NORTON ROSE FULBRIGHT US LLP Saul Perloffguardanthealth.com/wp-content/uploads/2017/06/complaint.pdf · 300 Convent Street, Suite 2100 . San Antonio, Texas 78205-3792 . Telephone

PAGE 1 PLAINTIFF’S ORIGINAL COMPLAINT (JURY DEMANDED)

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DOCUMENT PREPARED ON RECYCLED PAPER

NORTON ROSE FULBRIGHT US LLP Saul Perloff California Bar No. 157092 [email protected] 300 Convent Street, Suite 2100 San Antonio, Texas 78205-3792 Telephone (210) 224-5575 Telecopier (210) 270-7205

Jeffrey Margulies California Bar No. 126002 [email protected] 555 California Street, Suite 3300 San Francisco, California 94104 Telephone (628) 231-6800 Telecopier (628) 231-6799 Attorneys for Plaintiff GUARDANT HEALTH, INC.

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN FRANCISCO DIVISION

GUARDANT HEALTH, INC., a Delaware corporation, Plaintiff, vs. FOUNDATION MEDICINE, INC., a Delaware corporation, Defendant.

Case No. 3:17-cv-3590 ORIGINAL COMPLAINT JURY TRIAL DEMANDED

Plaintiff Guardant Health, Inc. (“Guardant” or “Plaintiff”) files this Original Complaint

against Defendant Foundation Medicine, Inc. (“FMI” or “Defendant”) and in support thereof,

alleges as follows:

I. INTRODUCTION

1. This case concerns Plaintiff’s Guardant360® liquid biopsy cancer assay

(“Guardant360”) and Defendant FMI’s campaign of false and misleading advertising directed at

this ground-breaking product. As the gold standard in liquid biopsy assays, Guardant360 has

Case 3:17-cv-03590 Document 1 Filed 06/22/17 Page 1 of 26


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made cancer detection and treatment easier, safer, and less expensive. FMI’s traditional tissue

biopsy assay and its recently-launched liquid biopsy assay cannot compete on the merits with

Guardant360 in the fast-growing market for cell-free DNA cancer assays. Instead, with little or

no concern for the patients who could benefit from an improved testing methodology, FMI has

undertaken a campaign of misinformation to convince oncologists and other clinicians to avoid

using Guardant360 in favor of FMI’s products.

2. In its commercial advertising, FMI makes false and misleading statements about

the performance of its own assays as well as Guardant360. Specifically, Defendant claims that

Guardant360 is inaccurate with both a high rate of false negative and a high rate of false positive

results; that FMI’s assays are more sensitive and provide more reliable results than Guardant360;

and that using Guardant360 could compromise patient care. None of this is true. FMI combines

outright misrepresentations with improper comparisons based on cherry-picked, outdated, and

methodologically flawed data that exaggerate the purported accuracy of FMI’s assays while

artificially denigrating Guardant360. At the same time, FMI willfully ignores extensive

research—including recent head-to-head testing—showing that Guardant360 is the superior

liquid biopsy assay overall.

3. Guardant seeks to enjoin FMI from continuing to make or disseminate false and

misleading statements about the performance of Guardant360 as well as FMI’s own assays; to

require FMI to retract, remove, and correct these false and misleading advertising claims; and to

recover damages and other relief for the harm that FMI has inflicted on Guardant.

II. PARTIES

4. Plaintiff Guardant is a Delaware corporation having its principal place of business

at 505 Penobscot Dr., Redwood City, California 94063.

5. Guardant was founded in 2012 by pioneers in DNA sequencing and cancer

diagnostics. Since its inception, Guardant has focused its expertise on the development of liquid

biopsy cancer assays. It was the first company to develop and commercialize a comprehensive

liquid biopsy assay to identify genomic biomarkers for advanced solid tumors using “cell-free

circulating tumor DNA,” or “ctDNA,” from simple, non-invasive blood draws.




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6. Today, Guardant markets and sells the Guardant360 ctDNA assay. Guardant360

uses advanced DNA sequencing methods to identify targeted therapy treatment options based on

the specific changes—also known as somatic mutations—that occur within the DNA of cancer

cells. Guardant360 has helped thousands of oncologists find accurate and actionable information

about tens of thousands of cancer patients, while avoiding the high costs and added risks of

tissue biopsies.

7. Defendant FMI is a publicly-traded Delaware corporation having its principal

place of business at 150 Second Street, Cambridge, Massachusetts 02141, and offices at 525

University Ave., Suite 100, Palo Alto, California 94301. FMI may be served with process by

serving a copy of this Complaint on its Registered Agent: The Corporation Trust Company,

Corporation Trust Center, 1209 Orange St., Wilmington, Delaware 19801.

8. FMI is a self-described “molecular information company” that competes with

Guardant in the market for cancer assays. FMI markets tissue biopsy assays, including

FoundationOne® (“FoundationOne”). In 2016, FMI began offering FoundationACT™

(“FoundationACT”), a liquid biopsy assay that also competes more directly against

Guardant360. Together, FoundationOne and FoundationACT will be called the “FMI Assays.”

III. JURISDICTION AND VENUE

9. This is an action for false advertising and unfair competition under Section 43(a)

of the Lanham Act, 15 U.S.C. § 1125(a); for false advertising in violation of CAL. BUS. & PROF.

CODE § 17500 et seq.; for unlawful trade practices in violation of CAL. BUS. & PROF. CODE

§ 17200 et seq.; and for unfair competition in violation of the common law of California and

other states in which Defendant is conducting its activities.

10. This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C.

§§ 1331 and 1338 and 15 U.S.C. §§ 1051, et seq.

