The Zhitong Finance App learned that Citi published a research report to maintain Moderna (MRNA.US) “sell” rating and a target price of $80. The bank pointed out that Moderna's investor conference call during the European Society of Medical Oncology (ESMO) further strengthened management's confidence in individualized oncology treatment platforms, but did not substantially change Citi's views on the limitations of commercialization and the disconnect in valuation.
According to Citi, management and opinion leaders (KOLs) focused on the three potential aspects of the individualized novel antigen therapy intismeran: novel antigen-specific immune response, efficacy in melanoma patients in different risk groups, and improvements in recurrence-free survival (RFS) and survival without distant metastasis (DMFS), which can ultimately translate into overall survival (OS) benefits.
Citi was “not surprised” by this discussion, but pointed out that the call would have less emphasis on the importance of manufacturing, patient screening qualifications, treatment sequence, and mature OS data.
Regarding the new adjuvant immunotherapy ideas put forward by ESMO panelists, Citi believes that Moderna's objection is reasonable in direction: only some patients with melanoma present with a disease that is visible to the naked eye and can be removed. However, this also means that intismeran's clinical role may be more selective than some investors think. Furthermore, considering MSD Keytruda's established efficacy and sufficient safety data, Citi believes that the prospects for intismeran monotherapy are still highly dependent on future clinical verification.
Phase 3 trial yielded positive results, but there is still a gap between efficacy and market expectations
Citi's question was based on a positive phase III clinical result.
InterPath-001 is a global randomized, double-blind phase III trial. A total of 1,137 patients with stage IIB-IV high-risk melanoma who have completed surgical resection were included to compare the efficacy of intismeran in combination with pabolizumab (Keytruda) and placebo Keytruda. The median follow-up time was 24.6 months.
The main results are as follows:
Primary endpoint RFS: Among those intending to treat (ITT), the risk of recurrence or death was reduced by 42% in the combination treatment group, the risk ratio (HR) was 0.58, the 95% confidence interval was 0.45—0.75, and the p-value was less than 0.001. The 24-month RFS rates for the two groups were 82.2% and 70.0%, respectively.
Default MiTT sensitivity analysis: the risk ratio was 0.51, which reduced the risk of recurrence or death by 49%.
DMFS: The risk of distant metastasis or death decreased by 38% in the combination treatment group, the HR was 0.62, the 95% confidence interval was 0.45—0.85, and the p-value was 0.002. The 24-month DMFS rates for the two groups were 88.5% and 80.2%, respectively.
6-month boundary analysis: The efficacy of the two groups was basically the same in the first 6 months, and HR was 0.99; after 6 months, HR dropped to 0.42, and the corresponding risk was reduced by 58%.
OS: HR is 0.77, 95% confidence interval is 0.45—1.31, p-value is 0.33. Currently, OS data is not mature and has not reached statistical significance.
In terms of safety, the incidence of adverse events related to grade 3-5 treatment in the combination treatment group was 14.2%, and the Keytruda single drug group was 13.4%. Common adverse events in the combined group included fever (52.2%), pain at the injection site (51.0%), and fatigue (38.5%). Moderna said that over 99% of randomly enrolled patients successfully completed the production of individualized therapies.
Overall, InterPath-001 reached the main end point, and both RFS and DMFS results showed positive signals. However, OS benefits are still subject to longer follow-up verification, and it is uncertain whether the test results can be replicated in other cancer types.
Why are the three-phase results still triggering a sell-off?
The market is concerned not only about whether the trial is successful, but also whether actual efficacy can exceed previous expectations and whether clinical results can support broader commercialization prospects.
According to five-year follow-up data from the Intismeran Phase II study previously released by MSD, the risk of recurrence or death was reduced by 49%, and the risk of distant metastasis or death was reduced by about 59%. The main ITT analysis of this phase III trial showed that the risk of recurrence or death was reduced by 42%, and the risk of distant metastasis or death was reduced by 38%. The values were lower than the long-term follow-up results of phase II.
