Moderna to Pay About $1 Billion to Settle Arbutus Litigation

Moderna Inc. agreed to pay $950 million to settle litigation related to the delivery technology behind its Covid shot, removing a looming financial risk for the struggling vaccine maker.

The company has settled all litigation worldwide with Arbutus Biopharma Corp. and Genevant Sciences GmbH over its existing and future vaccines, with no future royalties owed.

At issue were claims that Moderna had infringed on patents owned by Genevant and Arbutus related to lipid nanoparticles, or tiny bubbles of fat that Moderna used to deliver its Covid shot inside patients.

Moderna plans to argue that it has government-contractor immunity that limits its liability further, it said in a statement Tuesday. If it wins that argument, no other payments will be due. If the Federal Circuit affirms its liability, it will make an additional payment of up to $1.3 billion within 90 days, the company said.

The settlement removes a major financial risk for Moderna, which generated enormous sales during the pandemic with its breakthrough Covid shot but has struggled since then to launch new products. Demand for its Covid vaccine has sharply declined as the pandemic has faded. Last fall, the company secured a loan for up to $1.5 billion from Ares Management Credit Funds to shore up its finances. The company said Tuesday that it expects to end this year with between $4.5 billion and $5 billion in cash and cash equivalents.

In a statement, Moderna Chief Executive Officer Stéphane Bancel said resolving the case “removes uncertainty and allows us to turn our full focus to Moderna’s exciting near-term future.”

Investors cheered Moderna’s decision to put the case behind it and a lower settlement than feared. The company’s shares rose as much as 13.6% when markets opened on Wednesday.

Meanwhile Arbutus’s shares fell as much as 7.3%, a sign that Wall Street was disappointed the company may not receive any future payouts from Moderna.

In a note to clients, Jefferies analyst Andrew Tsai said the settlement was an “incremental” positive for Moderna and “removes a catastrophic worst-case scenario” of needing to make significant payments to the other companies.

“This outcome speaks to the fundamental role that Genevant’s foundational LNP technology played in enabling the world’s response to the Covid-19 pandemic,” Matt Gline, CEO of Roivant Sciences, parent company of Genevant, said in a statement. Gline added that the company will continue its litigation against Pfizer Inc. and BioNTech SE.

Moderna will make the initial payment in a lump sum during the third quarter of 2026, and will take a charge in the first quarter for it.

In January, before the legal dispute was settled, Bloomberg Intelligence analysts said Moderna risked up to $1.7 billion in damages in the US suit if Arbutus was able to prove it willfully infringed on patents.

The suit is in the US District Court for the District of Delaware.

Top photo: A researcher works in the lab at the Moderna Inc. headquarters in Cambridge, Massachusetts. Bloomberg.