Short Sellers Just Lost $5B on the Wrong Pharma Bet: Cancer Vaccine Sends Stock Soaring 177%

For years, Moderna's critics had made the same bet. The company had become synonymous with its COVID-19 vaccine. But demand for that product fell as the pandemic receded. Its shares then suffered four straight years of losses and fell sharply from their 2021 peak. Short sellers believed the decline would continue. On Wednesday, that bet went badly wrong.

Moderna shares closed 177% higher after the company and Merck announced promising results from a late-stage trial of their experimental personalised cancer vaccine. The move dealt an estimated $5 billion blow to short sellers, according to S3 Partners data reported by Bloomberg. The surge was Moderna's largest-ever percentage gain and offered investors a new reason to look beyond the company's fading COVID-19 vaccine business.

The $5 Billion Bet That Went Wrong

Short sellers borrow shares and sell them in the hope of buying them back later at a lower price. If the stock rises, the strategy can produce losses. That is what happened to Moderna's bearish investors.

The stock's dramatic rise generated about $5 billion in mark-to-market losses for short sellers in a single day. Their losses for 2026 had risen to more than $7 billion. Matthew Unterman, managing director at S3 Partners, said the move had materially changed the risk and reward for investors who remained bearish on Moderna.

Short interest had already fallen from around 20% of Moderna's available shares earlier this year to roughly 14%. About 20 million shares, or around a quarter of bearish positions, had already been covered during 2026. Wednesday's surge now raises fresh questions over how many remaining short sellers will maintain their positions.

Cancer Vaccine Clears Key Phase 3 Test

The rally followed positive initial results from the first Phase 3 trial of the personalised mRNA-based treatment developed by Moderna and Merck. The study involved more than 1,100 patients with high-risk or advanced melanoma whose detectable cancer had been completely removed through surgery.

Patients who received the personalised treatment alongside Merck's Keytruda lived significantly longer without their cancer returning than those who received Keytruda alone, the companies said. The combination also reduced the risk of the cancer spreading to distant parts of the body.

The full results have not yet been presented. The companies plan to share the data at an upcoming international medical meeting, while the study will continue to assess overall survival. The results, therefore, mark an important milestone rather than the end of the scientific process. The treatment remains experimental and has not yet been approved by regulators.

Why the Treatment Is Different

The therapy is designed for each individual patient. Tumours contain their own set of mutations. Moderna and Merck's treatment uses information from those mutations to help train the immune system to recognise cancer-specific markers.

It is then combined with Keytruda, Merck's immunotherapy, which helps the immune system attack cancer cells. Dr Dean Li, president of Merck Research Laboratories, said the Phase 3 findings reinforced the promise of a more personalised approach to cancer treatment.

The initial results could be particularly significant for melanoma patients. Melanoma accounts for a relatively small share of skin cancers but causes the majority of deaths linked to the disease. For patients who have undergone surgery, recurrence remains a serious concern. The new treatment aims to extend the period before the cancer returns or spreads.

A Potential Turning Point for Moderna

For Moderna, the trial could represent a major shift. The company has spent years trying to build a business that extends beyond COVID-19 vaccines. Its personalised cancer programme has been central to that effort.

The positive Phase 3 result gave investors the strongest evidence yet that Moderna's mRNA technology could have a future in cancer treatment. The company and Merck are also studying the approach in other cancers, including non-small cell lung cancer, bladder cancer and renal cell carcinoma.

Analysts responded positively to the melanoma results. Needham analyst Joseph Stringer described the study as a landmark win for Moderna, while William Blair's Myles Minter upgraded his rating to outperform from market perform, according to Bloomberg's report.

Those reactions reflect a sharp change in expectations for a company whose long post-pandemic decline had encouraged investors to bet against its future.

The Market Has Changed Its View

Science still has further tests to pass. Moderna and Merck must present the full data, continue assessing overall survival and eventually seek regulatory approval before the treatment can reach patients. But Wednesday's market reaction showed how dramatically the outlook had changed.

Short sellers had bet that Moderna would struggle to replace the revenues generated by its COVID-19 vaccine. The positive cancer vaccine results gave investors a possible answer. That does not guarantee commercial success. It does, however, give Moderna a potential new growth path. For the investors who bet against it, the cost of getting that call wrong was about $5 billion in a single day.