Patent Litigation and the MRD Testing Market: Strategic Implications for Natera and NeoGenomics

The patent litigation between Natera and NeoGenomics has become a defining case study in the precision diagnostics sector, illustrating how intellectual property (IP) battles can reshape market dynamics and long-term competitive positioning. Over the past two years, the legal clash over molecular residual disease (MRD) testing has seen dramatic reversals, with Natera initially securing a preliminary injunction in 2023 to block NeoGenomics’ RaDaR assay [4], only for the U.S. District Court to later invalidate Natera’s patents in August 2025, allowing NeoGenomics to commercialize its product freely [1]. These outcomes highlight the fragility of IP-based monopolies in rapidly evolving fields and underscore the strategic importance of innovation and regulatory agility.

Legal Reversals and Market Reallocation

Natera’s initial legal victory in 2023 granted it a de facto monopoly in a niche MRD testing segment, with the company holding 74% of the market share for both tumor-informed and tumor-naïve tests [4]. The court’s rationale—citing “irreparable harm” to Natera’s market position—reflected the broader trend of firms using patents to create entry barriers in high-margin diagnostic markets [4]. However, the August 2025 ruling invalidated Natera’s core patents for claiming “ineligible subject matter,” a decision that not only freed NeoGenomics to expand its commercial footprint but also signaled a shift in judicial scrutiny of biotech IP [1]. This reversal has forced Natera to pivot from litigation to innovation, while NeoGenomics now faces the challenge of differentiating its RaDaR ST assay in a newly competitive landscape.

Financial Performance and Strategic Priorities

Natera’s financials reveal a company balancing aggressive R&D spending with operational costs. In Q2 2025, revenue rose 32.2% year-over-year to $546.6 million, driven by a 50.6% increase in oncology tests [2]. However, operating expenses surged 59.2% to $457 million, with legal costs and stock-based compensation contributing to a net loss of $100.9 million [3]. This underscores the high-stakes nature of IP litigation, where legal victories can be offset by financial strain. NeoGenomics, meanwhile, reported a 10% revenue increase to $181 million in Q2 2025 but saw its net loss widen by 142% to $45 million, attributed to challenges in its non-clinical revenue streams [2]. The company’s revised 2025 guidance—projecting a $108–116 million net loss—reflects the financial toll of litigation and market uncertainty [2].

Market Share and Future Prospects

The invalidation of Natera’s patents has already begun to reshape the MRD testing market. NeoGenomics’ stock surged 18.07% following the August 2025 ruling, signaling investor optimism about its ability to capture market share [1]. While exact post-litigation market shares remain unreported, the ruling has enabled NeoGenomics to pursue reimbursement through CMS and expand its biopharma partnerships [1]. Natera, however, retains a first-mover advantage with its Signatera test, which has been reimbursed by Medicare since 2025 [5]. The company’s projected $550–590 million R&D spend for 2025 [3] suggests a strategy focused on product diversification and maintaining technological leadership.

Strategic Implications for the MRD Market

The Natera-NeoGenomics litigation underscores a broader trend: the MRD testing market, projected to grow from $2.58 billion in 2025 to $5.64 billion by 2032 [5], is becoming a battleground for firms that can balance IP management with regulatory and technological agility. Natera’s layered patent strategy—designed to create a “moat” around its Signatera test—has been partially dismantled, but its first-mover status and reimbursement advantages remain critical assets. NeoGenomics, by contrast, must now rely on partnerships (e.g., its collaboration with Adaptive Biotechnologies to offer clonoSEQ-based MRD monitoring [3]) and product innovation to close the gap.

For investors, the key takeaway is that IP litigation is a double-edged sword. While it can temporarily secure market dominance, it also invites regulatory and judicial challenges that may erode those gains. The firms that will thrive in the long term are those that treat IP as a tool for innovation rather than a weapon for exclusion. Natera’s continued R&D investment and NeoGenomics’ pivot to partnerships exemplify this approach, but both must navigate the inherent risks of a market where legal outcomes can shift overnight.

Source:
[1] Court Rules for NeoGenomics in Patent Infringement Lawsuit Against Natera [https://www.businesswire.com/news/home/20250829527926/en/Court-Rules-for-NeoGenomics-in-Patent-Infringement-Lawsuit-Against-Natera]
[2] Natera Reports Second Quarter 2025 Financial Results [https://www.natera.com/company/news/natera-reports-second-quarter-2025-financial-results/]
[3] NeoGenomics Reports Second Quarter 2025 Results [https://ir.neogenomics.com/news-events/press-releases/detail/304/neogenomics-reports-second-quarter-2025-results]
[4] Middle District of North Carolina Finds Public Interest Favors Granting Preliminary Injunction [https://www.fr.com/insights/thought-leadership/blogs/middle-district-of-north-carolina-finds-public-interest-favors-granting-preliminary-injunction]
[5] Minimal Residual Disease Testing Market Size and Trends [https://www.coherentmarketinsights.com/industry-reports/minimal-residual-disease-testing-market]