Arbutus BioPharma and Genevant (ROIV – Roivant Sciences Ltd.) and the Fight for Patent Rights via /r/wallstreetbets #stocks #wallstreetbets #investing


Arbutus BioPharma and Genevant (ROIV – Roivant Sciences Ltd.) and the Fight for Patent Rights

On February 28, 2022 Arbutus Biopharma Corp. and Genevant Sciences GmbH, the patent licensing arm for Arbutus (84% owned by Roivant Sciences Ltd.), filed a patent infringement suit against Moderna seeking patent infringement damages. Moderna utilized a “revolutionary lipid nanoparticle (“LNP”) delivery platform”, that was both created and patented by Arbutus, to deliver its Covid-19 vaccine (“Spikevax”) in record speed.

According to the filing, “Moderna was well aware of Arbutus’s LNP patents and licensed them for other product programs, but it chose not to do so for its Covid-19 vaccine. Instead, it attempted to invalidate several of the patents before the United States Patent and Trademark Office, and when those efforts largely failed, Moderna simply used the patented technology without paying for it or even asking for a license.”

On May 6, 2022, Moderna responded to the original Arbutus claim by suggesting that Moderna is covered by a little utilized “war-time” statute, 28 U.S.C. § 1498(a), which would in Moderna’s opinion effectively shield them from any patent infringement claims as any claim would need to be directed at the US Government and settled in a different venue, in this particular case the US Court of Federal Claims. Moderna argues that under Rule 12(b)(6) https://www.law.cornell.edu/rules/frcp/rule_12 the original Arbutus complaint against Moderna should be dismissed.

According to a 3/3/2022 CNBC report https://www.cnbc.com/2022/03/03/covid-pfizer-moderna-project-51-billion-in-combined-vaccine-sales-this-year.html, Moderna made $17.7B in 2021 sales and is expecting an additional $19B in 2022. Side note, Pfizer sales in 2021 were $36.7B and expects an additional $32B in 2022 (we’ll discuss Pfizer more a little later as there is a “bonus” opportunity here). If you believe that Covid-19 is here to stay, and that most countries will require periodic “booster shots” for the foreseeable future, then Moderna and Pfizer should continue to reap billions from their respective mRNA Covid-19 vaccines.

Genesis of the Trade:

Betting that Arbutus will resolve the patent infringement claims in a manner that ultimately is accretive to Arbutus’s stock price in the future. Whether Moderna succeeds in getting the current claims dismissed it is highly likely that there is a violation of several Arbutus patents in the creation of the Moderna Covid-19 vaccine Spikevax. So long-term the any trade should still payout.

Asymmetric Trade Opportunity:

Long Roivant Sciences Ltd. (ROIV) stock which is currently trading at $3.68 and has a $2.7B market cap. Roivant owns 84% of Genevant and stands to benefit significantly in any resolution to the patent dispute.

Either way we’re betting on the strength of the Arbutus patents and the continued success of the mRNA vaccines by Moderna and Pfizer.

Risks:

Moderna succeeds in getting the current claims dismissed in the US District Court for the District of Delaware. This would then require Arbutus and Genevant to refile the claim against the US Government in the US Court of Federal Claims and thus prolonging any opportunity to reap revenues from Moderna’s patent infringement for the initial supply to the government of the Spikevax vaccine for several years.

Moderna is deemed to not be infringing on any of Arbutus’s patents as the company claims. This is a long shot given that Moderna has tried several times in the past to get the Arbutus’s patents invalidated. There is a great Forbes article for background that can be found here: https://www.forbes.com/sites/nathanvardi/2020/07/29/modernas-mysterious-coronavirus-vaccine-delivery-system/?sh=3905815062d9 and a separate Reuters article that can be referenced here: https://www.reuters.com/business/healthcare-pharmaceuticals/moderna-loses-appeal-challenging-arbutus-vaccine-patents-2021-12-01/.

Submitted August 01, 2022 at 11:23PM by Duke78757
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