The market is doing OK with the CPI number.  You would have preferred not to have seen the fade but given the previous history with trading on CPI numbers, I still count this as a win.  It helps that the number was close to expectations and that it seems to have peaked.  In other words, the number sort of confirmed expectations and did not push rate expectations higher or higher for longer.

1. I sort of want to spend today going over the MRK/MRNA cancer vaccine data. It was highly anticipated and highly touted by MRNA.  MRK had opted into the program and so they at least saw something that intrigued them.  The trial was in stage II/IV melanoma after a complete resection and compare monotherapy Keytruda to the combination of Keytruda plus the vaccine.  The endpoint was recurrence or death, i.e. progression free survival.

2. The PR announced a statistically significant benefit for the combination over Keytruda with a HR of .56, which represents an impressive 44% decrease in risk of recurrence or death. If you look at the details, however, the test was only one tailed.  Not to get into the weeds but using a one-tailed test essentially halves what is needed to be statistically significant and the standard in the industry is to use a two-tailed test.  You can theoretically use a one-tailed test if you assume away one side of the curve, which essentially MRNA is arguing that there was no chance of the drug doing harm.  That is not reasonable and that is why the standard is the use the two-tailed test.

3. We can see the results of the two tailed test in the PR as they included the confidence intervals of the HR and the upper end is 1.08. This means that a two-tailed test would not be statistically significant and that is frankly how I would read the results.  There is a signal, but it is not statistically significant, but a larger trial could very well have enough statistical power to show a statistically significant benefit, but this trial did not (regardless of the what the PR notes).

4. Also, keep in mind that melanoma is perhaps the easiest indication for IO assets given its immunogenicity. We do, however, have to give credit that the trial had an active control arm and a very potent active control, but I cannot read these results as some sort of vindication for cancer vaccines or clear signal that they have arrived.  The safety seem good with SAEs occurring in 14.4% of the combination arm as compared to 10% in Keytruda monotherapy.  As such, the bar for added efficacy is not additionally high because its adding a lot of SAEs.

5. I am a little surprised by the 20% gain for MRNA as it seems pretty obvious how they massaged the statistical significance. The market seems to be pricing in not only a melanoma indication but others as well.  I would certainly say one can increase the odds of success in melanoma from the teens to the 40%-50% range but I do not see this as increasing the odds outside of melanoma.

6. To be clear, I do not want to be perceived as being too negative, but it is disappointing they used a one-tailed test, and the stock reaction was way too positive for the data. I would not classify it as a bad result.  It was a modestly sized trial that had a good signal of efficacy (but not statistically significant) that justifies a more robust trial to determine if that signal is true or false.  I would say it also justifies some continued investigation in indications outside of melanoma to see if that signal can be replicated outside of such a highly immunogenic cancer.

7. I think the odds of this generating some sort of accelerated approval are quite low and there will need to be a regular phase III trial. I put the odds of success of that trial as a coin toss but as we get more detailed results that could change higher or lower.  I do think the FDA might have a lower efficacy bar given the safety profile (or how it appears at this point) but I would not count on it.  All in all, it was an interesting result and shows that cancer vaccines might work but more work needs to be done.

I will end it here and hope that everyone has been having a great Holiday season to this point.

Disclosure: Long MRK