Moderna’s stock price jumped 10% in premarket trading Wednesday after the biotech company reached a settlement agreement to end a prolonged patent lawsuit concerning the technology behind its COVID-19 vaccine, clearing the way for investors to concentrate on the company’s future drug development.
The agreement requires Moderna to pay as much as $2.25 billion to Genevant, a subsidiary of Roivant Sciences, and Arbutus Biopharma to resolve all domestic and international lawsuits claiming the company illegally utilized lipid nanoparticle technology in its coronavirus vaccine. Financial experts believe this settlement will redirect investor attention toward Moderna’s experimental cancer treatments currently in development.
“The company (now) has certainty it is well funded through multiple late-stage oncology readouts expected in 2026 that represent new long-term growth drivers,” William Blair analyst Myles Minter stated.
Under the settlement terms, Moderna will make an initial payment of $950 million in July 2026, plus a potential additional $1.3 billion depending on the results of a separate legal challenge. Importantly for the company’s future, it will not owe royalty payments for using this technology in upcoming vaccines, which industry observers view as a major victory.
Citi analyst Geoffrey Meacham noted the settlement amount was lower than Wall Street’s fears of payments exceeding $3 billion.
However, Bernstein analyst Courtney Breen warned that if the full payment becomes required, it could drain Moderna’s cash holdings to approximately $3.2 billion by 2026. The company currently projects having between $4.5 billion and $5 billion in reserves this year.
Breen explained this “narrows the tightrope” for Moderna, particularly given the uncertain timing and scope of its own patent lawsuit against Pfizer and BioNTech over mRNA technology, plus management’s history of overly optimistic projections.
The patent battles continue elsewhere, as Moderna filed suit against Pfizer and BioNTech in 2022 for allegedly violating mRNA technology patents. BioNTech responded with its own lawsuit in February, claiming Moderna’s newer COVID-19 vaccine, MNEXSPIKE, violates one of its patents.