11. This Court has jurisdiction over Plaintiff’s state law claims pursuant to 28 U.S.C.

§ 1367 and the doctrine of supplemental jurisdiction.

12. The exercise of personal jurisdiction in California is proper both because of

Defendant’s ongoing and systematic contact with California and the Northern District of




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California, including its maintenance of a regular place of business in the District, and because

acts giving rise to Plaintiff’s causes of action have occurred in the Northern District of

California. Specifically, FMI markets, promotes, advertises, offers for sale, sells, and/or

distributes the FMI Assays to customers including oncologists, pathologists, other physicians,

health care institutions, pharmaceutical companies, and/or others throughout the United States,

including in the Northern District of California. Defendant has purposefully and voluntarily

placed the FMI Assays into the stream of commerce with the expectation that this product will be

purchased by customers in the Northern District of California. Furthermore, FMI falsely and

misleadingly advertises the FMI Assays to customers, including oncologists, pathologists,

additional physicians, health care institutions, pharmaceutical companies, and/or others

throughout the United States, including in the Northern District of California.

13. Venue is proper in the Northern District of California pursuant to 28 U.S.C.

§ 1391.

IV. FACTUAL BACKGROUND

A. Genomic Heterogeneity in Cancer

14. Cancer is not a single disease, but refers instead to any of a large number of

diseases characterized by the development of abnormal cells that divide uncontrollably. To date,

clinicians have identified more than 200 different types of cancer.

15. Cancers arise due to mutations in the genes that control cell survival, growth

proliferation, and differentiation. Scientists have identified hundreds of genes that are mutated in

cancers, and each cancer is characterized by its own array of genetic mutations.

16. Individual cancers are often highly heterogeneous, and a single tumor can contain

distinct cancer subtypes with different genetic mutations.

17. The genetic profile of cancers also changes over time, particularly in response to

treatment. These ongoing mutations can cause once-effective cancer therapies to stop working.




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18. This heterogeneity—within the same patient and often within the same tumor—

and the emergence of new mutations that are resistant to previously effective therapies—present

great challenges for cancer treatment. The effectiveness of cancer therapies often depends on the

ability of the treatment team to identify the particular gene mutation (the genomic “alteration”)

that exists within a tumor, and to employ drug therapies designed to target cells that carry these

specific alterations. Of the alterations known to cause cancer, many are “druggable,” that is,

currently treatable by targeted drug therapies. In general, targeted therapies have fewer side

effects than broad-based chemotherapy.

19. Historically, testing the genetic makeup of tumors required a tissue sample from a

biopsy specimen. Tissue biopsies involve expensive and invasive procedures that present health

risks to patients. When biopsy material is sent to the pathology lab, the material must be fixed

and treated in special ways to preserve the sample. Once a test is requested, the pathologist must

pull that patient’s tumor sample, review it under a microscope to identify areas with high

numbers of cancer cells, and then cut small, precise slices that are placed on microscope slides.

These slides are then packaged and typically sent to an outside laboratory for testing. FMI’s

FoundationOne is a tissue biopsy assay used for such testing.

20. Tissue-based profiling assays like FoundationOne suffer from several significant

drawbacks. Obtaining test results from a tissue biopsy is often expensive and time-consuming. In

addition to the need for an invasive procedure to obtain the tissue sample, multiple steps are

required to process the sample. Moreover, the quantity or quality of DNA in 10-40% of cancer




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biopsies is not sufficient (“quantity not sufficient,” or “QNS”) to permit genetic profiling at all.

21. Tissue-based tumor profiles are also subject to sampling bias, i.e., the results may

vary depending on the location of the tumor from which the sample was taken. Further, tissue-

based profiles provide only a snapshot of information from a particular fragment of tumor at a

particular moment. Obtaining tissue for repeat testing as the tumor evolves is often difficult or

impossible, particularly when the tumor is in a perilous anatomical location, like the mid-lung or

brain, or when patients are medically unable or unwilling to undergo the procedure.

22. The shortcomings of traditional, tissue-based biopsies created the impetus for a

revolutionary approach to cancer profiling—the liquid biopsy.

B. Guardant Develops Liquid Biopsy Assays to Detect and Identify Cancers

23. Human blood contains fragments of DNA that are shed into the bloodstream by

dying cells in tissues—including cancers. A liquid biopsy captures this genetic material using a

simple blood draw.

24. Liquid biopsies offer major advantages over traditional tissue biopsies: They are

quick, convenient, and less invasive (and thus safer), and their total cost is less. Not only can

liquid biopsies be used for diagnostic purposes, they can also be easily repeated to identify and

track changes in tumors over time, thus helping to guide treatment decisions when resistance to a

therapy develops.

25. However, the ability of a liquid biopsy to detect and characterize the very low

concentrations of ctDNA present in blood requires an assay that is highly sensitive (able to

detect a targeted alteration) and specific (able to distinguish a targeted alteration from all

others).1 Recognizing this need, Guardant expended substantial resources and time to develop

1The terms sensitivity and specificity can be defined analytically and clinically. For liquid biopsies in particular, analytical sensitivity refers to how often the assay correctly detects a particular mutation in a contrived sample known to harbor such a mutation. Analytical specificity refers to how often the assay correctly detects that a particular mutation is not present in a contrived sample known to be absent of such a mutation. Clinical sensitivity, on the other hand, refers to how often the liquid biopsy assay correctly identifies actual patients that harbor such a mutation in their tumor. Clinical specificity refers to how often the assay correctly identifies actual patients that lack such a mutation in their tumor.




