Moderna, the little-known company that built a big name on Covid vaccines, is shaking Wall Street and Big Pharma with a technology leap that could give medicine its best chance yet to take down cancer. And investors are asking whether personalized cancer vaccines will become the next big thing for biotech stocks, and drive a second act for Moderna stock.
In December, the company revealed that cancer patients who got its experimental vaccine experienced a 44% lower risk of relapse or death compared with those who received standard treatment, driving Moderna stock 20% higher in one day. The findings were significant enough that the Food and Drug Administration signed off Wednesday on an expedited review period, called a breakthrough designation, for a combination of Moderna's vaccine with Merck's cancer-fighting drug Keytruda.
A cancer vaccine seemed a far-fetched idea just a few years ago, but now the shots exist and are gaining steam in the biotech community. Further, the newest vaccines are personalized, meaning they can target a patient's specific tumor DNA and be much more effective.
Personalized cancer vaccines are likely to "dramatically disrupt the landscape of cancer therapy," said Dan Costin, director of the White Plains Hospital Center for Cancer Care. He also directs the Cancer Blood Specialists of New York.
"Over the past several years, we have witnessed dramatic progress in this field," Costin told Investor's Business Daily via email. "The vaccines create a tailored immune response against a patient's specific cancer, based on the cancer's unique tumor antigen profile."
Other Biotech Stocks Developing Cancer Vaccines
Four shots are available in the U.S. to prevent viruses that increase the chances of developing cervical or liver cancers. Another two treat bladder and prostate cancers.
Multiple biotech stocks are working in the cancer vaccine space, including BioNTech and Gritstone Bio.
But Brad Loncar, chief executive of Loncar Investments, called Moderna's study "a home run." Loncar's firm provides the indexes for two exchange traded funds that are focused on biotech companies working on cancer immunotherapies and Chinese biotech stocks.
Moderna ran its study in relatively healthy patients. They had their melanoma surgically removed and hadn't undergone an earlier treatment. But Loncar sees a future in which oncologists could treat cancer earlier than ever before, using blood tests that screen for cancer cells and a cancer vaccine regimen.
"Cancer vaccines might also be a great therapy in the future for very, very early-stage cancers when you're talking about something that's picked up in a liquid biopsy," Loncar told IBD. "That's really exciting to think about. With those detection technologies improving so much, it could create a new era of treating cancer where you're treating it way earlier than we've ever thought of before."
Meanwhile, others see risks to treating cancer too early — namely that the cancer can mutate to avoid detection.
How Moderna Cancer Vaccine Works
Cancer vaccines work much like the vaccines that protect against infectious diseases like Covid and flu. They prime the immune system to fight a specific target.
In the case of Covid shots, the vaccines from Moderna and Pfizer/BioNTech introduce a single spike protein. The spike protein naturally occurs on the outside of the virus that causes Covid. When the immune system sees that single spike protein, it creates antibodies to block it.
But the cancer vaccine field so far is marked by "almost all failures," Loncar said. That makes Moderna's study results that much more impressive. Moderna targeted the genetic mutations of each individual patient's tumors in bespoke vaccines. Testing of the Moderna-Merck regimen significantly lowered the risk of relapse or death for some melanoma patients.
The company creates these personalized vaccines by comparing biopsies of healthy tissue and the tumor. Then, using big, data-reading computers, the vaccines zero in on specific targets for the immune system.
"The results are beyond our expectations in terms of the outcome," Moderna Chief Executive Stephane Bancel told IBD at the time.
Moderna Stock Pulls Back, But CEO Is Bullish
While Moderna stock shot up on its December cancer vaccine study results, it has pulled back since then. Shares fell below their 50-day moving average on Jan. 30, according to MarketSmith.com. BioNTech stock also has sloped down since mid-December and fell below its 50-day line late that month. Both biotech stocks peaked in August 2021 after the rollout of their first Covid-19 vaccines.
But Bancel is bullish on the technology, saying it will be easy for Moderna to replicate the cancer vaccines model for multiple tumor types.
The FDA's breakthrough designation means the treatment is eligible for all fast-track features, intensive guidance from the agency on an efficient development program and assistance from its senior managers.
