The settlement, which requires Moderna to pay the plaintiffs $950 million upfront plus up to $1.3 billion in contingent commitments, is an outcome “better than feared,” according to analysts.
Moderna has agreed to pay up to $2.25 billion to resolve its patent conflict with Roivant and Arbutus Therapeutics, delivering some much-needed good news for shareholders after a difficult few weeks for the mRNA biotech.
Shares of Moderna climbed 6.5% to $53.10 per share in pre-market trading on Wednesday morning, compared to $49.83 at close Tuesday.
At issue in the patent case was Moderna’s alleged use of protected lipid nanoparticle technology to package and deliver its mRNA-based COVID-19 vaccine. In its original complaint in 2022, Arbutus alleged that Moderna “never entered a license agreement that covered the use of [the technology] to fight the coronavirus that causes COVID-19,” according to a court order last week. That order rejected two core defenses from Moderna. That left its enablement defense, in which Moderna argued that Arbutus’ patents did not enable a person of ordinary skill in the art to make and use its delivery technology.
Under the terms of the settlement, Moderna will front $950 million and pay an additional $1.3 billion in the case of a win on appeal to limit its liability through certain government-contractor immunity statutes, according to a Tuesday news release.
This contractor defense previously failed. Last month, Delaware District Judge Joshua Wolson wrote that infringement of patents for the government, as the statute allows, should benefit the government itself—such as through the vaccination of state employees—and not merely benefit the public at large. Moderna is appealing this decision to the Federal Circuit.
Despite this pending case, analysts at William Blair said in a note to investors that the settlement value is “better than feared,” adding that investors “were contemplating the impact of Moderna being liable for close to $5 billion.”
Such a sum, William Blair continued, would have raised concerns about the company’s liquidity. Now, however, “the company has certainty it is well funded through multiple late-stage oncology readouts” this year.
William Blair called Tuesday’s settlement a “clearing event” for Moderna amid a stretch of recent bad news for the company, most notably the FDA’s refusal to review its mRNA flu vaccine last month. The regulator at the time claimed that Moderna’s application was based on a study that did not meet its standards for being “adequate and well-controlled,” and that the company had not followed its recommendations in designing a pivotal trial.
Moderna and the FDA have since come to a compromise, with the agency agreeing to review the vaccine application for a narrower indication. A decision is expected in August.
Reporting full-year earnings last month, Moderna said that it is expecting Phase 3 data for the mRNA neoantigen therapy intismeran for the adjuvant treatment of melanoma later this year. The asset is also set to return mid-stage data in renal cell carcinoma and Phase 1 findings in pancreatic and gastric cancers.
Moderna indicated in January that it will no longer run late-stage vaccine trials amid growing skepticism in the U.S. Late last year, the company likewise axed three pipeline candidates and turned to a non-dilutive loan financing agreement to keep its balance sheet reassuring to investors.
