Moderna grabs $125M in expanded Merck cancer vaccine collaboration

On the heels of a massive $500 million round, Moderna has picked up another $125 million in preferred equity as it expands its mRNA cancer vaccine partnership with Merck.

The pair inked the original pact in 2016 to develop and market personalized, mRNA-based cancer vaccines. Merck handed over $200 million up front, which was earmarked to bring all R&D efforts through proof of concept and to build out a suburban Boston manufacturing facility. After proof of concept, Merck had the option to make an undisclosed payment to Moderna, following which the duo would equally share cost and profits.

Now, they are broadening the agreement to include mRNA-5671, Moderna’s mRNA KRAS cancer vaccine. The duo plan to test it in combination with immuno-oncology treatments. KRAS mutations occur in up to 25% of lung cancers, 45% of colon tumors and 90% of pancreatic cancers, but to date, no effective treatments targeting these defects have been developed. The fact that cancer vaccines have had a disappointing track record has not deterred Merck nor Moderna, which has 19 candidates in its pipeline.

"While KRAS has long been a challenging target, we believe our mRNA platform offers a novel approach designed to generate and specifically present KRAS mutations to the immune system, potentially allowing the patient’s own immune system to attack and eradicate cancers that harbor these mutations," said Moderna CEO Stéphane Bancel in a statement.

Under the expanded deal, Merck will be responsible for clinical development and associated costs, while Moderna will take care of clinical supply. Once mRNA-5671 has pushed through human proof of concept, Merck can then opt into further development and commercialization of the vaccine through payment of an undisclosed fee. The pair will then share the global costs and profits of the treatment.

Moderna reeled in a $500 million series G in February, which will enable it to gather more data on its mRNA pipeline and build out its manufacturing capabilities ahead of its long-anticipated IPO. There were rumblings in March that the biotech might consider listing both in the U.S. and Hong Kong, S.A.R., China, but Bancel put those rumors to rest.

"We are not planning on submitting an application to list in Hong Kong, S.A.R., China," he told CNBC. "We have no plans to list somewhere else outside the U.S. We are a U.S.-based company; the U.S. is a logical place to list."

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