Arbutus Biopharma Plunges 13.5% on Patent Revocation: Legal Storm Clouds Over Biotech Innovator

Summary
• Arbutus Biopharma’s stock tumbles 13.5% intraday to $4.065, erasing $630M in market value.
• European Patent Office revokes key EP 2279254 patent, central to legal battles with Moderna and Merck.
• Company plans to appeal to Enlarged Board of Appeal, citing U.S. jurisdictional differences.

Arbutus Biopharma’s stock is in freefall following a landmark patent revocation by the European Patent Office, triggering a 14% pre-market selloff. The decision, delivered without written reasoning, directly impacts ongoing litigation with Moderna and Merck. With a 52-week range of $2.705–$5.10 and a current price near its 52-week low, the stock’s volatility underscores the biotech sector’s reliance on intellectual property as a competitive moat.

Patent Revocation Sparks Legal Uncertainty
The European Patent Office’s revocation of Arbutus Biopharma’s EP 2279254 patent has triggered a sharp sell-off, as the ruling directly undermines the company’s legal leverage in disputes with Moderna and Merck. The patent, previously upheld in amended form after 2018 oppositions, was invalidated under the EPO’s ‘added matter’ standard—a criterion not applicable in U.S. jurisdictions where Arbutus has ongoing cases. The decision heightens uncertainty over the company’s ability to monetize its lipid nanoparticle (LNP) technology, which forms the basis of its licensing agreements and litigation strategy. Arbutus’s plan to appeal to the Enlarged Board of Appeal offers a potential lifeline, but the absence of immediate written reasoning delays clarity, amplifying market anxiety.

Biotech Sector Mixed as Gilead Gains
While Arbutus Biopharma’s stock crumbles, Gilead Sciences (GILD), a sector leader in antiviral therapeutics, rises 1.43% on intraday data. The biotech sector remains fragmented, with investors rotating into established players with robust cash flows and regulatory clarity. Arbutus’s patent-driven business model contrasts sharply with Gilead’s diversified pipeline, highlighting the sector’s bifurcation between high-risk innovators and cash-generative incumbents.

Options and ETF Plays in a Volatile Biotech Landscape
• RSI (14): 46.72 (neutral)
• MACD: 0.0392 (bullish), Signal Line: 0.0507 (bearish), Histogram: -0.0114 (bearish divergence)
• Bollinger Bands: Price at $4.065 (near lower band at $4.4697)
• 200D MA: $3.8792 (price below long-term trend)

Arbutus Biopharma’s technicals suggest a bearish near-term outlook, with key support at $3.3354 (200D support) and resistance at $4.41 (30D support). The stock’s 29.82% volatility and 303.91% implied volatility on the ABUS20260220P4 put option highlight its speculative nature. For aggressive short-term traders, the ABUS20260220P4 put option (strike $4, expiration 2/20/2026) stands out: it has a 126.67% price change ratio, 11.29% leverage, and 0.3852 gamma, indicating strong sensitivity to price declines. A 5% downside to $3.86 would yield a put payoff of $0.14 per share. The ABUS20260320C3 call option (strike $3, 3/20/2026 expiration) offers asymmetric upside with a 76.92% price change ratio and 2.30% leverage, though its 0.9944 delta suggests it’s more of a directional bet than a volatility play. Investors should monitor the 200D MA and RSI for potential reversal signals.

Backtest Arbutus Biopharma Stock Performance
The backtest of ABUS ETF after an intraday plunge of -14% from 2022 to the present shows a generally positive performance. The 3-Day win rate is 51.15%, the 10-Day win rate is 51.57%, and the 30-Day win rate is 58.49%, indicating that the ETF tends to recover and even exceed its pre-plunge levels in the short term. The maximum return during the backtest period was 6.39%, which occurred on day 58, suggesting that while there is some volatility, ABUS has the potential for decent returns in the aftermath of significant market downturns.

Arbutus at Crossroads: Legal Appeal or Market Rejection?
Arbutus Biopharma’s stock faces a critical juncture as the patent revocation reshapes its legal and financial trajectory. While the company’s robust liquidity (current ratio of 18.8) provides a buffer, the loss of a key IP asset could erode investor confidence. Gilead Sciences’ 1.43% gain underscores the sector’s preference for stability. Traders should watch for a breakdown below $3.3354 (200D support) or a rebound above $4.41 (30D support). A successful appeal to the Enlarged Board of Appeal could reverse the selloff, but until then, the stock remains a high-risk, high-reward proposition.