Strong Presumption Moderna Covid Vaccine Infringes on Arbutus IP

News last Thursday that the US Patent Trial and Appeal Board (PTAB) upheld a broad liposomal nanoparticle (LNP)-related patent added an interesting wrinkle to the race to develop a vaccine against covid19.  Given the way that LNP delivery of mRNA is practiced today (see also below), the patent owned by Arbutus Biopharma greatly impacts on the development of some of the most prominent covid19 vaccine candidates, most notably by Moderna, but also BioNTech, CureVac and others.

This blog entry will provide some background on the history of the science and business of LNPs and why there is a strong presumption that the mRNA-1273 formulation by Moderna which is about to enter phase 3 development infringes on the US patent 8,058,069 ('069) in question.

Disclosure: while anybody who has been following RNAi from the early days of IP battles should be able to call themselves an IP expert, I do not have a corresponding certificate hanging on my walls.  Moreover, since I am long Arbutus Biopharma (ticker: ABUS), I have a vested interest in Arbutus prevailing in the present case, but hear me out anyway...

A history of trade secret theft and IP misappropriation

In 2005-6, Protiva (a predecessor of Arbutus) emerged as the leader in the delivery of RNAi Therapeutics by reporting the first clinically relevant success in taking RNAi triggers into cells in the human body.  The delivery formulation, then called SNALP, involved a mixture of lipids that has essentially remained the same until today:

•         the nucleic acid payload;
• an ionizable cationic lipid for formulation and cell penetration;
• a (PEG-)conjugated lipid for stability;
• cholesterol;
• neutral phospholipids.

-           

What has mostly changed since is the nature of the cationic, typically ionizable lipid, but the 4 lipid-component-system has stayed the same despite at times frantic IP workaround attempts like using just 3 lipid components.

Due to the central importance of these LNPs to RNAi Therapeutics, large players (Sirna Therapeutics/Merck, Alnylam, Roche) soon came to collaborate, then misappropriate related IP from the small Canadian biotech company.  A bitter divorce of Protiva and scientists related to Pieter Cullis from the University of British Columbia certainly aided that goal by facilitating the transfer of know-how and trade secrets for peanuts. Divide and conquer.

Despite of what appeared to be a hopeless battle between David and Goliath, a settlement was reached in 2012 with Alnylam and 'Cullis' in which Alnylam got access to (now) Tekmira’s IP mainly for covering ONPATTRO for the treatment of TTR amyloidosis (now approved) in return for allowing Tekmira survive a system that greatly favors the guy with the most financial wherewithal (disclosure: I was an expert witness called on by Tekmira in that litigation).  The settlement also provided for the limited use of certain IP by 'Alnylam Canada' (AlCana, now Acuitas).

LNP going out of favor in RNAi as mRNA gains traction

The fact that Alnylam started to see success with a less invasive conjugate delivery strategy (GalNAc) for RNAi around that time, certainly helped with settling the dispute.  In ~2015 then conjugate technology in the form of second-generation GalNAc technology started to demonstrate superiority over LNPs in RNAi delivery and Tekmira faced the decision of where to take their company.

In my mind, the decision was obvious: leverage the LNP know-how and IP in order to cement their position in messenger RNA (mRNA) Therapeutics, a hot new field in biotech where Tekmira had been generating industry-leading data.

Instead, in what must be one of the most catastrophic business decisions that to this day I fail to grasp, Tekmira in 2015 gave up half of the company in a merger with a paper company called OnCore Biopharma in establishing an HBV therapeutics solutions company.  This shell contained nothing more but a list of untested chemical structures written on the back of an envelope by new biotech Wunderkind Vivek Ramaswamy and his scientific lieutenant Michael Sofia.

To wit, Vivek Ramaswamy is famous for dumpster diving and buying rights to a failed Alzheimer’s asset from GSK for $5M to then sell it to the public without much additional development for $1.5B soon thereafter.  It then only took one clinical trial to incinerate that value to essentially zero...

Arbutus Biopharma was born.

Unsurprisingly, in what must be one if not the longest string of failures in biotech history, small molecule after small molecule crashed and burned, mostly due to preclinical and early clinical tox issues.

Realizing that their legacy IP and know-how could be quite valuable for financing their string of failures, Vivek took advantage of Arbutus and its shareholders yet another time by spinning out Arbutus' mRNA assets into Genevant (January 2018).  

