The Delaware Court of Chancery has ruled against Dr. Minnie Sarwal in a case involving her former company, NephroSant, Inc. The court found that Sarwal breached her fiduciary duties by concealing critical information about a diagnostic test called QSant, which is used to assess the risk of kidney transplant rejection. This decision, issued on November 12, 2026, could have significant implications for Sarwal and the future of NephroSant, as the company navigates the fallout from the ruling.

The case, titled Minnie Sarwal v. Nephrosant, Inc. (C.A. No. 2023-0222-BWD), arose after Sarwal, who served as CEO and board member of NephroSant, was accused of failing to disclose a material change in the QSant test. The court's decision highlights the importance of transparency and accountability in corporate governance, particularly in the healthcare sector where patient outcomes are at stake.

NephroSant was founded in 2017 to develop diagnostic tests based on research from Sarwal's laboratory at the University of California, San Francisco. The QSant test, which measures biomarkers in urine to predict kidney transplant rejection, was initially designed as a six-biomarker test. However, during the testing process, Sarwal and other lab directors decided to exclude one of the biomarkers, clusterin, due to concerns about its stability during shipping. This change was not communicated to the NephroSant board or included in submissions to the Centers for Medicare & Medicaid Services (CMS) for reimbursement.

As the situation unfolded, employees raised concerns about the accuracy of the QSant test, prompting the board to form a special committee to investigate. The investigation revealed that Sarwal had deleted thousands of documents from her NephroSant account, which the court deemed as an attempt to obstruct the inquiry. The court found that Sarwal's actions constituted a breach of her fiduciary duty of loyalty, as she failed to inform the board of the significant change to the QSant test and engaged in document destruction.

In its ruling, the court stated, "Sarwal breached her fiduciary duty of loyalty by concealing material information about changes to the QSant test from the board, destroying company documents, and soliciting investors to form a competing business." The court awarded damages to NephroSant, although the amount was significantly less than the $100 million sought by the company's damages expert.

The decision also determined that Sarwal would not be entitled to indemnification related to the special committee's investigation. This ruling reinforces the principle that corporate officers must act in the best interests of their companies and shareholders, and failure to do so can result in severe consequences.

The impact of this ruling extends beyond Sarwal and NephroSant. It serves as a reminder to other companies in the healthcare industry about the importance of ethical governance and the need for transparency in their operations. The court's findings may influence how other companies approach compliance and oversight, particularly when it comes to the development and commercialization of medical technologies.

Looking ahead, it remains unclear whether Sarwal will appeal the court's decision. The court did not provide specific information on the possibility of an appeal or any related cases pending in the Delaware courts. However, the ruling marks a significant chapter in the ongoing saga of NephroSant and the QSant test.

As NephroSant continues to navigate the aftermath of this ruling, the company faces challenges in validating the five-biomarker test and regaining trust from investors and the medical community. The court's decision may also prompt NephroSant to reevaluate its governance practices and ensure that such breaches of fiduciary duty do not occur in the future.