Moderna stock tumbled late Thursday after the biotech lost a patent battle that may jeopardize the financial future of its coronavirus vaccine, though the company denies that.
XModerna (MRNA) challenged patents held by Arbutus Biopharma (ABUS) covering lipid nanoparticle, or LNP, technology. Lipid nanoparticles are the delivery system for messenger RNA drugs, including Moderna's coronavirus vaccine, which is known as mRNA-1273.
In a hearing Thursday, Moderna unsuccessfully argued before the U.S. Patent Trial and Appeal Board that Arbutus' claims shouldn't be patented. Moderna later said that the board "erred" in its decision and said it "may further pursue these matters." But it contends the ruling doesn't interfere with its plans for a coronavirus vaccine.
"Moderna is not aware of any significant intellectual property impediments for any products we intend to commercialize, including mRNA-1273," the company said in a written statement.
Shares of Moderna crumbled just before the stock market's close, losing 9.5% and ending the regular session at 75.33. Moderna further slipped 2% after hours. Shares of small-cap biotech stock Arbutus soared 119.9% to 6.20.
Moderna Stock: A 'Disappointing Turn'
Despite the company's contention, the ruling could cut into profits on any Moderna drug, including mRNA-1273, says SVB Leerink analyst Mani Foroohar.
"Revenue concentration in (the coronavirus vaccine) is a central feature of the investment case for Moderna shares," Foroohar said. "Any meaningful royalty burden could hamper Moderna's pricing flexibility and margin profile vs. other players in the SARS-CoV-2 vaccine market."
Foroohar called the decision in Arbutus' favor "a disappointing turn for Moderna."
"This decision opens the door to a fascinating (and likely protracted) period of investor controversy and debate around the implications of any potential infringement of claims by Arbutus regarding Moderna's use of Lipid Nanoparticle delivery technology, and any further actions Moderna may take to defend their own (intellectual property) position and freedom to operate," he said.
The result opens the door to debate around Moderna's entire pipeline, Foroohar said, including Moderna's coronavirus vaccine, which is expected to begin Phase 3 studies later this month. Moderna stock has been volatile amid its efforts to develop a coronavirus vaccine.
Foroohar kept his market perform rating on Moderna stock.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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