‘Reckless Disregard for the Truth’: Shareholders Sue Moderna for Misleading Investors on RSV Shot Efficacy
A group of shareholders is suing Moderna alleging the company knowingly inflated claims about the efficacy of its RSV vaccine for older adults. When the drugmaker later lowered expectations for the vaccine’s efficacy the stock price dropped precipitously.
A class-action lawsuit accuses Moderna of making “materially false and misleading statements” about the efficacy of its respiratory syncytial virus (RSV) shot, leading to significant damages for investors.
The lawsuit, filed Aug. 9 in the U.S. District Court for the District of Massachusetts, covers investors who owned or purchased Moderna stock between Jan. 18, 2023 — the day that Moderna announced that mRNA-1345, its candidate RSV vaccine, met primary efficacy endpoints in Phase 3 clinical trials — and June 25, 2024.
According to the lawsuit, Moderna misled investors by failing to disclose that “mRNA-1345 was less effective than Defendants had led investors to believe” and that “mRNA-1345’s clinical and/or commercial prospects were overstated.”
“As a result, the Company’s public statements were materially false and misleading at all relevant times,” the lawsuit states.
The lawsuit names Moderna and its key executives, including its CEO Stéphane Bancel, Chief Financial Officer James M. Mock and President Stephen Hoge, as defendants.
“Defendants acted with reckless disregard for the truth in that they failed or refused to ascertain and disclose such facts as would reveal the materially false and misleading nature of the statements made, although such facts were readily available to Defendants,” the lawsuit states.
Brian Hooker, Ph.D., chief scientific officer for Children’s Health Defense (CHD), told The Defender he is not surprised by allegations of fraud concerning Moderna.
“It is unfortunate that Moderna lied about the efficacy of the vaccine and misled investors,” Hooker said. But Hooker said the “bigger tragedy here is the lack of safety testing for modified mRNA products such as their RSV shot.”
Could similar strategy work for COVID vaccines?
Ray Flores, senior outside counsel for CHD, welcomed the lawsuit. He said that, unlike COVID-19vaccines, RSV vaccines aren’t shielded from liability under the Public Readiness and Emergency Preparedness (PREP) Act.
However, this type of shareholder lawsuit may open up new legal avenues to challenge the PREP Act in the future. He told The Defender:
“I believe that alleging securities fraud is a great way to hold COVID-19 vaccine makers accountable, as the PREP Act has so far shielded their intentionally false and misleading statements. Once the fat cats are hit in the pocketbook, things start to happen.
“I am also happy to see that the complaint seeks damages from controlling corporate officers … That will get their attention.”
However, Flores said the Moderna investors’ lawsuit faces significant legal hurdles. He noted that similar lawsuits against Big Pharma manufacturers have failed.
In lawsuits alleging securities fraud, plaintiffs are held to a higher standard of proof, he said. “General allegations never suffice. This has been the problem with these suits in the past.”
Hooker agreed. “These companies lie all the time … there is probably enough wiggle room in the data for Moderna to ‘wiggle’ out of this lawsuit.”
Daniel O’Connor, founder and publisher of TrialSite News, has extensively covered Moderna’s legal and regulatory difficulties. In February, he warned that investors should be wary of the promise surrounding the company’s mRNA products.
O’Connor told The Defender that Moderna is no stranger to legal disputes.
“TrialSite has been chronicling Moderna, and the confluence of scientific, financial, business and legal problems substantially impacting their stock price,” he said. “Lawsuits against the company have ranged from patent infringement allegations, a government patent dispute, consumer transparency and side effects, and stockholder litigation.”
Earlier this week, Moderna’s RSV and COVID-19 vaccines came under additional fire in a pair of lawsuits filed by competing drugmaker GSK. The lawsuits, filed Oct. 15, allege Moderna violated multiple GSK patents related to lipid mRNA vaccine formulation technology, Fierce Pharma reported.
According to a GSK spokesperson, the company “believes these patents provided the foundational technology” used in Moderna’s COVID-19 and RSV vaccines.
A lawsuit Moderna filed in 2022 against Pfizer and BioNTech, making similar patent infringement claims relating to the mRNA technology used in the companies’ COVID-19 shots, is currently paused.
