Buffeted for weeks by criticism from competitors and leading academic researchers in the spatial biology community, 10x Genomics is defending its strategy of aggressively litigating potential infringement of its patents, contending it is protecting innovation rather than squelching it.
In a letter to customers and partners issued last week, 10x CEO Serge Saxonov, PhD, and CSO Ben Hindson—both co-founders of the company—committed the company to continuing its pursuit of innovation, while insisting that the company has “been diligent in following both the spirit and the letter of the law” in challenging its rivals through lawsuits over what 10x argues is their unlawful incorporation of its patented technologies in their product offerings.
“We started this company because we believed we could do meaningful work, take on really hard problems, and bring valuable tools to researchers around the world. That’s what 10x is all about. And that’s why it has been so painful to watch the integrity of our mission and our company called into question,” Saxonov and Hindson wrote.
“We are not here to stifle innovation; we are here to fuel it. We’re here to accelerate scientific discovery.”
10x is continuing a defense of its litigation strategy that Saxonov articulated last fall on GEN’s “Close to the Edge” video interview series, when he made his case for 10x’s series of patent lawsuits against competitors.
“The narrative portraying 10x as impeding scientific progress could not be further from the truth,” Saxonov and Hindson added in their letter.
That sentence in the letter links to a page on 10x’s website defending its patent protection approach—and singling out NanoString Technologies for criticisms that it infringed on 10x patents, that NanoString executives discussed plans to crush 10x in internal documents, and that poor decisions by NanoString management led to its bankruptcy.
“NanoString’s management failed to build a sustainable company after more than 20 years in business, taking on massive debt while burning large amounts of cash well before 10x even filed the first patent infringement case,” 10x asserted.
Through a spokesperson, NanoString declined to comment on 10x’s letter.
Speaking with GEN last month from the sidelines of the Advances in Genome Biology and Technology (AGBT) meeting, Joe Beechem, PhD, NanoString’s CSO and senior vice president of research and development, said NanoString set out to specialize in high plex, multiomic, FFPE applications, leaving other specialized technologies to other companies attending the NanoString-hosted first spatial genomics summit at AGBT’s 2019 meeting.
“NanoString wasn’t structured to have the money laying around to be able to pay the legal bills that come when a monster company litigates you from A to Z,” Beechem said. “We made a decision: we want to keep our customers’ access to our products and new technologies, to keep building CosMX and GeoMX instruments, to continue to develop our entire product development roadmap, to provide customer service, and to do everything that we are currently doing. And Chapter 11 allows us to do that.”
Responding to commentary
Speaking exclusively with GEN Edge, Saxonov said 10x issued the letter after several academic researchers, many of them customers, echoed criticisms of the company made by some of its competitors in a pointed commentary published last month in GEN.
In that article, a dozen leading scientists from 10 academic institutions expressed alarm over what they called the negative impact that patent litigation is having on the field of spatial biology, and advocated unspecified antitrust action “to safeguard the spirit of exploration and innovation in spatial biology.”
“We are concerned about the potential emergence of monopolistic behavior that could hinder innovative patient care,” the group wrote. “These legal challenges are not just courtroom dramas; they are stifling the very momentum of scientific discovery, dimming the beacon of scientific advancement, and delaying clinical impact.”
Countered Saxonov: “It has been unfortunate to see some statements being made specifically by customers, and a lot of these customers who we deeply, deeply respect, and in some sense, if we exist to promote, to help them on their research. We’ve seen them make statements that are questioning our motives and our approach to things. That has felt unfortunate and absolutely worth correcting, or at least making a statement to make it clear where we come from.”
“I felt personally hurt by some of these kinds of accusations because they couldn’t be further from the truth,” Saxonov declared. “But most importantly, I felt it was impugning the integrity of our mission and our team, and the really hard work of all the inventors that has gone into making all these great products. Ben [Hindson] and I felt compelled to speak out and make it clear where we stand as a company, what we’re all about, to really set the record straight.”
Saxonov said the response to 10x’s letter has been positive: “At least the customers we’ve heard them felt very much aligned, and felt like we were doing very much the right thing.”
Going forward, he said, 10x still intends to maintain its focus on product development based on applying internally developed and externally licensed technologies. But he added: “We certainly need to make sure that it is clear to the scientific community where we’re coming from, and we will definitely keep some of our focus on that to make sure that our message gets out there, so that people have conviction around our motives.”
He also defended 10x’s attack on NanoString’s management decisions: “What NanoString has done in spreading its narrative out there is to deflect the blame from themselves, and somehow blame us for their decision making. Not every customer has the time to actually go and figure out what has happened, so I think it was important for us to say that.”
Pending acquisition
NanoString recently agreed to be acquired for $220 million by Patient Square Capital, a dedicated healthcare investment firm with approximately $8 billion in assets under management. Patient Square has agreed to serve as the “stalking horse” bidder in a court-supervised sales process, during which the firm plans to purchase substantially all of NanoString’s global business operations as a going concern. The sales process is subject to approval by the U.S. Bankruptcy Court.
“This agreement with Patient Square and our recent victory in the European patent court should ensure that our leading-edge platforms for spatial biology and gene expression will be available for many years to come,” NanoString stated.