However, it should be noted that the Phase II long-term follow-up did not have exactly the same research environment and analytical caliber as the Phase III main analysis, and it is impossible to simply determine that the efficacy of the drug has substantially regressed in the phase III trial based on this. The three-phase pre-set MiTT sensitivity analysis showed a 49% reduction in the risk of recurrence or death, which is similar to the Phase II results; boundary marker analysis after 6 months also showed stronger efficacy signals.
What really affects market sentiment is that although the main findings of the Phase III analysis are clinically significant, they are not necessarily sufficient to support the expectations of some investors for the wider application prospects and commercial value of this treatment.
The stock price suffered a severe drop, and Citi's target price of $80 implied that there was room for a decline of more than 60%
Moderna's stock price fell sharply after the release of IntiSmeran's phase III clinical data. On October 22, the stock fell about 25% intraday to close at $202.63. Although the trial reached its main end, market responses showed that investors still have higher expectations for the efficacy range, application prospects for other cancer types, and commercialization potential.
It is worth noting that the stock has had significant gains before, with a cumulative increase of over 553% during the year. Against the backdrop of a sharp rise in stock prices, even if the overall clinical data is positive, as long as it fails to exceed market expectations, it may trigger profit settlement and valuation correction.
Citi maintains its target price of $80. Based on the closing price of $202.63 on October 22, the target price is about 60.5% lower than the stock price at the time. This valuation reflects Citi's cautious approach to the commercialization capability and overall valuation of Moderna's oncology therapy platform, rather than determining that this phase III trial failed.
Citi's five questions
1. Success in melanoma does not mean that the curative effect can be replicated across tumor types
Interpath-001 validated the clinical efficacy of IntiSmeran in melanoma. Immunological results, such as clonal amplification of novel antigen-specific T cells, also provided support for its prespecified mechanism of action.
However, the immune response does not necessarily translate into significant clinical benefits in other types of cancer. There are differences in tumor immunogenicity, tumor microenvironment, disease background, and sensitivity to PD-1 inhibitors.
Until more convincing randomized clinical evidence is obtained for other tumors such as kidney cancer, lung cancer, bladder cancer, or stomach cancer, Citi does not believe that intismeran has proven itself to be a tumor treatment platform that can be repeatedly successful in different types of cancer.
2. MiTT results support drug efficacy, but ITT is the more complete evaluation benchmark
The main ITT analysis of the phase III trial showed a 42% reduction in the risk of recurrence or death; the pre-set MiTT sensitivity analysis showed a 49% reduction in risk.
MiTT analysis helps evaluate efficacy in patients receiving treatment as planned. Considering that individualized products need to go through processes such as tumor tissue collection, product manufacturing, and treatment initiation, this type of analysis has some reference value.
However, Citi believes that the MiTT results should be used as supporting evidence and should not replace the main ITT analysis. ITT analysis can cover a more complete patient treatment process, including product manufacturing and accessibility, delayed initiation of treatment, early recurrence, and patients not actually receiving treatment.
For therapies that require individualized production, the manufacturing and treatment process itself is part of the actual clinical application. Therefore, the drug shows efficacy in patients who meet the treatment conditions and actually receive treatment, which does not mean that all potential patients can benefit to the same extent.
Furthermore, the efficacy results assessed by researchers rather than determined by the Blind Independent Center Review (BICR) are also factors to pay attention to when interpreting trial data.
3. There is limited overlap between new adjuvant treatments and adjuvant treatments, which not only preserves market space but also limits potential players
Newly adjuvant immunotherapy can be used before surgery and has become a treatment option for some resectable melanoma patients. Citi believes that there is some overlap between this treatment path and the post-operative adjuvant treatment scenario that intismeran mainly targets, but it is not completely competitive.
Citi estimates that neoadjuvant immunotherapy may currently only be applied to about 20% of melanoma patients, as a significant proportion of patients are diagnosed at the limited stage of the disease and removed before medical oncology intervention.
This means that intismeran may still have considerable room for adjuvant treatment applications. However, it may not be the first choice for all high-risk patients, particularly those with visible, resectable lesions and the opportunity to receive existing new adjuvant treatments earlier.
