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In Ongoing False Advertising Suit, Judge Allows Natera Counterclaims Against Guardant Health

NEW YORK – A new judicial order this week has denied, in part, Guardant Health's motion to dismiss Natera's counterclaims to its initial false advertising suit, the first volley in what has since become a bidirectional legal battle, with each company making claims that the other has misled customers and the public about their liquid biopsy minimal residual disease assays, Guardant Reveal and Signatera.

The order, filed on Tuesday in the US District Court for the Northern District of California pertains to a motion on Guardant's part to dismiss or strike a set of eight amended counterclaims by Natera, which include four claims regarding false advertising on the part of Guardant, and four additional claims countering Guardant's initial allegations against Natera, also for false advertising.

US District Judge Edward Chen denied Guardant’s motion to dismiss the first four counts but granted its motion to dismiss the second four without prejudice. This means that the claims of false advertising by each company against one another still stand.

Important to note is that the order does not rule on the claims themselves, but rather whether they should be dismissed.

Notable in the document are details, though some are redacted, pertaining to information from Guardant's internal communications around a study of Guardant Reveal that has served as the primary reference for some of its promotional materials.

The judge's decision first addresses claims by Natera that Guardant misrepresented results of the study, deeming these sufficiently plausible to move forward.

But Natera had alleged not only that the study fails to support Guardant’s marketing claims but also that the trial's data and methodology themselves are fraudulent. And in the decision document on Tuesday, Chen upheld the plausibility of these claims as well, citing evidence, for example, that the study was erroneously described as blinded, when internal emails suggest Guardant had access to patient outcome data before certain final analyses.

"Natera sufficiently alleges that 'through nearly the entire duration of the Study, Guardant had access to clinical data while performing and re-performing the Reveal test'" and therefore "at the time Guardant was testing its assay, it already had the [answer key]," Chen's order stated.

Other claims by Natera around the study's categorization of different sample time points and its criteria for determining sensitivity and specificity also met the bar for plausibility, according to the order.

Specifically, in the study's analysis of the predictive nature of "surveillance" samples — samples taken within four months of a recurrence — the order describes investigators as having failed to disclose that they were excluding false negatives that occurred outside this four-month window, while including true positives that occurred prior.

Moreover, Chen wrote that while Guardant contends that patient-specific data that would make these analyses clear to readers is available in the study, it is only in internal email threads that it becomes clear certain patients were excluded from the surveillance calculation.

A similar take is offered on Natera's claim that the study is erroneously described as prospective.

Regarding Natera's additional four "declaratory judgment counterclaims," which essentially seek to deny or nullify Guardant's initial claims against it, Chen upheld Guardant's motion to strike. As a result, both companies remain in a position to argue for their claims against one another.

In an email, a Natera spokesperson said the company is "pleased with the judge's ruling" and looks forward to continuing to pursue its claims against Guardant.

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