Last month the European Unified Patent Court (UPC) Court of Appeal overturned a preliminary injunction previously issued by the Munich local division of the UPC in September (and applicable to all 17 UPC member countries within the European Union). The reversal allowed NanoString to immediately resume sales of its CosMx™ Spatial Molecular Imager (SMI) products in the EU.
The UPC appeals court cited substantial concerns about the invalidity of the asserted claim of European Patent No. 4108782B1 (also called the ‘782 Patent), stating that it was “highly probable that the patent will not prove to be legally valid.” However, the German injunction remains in place as NanoString weighs next steps in Germany.
Separately, in a case involving another European patent, No. 2794928 B1 (the ‘928 Patent), the German Higher Regional Court of Munich in December ordered the lifting of an injunction on the sale of CosMx products in Germany subject to a security bond payment.
NanoString president and CEO Brad Gray has publicly accused 10x of “a highly questionable litigation campaign against NanoString and several other innovative companies in the marketplace, in what we believe is an effort to eliminate competition in the research tools space to the detriment of science and the public good.”
Turning tide
“The tide is turning in favor of NanoString and scientific freedom,” Gray stated last month, citing the UPC and German court actions. “By seeking to enforce invalid and ill-gotten patents, 10x has caused untold disruption to scientific progress and tremendous harm to NanoString’s customers, employees, and investors.”
NanoString has operated under Chapter 11 bankruptcy since February when it filed for protection from creditors, blaming a $31-million jury award assessed against it last November in a patent infringement case filed by 10x.
A jury held that NanoString’s GeoMx® Digital Spatial Profiler (DSP) infringed seven patents that 10x held after exclusively licensing them from Prognosys Biosciences. 10x was awarded $31 million in damages ($25 million in lost profits, $6 million royalty) in a lawsuit filed against NanoString in U.S. District Court.
NanoString is appealing the decision, but has since disclosed that it is eliminating 9% of its workforce—about 50 employees—during this quarter. As a result of the Chapter 11 filing, NanoString saw its shares delisted from the Nasdaq Global Market, with trading shifted to the Over-the-Counter market under a new ticket symbol.
NanoString is one of two 10x competitors to lob verbal volleys publicly at 10x. Yesterday, Vizgen said it was “very pleased” to announce a setback for 10x: The Patent Trial and Appeal Board (PTAB) of the U.S. Patent and Trademark Office (USPTO) on March 7 denied a petition by 10x to launch an Inter Partes Review challenging U.S. Patent No. 11,098,303 B2, which Vizgen licenses exclusively from Harvard University. Vizgen has also filed a parallel case in the U.S. District Court for the District of Delaware, asserting in part that 10x’s Xenium In Situ single-cell spatial imaging platform infringes certain claims of the ‘303 Patent.
“We are emboldened by the recent development and plan to persevere, investing time and resources in ensuring that the science of genomics moves forward to benefit researchers in their pursuit of advances in human health,” Vizgen CEO Terry Lo said in a statement.
10x sued Vizgen in May 2022, alleging that Vizgen’s MERSCOPE Platform and workflow and Lab Services program, including associated instruments and reagents, infringed five U.S. patents (Nos. 11,021,737; 11,293,051; 11,293,052; 11,293,054; and 11,299,767). 10x seeks unspecified damages including attorneys’ fees.
Vizgen countersued 10x in August 2022, alleging that 10x’s Xenium In Situ single-cell spatial imaging platform infringed the ‘303 patent. 10x amended its complaint in March 2023 additionally alleging that MERSCOPE and Lab Services infringed U.S. Patent No. 11,549,136, but withdrew the earlier claim of infringement of the ‘054 patent after the companies clashed on whether it requires steps of the method claims must be performed in the order in which they appear in the patents.
Both companies have denied any wrongdoing. Saxonov dismissed the PTAB action as “a non-event,” saying the board previously sided with most of 10x’s arguments in a claim construction order that followed a “Markman hearing,” in which a judge decides the meaning of words and phrases used in a patent claim. The case is set to go to trial in October.
Defending “the right way”
In its letter, 10x did not name NanoString, Vizgen, or any other competitors, but defended its approach to innovation as one that advances its mission; strives for exponential impact; protects what it creates through patents; reflects ethical work by present and past employees; and incorporates external innovation.
“Unfortunately, not every company in our industry takes such a rigorous approach to product development. Some knowingly and repeatedly seek to exploit the work of others,” Saxonov and Hindson alleged. “We welcome and encourage all companies who commit to innovate the right way; however, we cannot allow other companies to take our inventions.”
Saxonov and Hindson contended that 10x did not enter litigation lightly or simply to harm others: “We do it to protect our right to our intellectual property and to preserve our ability to invest in continued innovation. In fact, we use patents in precisely the way they are meant to be used: to fuel innovation.”
“This is our commitment to you: we will continue to champion innovation, ensuring that our collective future is one filled with discovery and progress,” Saxonov and Hindson promised. “We will continue to push the limits of what’s possible, because that’s when we are at our best. And we will continue to support your work and your success, celebrating the incredible advances you make toward understanding and improving human health.”
