1013-00005 · Genome Dx Therapeutics Inc · Damages

preliminary-damages-memo.docx DOCUMENT Litigation

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PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

MEMORANDUM

February 2026

FROM: Peter Vassiliev, Lead Associate, intellectual Property, Calderwood & Harkness LLP

TO: Catherine Bloom, Responsible Partner, intellectual Property, Calderwood & Harkness LLP Alan Ngo, Billing Partner, intellectual Property, Calderwood & Harkness LLP

CC: Wendy Schultz, Working Associate, intellectual Property, Calderwood & Harkness LLP

RE: Preliminary Damages Analysis — Genome Dx Therapeutics Inc. v. Helios Precision Diagnostics, Inc., Case No. 3:25-cv-01847-JWL (N.D. Cal.)

PURPOSE: This memorandum sets forth an internal analysis of GenomeDx's damages theories for its patent infringement claims asserting U.S. Patent Nos. 10,438,271; 11,204,893; and 11,891,647 against Helios Precision Diagnostics, Inc.'s ProstaSignal™ Genomic Classifier. The memorandum is intended to serve two primary functions. First, it will inform expert engagement discussions with Dr. Louise Tremaine of Ashworth Economics Group LLC, whom we recommend retaining as GenomeDx's damages expert. Second, it will guide the development of GenomeDx's damages case through expert reports (deadline: May 15, 2026) and trial (currently set for February 2027). All figures and analyses herein are preliminary, based on data available as of February 2026, and will require refinement as discovery progresses and additional financial data becomes available.

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I. EXECUTIVE SUMMARY

GenomeDx possesses two principal damages theories in this matter, which we expect to present as complementary but hierarchically ordered components of a comprehensive damages case. The primary theory is a claim for lost profits, which, as the preferred measure of damages under the Patent Act where the patent holder is also a competitor, seeks to place GenomeDx in the economic position it would have occupied but for Helios's infringement. The alternative theory—functioning both as a standalone damages measure and as a statutory floor—is a reasonable royalty.

Based on the preliminary data available as of this writing, the lost-profits analysis yields estimated damages of $18,490,320 for the initial infringement period of October 2024 through March 2025. This figure derives from an estimated 6,100 diagnostic tests diverted from GenomeDx's Decipher® test to Helios's ProstaSignal™ test, valued at GenomeDx's average reimbursement of $4,210 per test and applied against a 72% incremental margin. The incremental margin reflects the high marginal profitability characteristic of genomic diagnostic testing, where fixed costs—including laboratory infrastructure, R&D investment, regulatory compliance, and reimbursement infrastructure—are already covered, and the marginal cost of processing an additional specimen is comparatively low.

The reasonable-royalty analysis yields estimated damages of $5,775,840 for the same period, based on an 18% royalty rate applied to Helios's ProstaSignal™ revenue of $32,088,000 (approximately 8,400 tests at an average reimbursement of $3,820 per test). The 18% rate represents a 3 percentage-point upward adjustment from the 15% running royalty established in GenomeDx's existing license agreement with Veridian Molecular Labs, Inc., reflecting the directly competitive nature of the prostate cancer application at issue here, the broader patent coverage implicated (three patents versus two in the Veridian agreement), and the adversarial relationship between the parties.

In addition to past damages, GenomeDx should pursue a permanent injunction against continued infringement. Should the court decline to issue a permanent injunction under the Cascade Holdings framework, GenomeDx should seek an ongoing royalty at a rate of 20–25%, reflecting the enhanced value of the adjudicated patent rights and the absence of the injunction threat as a negotiating tool. Enhanced damages under 35 U.S.C. § 284 may also be available depending on the willfulness evidence developed through discovery, which remains ongoing. The pre-launch knowledge and freedom-to-operate analysis evidence sought in GenomeDx's pending motion to compel will be central to this theory.

All damages figures are preliminary and cover only the first six months of infringement. Damages will continue to accrue through trial and any post-judgment period. Annualized lost-profits damages, if current volumes and reimbursement rates hold, would be approximately $36.98 million. These projections will need to be updated as additional discovery is completed and as market conditions evolve.

