Moderna/BioNTech: cancer vaccines will show mRNA not a one-trick pony

After riding high for much of the pandemic, mRNA vaccine pioneers came down to earth in 2022. By mid-June, the share prices of both Massachusetts-based Moderna and Germany’s BioNTech had more than halved. But investors’ excitement was rekindled a few weeks ago when Moderna and partner Merck published a promising set of melanoma trial results. After five decades of failed attempts, cancer vaccines are set for a breakthrough.

Unlike normal vaccines, these shots will treat, not prevent, the disease. Using mRNA technology should prompt the immune system to destroy mutated cells, often by tailoring them to the recipient’s tumour. That is the case in the Mod­er­na melanoma trial. Its mR­NA vac­cine, com­bined with Mer­ck’s im­munother­a­py, cut the risk of lat­er-stage melanoma re­cur­rence or death by 44 per cent in high-risk patients compared with immunotherapy alone.

The 27 per cent — or $16.8bn — jump in Moderna’s market value over two days following the announcement reflected investors’ wider hopes for cancer vaccines. Assuming a 50 to 75 per cent probability of success, the later-stage melanoma treatment market is worth up to $5bn to the company.

That would be worth $9 to $15 a share, says Jefferies. The figure is conservative. If the technology worked against other tumours, the value would be multiples of that.

Against this, there is no guarantee that the next phase of the clinical trials will be as encouraging as the last. Even if the vaccine proves its worth against melanoma, it might fail to work against other types of tumours.

Success in the battle against Covid-19 does not ensure success against cancer, but should narrow the odds. While many innovative biotechs are struggling to raise funds, a successful coronavirus vaccine has left Moderna with about $7bn of net cash. BioNTech has double that. They gained cash and knowhow in the pandemic. That can now be applied to other urgent medical needs.