Moderna breaks off after the enchantment attributable to patents referring to the supply of prescription drugs has been misplaced (2)

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Moderna Inc. shares slumped after the drug company lost an appeal against a patent ruling involving a competitor’s drug delivery technology that could make its Covid-19 vaccine vulnerable to infringement lawsuits.

A three-judge panel of the U.S. Federal District Court of Appeals on Wednesday ruled rulings from the Patent Trial and Appeal Board on two Arbutus Biopharma Corp. patents. confirmed. The court said Moderna had no power to appeal the ruling on a patent because it didn’t develop its Covid vaccine until the appeal was filed – the pandemic has not yet started. The panel also confirmed the board’s finding that Moderna had failed to demonstrate that the second patent covered an obvious invention.

Moderna was the worst performer on the S&P 500 index, losing 12% in New York trading. Arbutus was up 44% while its largest shareholder, Roivant Sciences Ltd., was up 34%, the biggest daily gain since the biotech company’s reverse merger last year.

“Ultimately, we expect the parties to go to court, but when the time comes, they will settle for a small royalty,” said Dennis Ding, an analyst at Jefferies, in a research note.

Genevant Sciences Inc., jointly founded by Arbutus and Roivant in 2018, holds licenses for the patents. Roivant has an 80% stake in Genevant.

Moderna’s future is tied to the Covid vaccine. The company recorded sales of $ 60.2 million in 2019, a number that rose to $ 803.4 million last year, thanks to federal grants. The Cambridge, Massachusetts-based company has forecast sales of approximately $ 20 billion this year, almost entirely from the Covid vaccine.

A Moderna spokeswoman said the court’s patent ruling was unrelated to the company’s dispute with the U.S. National Institutes of Health over whether government scientists co-inventing Moderna’s Covid-19 vaccine should have been included in a key patent application .

A representative from Arbutus did not respond to a request for comment.

Arbutus, based in Warminster, Pennsylvania, was “heavily preferred” to win the appeals, which could lead to an infringement lawsuit against Moderna, Jefferies analysts Kelechi Chikere and Michael Yee said in a statement to their clients.

Lipid nanoparticles

The patents relate to lipid nanoparticles – tiny balls of fat that protect genetic material as it travels through the body to enter specific cells to deliver drugs. Messenger RNA, the genetic material in the heart of Covid vaccines, needs the lipid nanoparticles as a protective shell.

The royalties for the nerve function drug Onpattro – the first Food and Drug Administration-approved drug to use Arbutus’ technology – is the sole source of revenue for Arbutus, which had just $ 6.9 million in royalties last year.

Investors have speculated that the Arbutus patents, which are directed to more stable lipid nanoparticles, entitle the company to royalties from Moderna and Pfizer Inc.’s mRNA-based vaccines. Moderna is licensed to the Arbutus patents, but is limited to the areas of a respiratory virus called RSV, Influenza A, and the mosquito-borne viruses Chikungunya and Zika.

Moderna has preemptively challenged three Arbutus patents on the technology at PTAB, with mixed results. The board invalidated a patent that was not in dispute in the Federal Circuit’s last two judgments, upheld all others, and upheld some claims by a third party.

Moderna appealed and denied the board’s findings that parts of the patents were not obvious and expected.

The cases are Arbutus Biopharma Corp. v Moderna Therapeutics Inc., 20-1186; and Moderna TX Inc. v Arbutus Biopharma Corp., 20-2329, US District Court of Appeals.

(Updates stock quotes, analyst comments, and details on Genevant Sciences’ licenses.)

–With support from Susan Decker, Robert Langreth, and Cristin Flanagan.

To contact the reporters on this story:
Christopher Yasiejko in Wilmington, Delaware at cyasiejko1@bloomberg.net;
Perry Cooper in Arlington at pcooper37@bloomberg.net;
Matthew Bultman in Arlington at mbultman@bloomberg.net

To contact the editors responsible for this story:
Katia Porzecanski at kporzecansk1@bloomberg.net

Steve Stroth

© 2021 Bloomberg LP All rights reserved. Used with permission.

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