CareDx Inc. has been on a big run. Over the last year, the molecular diagnostics company has seen its stock price quintuple, yielding a $1.5 billion market cap. The driver has been its patented method for assessing organ transplant rejections with a simple blood test.
Now other companies are moving into the market. Last month Natera Inc. announced a partnership with Thermo Fisher Scientific to market its own diagnostic test for kidney transplants.
That’s got CareDx crying foul. The company sued for patent infringement Tuesday in Delaware federal court, asserting two patents developed in part by a famed Stanford University researcher.
“Years after Stanford researchers and CareDx put in the research and development work to invent this new method and bring it to the clinical setting, Natera uses CareDx’s licensed technology without permission in violation of the patent laws,” CareDx states in a complaint signed by Weil, Gotshal & Manges partner Edward Reines.
Natera said in statement that it does “not expect this suit to impact our commercialization plans or disrupt our operations in any way,” and that its technology is newer than that described in the CareDx patents.
Diagnostics is a tricky area of patent law. The U.S. Court of Appeals for the Federal Circuit reluctantly ruled in 2015 that a breakthrough discovery for using cell-free DNA in an expecting mother’s blood to determine fetal abnormalities was directed to an unpatentable law of nature.
The court backed off that strict reading of Supreme Court case law somewhat last year in Vanda Pharmaceuticals v. West-Ward Pharmaceuticals. Earlier this month the Supreme Court asked the solicitor general’s office for its views on Vanda, indicating the court’s possible interest in the case.
Reines is litigating a different patent infringement case against Natera on behalf of Illumina involving a prenatal test. U.S. District Judge Susan Illston of San Francisco denied Natera’s motion to dismiss the case last year, saying it was too soon for her to determine whether Illumina’s method involves well-known, routine and conventional DNA amplification techniques.
Until recently, kidney tissue had to be biopsied to determine whether a body was rejecting the transplant. CareDx’s AlloSure product uses advanced DNA sequencing to quantify donor-derived cell-free DNA, or ddcfDNA, from a blood draw. The amount of ddcfDNA indicates how well the recipient is accepting the transplanted organ, and helps nephrologists manage the use of immuno-suppressive therapy, which can have serious side effects.
Stanford obtained the patents at issue in Tuesday’s suit in 2014 and 2017. The named inventors are Stephen Quake, Thomas Snyder and Hannah Valentine. Quake is co-president of CZ Biohub, a $600 million research center funded by Chan Zuckerberg that draws on Stanford, UC-Berkeley and UC-San Francisco expertise. Snyder is now the head of computational biology at Verily Life Sciences. Valentine is a senior investigator at the National Institute of Health’s National Heart, Lung and Blood Institute.
Stanford licensed the patents to CareDx, a Brisbane company that has been in the diagnostics business since 1998 and went public in 2014.
“CareDx then brought this invention out of the lab and into the clinical setting,” Reines wrote in his complaint. “It’s a game changer for transplant recipients,” he said in an interview.
CareDx’s products cover kidney and heart transplants. The company is developing similar products for lung, liver and bone marrow transplantation.
In January, San Carlos-based Natera announced results from a study of its own donor-derived cell-free DNA test. That was followed shortly by the announcement of its partnership under Thermo Fisher’s One Lambda brand. “We look forward to offering our customers a test that improves upon currently available options,” Thermo Fisher’s president of transplant diagnostics, Parisa Khosropour, said in a written statement.
CareDx says it’s clear from the clinical studies that Natera’s method infringes its patents. CareDx is seeking both damages and an injunction to block Natera from selling its competing product.
Natera disagreed in its written statement. “We are not surprised that CareDx would attempt to disrupt the imminent commercialization of Natera’s innovative organ transplant rejection test, which does not require donor genotyping, and will compete with CareDx’s older test,” it said. “In recently published analytical and clinical validation studies, Natera’s test demonstrated industry-leading performance.”