Therefore, the popularity of new adjuvant treatments does not mean that intismeran has lost its market, but rather further explains that its actual scope of application needs to be judged based on the patient's disease stage, surgical schedule, and treatment path.
4. Tumor tissue collection and individualized production may be a barrier to early commercialization
Citi pointed out that about 20% of screened patients had problems with insufficient tumor samples. This ratio may improve as clinical centers gain experience, but there is still a need to educate surgeons, pathologists, and treatment centers, and adjust sample collection and processing procedures.
Unlike standardized drugs, individualized novel antigen therapies require custom production based on the patient's tumor sample. Even if the drug itself is effective, factors such as insufficient tissue samples, manufacturing cycle, logistics, and treatment initiation time may affect whether patients can receive treatment in a timely manner.
Moderna said that more than 99% of randomly enrolled patients successfully completed production, which provided a positive signal about the viability of production. However, the production success rate does not completely eliminate the shortage of samples during the screening phase, nor does it alone prove that the process can be efficiently replicated across a wider range of healthcare institutions.
Citi believes that these issues are not unsolvable, but they are still a learning curve that requires time and resource investment. Whether individualized therapy can move from clinical trials to large-scale commercialization ultimately depends on whether sample collection, customized production, and clinical treatment processes can be reliably integrated.
5. OS benefits and monotherapy prospects are yet to be verified
The improvement in RFS itself is clinically significant, and the DMFS results are in the same direction, which also strengthens the market's confidence that this treatment can reduce important recurrences.
However, Citi believes that mature OS data is still an important indicator for subsequent evaluations. Overall survival is not only related to long-term clinical benefits, but also affects doctors' willingness to adopt, payer evaluations, and overall cost-benefit judgments.
The current OS analysis is not statistically significant, and follow-up will take longer. At this stage, improvements in RFS and DMFS cannot be directly equated with proven OS benefits.
As for intismeran monotherapy, Citi believes that its prospects are still highly theorized. Since Keytruda itself already has sufficient clinical evidence, it is necessary to verify through randomized trials in the future: after removing the PD-1 inhibitor as the therapeutic basis, can intismeran substantially improve safety, treatment burden, or cost while retaining the efficacy.
Valuation and risk: Clinical breakthroughs are not enough to eliminate commercialization uncertainty
Citi's target price of $80 is based on the Discounted Cash Flow (DCF) valuation model. The bank extended its free cash flow forecast to 2032 and used the capital asset pricing model (CAPM) to calculate the cost of equity; the model assumes a weighted average cost of capital (WACC) of 9.1% and a final value growth rate of 2%.
Citi listed Moderna as a high-risk investment, mainly considering fluctuations in biotech companies' stock prices and uncertainties in clinical trials, late-stage drug development and commercialization.
Upside risks: intismeran's clinical success in multiple tumors has exceeded expectations; commercially attractive efficacy characteristics drive widespread adoption (even when individual production is required); individualized oncology platforms are scaled up faster and more efficiently; respiratory product portfolios are more permeable and sustainable; more pipeline projects are converted into differentiated products; the vaccine policy environment is more friendly; and continued cost discipline.
Downside risks: Limited transformation of melanoma efficacy to other tumors; production or accessibility restrictions slow commercial adoption; more late-stage pipeline setbacks weaken confidence in broader mRNA platforms; demand, pricing, or shares of respiratory vaccines continue to be under pressure, compounded by slow pipeline transformation or increased operational requirements.
Conclusions
The positive results of the intismeran phase III trial proved that individualized mRNA tumor therapy has further development value in adjuvant treatment of high-risk melanoma. But for Moderna, clinical success is only the beginning of the commercialization path.
Citi's core concern is that the market may prematurely extrapolate clinical breakthroughs in single cancer types to cross-tumor platform advantages and give the company a higher valuation based on this. Whether it can be proven that OS benefits, replicate curative effects in other cancer types, and solve the implementation problems of tissue collection and individualized production will determine how much commercial value intismeran can ultimately create.
As a result, Moderna's current dispute is not about “the success or failure of the trial,” but rather whether clinical efficacy can be translated into commercial returns that are replicable, scalable, and sufficient to support current valuations.