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Guardant360, a clinical assay to evaluate ctDNA in blood using advanced DNA sequencing

methods.

26. Commercially launched in 2014, Guardant360 is a first-in-kind blood test that

enables simultaneous assessment of a wide-ranging panel of genomic alterations from a single

blood sample, thus aiding oncologists and other medical professionals in making more informed,

personalized cancer treatment decisions without a tissue biopsy.

27. Guardant also expended substantial time and effort performing and sponsoring

studies validating Guardant360. As a result, Guardant360 is the most validated comprehensive

liquid biopsy in existence, with 30 peer-reviewed and published papers.

28. Guardant360 uses Digital Sequencing™, a proprietary method of capturing and

genetically profiling trace fragments of ctDNA. This technology allows Guardant360 to detect

mutated tumor DNA at extremely low concentrations with high sensitivity and specificity.

29. Using information from the tens of thousands of samples it has analyzed,

Guardant continually works to refine Guardant360. In November 2016, Guardant released its 8th

version of Guardant360. Currently, Guardant360 looks at (or “interrogates”) 73 genes, including

all somatic genomic alterations that are clinically actionable with approved targeted drugs. At the

same time, Guardant’s enhancements to its Digital Sequencing platform have brought its ability

to detect ctDNA in blood to a point very close to the theoretical detection limits.

30. Due to the wealth of data establishing the high analytical and clinical sensitivity

and specificity of Guardant360, it is considered the gold standard for liquid biopsy assays.

Nearly 4,000 oncologists have relied upon Guardant360 to help more than 35,000 cancer

patients.

C. The FMI Assays

31. FMI advertises, promotes, markets, and sells the FMI Assays to oncologists,

pathologists, additional physicians, health care institutions, pharmaceutical companies, and

others nationwide, including in California. The FMI Assays compete with Guardant360 in the

market for tumor profiling products.

32. Until recently, FMI did not have a liquid biopsy assay. FoundationOne, FMI’s




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tissue-based assay, interrogates cancer-related genes in samples taken from traditional tumor

biopsies. FoundationOne requires an expensive and invasive procedure to obtain a tissue sample,

and suffers from the same limits and testing biases as other tissue-based assays.

33. In 2016, FMI launched FoundationACT, its first liquid biopsy product. Like

Guardant360, FoundationACT is also a liquid biopsy assay for patients with solid tumors.

However, FoundationACT is less analytically sensitive and specific than Guardant360 for all

four alteration types tested by these assays. FoundationACT has no peer-reviewed analytical

validation studies, and no published clinical outcome studies of more than one patient. In

contrast, Guardant360 has 16 published, blinded external clinical validation studies, and 12

published clinical outcome studies on more than one patient. In fact, according to PubMed, the

entire published, peer-reviewed record for FoundationACT consists solely of four single-patient

case reports.

D. FMI’s Advertising Falsely Claims that the FMI Assays are Superior to Guardant360, and that Guardant360 is Inaccurate and Threatens Patients’ Health

34. The FMI Assays cannot compete with Guardant360 on the merits. Instead,

Defendant falsely and misleadingly advertises and promotes the FMI Assays, alone and in

comparison to Guardant360. In some of this advertising, FMI deceptively characterizes

Guardant360 as inaccurate and unreliable, while touting the FMI Assays’ supposed superiority.

Most concerning, FMI falsely claims that using Guardant360 instead of an FMI Assay can

compromise patient care and well-being.

35. FMI’s advertising is based on outright falsehoods, misleading and inapt

comparisons, and deceptively non-representative, incomplete, and out-of-date data presented in

disregard of the overwhelming body of published scientific evidence directly contradicting

FMI’s claims.

1. FMI Falsely Claims that Guardant360 is Inaccurate, With a High Rate of False Negatives




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36. In its recent advertising, FMI asserts that Guardant360 misses detection of

alterations that FMI’s assays would find (that is, returns “false negative” results). These claims

are false. For example, FMI claims that clinical data show Guardant360 detects cancer-related

genomic alterations in only 58% of patients, and that Guardant360 fails “to detect a single

alteration in 42% of patients with common tumor types.” At the same time, FMI promotes

FoundationOne as detecting cancer-related genomic alterations in up to 98% of patients tested:

37. Similarly, FMI asserts that clinical data show Guardant360 detects actionable

genomic alterations—that is, ones treatable by available drugs—in only 39% of patients, and

thus fails to detect actionable genomic alterations in 61% of cancer patients. In comparison, FMI

currently claims that data show that the FoundationOne assay detects actionable alterations in up

to 90% of cancer patients:

38. FMI bases its “false negative” claims on its deceptive misuse of a single, limited




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clinical study, involving the first commercial generation of Guardant360—used only in 2014 (the

“Gen 1 Study”). Purporting to characterize an eighth generation product based on its first

iteration is inherently deceptive. More importantly, at the time FMI made those claims, published

data showed that the clinical sensitivity of even the early version of Guardant360 was, in fact,

85%. Furthermore, the Gen 1 Study investigators themselves identified important limitations to

their research, illustrating why it is an unrepresentative outlier. FMI, however, neither discloses

these limitations, nor acknowledges the overwhelming body of data contradicting its

inappropriate slant on the Gen 1 Study.

39. Chief among the Gen 1 Study’s limits was its inclusion of a disproportionate

representation of patients with two rare forms of cancer—glioblastoma (a type of brain cancer)

and carcinomas of unknown primary (“CUP”). According to leading clinical oncology practice

guidelines, there are no therapeutically actionable alterations in either glioblastoma or CUP.

