(Adds background on dispute)

By Jan Wolfe

July 23 (Reuters) – Shares of Moderna Inc fell nearly 10% after it lost a bid to invalidate a U.S. patent owned by Arbutus Biopharma that presents an obstacle to Moderna’s efforts to develop next-generation flu vaccines.

An administrative court run by the U.S. Patent and Trademark Office rejected arguments by Moderna that an Arbutus patent known as the ‘069 patent should be revoked because it described obvious concepts.

The ‘069 patent relates to lipid nanoparticle (LNP) technology that allows the human body to make its own therapeutic proteins or vaccines.

LNP technology is crucial to Moderna’s vaccine development efforts, and the patent ruling increases pressure on the Cambridge, Massachusetts-based firm to pay for a license to Arbutus’ patent portfolio.

Modern can still appeal the patent office ruling to the U.S. Court of Appeals for the Federal Circuit. But that court often upholds the patent office’s determinations.

Moderna has received funding from the U.S. government to develop a coronavirus vaccine.

Arbutus shares soared 56% after the patent board posted its opinion on its electronic docket.

Moderna did not immediately respond to a Reuters request for comment. (Reporting by Vishwadha Chander in Bengaluru and Jan Wolfe in Boston; Editing by Anil D’Silva and Cynthia Osterman)