Arbutus retains a 40% stake in Genevant, a number that Arbutus said needs to be adjusted for 'significant' dilution due to the convertibles that Genevant has issued since.   Possibly equally if not more importantly, Arbutus is eligible to 20% of the revenues (e.g. from damages and royalties payable to Genevant) from the sublicensing of LNP IP by Genevant, for example as the result of a settlement with Moderna, but also other prominent covid vaccine players like BioNTech and CureVac.

BioNTech and Moderna acknowledge fundamental importance of IP controlled by Arbutus

The Genevant creation apparently hinged on a settlement with the rival Vancouver group (now 'Acuitas') announced the following month (February 2018) where it was determined that Acuitas could not sublicense certain fundamental LNP IP under the grand 2012 Alnylam settlement.

Not long thereafter, covid vaccine player BioNTech which until then had worked with Acuitas on mRNA LNP delivery took a license to Genevant's LNP IP in an obvious acknowledgement of the new settlement (note: there has been no explicit disclosure of whether the original license agreement between Genevant and BioNTech has been extended to cover the lead covid vaccine candidates by BioNTech and partners Pfizer and Fosun Pharma; potentially another important puzzle piece of the intrigue).

Importantly, the settlement also provided that Moderna, which similarly had been working with Acuitas, would only retain legacy rights to such IP for 5 viral targets that had been selected by then, well before SARS-CoV-2 was on anybody’s radar.

Unhappy and feeling vulnerable- not surprising since the '069 and other IP may cover most if not all of Moderna's current pipeline- Moderna set out to challenge the validity of Arbutus patents in front of the patent courts.

In a great setback to those efforts, by upholding the ‘069 patent last week, the PTAB not only confirmed the validity of fundamental LNP claims, but strengthened them enormously to the point that Arbutus (the patent owner) would run little risk having its IP found unpatentable (not unusual in IPR proceedings like the one concluded last week) during an infringement lawsuit.

The ‘069 patent

In order for a biotechnology/product to infringe on a patent, it is sufficient that a single claim applies to the technology/product that is being monetized by the infringer.  Receiving government money specifically to develop and manufacture such product like Moderna did in April could be interpreted as such monetization.  More typically, however, it is the actual sale of pharmaceutical products that is viewed as an act of infringement.

The critical claim in the present controversy is as follows (color highlights are mine):

1. A nucleic acid-lipid particle comprising:

(a) a nucleic acid;

(b) a cationic lipid comprising from 50 mol % to 65 mol % of the total lipid present in the particle;

(c) a non-cationic lipid comprising a mixture of a phospholipid and cholesterol or a derivative thereof, wherein the phospholipid comprises from 4 mol % to 10 mol % of the total lipid present in the particle and the cholesterol or derivative thereof comprises from 30 mol % to 40 mol % of the total lipid present in the particle; and

(d) a conjugated lipid that inhibits aggregation of particles comprising from 0.5 mol % to 2 mol % of the total lipid present in the particle.

In order to infringe a ‘comprising’ claim, all individual elements need to be present in a covered product.  As detailed in Moderna’s recent publication in the New England Journal of Medicine on their phase I results with mRNA-1273 (Jackson et al), there is no controversy of whether mRNA-1273 contains all elements covered by the claim:

Messenger RNA -->  nucleic acid

Ionizable lipid --> cationic lipid

DSPC --> phospholipid

cholesterol

PEG2000-DMG --> conjugated anti-aggregation lipid

What then becomes critical is whether the percentages in the mRNA-1273 formulation fall within the ranges specified in the claim.  Curiously, this information is lacking in the publication, in sharp contrast to previous publications. Interesting!

But since Moderna is using a platform approach to developing mRNA therapeutics and vaccines and has stated that the development risk of mRNA-1273 is greatly reduced because it relies on already clinically tested LNP formulations, one could simply look up and compare the percentages used in other mRNA vaccine candidates currently being developed by Moderna.  This is just what I did by looking up the hitherto 3 most recent freely accessible mRNA vaccine publications by Moderna as listed on their website and where the ratios were explicitly detailed.

1)      HIV (Moyoet al, 2020)

Ionizable lipid: 50 mol % (i.e. within 50-65% stipulated in claim)

DSPC: 10 mol % (cf 4-10%)

Cholesterol: 30.5 mol % (cf 30-40%)

PEG-lipid: 1.5 mol % (cf 0.5-2%)

è The HIV formulation infringes on the ‘069 patent.

2)      RSV (Espeseth et al, 2020)

Ionizable lipid: 58 mol % (cf 50-65%)

DSPC: 10 mol % (cf 4-10%)

Cholesterol: 30 mol % (cf 30-40%)

PEG-lipid: 2 mol % (cf 0.5-2%)

è The RSV formulation infringes on the ‘069 patent.

