cancer vaccine is particularly significant. Following its covid vaccine as well as influenza and respiratory syncytial virus (RSV) products, the company urgently needs to further expand its product portfolio, and the cancer vaccine is seen as a potential major commercial growth engine.

This optimistic expectation had previously pushed Moderna’s stock price up sharply. As of Thursday afternoon, the stock had risen more than 530% year-to-date. By comparison, the larger Merck’s share price had risen nearly 41% this year.

However, commercialization of personalized cancer vaccines still faces challenges such as complicated manufacturing procedures and lengthy production cycles. As each patient requires a customized vaccine, the production process currently takes about six weeks, meaning whether the product can be delivered quickly and at scale will be a crucial test for future commercialization.

Merck CEO Robert Davis said in an interview last week that the company believes it will be able to further shorten the production cycle in the future, allowing more patients to access treatment more rapidly.

Overall, Moderna’s sharp stock drop highlights the gap between the market’s high expectations for breakthrough cancer therapies and the reality of clinical progress. Despite Phase 3 data showing clinically meaningful treatment outcomes, investor standards for new data have clearly risen amid several-fold year-to-date gains in the stock price.

As more complete trial results are disclosed at the ESMO conference, market attention will shift to the long-term efficacy, safety, regulatory progress, and whether this personalized cancer vaccine technology can successfully expand to more cancer treatment fields.