Dive Brief:

• Moderna has agreed to pay up to $2.25 billion to Arbutus Biopharma and Roivant subsidiary Genevant Sciences in a settlement that ends a longstanding legal dispute over technology used in its mRNA vaccines. 
• In a statement Tuesday, Moderna said it will make an upfront payment of $950 million in the third quarter of this year while appealing another $1.3 billion in possible payouts to a federal circuit court. Moderna won’t have to pay future royalties on sales of its mRNA vaccines following the initial lump sum payment. 
• The settlement comes just days before the scheduled start of a jury trial in Delaware and leaves Moderna liable for far less than the roughly $5 billion Arbutus and Genevant had been seeking. Moderna shares rose 9% in early trading Wednesday. 

Dive Insight:

Moderna rose to prominence by quickly bringing to market one of the world’s first COVID vaccines, a shot that brought in billions dollars in revenue and made the company a household name. But along the way, Moderna also found itself immersed in multiple legal fights, with spats erupting among several players asserting ownership of patents covering different aspects of the technology. 

The dispute with Arbutus and Genevant centers around the fatty shells, or “lipid nanoparticles,” Moderna uses to deliver mRNA into cells. These LNPs were pioneered by other companies, including Arbutus, and are a critical component of Moderna’s shots.

In its own announcement, Roivant — which in addition to owning Genevant holds a stake in Arbutus — said the settlement “holds Moderna accountable for infringement,” while offering the company a non-exclusive license to Genevant’s LNP technology for certain infectious disease vaccines.

“It is enormously gratifying for the Genevant team to, at long last, be recognized for our pivotal contribution to restoring normalcy around the world in the face of a once-in-a-lifetime pandemic,” Genevant’s CEO James Heyes said in the statement. 

Yet the deal was also a win for Moderna. The company has been under financial stress for multiple years following a decline in COVID vaccine sales and minimal contributions from another shot it developed. A larger settlement payment, plus ongoing sales royalties, would’ve left Moderna even more cash-strapped. 

The spike in Moderna’s share price, then,“reflects relief for a successful dodged bullet” and avoiding a “worst-case scenario,” wrote Leerink Partners analyst Mani Foroohar. Investors were concerned about a deal that’d “push the balance sheet into acute distress or burden out-year margins with a further royalty,” he wrote. 

William Blair analyst Myles Minter added in a separate note that the company is now well-funded through multiple late-stage oncology readouts expected this year. Those results are now critical growth drivers for Moderna, Minter added. 

Moderna now expects to end the year with between $4.5 billion and $5 billion in cash and cash equivalents, and has access to up to $900 million under an existing credit facility. 

Arbutus and Genevant also have an ongoing suit against Pfizer and BioNTech, the makers of another prominent mRNA vaccine for COVID.