July 24, 2020 / 4:38 AM / 21 days ago

Moderna loses challenge to Arbutus patent on vaccine technology

(Reuters) - Shares of Moderna Inc fell nearly 10% after it lost a bid to invalidate a U.S. patent owned by Arbutus Biopharma that poses a potential obstacle to Moderna’s efforts to develop next-generation vaccines, including a coronavirus vaccine.

An administrative court run by the U.S. Patent and Trademark Office rejected arguments by Moderna that an Arbutus patent known as the ‘069 patent should be revoked because it described obvious concepts.

The ‘069 patent relates to lipid nanoparticle (LNP) technology that allows the human body to make its own therapeutic proteins.

LNP technology is crucial to Moderna’s vaccine development efforts, and the patent ruling could increase pressure on the Cambridge, Massachusetts-based firm to pay for a license to Arbutus’ patent portfolio, said Zachary Silbersher, a patent lawyer in New York not involved the case.

Silbersher said it was unclear if vaccines being developed by Moderna, including its coronavirus vaccine, infringe the ‘069 patent and related ones owned by Arbutus. But Moderna’s effort to invalidate the patent suggests the company sees it as a potential obstacle, he said.

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

The ruling was a “disappointing turn” for Moderna but is not likely to have any immediate financial impact on the company, analysts at SVB Leerink said in a note.

Moderna can still appeal the patent office ruling to the U.S. Court of Appeals for the Federal Circuit. That court, however, often upholds the patent office’s determinations.

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

Arbutus shares more than doubled after the patent board posted its opinion on its electronic docket, to $6.20 on Nasdaq. Moderna shares lost 9.5% to end at $75.33, also on Nasdaq.

Moderna did not immediately respond to a Reuters request for comment.

Reporting by Vishwadha Chander in Bengaluru and Jan Wolfe in Boston; Editing by Anil D'Silva, Cynthia Osterman and Dan Grebler

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