Welcome

Moderna Wants Fed. Cir. Help to Avoid Covid Vaccine Patent Suits

Oct. 6, 2021, 9:00 AM

Moderna Inc. subsidiary ModernaTX will ask the Federal Circuit at oral arguments Thursday to invalidate two patents it says could make its Covid-19 vaccine vulnerable to infringement suits.

The Patent Trial and Appeals Board upheld parts of Arbutus Biopharma Corp.'s U.S. Patent Nos. 9,364,435 and 8,058,069, on drug-delivery technology. Arbutus argues Moderna has no standing to appeal those decisions because Moderna hasn’t suffered any injury related to the patents.

Moderna will tell the U.S. Court of Appeals for the Federal Circuit that there is a substantial risk that Arbutus will sue, accusing various Moderna products of infringing the patents.

Moderna’s future is tied to the Covid vaccine. The company reported $60.2 million in revenue in 2019, a figure that jumped to $803.4 million last year thanks to federal grant dollars. The Cambridge, Mass.-based company has projected about $20 billion in sales this year, almost all of it from the Covid vaccine.

Warminster, Pa.-based Arbutus is “heavily favored” to win the appeals, which could lead to an infringement suit against Moderna, Jefferies analysts Kelechi Chikere and Michael Yee said in a note to clients. The “most likely outcome” is some sort of agreement that would bring in royalties in the “low single digits,” they said. Still, the analysts maintained their “hold” rating on Arbutus shares because it’s so hard to determine timing.

“A case of this nature could take years to litigate through various courts,” they said.

Lipid Nanoparticles

The patents cover 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 at the heart of the Covid vaccines, needs the lipid nanoparticles as a protective shell.

Royalties from nerve-function drug Onpattro—the first Food and Drug Administration-approved medicine that used Arbtutus’ technology—form the only source of revenue for Arbutus, which reported just $6.9 million in licensing fees last year.

Investors are speculating that the Arbutus patents, directed to a more stable lipid nanoparticle, will entitle the company to royalties from the mRNA-based vaccines by Moderna and Pfizer Inc. Moderna has a license to the Arbutus patents, but it’s limited to the areas of a respiratory virus known as RSV, Influenza A, and the mosquito-transmitted viruses Chikungunya and Zika.

Arbutus continues to receive patents on its lipid nanoparticle technology, including one approved last month that analysts say closely hews to the technology used by Moderna.

Moderna preemptively challenged three Arbutus patents on the technology at the PTAB, with mixed results. The board invalidated U.S. Patent No. 9,404,127, upheld all of the ‘069 patent, and upheld some claims of the ‘435 patent but invalidated others.

Moderna appealed, challenging the board’s findings that it didn’t show parts of the patents were obvious and anticipated.

Moderna contends the patents are for ideas already covered by other patents, with only trivial differences in an effort to extend Arbutus’ patent protection. Arbutus said its inventions overcame technical difficulties in improving the effectiveness of the drug delivery while limiting toxicity.

Competitor Standing?

But the Federal Circuit may not reach the merits of the board’s decisions if it accepts Arbutus’ standing arguments. A line of Federal Circuit opinions holds that petitioners who lose at the board don’t have standing to appeal unless they can show they are being actively sued for infringement or that such a suit is imminent.

Moderna argues there is a real risk that Arbutus will assert the patents against its Covid-19 vaccine. “Arbutus has long proclaimed that its patent estate covers virtually all lipid particle delivery systems,” it said in its opening brief in one of the appeals.

“Furthermore, this risk of being accused of infringement and the uncertainty created by Arbutus’s aggressive stance regarding the scope of its patents is already harming Moderna in the eyes of its investors,” Moderna said. It said its stock price fell 10% in one day when the board’s decision in one of these cases was issued, even though there was no actual infringement suit.

Arbutus counters in its response brief that the relevant inquiry is whether Moderna showed there was a substantial risk of an infringement lawsuit when it appealed in September 2020, before the vaccine had even received FDA emergency use authorization.

“Whatever a market fluctuation may prove, it certainly does not establish an imminent lawsuit, nor does it establish standing,” Arbutus said.

Amy Wigmore of Wilmer Cutler Pickering Hale and Dorr LLP in Washington will argue both cases for Moderna. David I. Berl of Williams & Connolly LLP in Washington will argue both cases for Arbutus.

The cases are ModernaTX, Inc. v. Arbutus Biopharma Corp., Fed. Cir., No. 20-1184, argument 10/7/21 and ModernaTX, Inc. v. Arbutus Biopharma Corp., Fed. Cir., No. 20-2329, argument 10/7/21.

To contact the reporter on this story: Perry Cooper in Washington at pcooper@bloomberglaw.com

To contact the editors responsible for this story: Renee Schoof at rschoof@bloombergindustry.com; Kibkabe Araya at karaya@bloombergindustry.com

To read more articles log in. To learn more about a subscription click here.