While patients with these cancers make up fewer than 4% of all cancer patients, they made up

44% of the Gen 1 Study. If patients with glioblastoma and CUP are excluded from the Gen 1

Study data, the clinical sensitivity for the first generation Guardant360 found by this study

increases dramatically.

40. FMI compounds its deceptive use of the Gen 1 Study by contrasting that research

with different studies involving FMI’s own assays, but not Guardant360. FMI’s assertion that

its own FoundationOne tissue biopsy assay detects far more alterations than Guardant360 is not

derived from matched tissue samples from the same patients, or even the same class of patients

assayed by the Gen 1 Study. Rather the referenced data come from studies involving different

patients with different types and proportions of cancers. Thus, these data do not provide a valid

basis for direct comparison.

41. Furthermore, the high rates of detection FMI claims in its advertising for

FoundationOne are significantly inflated because FMI excludes the substantial number of biopsy

samples for which the quantity of tumor cells was inadequate (QNS) to actually test. Moving this

finger from the scale dramatically changes the results: In a recent study, Guardant360 had 85%

clinical sensitivity, while tissue tests from FMI were a much lower 62%, primarily due to a high




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QNS rate. Thus, on a valid, apples-to-apples basis, Guardant360 detects tumor alterations in

patients at a rate equal to or higher than FoundationOne.

2. FMI Falsely Claims Guardant360 Has a High Rate of False Positives

42. In its advertising, FMI also falsely claims that Guardant360 is inaccurate because

it returns “false positive” results (that is, it detects alterations that do not in fact exist). In so

doing, FMI tries to mislead customers into believing that using Guardant 360 will cause patients

to be diagnosed with alterations they do not have, resulting in unnecessary or improper

treatments.

43. For example, FMI’s advertising asserts that Guardant360 identifies c-MET

alterations (a mutation that is often present in cancers that have developed anticancer drug

resistance) in 15% of patients with breast cancer, and compares this statistic to data from other

studies where 1% or fewer of breast cancer patients were found to have a druggable c-MET

alteration:

Citing the supposedly “significant difference” in the data, with “p < 0.0001,” FMI states that 14

out of 15 Guardant360 detections are wrong, and that these patients do not, in fact, have a c-

MET alteration. In other words, FMI states and implies that if an oncologist relies on

Guardant360 and prescribes a course of medicine, she will be wrong 14 out of 15 times.

44. FMI’s claim that Guardant360 has a high false positive rate and that its use would




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lead to incorrect diagnoses and unnecessary treatment is based on a statistical sleight-of-hand

that incorrectly assumes the detection rate for c-MET is only 1% across all breast cancer patients.

But the Guardant360 data FMI uses comes from a study involving advanced cancer patients who

had already started their cancer therapies. Cancers often become drug-resistant in response to

treatment, and an increased c-MET amplification incidence would be expected in the

Guardant360 study patient population. Indeed, because c-MET is a druggable alteration, the

ability of Guardant360 to detect c-MET amplifications in these breast cancer patients is a

strength of the technology.

45. FMI did not re-test the same advanced breast cancer patients tested in the

Guardant360 study, and has no other reliable evidence that the Guardant360 results are

wrong. FMI instead misleadingly compares the Guardant360 results showing a 15% incidence of

c-MET alterations in advanced breast cancer patients receiving treatment to other study data that

characterized different patients from significantly different patient populations. On information

and belief, the data FMI uses for comparison come from samples taken from patients newly

diagnosed with breast cancer who have not been treated for the disease. c-MET alterations

would be expected to be rare in these patients, and the 1% prevalence in these patients does not

contradict the Guardant360 data. In fact, recent research confirms that the incidence of c-MET

alterations in post-treatment colorectal cancer patients is high (20%) compared to early-stage

patients (1%).

46. FMI fails to disclose the differences in the patient groups used in its comparison,

and its claim that Guardant360 will misidentify patients as having a c-MET alteration 14 times

out of 15 positive tests is unsupported and literally false. Because the patient populations at issue

are fundamentally different, FMI’s reporting of a “significant difference” at “p < 0.0001” in the

proportion of patients identified as having a c-MET alteration is improper and deceptive.

Nonetheless, FMI reports this supposed statistic to lend an air of scientific credibility to its

otherwise invalid conclusions.

3. FMI’s Advertising Falsely Claims the FMI Assays are Superior to Guardant360




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47. Beginning with its launch of FoundationACT in 2016, FMI began falsely

advertising its liquid biopsy assay as the “best-in-class” offering “superior performance” and

“unparalleled accuracy”:

FMI’s ads go on to tout FoundationACT as “the only commercially available molecular

information platform that comprehensively assesses cancer simultaneously for all four classes of

genomic alterations . . . across all cancer-related genes with the sensitivity and specificity

required for routine medical practice,” claiming it is “the most reliable and accurate test in the

industry,” and that it provides “unparalleled accuracy with 99% sensitivity and 99% specificity

(PPV) across all four types of genomic alterations.” FMI likens this to finding a “needle in a

haystack.”

48. In another recent ad, FMI asserts that the sensitivity and specificity of

FoundationACT is even greater than “99%.” Moreover, by defining sensitivity and specificity




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as the ability of the test “to correctly identify individuals with [or without] the disease” FMI

necessarily implies that these claims refer to clinical (not analytical) performance:

49. FMI’s claim of 99% (or better) sensitivity is false. What limited data exist suggest

that FoundationACT’s clinical sensitivity is much lower than 99%. In fact, buried in the fine

print of posters FMI recently presented at the annual meeting of the American Society of Clinical

Oncology (ASCO) are data demonstrating that FoundationACT was able to detect only 27% of

the amplifications that tissue biopsies identified in breast cancer patients and only 16% of the

amplifications observed in non-small cell lung cancer patients. Thus, FoundationACT’s clinical

sensitivity is far below the industry leading 85% of Guardant360, and nowhere near FMI’s

claimed 99%.

