NanoString Faces Setback in Patent Infringement Case Against Genomics

In a recent legal skirmish in the biotechnology sector, NanoString finds itself on the losing end of a federal jury decision against 10x Genomics in a patent infringement lawsuit. The Delaware district court ruled in favor of 10x Genomics, awarding approximately $31 million in damages. This sum includes a substantial $25 million attributed to lost profits and an additional $6 million in royalty payments. Despite the setback, NanoString has declared its intention to appeal the decision.

The dispute revolves around NanoString’s GeoMx Digital Spatial Profiler, which 10x Genomics alleges infringes on seven patents owned by Prognosys Biosciences, a co-plaintiff in the case. These patents are integral to the methods exclusively licensed by 10x Genomics for mapping the intricate landscape of RNA and protein expression within tissue samples.

NanoString’s President and CEO, Brad Gray, expressed unwavering confidence in the company’s position, asserting that the patents asserted by 10x Genomics describe a scientific method fundamentally distinct from that employed by NanoString’s GeoMx system. Gray contends that the asserted patents are invalid, that NanoString does not infringe upon them, and anticipates vindication on appeal.

Despite the legal setback, Gray emphasized that the verdict does not impede NanoString from continuing to sell GeoMx products globally. He remains optimistic about overcoming any potential future injunction sought by 10x Genomics and reiterates NanoString’s commitment to uninterrupted worldwide sales of GeoMx products.

In response, 10x Genomics has outlined its post-verdict strategy, which includes pursuing additional damages, royalties, and legal fees, along with the quest for a sales-stopping injunction. Eric Whitaker, Chief Legal Officer of 10x Genomics, pointed out that multiple courts, including European ones, have previously ruled in their favor. Notably, the European Unified Patent Court issued a preliminary injunction against NanoString covering its CosMx Spatial Molecular Imager instruments and reagents.

The legal battleground extends beyond patent disputes, as NanoString retaliates by countersuing 10x Genomics in an antitrust case involving Harvard University. NanoString alleges that 10x Genomics, in collaboration with Harvard, is attempting to establish an unwarranted monopoly through legal proceedings. The core of NanoString’s argument is that the underlying technology behind 10x Genomics’ patents was developed at Harvard with substantial public grant money, including provisions for licensing through nonexclusive deals.

The fallout from the legal clash has impacted NanoString’s financial standing, with its stock price plummeting by about 50%, reaching a meager 64 cents following the verdict. In response to the uncertain litigation impact, NanoString has withdrawn its financial guidance and revenue projections for the fourth quarter of 2023 and the full year, pending a comprehensive review.

In its third-quarter earnings report, NanoString disclosed $28.9 million in spatial biology revenue out of a total of $48.1 million in sales. Additionally, CEO Brad Gray highlighted the company’s strategic measures to mitigate financial challenges, including a nearly 50% reduction in cash burn achieved through layoffs affecting approximately 110 staff, constituting a 20% reduction in overall headcount by the year’s end.

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