Moderna faces shareholder lawsuit over misleading RSV vaccine efficacy claims

A class-action lawsuit has been filed against Moderna by a group of shareholders, accusing the pharmaceutical company of inflating the efficacy of its RSV vaccine for older adults.

Filed in the U.S. District Court for the District of Massachusetts on August 9, the lawsuit claims Moderna made “materially false and misleading statements” about the efficacy of its mRNA-1345 RSV vaccine.

The complaint targets key executives, including CEO Stéphane Bancel, CFO James Mock, and President Stephen Hoge, and covers shareholders who owned or purchased Moderna stock between January 18, 2023, and June 25, 2024.

The lawsuit alleges that Moderna exaggerated the vaccine’s clinical effectiveness, claiming an 83.7% efficacy rate in its January 2023 announcement following Phase 3 trials.

However, in May 2024, when the U.S. Food and Drug Administration (FDA) approved the vaccine for adults 60 and older, the stated efficacy had dropped to 78.7%, a significant decline from earlier claims.

This discrepancy caused Moderna’s stock price to fall by nearly 6%, leading to substantial losses for investors.

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Further damaging revelations came to light in June 2024 during a presentation to the Centers for Disease Control and Prevention (CDC).

Moderna disclosed that after 18 months, the vaccine’s efficacy ranged between 49.9% and 50.3%, much lower than competitors like GSK and Pfizer. This announcement triggered an 11% drop in Moderna’s stock price, further intensifying investor backlash.

Market analysts had been closely watching Moderna, particularly as the company’s reliance on its COVID-19 vaccine revenues diminished.

Moderna hoped that the RSV shot would establish a secondary revenue stream, especially after first-quarter sales of its COVID-19 vaccine plummeted 91% year-on-year. Yet, reduced efficacy, regulatory challenges, and stiff competition have hampered those plans.

Legal experts note that the case faces significant hurdles, as plaintiffs must meet a higher standard of proof in securities fraud cases. Similar lawsuits against major pharmaceutical companies have often failed due to lack of concrete evidence.

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Nonetheless, experts like Ray Flores, senior outside counsel for Children’s Health Defense, argue that this type of shareholder lawsuit could open new avenues to challenge broader legal protections, like the Public Readiness and Emergency Preparedness (PREP) Act, which shields COVID-19 vaccine makers from liability.

Despite the challenges, the lawsuit adds to Moderna’s growing legal woes, which include ongoing patent disputes and transparency concerns. Earlier this week, competing drugmaker GSK filed lawsuits accusing Moderna of infringing on patents related to mRNA technology.

Moderna, embroiled in litigation over patent claims with Pfizer and BioNTech, is no stranger to legal conflicts.

As the company continues to face scrutiny, the market response to its mRNA products, particularly the underperforming RSV vaccine, highlights broader investor concerns about the viability of Moderna’s mRNA-based pipeline beyond COVID-19.

While the company remains a significant player in the vaccine industry, recent setbacks suggest that its future profitability may be at greater risk than previously anticipated.