Back in October when Merck & Co. (MRK) committed $250 million upfront to partner with Moderna (MRNA) in developing its messenger RNA (mRNA)-based personalized cancer vaccine (PCV) candidate, investors viewed the news with caution, sending Moderna shares rising only 8% on the news.

They have since bought into the mRNA vaccine pioneer’s approach to fighting cancer, with Moderna shares soaring 72% since October 12. Just this week, after Moderna announced positive Phase II data on the vaccine candidate—which it calls mRNA-4157 and Merck calls V940—Wall Street showered more love on Moderna, namely a 26% surge in its stock price from investors and kudos from analysts.

Moderna shares jumped 20% on the day of the data announcement Tuesday, from $165.13 to $197.54, then rose another 6% on Wednesday, to $208.95, before dipping 1% Thursday to $207.25. (Merck, by contrast, saw only a 2% uptick Tuesday, from $108.97 to $110.91, followed by a roughly 2% decline to $109.63).

The latest stock surge followed Moderna and Merck trumpeting positive results from their Phase IIb KEYNOTE-942/mRNA-4157-P201 trial (NCT03897881), assessing the combination of mRNA-4157/V940 and Merck’s anti-PD1 cancer immunotherapy blockbuster Keytruda® (pembrolizumab) in stage III/IV melanoma patients with high risk of recurrence following complete resection.

Adjuvant treatment with mRNA-4157/V940 plus Keytruda reduced the risk of recurrence or death by 44%-—the study’s primary endpoint of recurrence-free survival—compared with Keytruda alone, the companies reported (HR=0.56 [95% CI, 0.31-1.08]; one-sided p-value=0.0266).

“[Tuesday’s] promising and strong data for PCV vs Keytruda monotherapy helps to validate the potential of the mRNA platform beyond COVID,” Jefferies analyst Michael J. Yee concluded in a research note. “Bottom line, there was a strong run-up in the stock in the past month with platform expectations beyond COVID starting to grow after MRK opted in on the partnership in Oct and investors starting to look past COVID for the time being.

“The strong results in PCV vaccine help to validate the platform beyond just respiratory vaccines and highlight the capabilities of mRNA technology,” Yee added.

KEYNOTE-942 enrolled 157 patients with stage III/IV melanoma. Following complete surgical resection, patients were randomized to receive mRNA-4157/V940 (nine total doses of mRNA-4157) and Keytruda (200 mg every three weeks up to 18 cycles [for approximately one year]) versus Keytruda alone for approximately one year until disease recurrence or unacceptable toxicity.

Moderna and Merck said they will share full results from the trial at one of the upcoming medical conferences that analysts have speculated will occur in 2023—by which point they are expected to have advanced mRNA-4157/V940 into Phase III studies.

Billions in projected sales

From a financial standpoint, Yee calculated, a successful PCV could rack up billions of dollars in sales. While later-stage first-line melanoma could generate about $1 billion alone, he calculated, an adjuvant melanoma therapy indication could make seven times that amount or $7 billion in enterprise value (EV), translating to an additional $18/share. Using point of sale (PoS) discounting of 50% to 75%, though, that per-share jump would shrink to between $9 and $15.

“A more holistic broader platform value approach would imply the potential for adjuvant lung cancer and other tumor types and utilize a [potential] $5B+ opportunity at 7x = $35B EV or $90-100/share,” Yee elaborated. “With a 25-50% PoS, [price] would be reduced to $25-50/share if taking a PCV platform value approach.”

Yee’s colleague at Jefferies, Akash Tewari, estimated the size of the potential adjuvant melanoma patient population as including ~17,500 patients in the U.S. and another ~16,500 in the “EU5,” the top five European countries (France, Germany, Italy, Spain, and the United Kingdom). Of the total population, 7.5% are Stage III patients, with another 2.5% being at Stage IV.

Mani Foroohar, MD, Senior Managing Director, Genetic Medicines, and a senior research analyst with SVB Securities, asserted that Moderna more than met the proverbial bar set by heightened expectations for the PCV after Merck joined the effort.

Clinical Proof of Concept

“While the opportunity in the studied adjuvant setting is modest in absolute terms, demonstrating added benefit represents clinical proof of concept for PCV, with potential read-across to other oncology indications for MRNA/MRK—with caveats regarding variability between tumor types in response to immunotherapy broadly—as well as competing programs at other companies, such as BNTX,” Foroohar wrote Tuesday in a research note.

