On Merck and Moderna’s relationship

You’ve probably already heard or read about Merck and Moderna’s announcement this week about a highly successful new mRNA treatment that prevents high-risk melanomas from recurring. The news caused stock at both companies to soar on Wednesday.

First, a bit of history: Long before Wednesday’s news, Moderna entered into a strategic alliance with Merck, so much so that the company was mentioned over 300 times in the S-1 that Moderna filed on Nov. 9, 2018. Moderna went public about a month later. By Dec. 2020, just before Moderna rolled out the Covid vaccine, Merck announced that it was selling its stake in Moderna and would book a small profit. Then, in October 2022, Merck announced that it had entered into a 50-50 joint development agreement with Moderna for personalized cancer vaccines — a deal that ultimately led to the stock surge for both companies on Wednesday.

But there’s another part to the puzzle: Merck has also been a buyer of Moderna stock starting in the fourth quarter of 2024 when Merck filed its very first 13F. The listed value on that first 13F was $96 million. That filing showed that Merck owned 2.3 million shares of Moderna, a position that hasn’t changed over six subsequent 13Fs, including the one filed two weeks ago on Aug. 7.

Because 13Fs are delayed by 45 days, the value of Merck’s interest in Moderna was listed as being worth $161 million as of June 30. On that date, Moderna stock closed at just over $70 a share. On Wednesday, Moderna stock climbed as high as $175 a share, representing a pretty substantial paper-gain for Merck, or just over $405 million. On Thursday, Moderna closed at $133.32 a share, bringing the value down to $306 million.

It will be interesting to see when the next 13F period rolls around in November whether Merck held onto those 2.3 million shares or took some profits off the table following Wednesday’s announcement. Unfortunately, 13Fs aren’t particularly detailed (one of the many reasons I find them not particularly useful as long as we’re being honest). All you really see is the number of shares owned and the value as of the last day of the quarter, which in this case will be Sept. 30.

On a somewhat related note — and why I find all of the breathless headlines about 13F holdings borderline useless — this “news” story, which was widely picked up by various financial aggregation sites and tied to the blockbuster mRNA results, stated that Merck’s position in Moderna was a new holding. But that’s not exactly accurate is it? A quick search of Merck’s 13Fs clearly shows that they first bought the stock sometime during the fourth quarter of 2024, although we don’t know when or how much they paid.