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.