3)      Chikungunya (Kose et al, 2019)

Ionizable lipid: 50 mol % (cf 50-65%)

DSPC: 10 mol % (cf 4-10%)

Cholesterol: 38.5 mol % (cf 30-40%)

PEG-lipid: 1.5 mol % (cf 0.5-2%)

è The Chikungunya formulation infringes on the ‘069 patent.

Similarly, since Moderna has referred to the clinical experience with their 1273 formulation, I finally checked on their latest clinical research paper.

4)      Flu (Feldman et al, 2019)

Paper references Richner et al 2017 paper for formulation details.

Ionizable lipid: 50 mol % (cf 50-65%)

DSPC: 10 mol % (cf 4-10%)

Cholesterol: 38.5 mol % (cf 30-40%)

PEG-lipid: 1.5 mol % (cf 0.5-2%)

è The flu formulation infringes on the ‘069

As you can see, the preponderance of evidence points to the fact that the covid vaccine candidate by Moderna infringes on ‘069.  Issuing a PR, as Moderna did on Friday, that it is not aware of an IP problem, of course is par for the biotech IP game, not only for public posture, but in particular to downplay the view that Moderna is willfully using somebody else’s IP.  If found to have done so after starting to commercialize the vaccine, this could lead to up to triple the amount the damages awarded to Genevant and Arbutus.  But then again, the motivation behind attempting to invalidate the patent right after it loses access to it following the Genevant-Acuitas settlement and hiding the lipid ratios in the NEJM paper will be obvious to any judge and should lead to the presumption of willful infringement.

What’s next?

In the typical biotech game, what would follow now is a last-ditch attempt by Moderna to still invalidate the patent by appealing the ruling.  Odds, however, are now strongly against Moderna that they will be able to reverse last week’s ruling.  In fact, the ‘069 is now stronger than ever and the above evidence will give them sufficient ammunition to sue Moderna on the presumption of infringement.  Appealing the decision would, however, buy Moderna some time trying to make their smaller adversary willing to settle for more favorable terms (following the Alnylam playbook).

This, however, is happening during a pandemic and IP-related tactical games may not be viewed kindly.  This also means that Arbutus would be well advised not to make a big public fuss out of what could be very valuable to them financially and continue with their low-key, matter-of-fact approach to the issue.

So in short, I don’t know when the issue will be resolved, but it certainly won’t be next week or month, but more likely at least after a first read-out of the phase 3 results before we hear about any resolution to the matter- most likely a settlement.

How much all of this is worth to Arbutus stock is anybody’s guess, too, depending, of course, mostly on the performance of mRNA-1273 in the clinic, the price Moderna could charge for its vaccine (note: Moderna is a proponent of whatever-the-market-will-bear) and whether covid19 vaccines will become an annual re-administration market.  Personally, the current share price of $5 is already justified by the promising HBV-RNAi phase I results disclosed in May (update pending soon) and the optionality from the fact that Michael Sofia from Arbutus, the inventor of the most impactful HCV medicine, polymerase inhibitor sofosbuvir, has now set his sights on inhibiting the SARS-CoV-2 and other coronavirus polymerases.

RNAi Therapeutics and mRNA Vaccines for COVID19

This is a time where the biotech industry has to mobilize resources to mitigate the impact of pandemic SARS-CoV-2. 

Nucleic acid-based therapeutics are prime candidates in this battle because of the speed with which drug candidates can be designed and their specificity.  This blog provides an overview of efforts in this area with an emphasis on my two favorite (and IMO most promising) nucleic acid approaches: RNAi Therapeutics and mRNA vaccines.

RNAi Therapeutics

RNAi Therapeutics (and by extension the competing antisense, ASO approach), knocking down genes for therapy, can be used in two ways to address the current pandemic.

First, the RNAi triggers could target the virus itself in an existing infection.  The hope would be that by doing so the damage, mainly lung inflammation leading to respiratory distress, can be mitigated sufficiently for the patient’s immune system to gain time and strength to successfully overcome the infection.  The question then would be how early would be early enough.

The second approach would be to target a host factor critical for viral replication.  The cellular entry receptor ACE2 is the most promising candidate target gene here.  This strategy seems particularly promising for prophylactically protecting those at high-risk of an infection, e.g. medical personnel, as protection may last for a month or so based on the very long durations of efficacy seen in human studies targeting genes in the liver and early studies in the lungs of sheep.

Application in a prophylactic setting would probably have the added delivery advantage in that the lung would be less congested and thus more accessible.  Also, delivery may not have to reach so deep into the lung as it would need to during later stages.   

