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Armed With Patent, Foundation Med Sues Diagnostic Rival Guardant

Xconomy Boston — 

[Updated, 1:15 pm ET and 7:53pm ET, see below] Cambridge, MA-based Foundation Medicine (NASDAQ: FMI), which analyzes tumor and blood samples from cancer patients and provides suggestions for potential genetically targeted medicines, is suing rival diagnostic firm Guardant Health.

The patent infringement suit comes swiftly on the heels of Foundation receiving a patent for its technology, which the company announced yesterday.

In that announcement, Foundation CEO Michael Pellini said his company did not aim to block others from offering tests, even if they used “methods covered by the patent.” That remains technically true. Foundation is not asking for an injunction—that is, a court-ordered suspension of Guardant’s business during the trial. It only seeks financial compensation.

[Updated with comment from Foundation] A Foundation spokesman reiterated that sentiment in a statement sent to Xconomy on Wednesday. He declined to comment on the company’s litigation strategy but said “while there are many possible avenues that can be explored to ensure that we receive fair value for the use of our IP assets, we do not intend to use our patent to block clinician or patient access to other tests.”

Foundation is bringing the suit to court in the Eastern District of Texas, even though Guardant is based in Redwood City, CA. The district has a reputation for attracting patent holders looking for a favorable venue.

Other than a possible favorable court setting, it wasn’t immediately clear why Foundation has chosen Texas. Guardant sells its Guardant360 testing service “throughout the United States, including in Texas,” Foundation’s complaint reads.

[Updated with a response from Guardant and Foundation’s closing stock price.] When asked where it does the most business, a Guardant spokeswoman declined to provide details. But she provided an official statement that said, in part, that the company has more than 50 patents and patent applications in liquid biopsies, and it believes the Foundation suit is without merit. “We will vigorously defend our position. Lawsuits of this nature will not distract us from our steadfast focus on patients.”

Foundation shares closed Wednesday at $16.94 apiece this morning, up less than one percent.

In its initial court filings, Foundation outlines Guardant’s underlying diagnostic technology as well as the structure of its business, but it does not say specifically how Guardant has allegedly infringed upon the Foundation patent.

Foundation has been majority-owned by Swiss healthcare giant Roche since January 2015. Roche is one of the world’s largest cancer drug developers, and Foundation’s technology offers not just a kit to sell to doctors who want to find a drug that might match a patient’s cancer, but also a tool for finding new drug targets and sorting out patients for clinical trials.

At the time of the deal, Pellini said Roche would use Foundation’s technology to “standardize” its clinical trials, using Foundation’s tests across all of its studies.

With the advent of cheaper and more accurate sequencing technology from industry leader Illumina (NASDAQ: ILMN) and others, the cancer diagnostics business has heated up in recent years. Many in the field believe that Foundation’s business will become commoditized as medical centers set up their own testing facilities.

Guardant remains privately held. Earlier this year it raised $100 million in a Series D round. Other companies have made strides, as well. Exosome Diagnostics raised $60 million in a Series B round, and Illumina helped launch Grail, which aims to screen for cancer at its earliest stages in people showing no outward signs of illness.

Foundation’s U.S. patent number is 9,340,830 and expires in 2032.