Natera, Inc. (NTRA) Misstated the Accuracy of its Prenatal Tests
On January 1, 2022, an article from the New York Times called into question the accuracy of certain noninvasive prenatal tests, including tests developed by Natera. The article alleges that positive results on tests are incorrect about 85% percent of the time. Patients who receive a positive result are supposed to pursue follow-up testing, which can be expensive and invasive, and cannot be performed until later in pregnancy. The investigation highlights the statistical challenge of testing for rare illnesses, which isn’t adequately explained to patients who are sold the tests. Companies that develop these tests use language like “highly accurate” and “total confidence,” do not publish data on their tests’ overall performance, or only stress data from tests that are more accurate. On this news, Natera’s stock declined as much as 3.5% during intraday trading on January 3, 2022, injuring investors.
On January 14, 2022, the Campaign for Accountability (“CfA”) filed a complaint letter with the SEC alleging that Natera misled investors by, among other things, failing to disclose the prevalence of false positives from four of the five disorders screened by Panorama. The CfA complaint letter also alleged that the Company issued false and misleading statements about the accuracy of Panorama. The CfA website also highlights that Natera’s Chief Operating Officer sold approximately 10,800 shares of Natera stock valued at more than $800,000 in the weeks leading up to the publication, which may indicate he had knowledge the story would have a negative impact on the Company’s share price in potential violation of insider trading laws. On this news, Natera’s stock price declined again, damaging investors.
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