A Delaware court has dismissed a case involving Invitae Corporation and Natera, Inc., ruling that Invitae's rejection of an asset purchase agreement (APA) constituted a breach, thus relieving Natera of its obligation to make a milestone payment. This decision affects both companies, particularly Invitae, which sought a $22.5 million payment related to a genetic testing business acquisition.

The court ruled on October 28, 2026, in the case titled Invitae Corporation v. Natera, Inc., with docket number N25C-10-310 PAW CCLD. The ruling came after a complex legal dispute that began following the closing of the APA on January 17, 2024. The decision is significant as it clarifies the implications of contract rejection in bankruptcy proceedings and sets a precedent for similar cases.

Background

Invitae Corporation, a Delaware corporation, entered into an asset purchase agreement with Natera, Inc., also a Delaware corporation, to sell certain assets related to Invitae's women’s health genetic testing business. This agreement included a milestone payment of up to $22.5 million, contingent on specific performance metrics being met within a designated timeframe.

After the APA closed, Natera calculated the milestone payment to be $0, leading Invitae to dispute this figure. However, shortly after the closing, Invitae filed for Chapter 11 bankruptcy and rejected the APA as part of its bankruptcy plan. This rejection was deemed a breach of the agreement, raising questions about the subsequent obligations of both parties regarding the milestone payment.

The Ruling

The court granted Natera's motion to dismiss Invitae's claim, stating that Invitae's breach of the APA relieved Natera of its obligation to pay the milestone amount. The ruling emphasized that “Plaintiff’s rejection of the APA constitutes a breach” and that this breach occurred before the milestone payment conditions could be met.

The judge noted that the rejection of the APA did not terminate the contract but created a pre-petition claim for breach of contract. The court highlighted that under Delaware law, a material breach excuses the non-breaching party from performing their obligations under the contract. The court concluded that Invitae could not enforce a post-petition obligation that depended on performance metrics that arose after its breach.

Impact

This ruling has significant implications for both Invitae and Natera. For Invitae, the dismissal of the claim means it will not receive the anticipated milestone payment, which could impact its financial recovery efforts following bankruptcy. For Natera, the ruling confirms its position that it is not liable for the milestone payment due to Invitae's breach.

The decision also sets a precedent regarding how courts may interpret contract breaches in the context of bankruptcy. It clarifies that a party's rejection of a contract can have immediate and significant consequences, relieving the other party of its obligations. This ruling could influence future cases involving similar contractual disputes and bankruptcy proceedings.

What's Next

Invitae may consider appealing the court's decision, although the filing did not specify any immediate plans for further legal action. The court's ruling effectively ends the current dispute regarding the milestone payment, but it also leaves open the possibility of related cases or claims that may arise from the ongoing fallout of Invitae's bankruptcy proceedings.