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Natera Outlines Plans for Cancer, Transplant Assays; Provides Update on Legal Proceedings

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NEW YORK – Natera recently provided updates on the development of its Signatera cancer and Prospera organ transplant assays, both cell-free DNA tests, as well as on a number of legal proceedings it is part of, including three patent lawsuits and two suits filed by patients.

In a conference call to discuss the firm's third quarter financial results last week, CEO Steve Chapman noted that the firm in August obtained a draft local coverage determination (LCD) from Palmetto for Signatera for colorectal cancer and is now "actively planning for a significant clinical launch next year." The final LCD is expected to come out in mid-2020, he added.

Solomon Moshkevich, Natera's general manager for oncology and transplant, said that the draft LCD covers Signatera in certain patients with stage II and stage III colorectal cancer and supports testing four times per year in the first two years and twice per year after that, with occasional short-interval testing in high-risk patients. "Overall, we think the indication described could represent a testing pool of up to 1 million tests annually," he added.

Natera is now designing a multi-center registry trial to support the clinical adoption of Signatera in colorectal cancer, he said, which will begin enrolling patients in the near future.

The company is also building out a commercial team for Signatera that will target oncologists and GI surgeons who treat colorectal cancer. "We're ramping up that effort over time and expect to have a sizeable team hired by mid-2020, which is about the time we expect to have a final coverage decision from Medicare," he said. Longer term, the commercial team, which he said will be "sizeable" by mid-2020, will also be able to sell Signatera for other solid tumor indications. Natera has already had a pre-submission meeting with Medicare for its second oncology assay, Chapman said, and plans to submit this for an LCD soon.

In partnership with BGI, Natera is also going after opportunities for Signatera in China. Moshkevich said he expects BGI to launch Signatera in the Chinese market next year, noting that BGI will handle the sales and marketing and pay Natera royalties on sales of the test. "We believe China represents a very large opportunity with roughly 4.3 million new cancer cases and 2.8 million cancer deaths annually," he said. Many patients in China don't have access to high-quality imaging, he said, which is why a blood-based test like Signatera can address an unmet need.

BGI will initially target select hospitals and specialty centers with Signatera, Chapman said, and launch the test more broadly after it is approved by Chinese regulators. Signatera will also be available for prospective clinical trials in China next year, he added.

He reiterated that under the new partnership with Foundation Medicine, Natera will codevelop personalized ctDNA monitoring assays using results from the FoundationOne CDx tissue-based assay.

Regarding its Prospera transplant assay, Natera estimates the size of the transplant testing market to be $2 billion and believes that it is only 5 percent penetrated at this time. Chapman said he recently visited several transplant centers and found that the majority of them "are still in the very beginning stages of using cell-free DNA as a tool in patient care." As such, the company sees a sizeable opportunity for Prospera. Assuming 20,000 new transplants in the US per year, and seven tests per patient in their first year and four per year for the two years after that, Chapman said, as well as "pricing at the current CMS rate," annual revenue from Prospera could range from $42 million if it penetrates 3 percent of the market to $98 million if it reaches 7 percent market of the market.

Natera continues to await the final LCD and pricing for Prospera, he said, and still anticipates to obtain it by the end of this year. Shortly after that, the company expects to launch Prospera.  

The company continues to recruit sites for the two clinical trials it announced earlier this year, he said, and is "really pleased with the interest thus far."

Ongoing lawsuits

In a 10Q filing with the US Securities and Exchange Commission on Friday, Natera also provided updates on several lawsuits.

The company filed a motion in May to dismiss a patent lawsuit brought against it by CareDx and Stanford University in March for failure to state a claim, and said that a hearing on the motion is scheduled for Nov 21. CareDx claims in the suit that Natera infringes two of its patents around organ transplant testing, US Patent No. 9,845,497 and 8,703,652.

In May, Natera also filed a motion to dismiss a second lawsuit CareDx filed against it, in April, in which the firm accused Natera of false advertising, unfair competition, and other practices. A hearing on that motion was held on Oct. 30.

Natera is also involved in two patent lawsuits with Illumina. In the first one, filed in March of 2018, Illumina alleged that Natera infringes its US Patent No. 9,493,831, which covers library preparation methods. In June of that year, Natera filed a petition for an inter partes review of the '831 patent with the Patent Trial and Appeal Board (PTAB) of the US Patent Office, but that petition was unsuccessful.

In August of 2018, Natera then filed a patent lawsuit against Illumina in the US District Court for the Northern District of California, alleging that Illumina infringes its US Patent No. 8,682,592, "System and method for cleaning noisy genetic data from target individuals using genetic data from genetically related individuals." In January of this year, the court held a claim construction hearing, after which it issued an order construing certain claims. Also, in June, Illumina filed a petition with the PTAB for an inter partes review of the '592 patent, and Illumina field its preliminary response in September.

Besides the patent lawsuits, Natera is also embroiled in two suits by customers relating to discordant test results. One of these was filed in January of this year in the Superior Court of the State of California in the County of San Mateo by a patient family. In July, the court granted a motion by Natera for forum non conveniens, meaning another court is better suited to hear the case, and the minor plaintiff dismissed the case. Last month, Natera filed another motion to dismiss the case with prejudice. The second suit was filed by a patient in August in the Circuit Court of Cook County.

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