We recommend the formal retention of Dr. Louise Tremaine at Ashworth Economics Group LLC as GenomeDx's damages expert. Dr. Tremaine's engagement should be finalized immediately to allow sufficient time for independent analysis and preparation of her expert report, which is due May 15, 2026.

II. FACTUAL BACKGROUND RELEVANT TO DAMAGES

A. The Parties and Their Products

GenomeDx Therapeutics Inc. GenomeDx is a Delaware corporation headquartered at 4750 Torrey Pines Road, Suite 300, San Diego, California 92130. The company is a molecular diagnostics company focused on developing and commercializing genomic tests for cancer prognosis and treatment decision-making. GenomeDx is a portfolio company of Pinnacle Biosciences Capital, LP, which holds approximately 62.4% of GenomeDx's equity. The company's leadership includes Dr. Miriam Langford (Chief Executive Officer), Dr. Rajan Mehta (Chief Technology Officer), Thomas Brennan (Chief Financial Officer), Victoria Sung (General Counsel), and Dr. Kevin Ostrowski (Vice President, intellectual Property).

GenomeDx's primary commercial product is the Decipher® Prostate genomic classifier test, a 22-gene expression-based prognostic test designed for prostate cancer patients who have undergone radical prostatectomy. The Decipher® test analyzes gene expression from formalin-fixed paraffin-embedded (FFPE) prostate tumor tissue to generate a prognostic score that classifies patients into risk categories, thereby informing post-surgical treatment decisions—including whether to proceed with adjuvant radiation therapy, active surveillance, or other therapeutic approaches. The Decipher® test is reimbursed under the Medicare MolDX program and has been assigned MAAA code 0047M, which GenomeDx obtained in 2018. GenomeDx has submitted an FDA De Novo classification application for the Decipher® test, filed on August 15, 2024, which remains pending as of this writing. The Decipher® test has been extensively validated through peer-reviewed clinical studies and is referenced in multiple clinical practice guidelines, including those issued by the National Comprehensive Cancer Network (NCCN) and the American Urological Association (AUA).

Helios Precision Diagnostics, Inc. Helios is a Delaware corporation headquartered at 200 CambridgePark Drive, Suite 600, Cambridge, Massachusetts 02140. Founded in 2019, Helios operates a CLIA-certified clinical laboratory located at 9830 Mesa Rim Road, Suite 140, San Diego, California 92121. The company's leadership includes Dr. Nathan Ashford (Chief Executive Officer), Dr. Elaine Kossack (Chief Scientific Officer), and Derek Mallinson (Vice President, Commercial). Helios is majority owned by Corinth Ventures Fund III, LP, which holds approximately 58.7% of Helios's equity.

Helios's accused product in this litigation is the ProstaSignal™ Genomic Classifier, a 24-gene expression-based prognostic test for prostate cancer patients post-radical prostatectomy. Like GenomeDx's Decipher® test, ProstaSignal™ analyzes gene expression from FFPE prostate tumor tissue to generate a prognostic risk classification intended to guide post-surgical treatment decisions. ProstaSignal™ was commercially launched on October 7, 2024. Helios obtained MAAA code 0239M in September 2024, approximately one month prior to commercial launch. The temporal proximity of these events, and the striking similarity between ProstaSignal™ and the Decipher® test in terms of clinical application, sample type, gene-expression methodology, and classifier architecture, are central to GenomeDx's infringement allegations and are also relevant to the willfulness analysis discussed in Section VII below.

B. Patents-in-Suit. GenomeDx asserts three United States patents against Helios's ProstaSignal™ test. These patents share a common technological foundation in multi-gene expression-based prognostic classification for cancer, but address different aspects and improvements of that core technology.

U.S. Patent No. 10,438,271 (the "'271 Patent"). The '271 Patent was filed on June 14, 2016, and issued on October 8, 2019. It expires on June 14, 2036. The '271 Patent is directed to methods for predicting prostate cancer outcomes using multi-gene expression classifiers. GenomeDx asserts claims 1, 3, 5, 7, 12, and 18 of the '271 Patent. These claims cover methods involving the extraction of RNA from prostate tumor tissue, quantification of gene expression levels for a specified panel of genes, application of a machine-learning classifier to the expression data, and generation of a prognostic risk score. The '271 Patent represents the foundational patent in GenomeDx's asserted portfolio for this matter.

