What happened

Shares of Moderna (MRNA -1.11%) declined by 3.9% on Monday. The biotech company's vaccine patent portfolio is reportedly being probed by the U.S. Department of Defense for a lack of proper funding disclosures, according to the Financial Times

So what

The Defense Department investigation comes after a report by patient advocacy group Knowledge Ecology International, which claimed that Moderna failed to disclose the grants it received from the Defense Advanced Research Projects Agency (DARPA) in its patent applications -- including those of its coronavirus vaccine candidate -- as required by federal law.

A person is using a magnifying glass to look more closely at a document.

The U.S. DoD is scanning Moderna's patent filings. Image source: Getty Images.

Moderna, meanwhile, denies any wrongdoing. "The company believes it has complied with applicable patent reporting requirements regarding patent filings, including as they relate to the DARPA program," Moderna spokesperson Ray Jordan told Bloomberg. 

Now what

It's unclear what penalties Moderna would face if it's found to have failed to make the proper disclosures in its patent filings. But investors don't like uncertainty, and some chose to sell their shares on Monday.

Recent reports that Moderna's experimental vaccine would also need to be stored at ultra-low temperatures, which could make distribution of the potential vaccine more difficult, likely also contributed to the decline. 

Still, Moderna is pressing forward. The company said last week it's in negations with Japan's Ministry of Health, Labour, and Welfare for the potential sale of 40 million doses of its COVID-19 vaccine candidate.