Shares in Moderna fell as much as 10% Thursday after the company failed in an attempt to invalidate a US patent on vaccine technology held by Arbutus Biopharma. SVB Leerink analyst Mani Foroohar suggested the decision by an administrative court run by the US Patent and Trademark Office opens the door to debate around Moderna's entire pipeline, with the near-term concern being its experimental coronavirus vaccine mRNA-1273, which is due to enter Phase III testing later this month.
The challenge centres on an Arbutus patent known as '069 covering lipid nanoparticles, which are the delivery system for messenger RNA drugs, including Moderna's coronavirus vaccine. Moderna had argued that Arbutus has used overlapping claims in different patents to extend its patent protection and limit research.
The ruling puts pressure on Moderna to pay for a license to Arbutus' patent portfolio, although the company can still appeal the patent office ruling to the US Court of Appeals for the Federal Circuit.
Foroohar called the decision in Arbutus' favour "a disappointing turn for Moderna." He predicted that it "opens the door to a fascinating (and likely protracted) period of investor controversy and debate around the implications of any potential infringement of claims by Arbutus regarding Moderna's use of lipid nanoparticle delivery technology, and any further actions Moderna may take to defend their own (intellectual property) position and freedom to operate."
The analyst noted that "revenue concentration in (the coronavirus vaccine) is a central feature of the investment case for Moderna shares. Any meaningful royalty burden could hamper Moderna's pricing flexibility and margin profile versus other players in the SARS-CoV-2 vaccine market."
Earlier this month, Phase I study findings for mRNA-1273 showed that the experimental vaccine induced "robust" immune responses in all study participants.
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