Moderna pays US government $400M 'catch-up payment' under new COVID-19 vaccine license

Not long after Moderna kicked off its COVID-19 vaccine launch, questions started swirling around the origins of the company's mRNA technology and the intellectual property rights to its vaccines. Now, Moderna and the U.S. government are putting one dispute to bed.

In Moderna's earnings release Thursday, the company said it recently paid the National Institute of Allergy and Infectious Diseases (NIAID) a $400 million "catch-up payment" under a new royalty-bearing license agreement between the parties.

The payment is part of a license agreement between Moderna and NIAID inked late last year. With the deal, Moderna is paying the U.S. government to access “certain patent rights concerning stabilizing prefusion coronavirus spike proteins,” Moderna Chief Financial Officer Jamie Mock said on a conference call Thursday. 

Going forward, Moderna agreed to pay NIAID “low single-digit royalties” on COVID-19 vaccine sales, Mock added.

This agreement does not put Moderna out of the woods on the patent litigation front. Even after this deal, the vaccine maker is fighting with the U.S. National Institutes of Health over the origins of the core technology in the vaccine, The New York Times points out

Within the industry, the company is facing patent suits from mRNA rivals Pfizer and BioNTech, plus a separate case from Arbutus and Roivant’s Genevant Sciences. One case between Pfizer and Moderna is heading to trial in London next April, Reuters reported last week.

Moderna pulled down around $36 billion in COVID-19 vaccine sales across 2021 and 2022, its two big launch years. While the $400 million payment represents only around 1% of the company's total COVID-19 vaccine sales over that span, the lump-sum nature of the "catch-up payment" drove up Moderna's fourth quarter's costs.

The payment was a "key driver" in pushing the company's cost of sales—as a proportion of total sales—to 39% in the fourth quarter, Mock said. That compared with 14% during the same period in 2021.

Aside from the license payment, Moderna also suffered financially from demand declines last year. For all of 2022, the company recorded around $2.8 billion in charges related to slouching demand. That figure included a $1.3 billion charge for inventory write-downs plus $725 million for contract cancellations. 

The company also paid $776 million related to unused manufacturing capacity and CDMO charges.