Published - December 14, 2022 @ 4:25 PM (EET)

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On Tuesday, shares of Moderna Inc. (NASDAQ:MRNA) and Merck & Co. (NYSE:MRK) rose after the two companies said a potential mRNA vaccine they are developing helped reduce deaths in melanoma patients.

Using the same technology behind Covid-19 preventative shots, combining Moderna's personalized cancer vaccine and Merck's Keytruda cancer immunotherapy reduced patients' risk of relapse or death by about 44% in a mid-stage trial.

While independent scientists haven't reviewed it, the companies said the results were a "statistically significant and clinically meaningful improvement."

The ongoing study included 157 stage III/IV melanoma patients whose tumors were surgically removed before being treated. It is the first randomized trial revealing that combining mRNA vaccine technology with a drug that boosts the immune response would offer better results. 

Pending regulatory approval, the companies plan to advance the cancer studies to Phase 3 in 2023, saying they intend to expand their approach rapidly to other tumor types.

Under the companies' collaboration terms, Moderna will split costs and any profits from the vaccine 50-50 with Merck.

WHY IT MATTERS

Moderna shares rose as much as 26%, easing concerns about the biotechnology company's second act after its Covid-19 success. Meanwhile, Merck gained 2.1%.

After stratospheric growth since the onset of the pandemic, investors have grown uneasy about Moderna's potential to keep up its success. In recent years, Merck has also faced pressure to find new growth sources following its blockbuster sales for Keytruda.

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Thus, melanoma could provide both companies with a large marketplace to sell a promising treatment. However, it's difficult to accurately predict how the vaccine might impact Moderna's future financial position.

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Turning to Jeffries, analysts estimated using Moderna's cancer vaccine on postsurgical melanoma patients could generate about $1 billion in annual sales and reach $5 billion if it proves to work for additional types of tumors like lung cancer.

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Chardan downgraded Moderna from Buy to Hold (Neutral) following an 'enthusiastic response' to the news.