50. But even assuming FMI means to claim a 99% analytical sensitivity, it stacks the

deck. In the real world, many genetic alterations associated with cancer are present in only tiny

amounts in the blood—on average less than 0.4%. Guardant360 can detect alterations in these

small concentrations with high sensitivity and specificity. FMI can only achieve a 99% sensitivity

by looking at test samples where alterations represent greater than 1% concentration; in other




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words, where the concentration is about two-and-a-half times greater than the average. This is not,

as FMI claims, finding a needle in a haystack, but is more akin to finding a needle in a pincushion.

51. FMI’s superiority claims are also literally false and deceptive. FoundationACT is

not “best in class.” Guardant360 is. Guardant360 interrogates 73 genes; FoundationACT

interrogates only 62. Guardant360 detects the same four classes of genomic alterations that

FoundationACT detects, and did so successfully years before FoundationACT was launched.

Guardant’s Digital Sequencing method provides Guardant360 with a near-perfect analytical

specificity, better than any other blood- or tissue-based sequencing system, including

FoundationOne and FoundationACT.

52. Not only was Guardant360 the first comprehensive liquid biopsy on the market to

detect all four classes of genomic alterations, it is still the best. Guardant360 demonstrates

superior performance over FoundationACT across each of the four alteration types. For example,

Guardant360 can detect and report Fusions and InDels (two alteration types) at thresholds that

are about 25 and 50 times lower than FoundationACT respectively. Moreover, Guardant360 can

reliably detect and report Copy Number Variations (“CNVs,” another alteration type) with a

mere 2.3 copies, whereas FoundationACT apparently requires at least 3.2 copies. The practical

difference between these threshold limits is immense. In actual testing, about 80% of the CNVs

Guardant360 detected were from samples with fewer than 3.2 copies. Thus, roughly four out of

five patients with CNV alterations present at concentrations that FoundationACT may miss, but

which Guardant360 would routinely find. Not surprisingly (and as FMI is aware), recent,

independent, head-to-head testing comparing Guardant360 to FoundationACT has shown that

Guardant360 is the superior liquid biopsy.

4. FMI’s Advertising Falsely Claims that Guardant360 Threatens Patients’ Health

53. The clinical consequences of a missed diagnosis are potentially dire for patients

with life-threatening advanced cancers. Seeking to capitalize on the concerns of patients and

their doctors about the consequences of inaccurate tests, as well as to influence oncologists and

others to use the FMI Assays instead of Guardant360, FMI’s advertising falsely states and




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implies that use of Guardant360 could cost a patient her life, while use of the FMI Assays could

save it.

54. For example, in a current ad campaign, FMI asserts that “FoundationACT has

uncovered what [Guardant360] ha[s] missed” and warns of the “profound clinical impact” from

this purported difference:

FMI bases this advertising on a single patient case study wherein the FMI Assays

discovered three alterations in a patient with stage 4 lung cancer, whereas Guardant360 allegedly

“incorrectly yielded a negative result.” FMI recently publicized this case study in a letter

authored, in part, by three FMI employees, and disseminated in the February 2017 issue of the

Journal of Thoracic Oncology, a periodical whose readership comprises nearly 4,000 lung cancer

specialists, including oncologists who order tumor profiling assays for their patients. FMI

prominently features this letter on its website and actively references the letter in current

advertising and social media promotions.

55. FMI points to this single patient case study as illustrating “the importance of

utilizing well-validated assays” and emphasizes that “assays with high negative predictive values




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are critical.” FMI refers to its own assays as “Well-validated Platforms,” yet describes

Guardant360 as “Other,” implying that Guardant360 is not “well-validated.” Moreover, on

information and belief, FMI’s sales representatives routinely tell oncologists and other potential

customers that FoundationACT is “validated, unlike other tests,” representing that Guardant360

is not validated. In making these statements, FMI suggests that if doctors had relied solely on an

initial ctDNA assay—that is, Guardant360—that “revealed no oncogenic driver,” this cancer

patient would have lost the opportunity to be treated with therapies that produced significant

clinical response. FMI further suggests that the possibility of such an outcome can be avoided

with “thorough testing with well-validated hybrid capture-based diagnostic tests,” i.e., use of the

FMI Assays.

56. In fact, since its commercial launch, Guardant360 has been the subject of at least

30 peer-reviewed papers, along with scores of abstracts and scientific conference posters. It is the

most thoroughly validated liquid biopsy assay on the market, with published validation studies

far exceeding those for FoundationACT. By contrast, case studies in general, and in particular

those involving a single patient, cannot properly support scientific conclusions or even

generalized observations. As the 2011 Reference Guide on Medical Testimony in the Federal

Judiciary Center’s Reference Manual on Scientific Evidence puts it, “unsystematic clinical

observations or case reports” “are at the bottom of the evidence hierarchy[.]” FMI’s statement

that Guardant360 is “unvalidated” is literally false, and FMI’s disregard of peer-reviewed studies

in favor of unrepresentative single-patient case studies is inherently misleading.

