This week Moderna became one of the biggest talking points on Wall Street after its share price nearly tripled during one trading session; the sharp rise followed the announcement by the biotechnology company and Merck of promising Phase 3 results for an experimental personalised cancer treatment aimed at melanoma.
Moderna’s shares rose as much as about 160% during trading and finally increased by 177%, ending the day at $174.38. The rise added around $44 billion to the company’s market value and was its largest one-day gain ever recorded.
The excitement was focused on intismeran autogene, the personalised mRNA-based cancer therapy being developed by Moderna in association with Merck. The treatment is based on the particular mutations identified in a patient’s tumour and is currently being tested together with Merck’s Keytruda, an already established cancer immunotherapy.
Why investors reacted so strongly
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The primary objective of the Phase 3 INTerpath-001 trial—which was to improve recurrence-free survival in patients with high-risk melanoma whose tumours had been removed by surgery—was achieved. Together, the drugs also reached a major secondary aim concerning distant metastasis-free survival, since the patients who received the treatment lived longer before the cancer came back or spread as compared with those who received Keytruda alone.
The fact was especially significant for Moderna since investors have been seeking methods by which the company can expand its operations beyond the COVID-19 vaccine area. A successful cancer treatment could in principle generate a major new source of revenue and show that Moderna’s mRNA technology has further applications than just vaccines against infectious diseases.
The most recent findings also follow on from previous research; data from the five-year follow-up of a Phase 2b study demonstrated that the combination of Moderna and Merck reduced the risk of recurrence or death by 49% and the risk of distant metastasis or death by 59% when compared with Keytruda alone.
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A short squeeze added fuel to the rally
Moderna’s decisive action was not due to the medical news alone.
Before the announcement, a large number of Moderna’s shares that were available for public trading had been sold short. The Wall Street Journal stated that around 13.7% of the public float was on sale short, which meant that a short squeeze was possible. When the price of the stock began to rise quickly, those investors who had wagered against Moderna were obliged to purchase shares in order to cover their positions, thus increasing the demand to buy.
The fact that the results were so clinically strong together with the requirement that short sellers had to buy helped transform what could have simply been a big rally in the biotech sector into an extraordinary one-day jump.
Merck and other biotech stocks also benefited
Moderna was not the only company to see benefits; Merck’s share price increased by about 12.6 per cent after the announcement, and other firms taking part in mRNA and cancer research also rose as investors reconsidered the potential of the technology.
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The importance of the news lies in the fact that personalized mRNA cancer vaccines have always been considered a promising but still experimental field of medicine. The latest results from Moderna have given investors new evidence that the technique could one day become a significant component of cancer treatment.
The rally does not mean the drug is approved
Even though there has been a huge change in the stock price, intismeran is still considered to be an investigational treatment. The companies have not yet made public all the details of the Phase 3 results, and further regulatory steps will be necessary before the therapy can become widely available.
The companies intend to give more detailed data at a future medical meeting and are currently discussing the next steps with the regulatory authorities. It has been suggested by analysts that the treatment could eventually become a product worth several billion dollars if it is given approval and is successfully extended to other kinds of cancer.
For Moderna, however, the message from Wall Street was clear at once: investors now regard the company as having a considerably larger future than its business after the COVID pandemic had indicated.
The spectacular increase in the stock was caused by more than just hype; it was the result of promising clinical findings, the potential of personalised cancer vaccines, renewed confidence in mRNA technology, and a large number of short positions which magnified the rise.
Moderna’s share price has since shown how rapidly biotechnology stocks can reverse their trend, illustrating the great degree of volatility involved when investing in companies whose values depend on the outcomes of clinical trials and regulatory decisions.
