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

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1 Case :-cv-00 Document Filed 0// Page of 0 NORTON ROSE FULBRIGHT US LLP Saul Perloff California Bar No. 0 saul.perloff@nortonrosefulbright.com 00 Convent Street, Suite 00 San Antonio, Texas - Telephone (0) - Telecopier (0) 0- Jeffrey Margulies California Bar No. 00 jeff.margulies@nortonrosefulbright.com California Street, Suite 00 San Francisco, California 0 Telephone () -00 Telecopier () - Attorneys for Plaintiff GUARDANT HEALTH, INC. GUARDANT HEALTH, INC., a Delaware corporation, vs. Plaintiff, FOUNDATION MEDICINE, INC., a Delaware corporation, Defendant. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Case No. :-cv-0 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. This case concerns Plaintiff s Guardant0 liquid biopsy cancer assay ( Guardant0 ) and Defendant FMI s campaign of false and misleading advertising directed at this ground-breaking product. As the gold standard in liquid biopsy assays, Guardant0 has PAGE

2 Case :-cv-00 Document Filed 0// Page of 0 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 Guardant0 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 Guardant0 in favor of FMI s products.. In its commercial advertising, FMI makes false and misleading statements about the performance of its own assays as well as Guardant0. Specifically, Defendant claims that Guardant0 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 Guardant0; and that using Guardant0 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 FMI combines outright misrepresentations with improper comparisons based on cherry-picked, outdated, and methodologically flawed data that exaggerate the purported accuracy of FMI s assays while artificially denigrating Guardant0. At the same time, FMI willfully ignores extensive research including recent head-to-head testing showing that Guardant0 is the superior liquid biopsy assay overall.. Guardant seeks to enjoin FMI from continuing to make or disseminate false and misleading statements about the performance of Guardant0 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. Plaintiff Guardant is a Delaware corporation having its principal place of business at 0 Penobscot Dr., Redwood City, California 0.. Guardant was founded in 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. PAGE

3 Case :-cv-00 Document Filed 0// Page of 0. Today, Guardant markets and sells the Guardant0 ctdna assay. Guardant0 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. Guardant0 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.. Defendant FMI is a publicly-traded Delaware corporation having its principal place of business at 0 Second Street, Cambridge, Massachusetts 0, and offices at University Ave., Suite 00, Palo Alto, California 0. FMI may be served with process by serving a copy of this Complaint on its Registered Agent: The Corporation Trust Company, Corporation Trust Center, Orange St., Wilmington, Delaware 0.. 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, FMI began offering FoundationACT ( FoundationACT ), a liquid biopsy assay that also competes more directly against Guardant0. Together, FoundationOne and FoundationACT will be called the FMI Assays. III. JURISDICTION AND VENUE. This is an action for false advertising and unfair competition under Section (a) of the Lanham Act, U.S.C. (a); for false advertising in violation of CAL. BUS. & PROF. CODE 00 et seq.; for unlawful trade practices in violation of CAL. BUS. & PROF. CODE 0 et seq.; and for unfair competition in violation of the common law of California and other states in which Defendant is conducting its activities. 0. This Court has subject matter jurisdiction over this action pursuant to U.S.C. and and U.S.C. 0, et seq.. This Court has jurisdiction over Plaintiff s state law claims pursuant to U.S.C. and the doctrine of supplemental jurisdiction.. 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 PAGE

4 Case :-cv-00 Document Filed 0// Page of 0 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.. Venue is proper in the Northern District of California pursuant to U.S.C.. IV. FACTUAL BACKGROUND A. Genomic Heterogeneity in Cancer. 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 0 different types of cancer.. 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.. Individual cancers are often highly heterogeneous, and a single tumor can contain distinct cancer subtypes with different genetic mutations.. 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. PAGE

5 Case :-cv-00 Document Filed 0// Page of 0. 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.. 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.. 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 0-0% of cancer PAGE

6 Case :-cv-00 Document Filed 0// Page of 0 biopsies is not sufficient ( quantity not sufficient, or QNS ) to permit genetic profiling at all.. 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, tissuebased 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.. 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. 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.. 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.. 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). Recognizing this need, Guardant expended substantial resources and time to develop The 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. PAGE

