Natera offers $52.5M for Invitae’s reproductive health screening tests after patent spat

Just a few weeks after earning a permanent injunction barring the use of Invitae’s Personalized Cancer Monitoring tests, Natera is taking another of the diagnostic developer’s product portfolios off its hands.

Invitae has agreed to sell off its reproductive health assets to Natera, the companies shared in separate announcements Monday. Natera has already paid out $10 million upfront, with another $42.5 million still on the table, to be meted out in cash, milestone payments and litigation credits.

The reproductive health portfolio includes genetic tests offering noninvasive prenatal screening and carrier screening. With the acquisition already in progress, Invitae will transfer over its existing customers in those spaces to Natera, while Natera will hire on Invitae’s reproductive health sales staffers.

Invitae said in its announcement that the sell-off will help with its ongoing efforts to slash spending, saving the company about $44 million in operating expenses per year—sans one-time costs related to severance payouts.

“Today’s announcement further helps us streamline operations and focus our resources on our strengths of clinical germline genetic information and superior variant interpretation in support of millions of oncology and rare disease patients,” Invitae CEO Ken Knight said in a statement.

In its most recent financial report, a third-quarter earnings sheet released in November, Invitae reported operating expenses topping $1 billion for the period, contributing to a total net loss of more than $1.34 billion for the first nine months of 2023—an improvement over the $3 billion net loss it reported at the same time a year prior.

Other recent cost-cutting measures include Invitae’s divestment of its Ciitizen platform—which allows patients to consolidate their digital health records in one place and which has now been set up as a VC-backed standalone entity—as well as layoffs of an undisclosed number of workers and other “cost-saving initiatives,” all of which are expected to save Invitae between $90 million and $100 million per year, according to a December release.

Alongside the continued losses, Invitae has seen its stock price plummet: Its shares haven’t traded above $1 since late August, prompting a warning from the New York Stock Exchange in September giving Invitae an unspecified cure period—typically six months—to regain compliance with minimum trading price rules. The share price ticked upward on Monday’s news of the sell-off, growing about 5% from Friday’s 43-cent closing price in the first hours of trading Monday.

The deal between Natera and Invitae comes after a years-long patent battle between the two finally wrapped up last year in Natera’s favor.

Natera initially filed suit against ArcherDX in early 2020—shortly before ArcherDX was acquired by Invitae that summer—claiming that the Anchored Multiplex PCR technology at the core of its Personalized Cancer Monitoring tests infringed upon several of Natera’s own patents.

Though ArcherDX and Invitae argued that Natera’s patents were invalid and therefore couldn’t be enforced, a judge ultimately sided with Natera, ruling last May that Invitae pay its competitor a total of $19.35 million in royalties and lost profits.

Though Invitae vowed to appeal the verdict, a district judge handed down a permanent injunction in December stopping Invitae from using the legacy PCM tests in many applications, according to reports at the time, though the tests may still be used in ongoing clinical trials, among a handful of other exceptions.