Moderna shares dropped as much as 25% on Thursday following the leak of partial data on its closely watched cancer vaccine developed with Merck.
Shares of both drugmakers fell even though the full data, released later Thursday following the leak, appeared meaningful for patients and positive relative to Wall Street expectations. The personalized vaccine, known as intismeran autogene, paired with Merck's immunotherapy Keytruda reduced the risk of recurrence or death in certain melanoma patients by 42% compared with Keytruda alone.
The data also showed the shot along with Keytruda reduced the risk of cancer spreading to distant parts of the body or death by 38%, compared with just the immunotherapy.
The companies say about 82% of patients who received the personalized cancer vaccine alongside Keytruda were alive without their melanoma returning at two years, compared with 70% of those who received Keytruda alone.
The detailed phase 3 trial results were set to be presented at the European Society for Medical Oncology conference this weekend.
Several analysts acknowledged investors' elevated expectations ahead of the release, but noted that the data is overall positive.
"We assert this relative reduction in recurrence/death is clinically meaningful," BMO Capital Markets analyst Evan Seigerman said in a research note on Thursday. "Such a reaction likely reflects inflated expectations into the full data release, rather than a true indictment on the efficacy of the combo therapy."
Investors see the targeted vaccine as a possible breakthrough treatment, with the potential to be used in other forms of cancer in the future. It could also offer Moderna a critical additional commercial product in its pipeline, following vaccines for Covid-19, the flu and respiratory syncytial virus.
In a research note Thursday, UBS analysts said "this is overall a strong data set" and gives more confidence in upcoming studies of the vaccine in kidney and bladder cancers. They added the stock reaction may be due more to massive expectations than disappointing data.
The high expectations for the product have sent Moderna shares soaring this year. The stock has spiked more than 530% year-to-date as of Thursday afternoon.
Shares of Merck, a much larger drugmaker, fell by about 1% on Thursday. The company's stock has climbed nearly 41% this year.
Since the vaccine is personalized, the complicated manufacturing process can take six weeks. But Merck CEO Robert Davis told CNBC last week that the company believes it can shorten that timeline in the future, potentially allowing the shot to reach more patients more quickly.
