Moderna’s efforts to develop next-generation vaccines faces strong headwinds

In a significant development, the U.S. Patent and Trademark Office has rejected arguments by Moderna that an Arbutus patent, known as the ‘069’ patent should be revoked since it described obvious concepts.

With the news reaching the market, Moderna Inc’s shares fell by nearly 10%. Arbutus shares more than doubled to $6.20 on Nasdaq. Moderna shares lost 9.5% and ended at $75.33 on the Nasdaq.

The development poses a significant challenge to Moderna’s efforts to develop next-generation vaccines.

The ‘069 patent relates to lipid nanoparticle (LNP) technology that helps enables our bodies to make its own therapeutic proteins.

According to Zachary Silbersher, a New York-based patent lawyer who is not involved in the case, LNP technology plays a vital role in Moderna’s vaccine development strategy; the patent ruling is likely to increase on the company to pay for a licensing fee to Arbutus.

As yet, it is unclear whether vaccines that are being developed by Moderna, including for the Wuhan coronavirus, infringe on the ‘069 patent and related ones owned by Arbutus. Moderna’s effort to invalidate the patent suggests that it sees it as a potential obstacle.

“At the end of the day, Arbutus might be able to claim a royalty in the [coronavirus] vaccine,” said Silbersher.

In a note, analysts at SVB Leerink said, the ruling was a “disappointing turn” for Moderna; it is however unlikely to have any immediate financial impact on the company.

Moderna can go on an appeal to the U.S. Court of Appeals for the Federal Circuit on the ruling, although there are numerous precedents that the appeals court often upholds the patent office’s observations.

Incidentally, Moderna has received funding from the U.S. government to develop a coronavirus vaccine.

Moderna did not immediately respond to requests for comments.

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