7 Case :-cv-00 Document Filed 0// Page of 0 Guardant0, a clinical assay to evaluate ctdna in blood using advanced DNA sequencing methods.. Commercially launched in, Guardant0 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.. Guardant also expended substantial time and effort performing and sponsoring studies validating Guardant0. As a result, Guardant0 is the most validated comprehensive liquid biopsy in existence, with 0 peer-reviewed and published papers.. Guardant0 uses Digital Sequencing, a proprietary method of capturing and genetically profiling trace fragments of ctdna. This technology allows Guardant0 to detect mutated tumor DNA at extremely low concentrations with high sensitivity and specificity.. Using information from the tens of thousands of samples it has analyzed, Guardant continually works to refine Guardant0. In November, Guardant released its th version of Guardant0. Currently, Guardant0 looks at (or interrogates ) 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. 0. Due to the wealth of data establishing the high analytical and clinical sensitivity and specificity of Guardant0, it is considered the gold standard for liquid biopsy assays. Nearly,000 oncologists have relied upon Guardant0 to help more than,000 cancer patients. C. The FMI Assays. 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 Guardant0 in the market for tumor profiling products.. Until recently, FMI did not have a liquid biopsy assay. FoundationOne, FMI s PAGE

8 Case :-cv-00 Document Filed 0// Page of 0 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.. In, FMI launched FoundationACT, its first liquid biopsy product. Like Guardant0, FoundationACT is also a liquid biopsy assay for patients with solid tumors. However, FoundationACT is less analytically sensitive and specific than Guardant0 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, Guardant0 has published, blinded external clinical validation studies, and 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 Guardant0, and that Guardant0 is Inaccurate and Threatens Patients Health. The FMI Assays cannot compete with Guardant0 on the merits. Instead, Defendant falsely and misleadingly advertises and promotes the FMI Assays, alone and in comparison to Guardant0. In some of this advertising, FMI deceptively characterizes Guardant0 as inaccurate and unreliable, while touting the FMI Assays supposed superiority. Most concerning, FMI falsely claims that using Guardant0 instead of an FMI Assay can compromise patient care and well-being.. 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.. FMI Falsely Claims that Guardant0 is Inaccurate, With a High Rate of False Negatives PAGE

9 Case :-cv-00 Document Filed 0// Page of. In its recent advertising, FMI asserts that Guardant0 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 Guardant0 detects cancer-related genomic alterations in only % of patients, and that Guardant0 fails to detect a single alteration in % of patients with common tumor types. At the same time, FMI promotes FoundationOne as detecting cancer-related genomic alterations in up to % of patients tested: 0. Similarly, FMI asserts that clinical data show Guardant0 detects actionable genomic alterations that is, ones treatable by available drugs in only % of patients, and thus fails to detect actionable genomic alterations in % of cancer patients. In comparison, FMI currently claims that data show that the FoundationOne assay detects actionable alterations in up to 0% of cancer patients:. FMI bases its false negative claims on its deceptive misuse of a single, limited PAGE

10 Case :-cv-00 Document Filed 0// Page 0 of 0 clinical study, involving the first commercial generation of Guardant0 used only in (the Gen 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 Guardant0 was, in fact, %. Furthermore, the Gen 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 Study.. Chief among the Gen 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 % of all cancer patients, they made up % of the Gen Study. If patients with glioblastoma and CUP are excluded from the Gen Study data, the clinical sensitivity for the first generation Guardant0 found by this study increases dramatically. 0. FMI compounds its deceptive use of the Gen Study by contrasting that research with different studies involving FMI s own assays, but not Guardant0. FMI s assertion that its own FoundationOne tissue biopsy assay detects far more alterations than Guardant0 is not derived from matched tissue samples from the same patients, or even the same class of patients assayed by the Gen 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.. 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, Guardant0 had % clinical sensitivity, while tissue tests from FMI were a much lower %, primarily due to a high PAGE

