A patent court has sided with Arbutus Biopharma in its dispute with Moderna, raising concerns that the intellectual property dispute could stymie COVID-19 vaccine development. The news sent shares in Moderna down 9% despite it being unclear whether the patent is relevant to its COVID-19 vaccine.
The case centers on an Arbutus patent covering lipid formulations for the delivery of nucleic acids. In filing the patent, Arbutus said the technology is based on a “surprising discovery.” Moderna disputed the novelty of the idea and took Arbutus to court on the grounds that it would have been obvious at the time of the invention.
In a decision published Thursday, the Patent Trial and Appeal Board sided with Arbutus, concluding that Moderna had failed to show the claims made in the patent “would have been anticipated or obvious.”
The decision is the third ruling in a series of cases brought by Moderna against Arbutus with mixed, but largely unnoticed, results. However, the two previous rulings arrived last year, well before COVID-19 turned Moderna into one of the most closely watched companies on earth. In today’s heightened environment, the patent loss was enough to send Moderna’s stock spiraling downward.
Whether the stock drop is justified remains to be seen. Moderna licensed lipid nanoparticle (LNP) technology from Acuitas to enable the delivery of mRNA. The ClinicalTrials.gov listing for the first human study of Moderna’s COVID-19 vaccine, mRNA-1273, describes the shot as a LNP-encapsulated mRNA-based vaccine, but the mRNA specialist maintains there are no patent barriers to its progress.
Some investors clearly see a payday in Arbutus’ future. Arbutus’ stock doubled in the wake of the patent ruling, although the biotech would have to risk a global backlash to take any actions that may slow the development of mRNA-1273.
Such patent disputes often end in one party agreeing to pay an upfront fee and ongoing, perhaps time-limited royalties to secure the right to use a piece of intellectual property. Along the way, the courts can impose injunctions that stop companies from selling products that may infringe patents. This often protracted process rarely makes or breaks a product, but the time pressures and level of competition that characterize the COVID-19 vaccine race make Moderna’s situation atypical.