BNTX is BioNTech, Moderna’s archrival along with Pfizer in development of mRNA vaccines for COVID-19. A month before Merck joined Moderna, BioNTech presented promising follow-up data from its ongoing Phase I/II trial (NCT045032782019-004323-20) assessing its wholly-owned BNT211 in patients with relapsed or refractory advanced solid tumors. Unlike Moderna, BioNTech saw its share price slide 6.5%, from $150.91 to $141.05, then partially bounce back 4% to $146.55 after

BNT211’s therapeutic approach combines two of BioNTech’s platforms—an autologous novel chimeric antigen receptor T-cell (CAR-T) therapy targeting the oncofetal antigen Claudin-6 (CLDN6) with a CLDN6-encoding CAR-T cell amplifying RNA vaccine (CARVac) designed to improve persistence and functionality of the adoptively transferred cells. BNT211 is the most advanced CAR-T product candidate in BioNTech’s pipeline.

The 21 evaluable patients (of 22 patients overall) showed a best overall response rate (ORR) of 33% and a disease control rate (DCR) of 67% with one complete response, six partial responses and seven patients with stable disease, BioNTech reported. One likely reason for investor disinterest: The 33% ORR and 67% DCR reported for BNT211 marked a drop from the 43% ORR and 86% disease control rate reported for the vaccine candidate back in April, based on 14 evaluable patients.

Merck and Moderna began collaborating on developing PCVs in 2016, by agreeing to combine Merck’s immuno-oncology expertise with Moderna’s mRNA vaccine platform and GMP manufacturing capabilities. Merck paid Moderna $200 million cash upfront as the companies agreed to develop mRNA-4157 and other individually tailored cancer vaccines that encode a patient’s specific neoantigens, eliciting an immune response intended to recognize and destroy cancer cells. Moderna agreed to lead all R&D efforts through human proof-of-concept studies.

The companies expanded their collaboration in May 2018, with Merck investing $125 million in Moderna’s Series H equity round seven months before Moderna went public through a $604 million initial public offering. Under that expanded agreement, Merck agreed to pay Moderna $250 million for exercising its option for PCVs that included mRNA-4157/V940, while the companies agreed to partner on development and commercialization, sharing costs and profits equally.

Besides the Moderna-Merck tandem and BioNTech, other companies working on PCVs include Roche (ROG; SIX-Swiss Exchange) and its Genentech subsidiary, which is developing RO7198457;  Nykode (OSE: NYKD), which expects to report updated interim Phase II data for its lead cancer vaccine candidate VB10.16 in the first half of 2023; Gritstone bio (GRTS), which is pursuing two PCV programs, Slate (consisting of Slate v1 and Slate-KRAS) and Granite; as well as privately-held Nouscom, whose NOUS-PEV is based on patient-specific neoantigens sourced from individual patient tumor mutanomes.

Leaders and laggards: Declines for AXLA, SNPX, THRD

Three biotechs were among Wall Street’s laggards this week as clinical and commercial setbacks shrank their stock prices by greater than half:

  • Axcella Therapeutics (AXLA) tumbled 51% early Thursday, from $0.8919 to $0.439, a day after announcing it was eliminating 85% of its workforce, including CFO Bob Crane and Chief People Officer Virginia Dean. Axcella employed 59 full-timers at the start of 2022. The job cuts are part of a restructuring that will refocus the company’s efforts on developing the Phase II programs of AXA1125 for Long COVID Fatigue and adult Nonalcoholic Steatohepatitis (NASH), as well as realize value from its platform and current programs.
  • Synaptogenix (SNPX) plunged 73% Friday as of 11:30 a.m. ET, from $4.73 to $1.29, after announcing that its lead candidate Bryostatin-1 failed an NIH-sponsored Phase II trial (NCT04538066) in advanced Alzheimer’s disease by missing the primary endpoint of statistically significant change from baseline in the Severe Impairment Battery (SIB) total score after completing the second course of treatment. An average increase in the SIB total score of 1.4 points and 0.6 points was seen for the Bryostatin-1 and placebo groups, respectively, at week 28, according to topline data.
  • Third Harmonic Bio (THRD) cratered 78% Thursday, from $19.80 to $4.30, after it terminated a Phase Ib trial (NCT05510843) assessing the KIT inhibitor THB001 in chronic inducible urticaria. Two patients enrolled in the first dose cohort of 200mg twice-daily dosing of THB001 were observed with asymptomatic liver transaminitis, Third Harmonic acknowledged. The company said it has begun nonclinical studies to elucidate the mechanism for the transaminitis, which it said was not predicted by earlier GLP toxicology studies nor seen in a Phase Ia study.
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