Moderna's $44 Billion Stock Surge Hides a Hidden Cost

Moderna's stock surged $44 billion in a single day after its personalized melanoma vaccine, intismeran autogene, hit its Phase 3 goals. This was not a surprise, but rather the culmination of a strategy that has been in place since the company's early years.

CEO Stephane Bancel's rule is to never let two unknowns share one experiment. In other words, he wants to isolate one risk at a time and pay someone else to carry the risk Moderna cannot learn from. This approach was put into action with the cancer vaccine partnership with Merck.

In 2016, Moderna signed an agreement with Merck to co-develop intismeran autogene. Merck paid $200 million upfront and had the option to buy in for another $250 million participation payment. The two companies split development costs and worldwide profits 50/50, with Merck leading commercialization.

By partnering with Merck on a well-understood disease like cancer, Moderna was able to test its technology without taking on too much risk. This strategy has allowed the company to maintain control over its manufacturing process and reap significant profits from the partnership.