Tech watchdog files SEC complaint against Natera over false prenatal screening claims

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Tech watchdog files SEC complaint against Natera over false prenatal screening claims

A tech watchdog has filed a complaint with the Securities and Exchange Commission SEC alleging that biotech firm Natera misled the public about its prenatal screening technology.

The complaint came about two weeks after the New York Times published a story on the accuracy of non-invasive prenatal tests NIPTs from companies like Natera. That report, the Campaign for Accountability CfA contends, pointed out data that told a different story than what Natera's marketing, SEC filings and public statements did.

Natera told the FOX Business that CfA's allegations were bogus: The entire premise of the story and every allegation of it originates from meritless, opportunistic legal maneuvering from plaintiffs firms trying to foment litigation. If any of these purported claims are ever brought, we look forward to vigorously defending ourselves and exposing these claims for what they are through the proper legal channels. CfA's complaint relates to earnings calls in which founder Matthew Rabinowitz compared artificial intelligence for its test, known as Panorama, to the supercomputer that beat chess champion Garry Kasparov. According to CfA, that and other purportedly extravagant claims from Natera are untrue. In the weeks leading up to the Times story, Chief Operating Officer COO Robert Allan Schueren sold about 10,800 shares of stock.

CfA referenced to a Times graphic that it said was later edited. A graphic from Natera suggested a high number of false positives for its NIPT for DiGeorge syndrome, which is associated with intellectual disability and heart defects.

The Times wrote that Natera's latest algorithm would identify about an equal number of false positives in a recent study. The results from when the tests were actually taken were included in the same study. There would be three times as many false positives as actual cases, according to the numbers. CfA filed in Panorama's patient brochure, website, and SEC filings arguing that they don't provide enough information on the company's false positives.

By disingenuously claiming the accuracy of its NIPT to investors, Natera can be directly or indirectly involved in the offering or sale of securities, use of the means or instruments of transportation or communication in interstate commerce or use of mails, obtaining money or property by means of untrue statements of material fact, or omitting to state a material fact necessary in order to make the statements in light of the circumstances under which they were made, CfA's filing alleges.

Natera filings have provided general statements about the uncertainty, and its most recent 8-K discusses the prevalence of certain microdeletions in the population.

It says that its testing is accurate in more than 99% of cases. Our SMART study, which Rabinowitz cited in his earnings call, reported clinical results for 22 q 11.2 22 q deletion syndrome to 18,014 patients, and we delivered a correct result to 17,982 of those patients, 99.8% Our results are even stronger with our new Panorama AI algorithm. In addition, we were able to detect 75% of 22 q deletions in the study, and 83% of cases with our improved algorithm. The controversy over NIPTs has prompted intense debate about the method, which can affect expectations for pregnant mothers and potentially influence a decision to abort the fetus. After the Times found an 85% false positive rate for the five most common microdeletion tests from multiple companies, several GOP politicians called for some form of accountability. The Times article was cited by several law firms in announcing investigations of Natera.

In studying NIPT, researchers look at the positive predictive value PPV, which refers to the likelihood that the result is a positive and the disease is actually present in the population.

A researcher with the Anti-Abortion Charlotte Lozier Insitute, Tara Sander Lee, told FOX Business that NIPTs are a lot better than standard screens, but they still face issues with false positives among low-risk women. A 2014 study found a PPV of 45.5% in screening for Down syndrome in low risk women. She said that the PPV means that the probability that a woman is a true positive is less than 50%. Over half of the results will be wrong and the disease will not be present. In a press release earlier this month, Natera said its microdeletion PPVs ranged from 5% to 50% and compared its PPVs to historic standards for prenatal screening.

While a false positive result can be difficult for expectant families to receive, these PPVs compare favorably to historically accepted maternal serum based prenatal screening methods, which were used routinely on 80% of all pregnancies for the past 40 years and are still recommended by ACOG the American College of Obstetricians Gynecologists today.

The prenatal screening tests have a PPV of around 3 5% 1 33 - 1 20 for chromosomal conditions. The microdeletion test of Natera has PPVs ranging from 5% to 50%, depending on the specific microdeletion syndrome being screened. Screenings are not necessarily the end of the road for pregnant women looking to find more information about their unborn children.

In line with ACOG, Natera says it recommends diagnostic testing and genetic counseling.

We require a licensed physician to order tests, and we don't perform testing unless a physician signs the requisition indicating that the patient consents to testing, the company said in its press release.

We put the PPV for each condition directly onto the patient report with a recommendation for confirmatory diagnostic testing, so that physicians can discuss the results with their patients.