Moderna’s cancer vaccine passed its first big test this past week. The bigger problem is that its stock is priced as if it has already passed them all.
The stock nearly quadrupled in two months, even though many analysts saw a scientific milestone whose reach beyond melanoma was still unproven . This past week came the details, and a reality check. The data itself delivered, even if it fell short of the most bullish hopes. But expectations built into the stock prior to the release were far too high. Consider the math. Analysts often value a drug at roughly four times its peak annual sales. The trial also tracked whether patients’ cancer spread to other organs, such as the lungs or brain, which is the main driver of melanoma deaths.
Moderna has been a hugely volatile stock since the Covid-19 pandemic. Its value peaked near $200 billion in 2021, then collapsed along with vaccine sales, bottoming at about $10 billion last year. Moderna shares fell about 20% through Friday after results leaked Thursday , prompting the companies to release data two days before their planned presentation at a major oncology conference in Madrid. Among 1,137 patients whose melanoma had been surgically removed, adding the vaccine to Merck’s immunotherapy Keytruda cut the risk of the cancer returning, or of death, by 42% compared with Keytruda alone. That cleared the roughly 40% bar investors had set, and should be enough to win approval. An approved melanoma treatment could reach about $4 billion a year, according to analyst estimates. Split with Merck, that is about $2 billion in peak sales for Moderna, worth roughly $8 billion in market capitalization. On that score, the vaccine cut the risk of spread or death by 38% after about two years. In an earlier, smaller trial, it had cut it by 59% after five years.
The latest big rally began in August , when Moderna and partner Merck said their personalized shot cut the risk of melanoma returning after surgery in a large trial. Moderna has told analysts the gap partly reflects the larger trial’s inclusion of patients with earlier-stage cancer, which takes longer to spread.
Kidney cancer data could arrive in a few months, while results from a bladder cancer trial could come in 2027. From here, the stock will trade on what comes next. Moderna is also testing the vaccine in lung cancer, a potentially bigger opportunity.
