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Moderna, pacing a global vaccine race, loses a key patent fight

The U.S. Patent Trial and Appeal Board ruled against Moderna in an intellectual property dispute with Arbutus Biopharma, stating Thursday that a key technology to deliver messenger RNA, or mRNA, was invented by the latter company. Moderna had argued that the technology was “unpatentable.”Moderna’s experimental coronavirus vaccine uses lipid nanoparticles to deliver mRNA to human cells, along with other candidates in the biotech’s pipeline. Should the vaccine get to market, Moderna could now owe Arbutus substantial royalties, which could limit its “pricing flexibility and margin profile vs other players” developing coronavirus vaccines, SVB Leerink analyst Mani Foroohar wrote.

Arbutus has licensed much of the lipid nanoparticle intellectual property to a spinoff called Genevant, of which it shares ownership with Roivant Sciences. Arbutus stated that should Moderna be forced to sign a licensing agreement with Genevant because of the PTAB ruling, it would receive 20% of sales royalties.

Biopharma companies are especially dependent on the intellectual property they own to secure a competitive advantage and gain exclusive rights to sell their drugs.

In the world of small molecule drugs, patents can be relatively straightforward, centering on what’s known as the composition of matter of the medicine’s main therapeutic chemicals. However, with biological agents and other complex therapies, the delivery method can serve as an additional wall against competition.

Along with many other companies, Moderna is trying to change the course of disease by delivering genetic material that will instruct cells to begin manufacturing certain proteins — in the case of its coronavirus vaccine, mRNA-1273, a protein that mimics the SARS-CoV-2 “spike” protein and stimulates an immune response. Encasing the mRNA in a lipid nanoparticle — a microscopic fat bubble — protects it from breaking down and allows it to be delivered to its target, an invention that the disputed patent calls “stable nucleic acid-lipid particles.”

Moderna had sued Arbutus over three patents, and the PTAB last year invalidated one and parts of a second. The patent upheld Thursday was the parent of the one partially upheld earlier.

In a statement, Moderna noted those earlier patent decisions and said, “To the extent it is believed the PTAB erred in their decisions, Moderna may further pursue these matters.”

Moderna added that it “is not aware of any significant intellectual property impediments for any products we intend to commercialize, including mRNA-1273.”

Foroohar acknowledged that the decision may leave Moderna paying royalties to Arbutus in the future, which could be a burden should it eventually price and sell its vaccine — a problem its rivals won’t have. But he called that issue a “secondary concern.” More pressing for Moderna is “the impact of clinical data, pricing power, and competitive positioning in global tender markets,” he wrote.

Moderna shares fell 9% Thursday after the decision was issued during market trading hours, and another 4% in morning trading Friday, changing hands at $72.55 apiece. Arbutus shares rose 82% on Thursday but fell back 7% on Friday, at $5.75.