Devices & Diagnostics, Legal

Jury orders Natera to pay $44.9M in damages to CareDx for false advertising

A jury ruled that Natera owes $44.9 million in damages to CareDx on grounds that Natera intentionally mislead the transplant community regarding its Prospera Kidney Transplant Technology by likening it to CareDx’s AlloSure test; the jury also ruled that CareDx engaged in two accounts of false advertising.

A jury ruled that Natera, a cell-free DNA testing company, and its executives recklessly and intentionally misrepresented the benefits of Natera’s kidney transplant rejection assessment test: Prospera and engaged in false advertising.

South San Francisco-based CareDx, a precision medicine company serving transplant patients, sued Austin, Texas-based Natera in 2019 for false advertising of its product and likening it to CareDx’s product. At their core, both Prospera and AlloSure are blood tests that can assess the risk of rejection of a transplanted kidney.

This week, a jury ordered Natera to pay CareDx $44.9 million in damages for the false advertising case, comprising $23.7 million in punitive damages and another $21.2 million in compensatory damages.

“Today was a landmark day for the transplant community because patient care and science won over false advertising,” said Reg Seeto, CEO of CareDx in a statement Monday. “We were dismayed to see the extent of Natera’s systematic approach, from the most senior levels, including the CEO, to mislead the transplant clinician. The evidence showed Natera’s Prospera marketing campaign was conceived to deceive by making false statements to transplant clinicians that prioritized profits over science.”

However, CareDX, a public company, like Natera, did not emerge unscathed. The jury agreed with Natera that CareDx engaged in two accounts of false advertising – one involving a CareDx’s press release that touted the fact that an independent study found that its AlloSure product as more accurate and had faster turnaround than a competing product. For the second claim, the jury agreed with Natera that CareDx had falsely cited a study about CareDx’s AlloSure claiming that it was an independent study.

Despite the jury judgment asking it to pay nearly $45 million, Natera seized on CareDx missteps in its own news release following the jury’s decision.

A jury in Delaware District Court found that both CareDx, Inc. and Natera, Inc. engaged in false advertising – including that CareDx made materially false statements about its involvement in and funding of a scientific publication,”  Natera declared in a news release. “Specifically, the evidence showed that CareDx senior leadership misled investors and physicians regarding CareDx’s drafting and funding of a paper that they claimed was independent, when it was not. Final monetary relief, if any, remains to be decided by the Court.

Natera also took aim at CareDx’s own narrow reporting on the jury’s decision.

In reporting the jury’s decision, CareDx omits that CareDx itself was found to have engaged in false advertising, and makes unsubstantiated allegations, including false assertions regarding Natera’s executives.

Meanwhile, other lawsuits between the two continue. Natera declared that a federal court invalidated the patents CareDx asserted against it. Natera is also asserting its own patent litigation against CareDx. In other words, the fireworks are set to continue in the near term.

Photo: zimmytws, Getty Images

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