Flores noted that pharmaceutical companies’ trade secrets are unlikely to be revealed as a result of any of these lawsuits.
“Don’t expect any trade secrets to be disclosed since these drug companies invariably move to have the more damning pleadings — particularly discovery — sealed,” Flores said.
‘Market analysts took notice’ of Moderna’s misleading efficacy claims
In its Jan. 17, 2023, announcement, Moderna said the Phase 3 clinical trial of mRNA-1345 in older adults was successful, demonstrating an efficacy rate of 83.7% “against RSV-associated lower respiratory tract disease … as defined by two or more symptoms.”
According to the lawsuit, Moderna then repeated its claim of 83.7% efficacy for its mRNA-1345 vaccine several times throughout 2023 and through March 2024 — including during quarterly earnings calls with investors, in press releases and other corporate documents.
Based on this claimed efficacy, Moderna submitted a Biologics License Application for mRNA-1345 to the U.S. Food and Drug Administration (FDA) in July 2023.
In May 2024, the FDA approved mRNA-1345 for adults 60 and over. However, the lawsuit notes that Moderna’s press release announcing the vaccine’s approval “indicated a vaccine efficacy of only 78.7%, significantly lower than the 83.7% vaccine efficacy that Moderna had previously identified.”
“On this news, Moderna’s stock price fell $8.94 per share, or 5.9%, to close at $142.55 per share on May 31, 2024,” the lawsuit states. “Market analysts took notice of mRNA-1345’s lower-than-expected vaccine efficacy rate.”
The market reaction was contrary to Moderna’s expectations for its new mRNA product. The company hoped its mRNA RSV vaccine would provide it with a second revenue stream, after its first-quarter sales fell 91% compared with same-quarter sales in 2023, due to declining demand for its mRNA COVID-19 shot — the company’s only other FDA-approved drug.
At the time of mRNA-1345’s approval, the company said it hoped to capture part of what it predicted would be a $10 billion market for RSV vaccines.
But a month later, more problems with the RSV shot came to light. According to the lawsuit, on June 26, 2024, in a presentation before the Centers for Disease Control and Prevention’s (CDC) Advisory Committee on Immunization Practices, “Moderna disclosed that after 18 months, mRNA-1345 proved only 49.9% to 50.3% effective against multiple symptoms of lower respiratory tract disease.”
This was “a significantly lower efficacy rate than vaccines produced by Moderna’s competitors,” the lawsuit noted. In 2023, the FDA approved GSK’s Arexvy and Pfizer’s Abrysvo RSV vaccines for adults 60 and over.
“Market analysts once again took notice of mRNA-1345’s reduced efficacy rate,” the lawsuit stated — as did investors. “On this news, Moderna’s stock price fell $15.15 per share, or 11.01%, to close at $122.45 per share on June 26, 2024.”
Albert Benavides, founder of VAERSAware.com, which tracks adverse event reports filed with VAERS— the Vaccine Adverse Event Reporting System — told The Defender that even the originally claimed efficacy rate for Moderna’s RSV vaccine was problematic.
“Even on Moderna’s best day, with 83.7% supposed efficacy and 100% accuracy — no administration errors — this was going to be a bad bet,” Benavides said.
Although the class action period set by the investors’ lawsuit ends June 25, troubles concerning mRNA-1345 have continued.
Following the June presentation, the CDC narrowed the recommended age group for RSV vaccines to adults 75 and older — a development that reduced the U.S. market size for RSV shots in 2024-25 from $93 million to about $55 million.
And in August, Moderna cut its projected product sales outlook for 2024 from $4 billion to an expected $3-$3.5 billion. BioPharmaDive cited “more conservative expectations” for revenue from Moderna’s RSV shot, lowered demand for Moderna’s COVID-19 shots and “tough competition from other vaccine developers” as factors.
In a more positive development for Moderna and rival Pfizer, research published Oct. 15 in the Journal of Infectious Diseases found that a third dose of the companies’ COVID-19 boosters provides “significant protection” to seniors 65 and over.
The study notes though that the boosters’ effectiveness wanes after approximately four months.
