Moderna pops 17% after Merck exercises option to jointly develop a personalized cancer vaccine

• Moderna spiked as much as 17% on Wednesday after the company teamed up with Merck to develop personalized cancer vaccines.
• Merck will pay Moderna $250 million under the agreement, which was initially struck in 2016.
• Data from an ongoing phase 2 trial of Moderna's vaccine used in combination with Merck's Keytruda is expected in the fourth quarter.

Moderna stock soared as much as 17% on Wednesday after the company struck a deal with Merck to jointly develop personalized cancer vaccines.

Under an existing licensing agreement that was initially inked in 2016, Merck had the option to exercise an option to jointly develop and sell the personalized cancer vaccines. Merck will pay Moderna $250 million to exercise its option, and will collaborate on the development and commercialization of the vaccines.

Merck's cancer drug Keytruda is currently being evaluated in combination with Moderna's mRNA-4156/V940 vaccine as a treatment for patients with high-risk melanoma. Data from a phase 2 trial of the drug combination is expected in the fourth-quarter.

"We have been collaborating with Merck on PCVs since 2016, and together we have made significant progress in advancing mRNA-4157 as an investigational personalized cancer treatment used in combination with KEYTRUDA. With data expected this quarter on PCV, we continue to be excited about the future and the impact mRNA can have as a new treatment paradigm in the management of cancer," Moderna president Stephen Hoge said in a statement.

"We look forward to working with our colleagues at Moderna to advance mRNA-4157/V940 in combination with KEYTRUDA as it aligns with our strategy to impact early-stage disease," Merck's Dr. Eliav Barr said.

The move is welcomed by investors because if successful, it would help Moderna diversify away from its COVID-19 vaccines, which make up all of the biotech's revenue and profits and is expected to see declining demand as the pandemic wanes.

That's evidenced in Moderna's stock price. Since its peak near $500 in August 2021, shares of Moderna have plunged 74% to about $131 today. Moderna pared some of its gains on in afternoon trading on Wednesday, with the stock up about 9%.

If successful, Moderna and Merck's cancer-fighting vaccine would be a win for mRNA technology as a whole, proving that it has more use cases than its initial debut as COVID vaccines developed by both Moderna and Pfizer and BioNTech.