11 Case :-cv-00 Document Filed 0// Page of 0 QNS rate. Thus, on a valid, apples-to-apples basis, Guardant0 detects tumor alterations in patients at a rate equal to or higher than FoundationOne.. FMI Falsely Claims Guardant0 Has a High Rate of False Positives. In its advertising, FMI also falsely claims that Guardant0 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 0 will cause patients to be diagnosed with alterations they do not have, resulting in unnecessary or improper treatments.. For example, FMI s advertising asserts that Guardant0 identifies c-met alterations (a mutation that is often present in cancers that have developed anticancer drug resistance) in % of patients with breast cancer, and compares this statistic to data from other studies where % 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 < 0.000, FMI states that out of Guardant0 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 Guardant0 and prescribes a course of medicine, she will be wrong out of times.. FMI s claim that Guardant0 has a high false positive rate and that its use would PAGE 0

12 Case :-cv-00 Document Filed 0// Page of 0 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 % across all breast cancer patients. But the Guardant0 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 Guardant0 study patient population. Indeed, because c-met is a druggable alteration, the ability of Guardant0 to detect c-met amplifications in these breast cancer patients is a strength of the technology.. FMI did not re-test the same advanced breast cancer patients tested in the Guardant0 study, and has no other reliable evidence that the Guardant0 results are wrong. FMI instead misleadingly compares the Guardant0 results showing a % 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 % prevalence in these patients does not contradict the Guardant0 data. In fact, recent research confirms that the incidence of c-met alterations in post-treatment colorectal cancer patients is high (%) compared to early-stage patients (%).. FMI fails to disclose the differences in the patient groups used in its comparison, and its claim that Guardant0 will misidentify patients as having a c-met alteration times out of 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 < 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.. FMI s Advertising Falsely Claims the FMI Assays are Superior to Guardant0 PAGE

13 Case :-cv-00 Document Filed 0// Page of. Beginning with its launch of FoundationACT in, FMI began falsely advertising its liquid biopsy assay as the best-in-class offering superior performance and unparalleled accuracy : 0 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 % sensitivity and % specificity (PPV) across all four types of genomic alterations. FMI likens this to finding a needle in a haystack.. In another recent ad, FMI asserts that the sensitivity and specificity of FoundationACT is even greater than %. Moreover, by defining sensitivity and specificity PAGE

14 Case :-cv-00 Document Filed 0// Page of 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: 0. FMI s claim of % (or better) sensitivity is false. What limited data exist suggest that FoundationACT s clinical sensitivity is much lower than %. 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 % of the amplifications that tissue biopsies identified in breast cancer patients and only % of the amplifications observed in non-small cell lung cancer patients. Thus, FoundationACT s clinical sensitivity is far below the industry leading % of Guardant0, and nowhere near FMI s claimed %. 0. But even assuming FMI means to claim a % 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.%. Guardant0 can detect alterations in these small concentrations with high sensitivity and specificity. FMI can only achieve a % sensitivity by looking at test samples where alterations represent greater than % concentration; in other PAGE

15 Case :-cv-00 Document Filed 0// Page of 0 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.. FMI s superiority claims are also literally false and deceptive. FoundationACT is not best in class. Guardant0 is. Guardant0 interrogates genes; FoundationACT interrogates only. Guardant0 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 Guardant0 with a near-perfect analytical specificity, better than any other blood- or tissue-based sequencing system, including FoundationOne and FoundationACT.. Not only was Guardant0 the first comprehensive liquid biopsy on the market to detect all four classes of genomic alterations, it is still the best. Guardant0 demonstrates superior performance over FoundationACT across each of the four alteration types. For example, Guardant0 can detect and report Fusions and InDels (two alteration types) at thresholds that are about and 0 times lower than FoundationACT respectively. Moreover, Guardant0 can reliably detect and report Copy Number Variations ( CNVs, another alteration type) with a mere. copies, whereas FoundationACT apparently requires at least. copies. The practical difference between these threshold limits is immense. In actual testing, about 0% of the CNVs Guardant0 detected were from samples with fewer than. copies. Thus, roughly four out of five patients with CNV alterations present at concentrations that FoundationACT may miss, but which Guardant0 would routinely find. Not surprisingly (and as FMI is aware), recent, independent, head-to-head testing comparing Guardant0 to FoundationACT has shown that Guardant0 is the superior liquid biopsy.. FMI s Advertising Falsely Claims that Guardant0 Threatens Patients Health. 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 Guardant0, FMI s advertising falsely states and PAGE

