Some clinical trial data leaked! Moderna (MRNA.US) stock plunged as much as 25% at one point; Wall Street says market expectations were too high.

Moderna (MRNA.US) shares plunged as much as 25% on Thursday after partial clinical trial data for a personalized cancer vaccine it is developing with Merck & Co., Inc. (MRK.US) leaked ahead of schedule, triggering a selloff. Although full Phase 3 data subsequently released showed the cancer vaccine can significantly reduce the risk of cancer recurrence or death in some melanoma patients, shares of both drugmakers still fell. Wall Street analysts believe the negative market reaction may stem more from investors' previously overly high expectations for the highly anticipated cancer vaccine than from the clinical data itself being disappointing. The personalized cancer vaccine, called intismeran autogene, used in combination with Merck & Co., Inc.'s immunotherapy Keytruda, reduced the risk of cancer recurrence or death by 42% compared with Keytruda alone in a Phase 3 trial involving specific melanoma patients. Meanwhile, trial data showed the combination therapy reduced the risk of cancer spreading to distant parts of the body or death by 38%. Two years after treatment, about 82% of patients who received the cancer vaccine plus Keytruda were still alive and free of melanoma recurrence, compared with 70% of those who received Keytruda alone. The two companies plan to formally present detailed results from the Phase 3 trial at the European Society for Medical Oncology (ESMO) congress this weekend. Despite the data indicating a clear clinical benefit for the combination therapy, investors still appeared disappointed. Moderna shares fell as much as 25% on Thursday, while Merck & Co., Inc. shares also dropped more than 1%. BMO Capital Markets analyst Evan Seigerman said in a research note published Thursday that the relative improvement in reducing the risk of cancer recurrence or death achieved by the combination therapy has clear clinical significance. He believes such a sharp reaction in Moderna's stock may reflect investors' expectations having become overly inflated before the full data were released, and should not be interpreted as the market rejecting the combination therapy's efficacy. UBS Group AG analysts also said in a research note published Thursday that the clinical trial data were strong overall and strengthened the bank's confidence in the future clinical research prospects of the cancer vaccine in kidney cancer and bladder cancer. UBS Group AG likewise believes Moderna's sharp stock decline may be more related to the market's previously extremely high expectations than to poor actual clinical data performance. The market has long viewed the personalized cancer vaccine jointly developed by Moderna and Merck & Co., Inc. as a potential breakthrough cancer treatment. Unlike traditional vaccines, this product must be individually designed based on the characteristics of a patient's own tumor, aiming to help the immune system recognize and attack cancer cells. Investors expect the technology could eventually be used not only to treat melanoma but also to expand to other cancer types, thereby opening a broader commercial market. For Moderna, this cancer vaccine is particularly important. Following its COVID-19 vaccine and products related to influenza and respiratory syncytial virus (RSV), the company urgently needs to further expand its product portfolio, and the cancer vaccine is seen as a potentially important commercial growth driver for its future. This optimistic expectation had previously driven a sharp rise in Moderna's stock. As of Thursday afternoon, the stock had gained more than 530% year to date. By comparison, the larger Merck & Co., Inc. had risen nearly 41% year to date. However, commercialization of personalized cancer vaccines still faces challenges such as complex manufacturing processes and long production cycles. Because each patient requires a customized vaccine, the related production process may currently take about six weeks, meaning whether the product can be delivered quickly and at scale will be an important test for future commercialization. Merck & Co., Inc. Chief Executive Officer 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 faster. Overall, Moderna's sharp stock decline highlights the gap between the market's high expectations for breakthrough cancer therapies and actual clinical progress. Although the Phase 3 clinical data showed a clinically meaningful treatment effect, with the stock having risen severalfold year to date, investors' demands for new data have clearly risen as well. As full trial results are further disclosed at the ESMO congress, the market's focus will shift to the combination therapy's long-term efficacy, safety, subsequent regulatory progress, and whether this personalized cancer vaccine technology can successfully expand into more cancer treatment areas.