Moderna and Merck already plan to begin a final-phase test of their regimen in melanoma this year. Bancel imagines a future in which adding the cancer vaccine to Keytruda improves outcomes in cancers where Keytruda alone didn't work or wasn't enough.
"Once you make a vertical work once, then it just becomes copy and paste, so you can scale very quickly," he said.
Moderna gained international notoriety in 2020 when it was among the first companies to launch a Covid vaccine in under a year. But Moderna isn't a Covid company, Bancel says. He notes Moderna is working on vaccines and treatments for infectious diseases, cancer and rare diseases.
"People are starting to realize, 'Oh boy, those guys can do cancer too,' " he said.
Other Biotech Stocks Eye Cancer Space
Investors in BioNTech and Moderna stock are hoping cancer vaccines will offer a second sales source after their massively successful Covid shots. They all use the same messenger RNA technology. Moderna managed to eke out another sales gain in 2022. Sales grew 4% to $19.26 billion. But next year, they are expected to crash 60% to $7.73 billion. Analysts expect BioNTech to report 2022 declines.
This makes their efforts in cancer vaccines that much more important.
If its approach works, Moderna could have "multiple blockbusters, potentially, in their pipeline already," Robo Global analyst Zeno Mercer told IBD. Research firm Robo Global runs the Healthcare and Technology Innovation ETF. It has 77 holdings, including Moderna stock.
BioNTech is testing its technology in patients with melanoma as well as prostate, head-and-neck, ovarian and lung cancer.
BioNTech's tests involve patients with metastatic melanoma. These are sicker patients whose cancer has spread to other organs. It's studying the cancer vaccine with an immunotherapy called Libtayo from Regeneron Pharmaceuticals and Sanofi.
Libtayo and Keytruda both block a protein called PD-1 that cancer cells use to camouflage themselves from the immune system.
How Biotech Companies Aim To Boost Immune Response
Immunotherapies are the key to unlocking the success of cancer vaccines, says Gritstone Chief Executive Andrew Allen. These drugs unveil hidden tumor cells. But many patients still don't have a strong immune response. Enter cancer vaccines, which supercharge the immune system with cancer-fighting T cells.
Costin, the cancer center director, says combining therapies — a long-standing Merck approach — could lead to "a more robust and effective immune response against cancer." He expects a higher number of responses that last longer and ultimately more cures.
Curt Kugel, the manager for the cell and gene vertical at research firm ZS, recalls the early days of research in immunotherapy. Blocking a protein called CTLA-4 didn't do much. But response rates spiked when they added a PD-1 blocker. If the cancer tries to dodge one mechanism, another backs it up.
"If you get the immune cells to now recognize the cancer, but the cancer is able to evade or kill the cells that recognize it, you're fighting an uphill battle, which is why this combination is so powerful," he said in an interview. "There are many other checkpoint inhibitors out there that could be equally as effective, and I think that's just something that the right combination will have to be investigated in different cases."
An Early Challenge For Cancer Vaccines
Supercharging the immune system proved a challenge in the early days of cancer vaccines. Then, Gritstone CEO Allen says four biotech stocks were in the mix: Moderna, BioNTech, Gritstone and Neon Therapeutics. But Gritstone and Neon employed a different strategy from their messenger RNA rivals.
Moderna and BioNTech saw a chance to use their existing platforms, he says.
"Whereas, we and Neon started with a sheet of paper saying, 'How do I solve this biological problem?' " Allen said in an interview. "And you then build the company to address that specific problem."
It takes the second group longer, "but maybe we end up with a better answer because it's customized for that particular challenge."
BioNTech has since acquired Neon.
Gritstone Success Buoys Moderna Stock Too
Early data is promising for Gritstone's approach.
In November, Gritstone stock gained almost 29% over two days after the company reported promising results for the company's cancer vaccine in patients with metastatic colon cancer. It's important to note the biotech stock rose from a low base. Gritstone stock closed at 3.03 on Nov. 11. Now it trades around 2.40.
