Why has the stock price of Moderna plummeted by 17% despite positive results from cancer vaccines?

Moderna stock (NASDAQ : MRNA) tumbled 17.57% on Thursday, October 22nd, to $202.63. Prior to this, after the detailed results of its third-stage cancer vaccine were announced, there was a clear 'realization of gains' selling reaction in the market.

This personalized cancer vaccine was jointly developed by Moderna and Merck. When used in conjunction with Keytruda, it can reduce the risk of melanoma recurrence or death by 42%.

Despite the positive results from the experimental personalized cancer vaccine, Moderna's stock price still experienced a significant panic drop on Thursday, closing down 17.57% to $202.63. This selling off occurred after the early release of data from intismeran autogene phase three trials. The therapy, developed in collaboration between Moderna and Merck, has shown the ability to significantly reduce the risk of melanoma recurrence, but investors seem to be more concerned about the expectations that had been raised after the stock price soared earlier this year. Reports point out that this incident highlights that even when clinical results are positive, good news can still trigger heavy selling when investors have already factored in large future growth expectations.

Moderna Cancer vaccine announces positive phase three results

The clinical results that triggered this decline in stock price are actually quite encouraging. Phase III INTerpath-001 trials evaluated the combination of intismeran and autogene, also known as mRNA-4157 or V940, in conjunction with Merck's blockbuster immunotherapy Keytruda, in patients with high-risk melanoma.

Compared to using Keytruda alone, this combined therapy reduced the risk of cancer recurrence or death by 42%; at the same time, it also reduced the risk of distant metastasis or death by 38%. This provides evidence that the personalized mRNA vaccine has the potential to further improve treatment outcomes on top of standard immunotherapy.

This study included over 1,100 patients, making this result an important milestone for Moderna's tumor product line. However, the overall survival data are still not mature. Although early results show promising trends, further follow-up is needed to confirm whether this therapy can improve long-term survival.

"Positive news comes true": Why are investors selling MRNA stocks?

This sharp drop seems more like a typical reaction to "realization of positive news" rather than evidence of a failed experiment. The stock price has risen by over 500% this year, driven mainly by the market's optimistic expectations regarding its cancer vaccine project. With the release of detailed test results, this upward trend also makes the stock more susceptible to profit-taking.

When market expectations are exceptionally high, even positive data can disappoint investors. Traders may have already factored in a higher probability of clinical success into the stock price, so unless the results significantly exceed expectations, there may be limited room for further gains.

Moderna Does a 17% drop in stock price constitute a buying opportunity?

The report suggests that the recent sharp decline of Moderna reflects a combination of factors, including high expectations, profit-taking, and uncertainty in the market's interpretation of newly released clinical data. While cancer vaccines have indeed achieved positive results in phase three trials, investors had already pushed up the stock price of MRNA significantly based on anticipated progress of the project prior to that.

In the past few trading days, the stock price of MRNA has been on a clear upward trend, continuously reaching new highs. Influenced by the latest news, sellers have regained the upper hand, and the stock price has fallen below the 20-day EMA support level. The immediate test area in the short term is around $180 to $181; if the stock price manages to rebound above $220, it could be an early sign of renewed interest from buyers.

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