There’s a new reason to believe that their joint projects are going well.
According to some new data revealed by Moderna (MRNA -1.75%) at the American Association for Cancer Research Annual Meeting on April 8, the biotech responsible for the Spikevax coronavirus vaccine may have another blockbuster drug in the works, this time a personalized cancer vaccine (PCV) for head and neck cancers that it’s developing in conjunction with Merck (MRK -0.33%).
It’s a no-brainer that favorable data makes for favorable sentiments, but this new development could prove to be even more positive than investors realize in the long term. Let’s explore in more detail why both companies just got a new green flag.
This vaccine could drive growth for years if it gets approved
Moderna’s individualized cancer vaccine is called mRNA-4157, and it’s being investigated for a handful of different indications, including melanoma, non-small cell lung cancer (NSCLC), colorectal carcinoma, and bladder cancer, among others. Some of the indications, such as for melanoma, are being tested in late-stage clinical trials, whereas others are less mature.
But unlike its prophylactic jab to protect against coronavirus infections, 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 that warrants aggressive action. To accomplish that, it’s necessary to take a sample of the tumor so that it can be analyzed, which enables the appropriate attributes to be encoded into the vaccine. So it’s a treatment for people who have already been diagnosed with cancer, not a preventative measure, despite the name.
Globally, roughly 660,000 people develop head and neck cancers annually. According to Expert Market Research, the market for therapies to treat those cancers will grow to reach $4.3 billion annually by 2032. The prevalence of these cancers also appears to be rising over time. Unfortunately, the five-year survival rate for these cancers as a group is only 50%, so there is a pressing need for effective treatments.
Per the data Moderna recently presented at the conference, in a phase 1 trial evaluating 22 patients with head and neck cancer, mRNA-4157 could one day be a valuable tool. Two patients experienced a complete response to the treatment, four had a partial response, and eight saw the progression of their disease stabilize. In total, that makes for a disease control rate of near 64%, which is pretty good in the context of moderately aggressive cancers. Furthermore, the therapy did not appear to cause any severe side effects, so it’ll likely advance to the next set of trials.
It’s important to note that mRNA-4157 has been through other phase 1 clinical trials where it performed as expected and without major safety incidents. This data builds on that body of evidence, adding value to all of the more mature programs in the personalized cancer vaccine grouping. It also lends credence to a key part of the investing thesis for Moderna in its post-coronavirus jab boom era — its trailing 12-month revenue only grew by 9% in the last three years, reaching $6.8 billion.
Remember, head and neck cancers are just one target indication of many for this program, and it likely won’t be the last to receive approval, assuming any of them do. The next 10 years could see the biotech mint indication after indication, expanding the addressable market for the program again and again over time — and it’s that stream of potential future revenue that just became one step closer to being tangible for shareholders.
Plus, Moderna intends to launch new clinical trials for additional indications before the end of the year.
It pays to collaborate
It’s obvious why these results are a good sign for Moderna’s stock. Good early results set the stage for the candidate to potentially be approved for sale in a handful of years, once it’s done with the rest of the clinical trials process. But Merck will benefit too.
Merck and Moderna split the costs and profits of the mRNA-4157 program equally, because both contributed their technology and intellectual property to the effort. In fact, it’s Merck’s best-selling immuno-oncology drug Keytruda that’s a key component of most of the personalized cancer vaccine formulations being tested currently. Whereas mRNA-4157 aims to activate the immune system against a tumor, Keytruda protects the cells of the immune system from being hampered by some of the defenses that tumor cells often have.
So good results in the clinic for Moderna are also good results for Merck, and it looks like the pair are cooking up some more bullish results for the future too.
Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Merck. The Motley Fool recommends Moderna. The Motley Fool has a disclosure policy.
