Moderna shares fall despite promising data from cancer vaccine trial

Shares of Moderna fell Monday as Wall Street chewed over new trial results on the personalized cancer vaccine it is developing with Merck. 

Merck's shares were essentially flat.

The experimental mRNA vaccine, when combined with Merck's blockbuster drug Keytruda, cut the risk of recurrence of skin cancer melanoma by 44% compared with Keytruda alone, the companies said Sunday in their first detailed presentation of results from a key phase two trial. 

Nearly 80% of participants who received both the vaccine and Keytruda stayed cancer-free for 18 months compared with the 62% of participants who only received Keytruda, the companies said. They added that side effects with the vaccine were generally mild, with fatigue being the most common. 

Those results, presented at an American Association for Cancer Research meeting in Florida, add to the initial results on the treatment combination released in December. 

The results suggest the vaccine in combination with Keytruda "may be a novel means of potentially extending the lives of patients with high-risk melanoma, Dr. Kyle Holen, Moderna's head of development, therapeutics and oncology, said in a press release. Moderna and Merck said they will initiate a phase three trial in 2023 and will "rapidly expand" their research to study the treatment's effect on additional tumor types, including a major type of lung cancer. 

Wall Street met the news with a mix of cautious optimism and doubt.

Analysts from SVB Securities said the results suggest the personalized cancer vaccine shows promise. But they also wrote in a Sunday note that the treatment's path to approval is new and untested, adding that the firm does not believe accelerated approval is an option.

The Food and Drug Administration's accelerated approval designation is meant to allow for faster clearance of drugs for serious conditions that fill an unmet medical need. 

A Monday note from Wolfe Research analyst Tim Anderson said many Moderna and Merck stakeholders remain "cautiously optimistic at best" about the opportunity of the cancer vaccine-Keytruda combination.

He said expectations for the treatment combination were reasonably high going into the weekend, but noted there are still plenty of cancer vaccine skeptics due to a "long history of failures in this space." 

Wells Fargo analyst Mohit Bansal also said he's expressing "cautious optimism" about the treatment combination. In a Sunday note, Bansal pointed to "trial imbalances" that potentially produced more favorable results for the personalized cancer vaccine. 

He said those imbalances warrant waiting for more data on the treatment.