Like Moderna and BioNTech, Gritstone tested its vaccine on top of a PD-1 blocker. Patients previously worsened while taking two earlier drugs. But these patients were still responding to the cancer vaccine for a median north of 22 months. Allen notes the company ran its study in a small number of patients.
"Roughly half of the patients with advanced colorectal cancer had molecular responses," Allen said. "Of the six or seven subjects who had molecular responses, their median survival has not been reached, but it was at least 22 months. Whereas in the six or seven who didn't have molecular responses, their median survival was 7.8 months, which is actually what you'd expect in third-line colorectal cancer."
Put another way, Gritstone's combo nearly tripled the expected overall survival rate among those who responded to the cancer vaccine.
Moderna stock also got a 3% boost the day Gritstone announced the test results.
Can Biotech Firms Turn 'Cold' Tumors 'Hot'?
Now, Gritstone hopes to push the envelope on which tumors could respond to its cancer vaccine.
There are two types of tumors. What researchers call "hot tumors" typically respond to immunotherapy. Melanoma is a hot tumor. These are cancers in which the immune system tends to have nearby T cells.
"Whenever you have an immuno-oncology drug, you test it in melanoma first," said Loncar, the biotech ETF indexes provider. "If it doesn't work in melanoma, it's unlikely you'll have much success in anything else. Biologically, melanoma is the most susceptible to immuno-oncology drugs."
He added: "It's important to know if an immunotherapy drug is going to work in anything, it's probably going to work in melanoma."
But colon cancer, the type of cancer where Gritstone tested its cancer vaccine, is typically a "cold tumor." Moderna's cancer vaccine previously missed the mark in a Phase 1 study of colon cancer patients unveiled in November 2020. Moderna stock surged that day, though, on promise in head-and-neck cancer patients.
Allen, Gritstone's CEO, sees a chance its tech could turn cold tumors hot, making them responsive to immunotherapy and, thus, cancer vaccines. Many types of lung, breast, prostate and ovarian cancers are thought of as cold tumors.
"That's a big challenge for the field," he said. "Can I make cold tumors hot? The answer is yes. We take these cold colorectal cancers and we make them hot."
Use Of Personalized Cancer Vaccines In Early-Stage Patients
Mercer, the Robo Global analyst, says cancer vaccines could be a game-changer for both health care and Moderna stock.
But he says they're not yet a silver bullet in cancer. Investors in biotech stocks must keep in mind what today's nascent cancer vaccines can do — and can't do.
"It doesn't necessarily appear preventative," he said. "I think 'vaccine' is a confusing term for the public. It often implies something is preventative. In reality, the vaccine is illuminating cancer that exists. It helps the immune system find it."
That doesn't mean the future won't get there, experts say. Like Loncar, Mercer notes screening tools like Illumina's Grail are finding cancerous cells at earlier and earlier stages. These tests, also known as liquid biopsies, only require a blood draw to screen for myriad cancers.
Costin, the cancer center director, sees a similar future.
"We are likely to see less surgery, less radiation therapy and less cytotoxic chemotherapy in the management of our patients," he said. "We are likely to see more people living healthy long and productive lives with cancer, and more people cured of cancer."
But Kugel, from ZS, notes risks to treating patients too early.
"It's about finding the right patients," he said. "In terms of the early ones, you also do want to be a little careful in terms of treating too early or too aggressively. In many cases, it could work but you really want to make sure you're not giving the cancer the ability to essentially become resistant because we know cancer is very, very good about that."
Are Cancer Vaccines Part Of The Holy Grail?
But most late-stage cancers could become a thing of the past, opening the door wider for early-stage treatments like cancer vaccines, Robo Global's Mercer says.
For cancers that progress and spread to multiple organs, there's less chance for cancer vaccines to make a difference, Mercer says. Moderna stock, notably, has gained on its efforts in early-stage cancer.
Still, he emphasizes, the vaccine is not a cure. It's too early to make claims that cancer vaccines can prevent tumor cells from becoming tumors. Yet they could play an important role in early cancers.
"I'm optimistic that annual cancer screenings with liquid biopsy will eliminate the number of people that get diagnosed at later stages," he said. "Where we might not even need to treat those types of cancers for the majority of cancers. That's what we want to envision."
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