Delivery

Theory is one thing, but getting the RNAi triggers to where they are needed in the body is and has always been the main challenge for RNAi Therapeutics.  Unlike targeting genes in the liver which is now well-established, RNAi in the lung is a re-emerging area of RNAi development.

Given that COVID19 is a respiratory illness where the virus intrudes the body via the respiratory epithelium, a local, inhaled delivery approach should be adequate and also happens to be the most promising route for RNAi Therapeutics in addressing pulmonary disease.

In the early days of RNAi Therapeutics development, the world was facing the SARS outbreak. Seemingly attesting to the promise of speed and specificity against emerging pathogens, Sirnaomics (based in both the US and China) soon published a high-profile paper on the efficacy of RNAi in a monkey model of SARS coronavirus.  

In hindsight and with the benefit of 15 more years of RNAi Therapeutics development up-and-downs, however, these results were probably based on innate immunostimulatory artefacts given the use of unmodified Tuschl-type RNAi triggers and a nasal instillation route of administration making employing sugar water as a carrier.

Today, however, RNAi Therapeutics is much more advanced and an approach that utilizes aerosolized highly modified and thus stabilized RNAi triggers seems most appropriate. 

Arrowhead Pharmaceuticals has emerged as the front-runner in lung RNAi and is close to filing for clinical study approval for addressing cystic fibrosis.  Their approach combines the two most promising elements of today’s RNAi Therapeutics.  In addition to RNAi trigger stabilization, Arrowhead is adding targeting ligands to their agents, in this case small moieties targeting integrin on lung epithelial cells.

While Arrowhead has not announced their entry into the COVID19 race, Sirnaomics and Alnylam Pharmaceuticals (along with partnered Vir Biotechnology) have.  While it is unclear what particular approach Sirnaomics is using 15 years after their SARS work, Alnylam will be using highly modified RNAi triggers.  Whether targeting ligands will be utilized or not is unknown to me (update: the press release refers to 'conjugates of siRNA' so a targeting ligand is likely). 

Of note, Alnylam had suffered an anti-viral innate immunostimulatory fiasco with their first commercial RNAi development program around the same time that Sirnamoics was working on SARS.  That program was for the respiratory syncytial virus (RSV) and Alnylam should be able to capitalize on the the lung RNAi development experience back then.

Other RNAi-related companies with experience in inhaled lung delivery are miRNA Therapeutics company Miragen (miRNAs are structurally quite similar to RNAi triggers), Genevant/Arbutus (descendants of Tekmira which became famous for their Ebola efforts), and Arcturus Therapeutics.

mRNA vaccines

Arcturus Therapeutics and Genevant are now focused on developing messenger RNA (mRNA) therapeutics and vaccines, including for lung disease cystic fibrosis.  The most known name in this area is Moderna Therapeutics which has a high-profile, government-sponsored vaccine effort against SARS-CoV-2.  Ultimately, it is vaccines that will allow the world to fully recover from the COVID19 scare while therapeutics should be used in a much more focused manner.

The delivery challenge for vaccines is also lessened by the fact that it is a gain-of-function approach and that the immune system itself is expert at spotting foreign, in this case viral antigen expression.  The challenge here is that this is has to be achieved in the right immunological context so that a fruitful immune response is formed.  

The fact that Moderna were the first to ship mRNA for imminent trials shows how easy it is for mRNA to go from viral sequence to product candidate and drug material production.  While I used to poke fun at Moderna for building factories and installing robots without having much science behind it to fill the production halls, for emerging biothreats like SARS-CoV-2 this has proven to be prescient.

CureVac, an mRNA competitor of Moderna, has also announced their entree into COVID19.  While they may lag behind Moderna in terms of robotics and manufacturing capacity, they should be more expert in vaccine development (‘a little innate immune stimulation by the mRNA agent itself may go a long way’).

The most intriguing and differentiated entrant in the mRNA vaccine area to me, however, is Arcturus Therapeutics (disclosure: no stock position, but considering taking one) to me.  This is because they are using a self-replicating RNA ('STARR') that they claim to require ~40-fold less RNA to be intramuscularly injected. Formulation into an LNP 'LUNAR' particle may further lower the required dose.  Given that vaccinating the world will in the end also be a manufacturing challenge, being able to start with 40-times or thereabouts less material is a serious practical advantage.

COVID19 shall pass and therapeutics and vaccines will play an important role here.  Even more important, however, is that everybody does their part in minimizing and slowing the spread of the virus ('flatten the curve', #SocialDistancing), particularly to protect those most at risk without having to resort to draconian measures.