16 Case :-cv-00 Document Filed 0// Page of implies that use of Guardant0 could cost a patient her life, while use of the FMI Assays could save it.. For example, in a current ad campaign, FMI asserts that FoundationACT has uncovered what [Guardant0] ha[s] missed and warns of the profound clinical impact from this purported difference: 0 FMI bases this advertising on a single patient case study wherein the FMI Assays discovered three alterations in a patient with stage lung cancer, whereas Guardant0 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 issue of the Journal of Thoracic Oncology, a periodical whose readership comprises nearly,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.. 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 PAGE

17 Case :-cv-00 Document Filed 0// Page of 0 are critical. FMI refers to its own assays as Well-validated Platforms, yet describes Guardant0 as Other, implying that Guardant0 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 Guardant0 is not validated. In making these statements, FMI suggests that if doctors had relied solely on an initial ctdna assay that is, Guardant0 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.. In fact, since its commercial launch, Guardant0 has been the subject of at least 0 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 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 Guardant0 is unvalidated is literally false, and FMI s disregard of peer-reviewed studies in favor of unrepresentative single-patient case studies is inherently misleading.. Moreover, FMI s contention that Guardant0 missed the ROS 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 Guardant0 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 ROS Fusion alteration using FoundationACT were not blinded, and knew that FoundationOne had found the ROS Fusion in prior testing. By knowing exactly which PAGE

18 Case :-cv-00 Document Filed 0// Page of 0 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 out of ROS fusions found by tissue biopsy.. 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 Guardant0. Guardant0 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.. FoundationACT did not uncover what [Guardant0] 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 0. Defendant s commercial advertising and promotions have had their intended effect. Defendant s efforts to disparage the performance of Guardant0 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 Guardant0.. In addition, Defendant s false statements regarding Guardant0 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 Guardant0 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 Guardant0. FMI explicitly reinforces this doubt by warning doctors that using Guardant0 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.. By misleading oncologists, additional medical professionals, and the patients PAGE

19 Case :-cv-00 Document Filed 0// Page of 0 themselves into believing that Guardant0 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. herein. COUNT I: FALSE ADVERTISING IN VIOLATION OF SECTION (a)()(b) OF THE LANHAM ACT, U.S.C. (a)()(b). Plaintiff repeats and hereby realleges the allegations above as if fully set forth. In its commercial advertising and promotion to potential customers, Defendant markets the FMI Assays by stating and implying that Guardant0 is inaccurate and leads to false negative and false positive results, and that the FMI Assays are superior to Guardant0.. Moreover, Defendant s advertising falsely describes Guardant0 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 Guardant0 for genomic profiling of their patients tumors.. Defendant s promotional claims about the clinical performance of Guardant0 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 Guardant0 has excellent clinical sensitivity and specificity.. These claims violate Section (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, PAGE

20 Case :-cv-00 Document Filed 0// Page of 0 shall be liable to a civil action by any person who believes that he or she is likely to be damaged by such act.. Defendant s promotional claims about the clinical performance of Guardant0, 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.. Pursuant to U.S.C., 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. 0. 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 U.S.C... Unless enjoined by this Court, Defendant s acts will irreparably injure Plaintiff s goodwill and erode its market share. Pursuant to U.S.C., Plaintiff is entitled to preliminary and permanent injunctive relief to prevent Defendant s continuing acts. herein. COUNT II: FEDERAL UNFAIR COMPETITION IN VIOLATION OF SECTION (a)()(a) OF THE LANHAM ACT, U.S.C. (a)()(a). Plaintiff repeats and hereby realleges the allegations above as if fully set forth. Plaintiff has become uniquely associated with Guardant0, and the public identifies Plaintiff as the source for Guardant0.. Based on scientifically invalid comparisons of data from different studies involving dissimilar patient groups, some of which used outdated versions of Guardant0, Defendant has marketed and continues to promote the FMI Assays as clinically superior to Guardant0 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.. Defendant s misleading comparisons of Guardant0 to the FMI Assays, and the omission of relevant facts are likely to cause and have caused confusion, mistake, or deception PAGE 0

