Moderna rallies on Covid vaccine lawsuit settlement
Moderna, Inc. (MRNA) said late on Tuesday that it had agreed to pay $950 million to settle litigation cases brought against it by Arbutus Biopharma (ABUS) and Genevant Sciences.
The biopharmaceutical companies had accused Moderna of infringing on their patents in the development of its Covid-19 vaccine.
Genevant is a joint venture between Arbutus and Roivant Sciences (ROIV).
Moderna said that it would make a $950 million lump sum payment in this year's third quarter. But the company said that it expects to record a charge for the settlement in this year's first quarter.
Moderna also noted that it will appeal to the Federal Circuit court to argue that its government-contractor status limits its liability. If it loses the appeal, it will pay another $1.3 billion to Arbutus and Genevant within 90 days of the ruling.
However, the company said that losing the appeal "is not probable" and therefore does not expect to face any additional charges.
The litigation pertained to Moderna’s Spikevax shot for Covid-19 and its mResvia vaccine - also known as RSV - which is administered to prevent a type of lower respiratory tract disease caused by respiratory syncytial virus.
The biopharmaceutical companies accused Moderna of infringing on several patents covering lipid nanoparticle technology, which is used in Moderna’s mRNA vaccines.
Arbutus and Genevant first filed suit against Moderna in 2022. They later expanded their litigation against the drugmaker by filing additional lawsuits in Canada, Switzerland and Japan last year.
The settlement covers all legal action taken against Moderna. A trial was set to begin next week.
Shares of the drugmaker surged over 12% on Wednesday.
Although Moderna will record a fairly significant charge to settle the litigation, it is not only smaller than what had been expected, but Wall Street analysts see the settlement as also avoiding the worst possible outcome for the company.
If Moderna had lost in a trial, the company could have been liable for up to $7.9 billion in damages.
Leerink Partners analysts David Risinger and Mani Foroohar said in a note last year that losing the case could have been a “potentially crippling outcome” for Moderna.
Moderna expects to end 2026 with $4.5 to $5 billion in cash and cash equivalents after paying off the settlement.
"Resolving this legacy matter from our pandemic response removes uncertainty and allows us to turn our full focus to Moderna's exciting near-term future," Moderna CEO Stéphane Bancel said in a statement. "In 2026, we will return to revenue growth and end the year with a strong balance sheet, with more than $5 billion in liquidity, as we drive toward breakeven in 2028.”
Arbutus and Genevant are pursuing patent litigation against Pfizer Inc. (PFE) and BioNTech SE (BNTX) for their Covid-19 vaccines as well.
Moderna has also filed lawsuits against Pfizer and BioNTech, accusing the companies of infringing on its patents. There have in fact been a wave of lawsuits filed by pharmaceutical companies as they battle over who should be credited with inventing the Covid-19 vaccine.