When Merck invested $100 million in cash and stock in Moderna back in 2015, and then another $125 million three years later, the term “mRNA” was barely known outside of biotech circles.
But now that Moderna’s mRNA vaccine to prevent COVID-19 is nearing the finish line—contributing to the collective worldwide sigh of relief that an end to the pandemic may be in sight—Merck’s early investment in the company looks rather prescient.
Merck said in a statement Tuesday that it had divested its stake in Moderna and would record “a small fourth-quarter gain” as a result. The value of the gain has not yet been disclosed, but it’s likely to be significant: Moderna went public in December 2018 at a price of $23 per share. Tuesday’s closing price was $142.
In 2015, Merck handed Moderna $50 million in cash and took a $50 million equity investment to partner on five preclinical mRNA projects. The idea of using mRNA, or messenger RNA, to spur cells in the body to make therapeutic proteins or antibodies was novel at the time and predicted to be years away from marketability. But Merck saw promise in using the technology to create cancer vaccines.
Merck was so optimistic, in fact, that it grabbed another $125 million in preferred equity in 2018, earmarking it for R&D and manufacturing. The expanded agreement included a KRAS-directed cancer vaccine, mRNA-5671, which is currently in phase 1 testing, both as a solo treatment and in combination with Merck’s immuno-oncology blockbuster Keytruda.
When the COVID-19 pandemic struck, Moderna poured all its attention into the rapid development of an mRNA vaccine to fight the virus. It applied for emergency use authorization from the FDA on Monday, citing 94% efficacy for its vaccine in an ongoing phase 3 trial.
Moderna is neck-and-neck with mRNA vaccine contenders Pfizer and BioNTech, who made history Wednesday when their vaccine, BNT162b2, was authorized for emergency use by U.K. regulators. Advisory committees to the FDA and CDC are scheduled to meet Dec. 10 to discuss Pfizer’s vaccine, which was 95% effective in its phase 3 study. And the company is already preparing for a rollout, staging dry runs with distributors and reportedly shipping doses from Belgium to the U.S.
Merck, for its part, has taken a measured approach to COVID-19 vaccine development. In July, it bought Themis, gaining control of V591, which uses a measles virus vaccine vector to deliver antigens that spark an immune response to SARS-CoV-2. Merck is also working on V590, a COVID-19 vaccine that’s based on a recombinant vesicular stomatitis virus platform.
Merck’s partnership with Moderna remains focused on oncology. In fact, Merck is pulling back from its work with Moderna on a respiratory syncytial virus (RSV) vaccine. Merck said in October it would take the vaccine, mRNA-1172, through phase 1 trials and then hand the rights to it back to Moderna. Merck opted instead to focus its resources on its own RSV antibody, which is currently in phase 2 trials.