57. Moreover, FMI’s contention that Guardant360 missed the ROS1 Fusion alteration,

while the FMI Assay detected it, is the result of a rigged test. To begin with, the patient’s blood

sample analyzed using Guardant360 was drawn before chemotherapy, while the sample analyzed

by FoundationACT was drawn after treatment had started. Both chemotherapy and the passage

of time itself may have increased ctDNA in the patient’s blood—possibly resulting in a more

target-rich environment for the FoundationACT assay. In addition, the FMI researchers who

found the ROS1 Fusion alteration using FoundationACT were not “blinded,” and knew that

FoundationOne had found the ROS1 Fusion in prior testing. By knowing exactly which




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alterations were present before it ran its liquid biopsy assay, FMI was effectively betting on

yesterday’s races with today’s newspaper. In fact, data FMI presented at the recent ASCO

meeting demonstrate that FoundationACT only detects about 1 out of 3 ROS1 fusions found by

tissue biopsy.

58. Most importantly, FMI knew that the case study was fundamentally false before

FMI launched an advertising campaign based on it. Guardant analyzed a replicate blood sample,

taken from the same patient at the same time, using the current version of Guardant360.

Guardant360 found all three alterations in the replicate sample, including an alteration FMI

detected only as “equivocal.” Although Guardant notified the lead author of this finding six

months before the letter was published or the ads began, the authors omitted the replicate

sample results from the published case presentation, and FMI launched its false advertising

campaign.

59. FoundationACT did not “uncover what [Guardant360] missed” and FMI’s

warnings of “profound clinical impacts” based on this untrue claim are false and misleading.

E. FMI’s False and Misleading Advertises Causes Harm to Guardant

60. Defendant’s commercial advertising and promotions have had their intended

effect. Defendant’s efforts to disparage the performance of Guardant360 while falsely touting the

FMI Assays has misled oncologists, healthcare institutions, and other potential customers, and

caused these customers to purchase the FMI Assays rather than Guardant360.

61. In addition, Defendant’s false statements regarding Guardant360 have injured the

reputation of this product and the reputation of Guardant itself, costing Guardant customer good

will and causing the loss of future sales. FMI’s express and implied assertions that Guardant360

is not well-validated and has a high false negative rate and a high false positive rate sows doubt

among oncologists about the validity and reliability of Guardant360. FMI explicitly reinforces

this doubt by warning doctors that using Guardant360 can have “profound clinical impacts.”

FMI’s assertions will cause cancer patients to lose opportunities to undergo effective treatment.

It is also likely to cause irreparable harm to Guardant’s business and reputation.

62. By misleading oncologists, additional medical professionals, and the patients




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themselves into believing that Guardant360 is inaccurate and/or insensitive, patients have missed

the opportunity to benefit from liquid biopsies using Guardant’s superior product. Instead, they

have undergone the added pain, expense, delay, and uncertainty of a tissue biopsy using

FoundationOne, or an inferior liquid biopsy using FoundationACT.

COUNT I: FALSE ADVERTISING IN VIOLATION OF

SECTION 43(a)(1)(B) OF THE LANHAM ACT, 15 U.S.C. § 1125(a)(1)(B)

63. Plaintiff repeats and hereby realleges the allegations above as if fully set forth

herein.

64. In its commercial advertising and promotion to potential customers, Defendant

markets the FMI Assays by stating and implying that Guardant360 is inaccurate and leads to

false negative and false positive results, and that the FMI Assays are superior to Guardant360.

65. Moreover, Defendant’s advertising falsely describes Guardant360 as unreliable,

unvalidated, and posing risks for patients. This includes Defendant’s letter to the Journal of

Thoracic Oncology, which constitutes commercial advertising, in that it is commercial speech by

FMI to the thousands of oncologists and other physicians who comprise the journal’s readership

for the purpose of influencing this group to order the FMI Assays in lieu of Guardant360 for

genomic profiling of their patients’ tumors.

66. Defendant’s promotional claims about the clinical performance of Guardant360

and the FMI Assays are false and/or misleading. The data Defendant relies upon to make these

statements are derived from studies conducted by different researchers, using different patient

populations, and having different qualities and characteristics that do not permit a fair or valid

comparison. Defendant disregards data from other studies that show Guardant360 has excellent

clinical sensitivity and specificity.

67. These claims violate Section 43(a) of the Lanham Act, which provides in relevant

part that a “person who, or in connection with any goods or services . . . uses in commerce any . . .

false or misleading description of fact or misleading representation of fact, which . . . in

commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or

geographic origin of his or her or another person’s goods, services, or commercial activities,




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shall be liable to a civil action by any person who believes that he or she is likely to be damaged

by such act.”

68. Defendant’s promotional claims about the clinical performance of Guardant360,

alone and in comparison to the FMI Assays, are material. The clinical characteristics,

performance and validation of cancer diagnostics are of paramount importance to doctors

responsible for treating patients with life-threatening illnesses.

69. Pursuant to 15 U.S.C. § 1117, Plaintiff is entitled to damages for Defendant’s

Lanham Act violations, an accounting of profits made by Defendant on sales of its product, as

well as recovery of the costs of this action.

70. Defendant’s acts are willful, wanton and calculated to deceive, and are undertaken

in bad faith, making this an exceptional case entitling Plaintiff to recover additional damages and

reasonable attorneys’ fees pursuant to 15 U.S.C. § 1117.

71. Unless enjoined by this Court, Defendant’s acts will irreparably injure Plaintiff’s

goodwill and erode its market share. Pursuant to 15 U.S.C. § 1116, Plaintiff is entitled to

preliminary and permanent injunctive relief to prevent Defendant’s continuing acts.

COUNT II: FEDERAL UNFAIR COMPETITION IN VIOLATION OF

SECTION 43(a)(1)(A) OF THE LANHAM ACT, 15 U.S.C. § 1125(a)(1)(A)


herein.