21 Case :-cv-00 Document Filed 0// Page of 0 about the nature, characteristics and qualities of Guardant0 in comparison, connection or association with the FMI Assays.. 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 Guardant0 in comparison, connection, or association with the FMI Assays and FoundationACT in particular.. 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 Guardant0 in comparison to the FMI Assays.. Defendant s acts constitute unfair competition in violation of Section (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.. By reason of Defendant s conduct, Plaintiff has suffered, and will continue to suffer, damage to its business, reputation, and goodwill. Pursuant to U.S.C., 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. 0. 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 U.S.C... 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 U.S.C., Plaintiff is entitled to preliminary and permanent injunctive relief to prevent PAGE

22 Case :-cv-00 Document Filed 0// Page of 0 Defendant s continuing acts. COUNT III: FALSE ADVERTISING IN VIOLATION OF CAL. BUS. & PROF. CODE 00 ET SEQ. herein.. Plaintiff repeats and hereby realleges the allegations above as if fully set forth. Plaintiff brings this cause of action pursuant to CAL BUS. & PROF. CODE in an individual capacity and not on behalf of the general public.. CAL. BUS. & PROF. CODE 00 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.. CAL. BUS. & PROF. CODE 0 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 () purport to be based on factual, objective, or clinical evidence, that () compare the product s effectiveness or safety to that of other brands or products, or that () purport to be based on any fact.. Defendant s misleading statements violate CAL. BUS. & PROF. CODE 00 and 0, and Plaintiff has acted in response to and reliance on the misleading statements made by Defendant regarding the performance of Guardant0 and the FMI Assays, including by expending time, money, and other resources on preparing its sales force to respond to these misleading statements.. Defendant s conduct has caused Plaintiff damage in an amount to be determined at the trial herein but not less than $,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.. Pursuant to CAL. BUS. & PROF. CODE, 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 PAGE

23 Case :-cv-00 Document Filed 0// Page of 0 and misleading statements and injunctive relief enjoining Defendant from making such false and misleading statements. herein. COUNT IV: UNLAWFUL TRADE PRACTICE IN VIOLATION OF CAL. BUS. & PROF. CODE 0 ET SEQ.. Plaintiff repeats and hereby realleges the allegations above as if fully set forth 0. Pursuant to CAL. BUS. & PROF. CODE 0, 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 Guardant0 violate CAL. BUS. & PROF. CODE 0 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 0 et. seq. Defendant s conduct is also otherwise unfair and therefore a violation of these provisions.. 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.. Pursuant to CAL. BUS. & PROF. CODE, 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 misleading statements. herein. COUNT V: COMMON LAW UNFAIR COMPETITION. Plaintiff repeats and hereby realleges the allegations above as if fully set forth. With full knowledge of Plaintiff s Guardant0, Defendant has made false and misleading explicit and implicit representations to potential customers, and others that PAGE

24 Case :-cv-00 Document Filed 0// Page of 0 Defendant s FMI Assays offer superior clinical performance compared to Guardant0.. 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 Guardant0.. 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 Guardant0.. 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 Guardant0.. 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.. 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; PAGE

25 Case :-cv-00 Document Filed 0// Page of 0 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 Guardant0; that Guardant0 lacks appropriate scientific and medical validation; or that use of Guardant0 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 Guardant0 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 Guardant0 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 U.S.C. (a), CAL. BUS. & PROF. CODE 0 et. seq. and 00 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 U.S.C. (a); H. The Court enter an order finding that Defendant acted maliciously, wantonly, PAGE

26 Case :-cv-00 Document Filed 0// Page of 0 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 U.S.C. (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 U.S.C. (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, NORTON ROSE FULBRIGHT US LLP By: /s/saul Perloff Saul Perloff Attorney for Plaintiff GUARDANT HEALTH, INC. PAGE