Moderna could be sued over vaccines as court upholds Arbutus patents

Dec 1 (Reuters) - Moderna Inc (MRNA.O) could face a patent infringement lawsuit over its COVID-19 vaccine after a federal appeals court on Wednesday rejected its challenge to patents belonging to Arbutus Biopharma Corp (ABUS.O).

Arbutus shares nearly doubled following the ruling, up 95% at $6.25. Moderna shares were off more than 10% at $316.43.

The Federal Circuit U.S. Court of Appeals let stand an administrative panel's findings that Arbutus' patents - which may cover technology used in the vaccines - are valid, as the science involved was not previously known.

Moderna and Arbutus did not respond to requests for comment.

Moderna previously said in court filings that it believes Arbutus could bring a lawsuit demanding royalties from its COVID-19 vaccine if the patents were upheld.

The company last month forecast 2021 sales of between $15 billion and $18 billion, and 2022 sales of between $17 billion and $22 billion, for its COVID-19 vaccine.

Jefferies analyst Dennis Ding said an infringement lawsuit was possible, but could drag for years, adding that Arbutus will likely settle for a small royalty.

"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," he said.

Both patents in question involve the so-called lipid nanoparticles that enclose the genetic material, known as messenger RNA (mRNA), in the vaccine. The technology could prove useful in developing future mRNA-based vaccines against other illnesses as well.

Moderna initially challenged the patents before the U.S. Patent Trial and Appeal Board, part of the federal patent office. The board agreed with Moderna that some portions of one of the patents were invalid but otherwise sided with Arbutus, and the Federal Circuit upheld its findings.

The patents are licensed to Genevant Sciences Inc, a company launched in 2018 by Arbutus and Roivant Sciences Ltd (ROIV.O). Roivant owns about 80% of Genevant and Arbutus owns the remainder.

Moderna is also embroiled in a months-long patent conflict over its COVID-19 vaccine with the U.S. National Institutes of Health (NIH). read more

NIH has asserted that three of its scientists helped design the genetic sequence used in Moderna's multibillion-dollar vaccine and should be named on the patent application, a claim the company disagrees with.

The company maintains that the mRNA sequence in the company's vaccine was selected exclusively by Moderna's scientists, and without input of NIH scientists.

Reporting By Brendan Pierson in New York; Additional reporting by Mrinalika Roy and Amruta Khandekar in Bengaluru; Editing by Bill Berkrot

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Brendan Pierson reports on product liability litigation and on all areas of health care law. He can be reached at