73. Plaintiff has become uniquely associated with Guardant360, and the public

identifies Plaintiff as the source for Guardant360.

74. Based on scientifically invalid comparisons of data from different studies involving

dissimilar patient groups, some of which used outdated versions of Guardant360, Defendant has

marketed and continues to promote the FMI Assays as clinically superior to Guardant360 for

performing genomic analysis of cancers, and in doing so, has deceived, misled, and confused

customers. This has enabled Defendant to trade off of Plaintiff’s reputation and good will.

75. Defendant’s misleading comparisons of Guardant360 to the FMI Assays, and the

omission of relevant facts are likely to cause and have caused confusion, mistake, or deception




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about the nature, characteristics and qualities of Guardant360 in comparison, connection or

association with the FMI Assays.

76. Defendant knows, or in the exercise of reasonable discretion should know, that its

marketing program deceives potential customers and others about the nature, characteristics, and

qualities of Guardant360 in comparison, connection, or association with the FMI Assays and

FoundationACT in particular.

77. Defendant’s conduct amounts to deception, trickery and/or unfair methods, and

has damaged and jeopardized Plaintiff’s business. As a result of such malicious, wanton, and/or

fraudulent conduct, Defendant has caused, and unless enjoined by this Court, will continue to

cause, consumer confusion as to the clinical sensitivity of Guardant360 in comparison to the FMI

Assays.

78. Defendant’s acts constitute unfair competition in violation of Section 43(a) of the

Lanham Act, which provides “Any person who, on or in connection with any goods or services

. . . uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any

false designation of origin, false or misleading description of fact, or false or misleading

representation of fact, which . . . is likely to cause confusion, or to cause mistake, or to deceive as

to the affiliation, connection, or association of such person with another person, or as to the origin,

sponsorship, or approval or his or her goods, services, or commercial activities by another person.”

79. By reason of Defendant’s conduct, Plaintiff has suffered, and will continue to

suffer, damage to its business, reputation, and goodwill. Pursuant to 15 U.S.C. § 1117, Plaintiff

is entitled to damages for Defendant’s Lanham Act violations, an accounting of profits made by

Defendant on sales of the FMI Assays, and recovery of Plaintiff’s costs for this action.

80. Defendant’s acts are willful, wanton, and calculated to deceive, and are

undertaken in bad faith, making this an exceptional case entitling Plaintiff to recover additional

damages and its reasonable attorneys’ fees pursuant to 15 U.S.C. § 1117.

81. Unless enjoined by this Court, Defendant’s acts will continue to cause immediate

and irreparable harm to Plaintiff for which there is no adequate remedy at law. Pursuant to 15

U.S.C. § 1116, Plaintiff is entitled to preliminary and permanent injunctive relief to prevent




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Defendant’s continuing acts.

COUNT III: FALSE ADVERTISING IN VIOLATION OF CAL. BUS. & PROF. CODE § 17500 ET SEQ.


herein.

83. Plaintiff brings this cause of action pursuant to CAL BUS. & PROF. CODE § 17535

in an individual capacity and not on behalf of the general public.

84. CAL. BUS. & PROF. CODE § 17500 provides that it is unlawful for any person,

firm, corporation, or association to dispose of property or perform services, or to induce the

public to enter into any obligation relating thereto, through the use of untrue or misleading

statements.

85. CAL. BUS. & PROF. CODE § 17508 provides:

It shall be unlawful for any person doing business in California and advertising to consumers in California to make any false or misleading advertising claim, including claims that (1) purport to be based on factual, objective, or clinical evidence, that (2) compare the product’s effectiveness or safety to that of other brands or products, or that (3) purport to be based on any fact.

86. Defendant’s misleading statements violate CAL. BUS. & PROF. CODE §§ 17500

and 17508, and Plaintiff has acted in response to and reliance on the misleading statements made

by Defendant regarding the performance of Guardant360 and the FMI Assays, including by

expending time, money, and other resources on preparing its sales force to respond to these

misleading statements.

87. Defendant’s conduct has caused Plaintiff damage in an amount to be determined

at the trial herein but not less than $75,000 and, unless enjoined by this Court, Defendant’s

conduct will continue to cause Plaintiff irreparable damage for which Plaintiff has no adequate

remedy at law.

88. Pursuant to CAL. BUS. & PROF. CODE § 17535, Plaintiff seeks an order of this

Court compelling the Defendant to provide restitution, and to disgorge the monies to which

Plaintiff is entitled but were instead collected and realized by Defendant as a result of its false




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and misleading statements and injunctive relief enjoining Defendant from making such false and


COUNT IV: UNLAWFUL TRADE PRACTICE IN

VIOLATION OF CAL. BUS. & PROF. CODE § 17200 ET SEQ.


herein.

90. Pursuant to CAL. BUS. & PROF. CODE § 17200, unfair competition is “any

unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading

advertising . . . .” The misleading statements made by Defendant regarding the clinical

performance of its FMI Assays in comparison to Plaintiff’s Guardant360 violate CAL. BUS. &

PROF. CODE § 17200 et. seq. Moreover, Defendant’s conduct constitutes a violation of the

Lanham Act, and thus as unlawful business conduct is separately actionable as a violation of

CAL. BUS. & PROF. CODE § 17200 et. seq. Defendant’s conduct is also otherwise unfair and

therefore a violation of these provisions.

91. Defendant’s conduct has caused Plaintiff damage in an amount to be determined

at the trial herein, and, unless enjoined by this Court, Defendant’s conduct will continue to cause

Plaintiff irreparable damage for which Plaintiff has no adequate remedy at law.

