1 New Green Flag for Moderna and Merck Stock

According to new data released by modern (MRNA -0.12%) The biotech company responsible for the Spikevax coronavirus vaccine may have another blockbuster drug in the works, the American Association for Cancer Research said at its annual meeting on April 8. This time, a personalized cancer vaccine (PCV) for head and neck cancer is being developed together. Merck (MRK -0.47%).

It goes without saying that favorable data breeds favorable sentiment, but this new development could prove to be much more positive in the long term than investors realize. Let’s take a closer look at why both companies got the new green flag.

If approved, this vaccine could fuel growth for years.

Moderna’s personalized cancer vaccine is called mRNA-4157 and is being investigated for a variety of indications, including melanoma, non-small cell lung cancer (NSCLC), colorectal cancer, bladder cancer, and more. Some indications, such as melanoma, are being tested in late-stage clinical trials, while others are less mature.

But unlike prophylactic jabs aimed at preventing coronavirus infection, the point of this candidate is to alert the body’s immune system to interpret the surface features of a patient’s tumor cells as a threat warranting aggressive action. To achieve this, tumor samples must be taken and analyzed, which allows the appropriate properties to be encoded into the vaccine. So, despite the name, it is not a preventive measure, but rather a treatment for people who have already been diagnosed with cancer.

Worldwide, approximately 660,000 people develop head and neck cancer each year. According to Expert Market Research, the market for treatments to treat these cancers is expected to reach $4.3 billion annually by 2032. The prevalence of these cancers also appears to be increasing over time. Unfortunately, the 5-year survival rate for these cancers collectively is only 50%, so effective treatments are desperately needed.

According to data presented by Moderna at a recent conference, mRNA-4157 could one day be a valuable tool in a Phase 1 trial evaluating 22 patients with head and neck cancer. Two patients experienced a complete response to treatment, four had a partial response, and eight had stabilization of disease progression. Overall, this provides a disease control rate of nearly 64%, which is quite good in the context of a moderately aggressive cancer. Moreover, this treatment does not appear to cause serious side effects, so it is likely to move on to the next clinical trial.

It is important to note that mRNA-4157 performed as expected and has been through other Phase 1 clinical trials without major safety incidents. This data builds on this evidence and adds value to all of the more mature programs in the personalized cancer vaccines group. It also lends credence to a key part of Moderna’s investment thesis in the post-coronavirus jab boom. Trailing 12-month revenues reached $6.8 billion, up 9% over the past three years.

Keep in mind that head and neck cancer is just one of many targeted indications for this program, and if it is approved, it likely won’t be the last. Biotech mint indications may continue to emerge over the next decade, and the program’s target market may continue to expand over time. This is a potential future revenue stream one step closer to visibility for shareholders.

Additionally, Moderna plans to initiate new clinical trials for additional indications before the end of the year.

Cooperation is beneficial

It’s clear why these results are a good sign for Moderna stock. Good early results set the stage for the candidate to potentially receive marketing approval within a few years once the remainder of the clinical trial process is completed. But Merck will also benefit.

Merck and Moderna will split the costs and benefits of the mRNA-4157 program equally. Because both contributed their skills and intellectual property to the effort. In fact, a key component of most personalized cancer vaccine formulations currently being tested is Merck’s best-selling immuno-oncology drug Keytruda. While mRNA-4157 aims to activate the immune system against tumors, Keytruda protects immune system cells from being interfered with by some of the defense functions that tumor cells commonly possess.

Moderna’s good clinical results are also good results for Merck, and it looks like the two are preparing for more optimistic results for the future as well.