Merck Sells Moderna Stake After Record Pandemic-Era Gains

Compiled by Keke

On December 2, Merck & Co., Inc. (MSD) issued a statement announcing that it had divested its direct equity stake in Moderna during the first half of the fourth quarter of this year by selling its shares in the company, which would result in “a slight increase in financial revenue for the fourth quarter.” The value of the proceeds has not been disclosed but could be significant. Moderna went public in December 2018 at $23 per share, and its closing price as of Tuesday, December 1, was $142.

In a statement, Merck Sharp & Dohme (MSD) indicated that the company realized substantial gains from its direct investment in Moderna stock, particularly during the significant share price surge in 2020. According to U.S. media reports, MSD generated nearly $1 billion in investment income over the past nine months, primarily driven by the skyrocketing share price of Moderna. Currently, MSD maintains an indirect investment in Moderna through its holdings in venture capital funds. Amid this news, Moderna’s shares fell 2.5% in pre-market trading on Wednesday.

It is reported that Merck & Co., Inc. (MSD) is not the only company to have divested its stake in Moderna. According to The Washington Post, as early as May this year, Noubar Afeyan of Flagship Pioneering sold off $68 million worth of Moderna shares he held. Flagship Pioneering is a biotechnology company headquartered in Cambridge, Massachusetts, USA, and is Moderna’s largest shareholder.

Merck Sharp & Dohme’s collaboration with Moderna began in 2015, when Merck provided Moderna with $50 million in cash and a $50 million equity investment, while also signing a collaboration agreement worth up to $350 million to develop and commercialize messenger RNA (mRNA) programs targeting respiratory syncytial virus (RSV) and three other viruses. These initiatives primarily leveraged the then-novel concept of using mRNA to stimulate cells in the body to produce therapeutic proteins or antibodies. At the time, mRNA was largely unknown outside the biotechnology community and was expected to be years ahead of the market.

Meanwhile, Merck Sharp & Dohme (MSD) recognized the potential of leveraging this technology to develop cancer vaccines and expressed strong optimism. Consequently, in 2018, MSD invested an additional $125 million in preferred shares in Moderna, specifically earmarked for research, development, and manufacturing. The expanded agreement includes mRNA-5671, a KRAS-targeted cancer vaccine, which has currently entered Phase 1 clinical trials. It is being studied both as a monotherapy and in combination with Keytruda, MSD’s blockbuster immuno-oncology product. In retrospect, MSD’s early investment in Moderna proved to be quite prescient.

When the COVID-19 pandemic struck, Moderna directed all its efforts toward the rapid development of an mRNA vaccine capable of combating the SARS-CoV-2 virus. On November 30, the company submitted a request for Emergency Use Authorization to the U.S. FDA, based on data from its ongoing Phase 3 trial demonstrating that its vaccine, mRNA-1273, achieved an efficacy rate of 94%. The review meeting of the FDA’s Vaccines and Related Biological Products Advisory Committee is likely to be scheduled for December 17, 2020.

However, Pfizer/BioNTech’s BNT162b2 vaccine, a competitor on par with Moderna’s vaccine, received emergency use authorization in the United Kingdom this Wednesday. The advisory committees of the U.S. FDA and CDC are scheduled to meet on December 10 to discuss the authorization of the Pfizer vaccine, which demonstrated 95% efficacy in Phase 3 trials. Moreover, both companies have conducted trial runs with distributors, planning to ship the vaccine from Belgium to the United States.

In contrast, Merck Sharp & Dohme (MSD) has adopted a cautious approach to developing COVID-19 vaccines. In July this year, the company acquired Themis, thereby securing rights to the candidate vaccine V591, which uses a measles virus vector to deliver antigens and elicit an immune response against SARS-CoV-2. Additionally, MSD is developing another candidate vaccine, V590, a COVID-19 vaccine based on a recombinant vesicular stomatitis virus platform.

Merck Sharp & Dohme (MSD) stated that its future partnership with Moderna will remain focused on oncology, with the two companies continuing to collaborate on the development of personalized cancer vaccines and a cancer vaccine targeting the four most common KRAS mutations. On the other hand, MSD is clearly withdrawing from its research into respiratory syncytial virus (RSV) vaccines. In October, the company announced that it would return the candidate vaccine mRNA-1172 to Moderna after Phase 1 clinical trials. MSD has since shifted its resources to focus on its own RSV antibody, which is currently in Phase 2 trials.

Reference Source:

1、Merck sells off its Moderna stake after making record gains amid the pandemic

2、Merck cashes in on Moderna COVID-19 vaccine enthusiasm with sale of equity stake