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.

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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.

AstraZeneca Selects MicroRNA Development Candidate, Blazes Innovative Trail

When it is screaming into your face that your business model has failed you and the young competition is running circles around you, only then you might be compelled to change. 

This certainly is true for Big Pharma which have lost sight that their business is to make a buck while increasing the health of their customers instead of wasting time and energy on challenges like turning a twice-a-pill into a once daily therapy.  In its quest to optimize their business processes, it has thus thrown out of the window revolutionary, innovative technologies that just would not fit into those loved models.

Case in point, Merck writing off their multi-billion dollar investment in RNAi Therapeutics and selling it to Alnylam for $175 in largely equity and some cash. Alnylam then turned around and made at least a 10x return on the RNAi trigger stabilization chemistry by Merck in little more than a year.

This is a rough estimation of how much the Merck RNAi assets have approximately contributed to increasing Alnylam’s market cap.

AstraZeneca leading the way for Big Pharma in RNA Therapeutics

Not long ago, AstraZeneca was widely vilified for being the worst of the worst in terms of R&D productivity.  Their labs just would not produce new compounds that mattered to patients.

After a corporate shake-up, things certainly have changed on the innovation front.  AstraZeneca has fully emerged as a real risk-taker when it paid Moderna $240M in upfront monies alone for access to a comparatively early-stage mRNA Therapeutics platform in 2013. 

Before that, however, it already got active in the RNA Therapeutics in a less visible manner, notably with a much smaller, but possibly more profitable deal with microRNA Therapeutics platform company Regulus Therapeutics.

In the 2012 deal, AstraZeneca made a $25M equity investment in addition to a token $3M cash hand-out in the then privately-held Regulus Therapeutics.  In exchange, AstraZeneca received 3 microRNA target picks in the cardiovascular, metabolic, and/or oncology areas.

The best part of the deal for AstraZeneca (and the reason why I took money off the table today at what I considered an outsized reaction) was that it only has to pay $2.5M per target/candidate pick and Regulus Therapeutics has to pay for part of the work involved in generating the candidate at that.  There would, of course, be the milestones and royalties, but they should also be modest, in-line with the $2.5M payment due now. 

Oh, those were the good old times of abusive (because they could) Big Pharma biotech business development deal right on par with the steal that The Medicines Company got from Alnylam with regard to the PCSK9 target.

But still, you have got to credit AstraZeneca that unlike its brethren they not only sealed the deal, but actually advanced one of the first clinical candidates involving a fundamentally new molecular target class.  It will be interesting whether they will do the same in mRNA Therapeutics.

Anti-miR103/107 antagonism for improving liver health in diabetes

Initially, the focus  of the partnership had been on what looked like a very promising HDL-augmentation strategy by inhibiting miR33 in the liver, but this candidate has apparently taken a backseat in favor of the insulin-sensitizing strategy by inhibiting miR103/107.

It had been known that in type II diabetes, there is an inverse correlation between insulin sensitivity and miR103/107 expression.  Supporting a causal involvement, inhibiting miR103/107 in mouse models of diabetes with (unconjugated) antisense oligonucleotides increased not only insulin sensitivity, but also had positive effects on a couple of other diabetes-related parameters not only in the liver (e.g. triglyceride levels), but also body fat (adipocyte size/differentiation).

One puzzling aspect, somewhat akin to Regulus’ Alport’s program (--> miR-21), in exploiting anti-miR103/107 for pharmacological intervention is that it was initially uncertain what the target cells ought to be: adipocytes and/or hepatocytes?  A role for miR103/107 expression in adipocytes was particularly supported by the observation that its steady-state level there is higher than in the liver and the fact that single-strand phosphorothioate oligonucleotides also distribute to body fat.

However, with the adoption of GalNAc conjugation technology where most of the oligonucleotides now accumulate in hepatocytes it seems that AstraZeneca and Regulus have come to the conclusion that it is the liver that once again is calling the shots here as it usually does in diabetes.  You can deduce this from the fact that a GalNAc version was selected as the clinical candidate (AZD4076) slated to enter the clinic later this year.

Taking advantage of the observation that anti-miR103/107 has positive effects on liver triglyceride levels, the clinical development of AZD4076 will at least initially be geared towards treating non-alcoholic steatohepatitis (NASH) in diabetes patients.