We’ve been seeing some pretty big news emerge out of the biotech sector recently. Vaccine makers are already seeing plenty of gains these past days as fears over the Omicron variant continue to grow. This includes Moderna (MRNA), whose stock has been swinging back and forth multiple times over the past few days. However, Moderna is now falling after losing a crucial patent battle against a much smaller biotech rival, Arbutus Biopharma (ABUS).
The U.S. Court of Appeals for the Federal Circuit ended up rejecting Moderna’s petition to invalidate a number of Arbutus’ patents, all of which use the same underlying technology that the mRNA Moderna shot uses to delivery genetic information. What that means is that Arbutus, if management wishes, has the right to file for patent infringement against Moderna for its Covid-19 shot.
The company had been working on its own lipid nanoparticle technology, which is used to deliver genetic material throughout the body. These lipid nanoparticles are used by both Arbutus and Moderna in their respective treatments, although Arbutus technically filed for a patent first. After realizing the issue, Moderna decided to file pre-emptive legislation, challenging three of Arbutus’s lipid nanoparticle patents.
Even before the ruling, most experts expected that an Arbutus victory would be likely. However, the real question is whether the company will seriously sue Moderna. In all likelihood, it’s more probable that they’ll come to a modest settlement than anything else. As for how much, that could range from the hundreds of millions to potentially low billions of dollars.
“When you’re thinking about the revenue opportunity from the vaccine, so just like $10 (billion) to $20 billion annually, a small low-single-digit royalty is immaterial to Moderna,” said Jefferies analyst Dennis Ding following the news. He added that, despite the ruling, a small settlement would mean little to Moderna in the long run. It’s largely a symbolic loss for the company.
Shares of Moderna were down around 9.5% on the news. However, Arbutus saw its stock soar over 85.4%, making it the best performing stock over the course of Wednesday. Most analysts don’t think the court ruling really makes a big difference for either party, although Arbutus will definitely appreciate the extra publicity and possible settlement money it will receive.
Moderna has recently gotten in some trouble with the U.S. government, specifically with the National Institutes of Health, over some aspects of its vaccine. Despite this, however, the company has continued to rake in cash. The company’s most recent third-quarter showed that it expects to bring up to $18 billion in revenue this year from vaccine sales, even if that is a slight downgrade from its previous $20 billion estimate.
Moderna Company Profile
Moderna is a commercial-stage biotech that was founded in 2010 and had its initial public offering in December 2018. The firm’s mRNA technology was rapidly validated with its COVID-19 vaccine, which was authorized in the United States in December 2020. Moderna had 24 mRNA development programs as of early 2021, with 13 of these in clinical trials. Programs span a wide range of therapeutic areas, including infectious disease, oncology, cardiovascular disease, and rare genetic diseases. – Warrior Trading News
