Impact of MSD's Rejection of Evaxion's Gonorrhea Vaccine Option and Investment Value Assessment

According to news released by GlobeNewswire on December 19, 2025 [1], MSD (Merck) officially announced that it will not exercise the option for Evaxion Biotech’s gonorrhea vaccine candidate EVX-B2. Evaxion will retain the global rights to this product and seek new licensing partners.

• Short-term Impact
  : Following the news release, Evaxion’s stock price dropped 16.81% on December 19, and as of the close on December 23, it had fallen a cumulative 17.74% [0]. The decline mainly stems from the market’s negative reaction to losing MSD as a potential key partner.
• Long-term Impact
  : Evaxion’s cash runway can last until the second half of 2027, and since it did not include the option proceeds from MSD in its cash flow projections, its capital chain has not been directly impacted [0]. The company will continue to advance the EVX-B2 project (which has shown positive data) and collaborate with Afrigen Biologics to develop its mRNA version [0].
• Finance and Investment
  : Evaxion currently has weak financial performance, with negative EPS and ROE, and a high net loss ratio [0]. Its revenue depends on collaborative projects. Analysts have given it a consensus buy rating, with a target price of USD 13.50, far higher than the current stock price [0].

• Short-term Impact
  : MSD’s stock price rose 0.49% on December 19, and as of the close on December 23, it had increased a cumulative 4.41% [0]. The gain was mainly driven by other positive news, including the FDA prioritizing patient access to its products and the successful Phase 2 trial of the Winrevair drug [0].
• Long-term Impact
  : This decision has minimal impact on MSD due to its large scale (market capitalization of USD 263.99 billion [0]) and diversified pipeline. MSD had already exercised the option for Evaxion’s other vaccine candidate EVX-B3 earlier this year, and Evaxion is eligible for up to USD 592 million in milestone payments [0].
• Finance and Investment
  : MSD has a sound financial position, with positive EPS and ROE, and healthy profit margins [0]. Analysts have given it a consensus buy rating, with a target price of USD 120.00 [0].

1. Difference in Impact of Collaboration Decisions Based on Company Size
   : The stock price of small biotech companies (such as Evaxion) is susceptible to significant impacts from collaboration decisions by large pharma companies, while large pharma companies (such as MSD) can offset the impact of such decisions with other factors due to their diversified pipelines and financial strength [0].
2. Buffering Effect of Cash Runway
   : Evaxion’s sufficient cash reserves (until the second half of 2027) provide a time window for finding new partners, reducing short-term financial pressure [0].
3. Value of Pipeline Diversification
   : MSD had previously exercised the option for EVX-B3, which allows it to retain collaboration opportunities with Evaxion in the vaccine field while diversifying risks from a single project [0].

• Evaxion Biotech
  : May face challenges in finding new partners; sustained financial losses also pose long-term risks [0].
• MSD
  : This decision has minimal impact on it, with no significant new risks.

• Evaxion Biotech
  : Retaining global rights to EVX-B2 gives it the opportunity to collaborate with other pharma companies; the collaboration with MSD on EVX-B3 and the development of the mRNA version also provide potential for future revenue growth [0].
• MSD
  : Can focus resources on other more promising pipeline projects, including the already under development EVX-B3 [0].

MSD’s rejection of the option for Evaxion’s gonorrhea vaccine EVX-B2 is a short-term setback for Evaxion, but its sufficient cash runway and other collaborative projects (such as EVX-B3) mitigate the long-term impact. Evaxion has upside investment potential, but its financial status and progress in finding new partners need to be monitored. MSD’s decision has no substantial impact on its finances and operations; its sound financial position and diversified pipeline maintain a positive investment outlook.