92. Pursuant to CAL. BUS. & PROF. CODE § 17203, Plaintiff seeks an order of this

Court compelling the Defendant to provide restitution, and to disgorge the monies to which

Plaintiff is entitled but were instead collected and realized by Defendant as a result of its false

and misleading statements and injunctive relief enjoining Defendant from making such false and


COUNT V: COMMON LAW UNFAIR COMPETITION


herein.

94. With full knowledge of Plaintiff’s Guardant360, Defendant has made false and

misleading explicit and implicit representations to potential customers, and others that




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Defendant’s FMI Assays offer superior clinical performance compared to Guardant360.

95. Defendant’s false and misleading statements and omission of relevant facts are

likely to cause and have caused confusion, mistake, or deception about the nature, characteristics

and qualities of Defendant’s FMI Assays in comparison, connection, or association with

Plaintiff’s Guardant360.

96. Defendant knows, or in the exercise of reasonable discretion should know, that its

marketing program deceives potential customers about the nature, characteristics, and qualities

of its FMI Assays in comparison, connection, or association with Plaintiff’s Guardant360.

97. Defendant’s conduct amounts to deception, trickery, and/or unfair methods and

has damaged and jeopardized Plaintiff’s business. As a result of such malicious, wanton, and/or

fraudulent conduct, Defendant has caused, and unless enjoined by the Court, will continue to

cause confusion as to the superior clinical performance of the FMI Assays in comparison to

Plaintiff’s Guardant360.

98. Plaintiff is entitled to damages for Defendant’s unfair competition, an accounting

of profits made on sales of Defendant’s product, and recovery of Plaintiff’s costs of this action.

Defendant’s actions have been willful and have been undertaken with the purpose of deceiving

consumers. Thus, Plaintiff is entitled to an award of punitive damages.

99. As a result of Defendant’s conduct, Plaintiff has suffered, and unless such acts

and practices are enjoined by this Court, will continue to suffer, damage to its business,

reputation, and goodwill for which it is entitled to relief.

V. JURY DEMAND

Plaintiff demands a trial by jury of all issues so triable.

PRAYER FOR RELIEF

WHEREFORE, Plaintiff respectfully prays for the following relief:

A. The Court enter an order temporarily, preliminarily, and permanently enjoining

Defendant, its agents, servants, employees, attorneys, successors and assigns, and all others in

active concert or participation with them, from directly or indirectly falsely or misleadingly

advertising or promoting the FMI Assays;




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B. The Court enter an order temporarily, preliminarily, and permanently enjoining

Defendant, its agents, servants, employees, attorneys, successors and assigns, and all others in

active concert or participation with them, from making or inducing others to make any false,

misleading, or deceptive statement of fact, or representation of fact in connection with the

promotion, advertisement, display, sale, offering for sale, manufacture, production, circulation or

distribution of the FMI Assays in such fashion as to suggest the FMI Assays offer superior

clinical sensitivity or specificity or performance compared to the Guardant360; that Guardant360

lacks appropriate scientific and medical validation; or that use of Guardant360 could

compromise patient care;

C. The Court enter an order requiring that Defendant take corrective action to correct

any erroneous impression persons may have derived concerning the nature, characteristics, or

qualities of Plaintiff’s Guardant360 alone or in comparison to the FMI Assays, including without

limitation the placement of corrective advertising;

D. The Court enter an order granting Plaintiff such other relief as the Court may

deem appropriate to prevent the trade and public from deriving any erroneous impression

concerning the nature, characteristics, qualities, or benefits of Guardant360 or the FMI Assays;

E. The Court enter an order requiring Defendant to pay Plaintiff damages in an

amount sufficient to compensate Plaintiff for injury it has sustained as a consequence of

Defendant’s unlawful acts;

F. The Court enter an order requiring Defendant to pay Plaintiff damages in the

amount of Plaintiff’s actual and consequential damages resulting from Defendant’s false and

misleading advertisements and marketing and unfair competition pursuant to 15 U.S.C. §

1117(a), CAL. BUS. & PROF. CODE §§ 17200 et. seq. and 17500 et. seq., and the common law of

the State of California;

G. The Court enter an order finding that this is an exceptional case and requiring

Defendant to pay Plaintiff additional damages equal to three times the actual damages awarded

Plaintiff pursuant to 15 U.S.C. § 1117(a);

H. The Court enter an order finding that Defendant acted maliciously, wantonly,




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and/or fraudulently, requiring Defendant to pay Plaintiff punitive damages pursuant to the

common law of the State of California;

I. An accounting be directed to determine Defendant’s profits resulting from its

illegal activities and such profits be paid over to Plaintiff, increased as the Court finds to be just

under the circumstances of this case pursuant to 15 U.S.C. § 1117(a);

J. The Court enter an order finding that this case is an exceptional case and requiring

Defendant to pay all of Plaintiff’s reasonable attorneys’ fees, costs and expenses, including those

available under 15 U.S.C. § 1117(a), and any other applicable law;

K. The Court enter an order requiring Defendant to pay Plaintiff pre-judgment and

post-judgment interest on the damages awarded; and

L. The Court enter an order awarding Plaintiff such other and further relief as the

Court deems just and equitable.

Dated: June 22, 2017 NORTON ROSE FULBRIGHT US LLP

By: /s/Saul Perloff Saul Perloff

Attorney for Plaintiff GUARDANT HEALTH, INC.


Documents

NORTON ROSE FULBRIGHT US LLP Saul Perloffguardanthealth.com/wp-content/uploads/2017/06/complaint.pdf · 300 Convent Street, Suite 2100 . San Antonio, Texas 78205-3792 . Telephone