U.S. Patent No. 11,204,893 (the "'893 Patent"). The '893 Patent was filed on March 22, 2019, and issued on December 21, 2021. It expires on June 14, 2036, sharing a common priority chain with the '271 Patent. The '893 Patent is directed to genomic classifier systems for post-surgical cancer prognosis, with a particular emphasis on the system architecture—including the computational platform, database components, and reporting modules—that enable clinical deployment of the classifier methodology. GenomeDx asserts claims 1, 2, 9, 14, and 20 of the '893 Patent.

U.S. Patent No. 11,891,647 (the "'647 Patent"). The '647 Patent was filed on September 9, 2021, and issued on February 6, 2024. It expires on September 9, 2041. The '647 Patent is directed to improved methods for genomic risk stratification that combine biomarker expression data with clinical variable models—such as Gleason score, tumor stage, and margin status—to produce an integrated risk classification with enhanced prognostic accuracy. GenomeDx asserts claims 1, 4, 6, 11, and 15 of the '647 Patent. The '647 Patent represents the most recent addition to GenomeDx's portfolio and extends patent coverage through 2041, approximately five years beyond the expiration of the '271 and '893 Patents.

C. Market and Financial Data

The following financial data provides the foundation for the damages calculations presented in this memorandum. These figures are based on GenomeDx's internal financial reporting, publicly available information, and preliminary discovery productions. All figures will require verification through GenomeDx's audited financial statements prepared by Whitfield & Garner LLP and through Helios's discovery responses.

GenomeDx Financial Data:

• FY 2024 Revenue: $387.6 million (primarily from Decipher® test reimbursements, with a small contribution from ancillary services and collaborative research agreements)

• FY 2024 EBITDA: $54.3 million (14.0% margin: $54.3M ÷ $387.6M)

• Average reimbursement per Decipher® test: $4,210 (2024 average, reflecting blended rates across Medicare, commercial payors, and direct institutional billing)

• Employees: approximately 820, including approximately 340 laboratory and R&D staff

• Auditor: Whitfield & Garner LLP

• Primary lender: Meridian Commercial Bank, N.A. ($75 million revolving credit facility)

Helios Financial Data:

• FY 2024 Revenue: $71.2 million (including revenue from ProstaSignal™ and other Helios products, if any; clarification needed from discovery)

• Employees: approximately 215

ProstaSignal™-Specific Financial Data (October 2024 – March 2025):

• Test volume: approximately 8,400 tests

• Average reimbursement per test: $3,820

• Estimated revenue for the period: 8,400 × $3,820 = $32,088,000

The $390 per-test differential between GenomeDx's average reimbursement ($4,210) and Helios's average reimbursement ($3,820) is notable and may reflect differences in payor mix, negotiated rates, introductory pricing strategies, or reimbursement challenges associated with a newer test. This differential is relevant to both the lost-profits and reasonable-royalty analyses.

D. Market Share Data

GenomeDx held approximately 74% of the market for genomic prostate cancer prognostic testing in the United States prior to Helios's commercial launch of ProstaSignal™ in October 2024. This dominant market position was the product of years of clinical validation, guideline incorporation, payor relationships, and physician adoption of the Decipher® test.

Following the ProstaSignal™ commercial launch, GenomeDx's market share declined to approximately 68%, a decline of approximately 6 percentage points. This decline corresponds temporally with the introduction of ProstaSignal™ and is consistent with the thesis that ProstaSignal™ diverted test orders that would otherwise have been fulfilled by GenomeDx's Decipher® test. The temporal correlation between the market share decline and ProstaSignal™'s entry, in the absence of any other material market development during the same period, strongly supports GenomeDx's "but for" causation argument.

The market share data will need to be further substantiated through GenomeDx's internal tracking systems, third-party market research reports (to the extent available), and payor-level data. Dr. Louise Tremaine's analysis should include an independent market share assessment using multiple data sources.

E. Comparable License

The most directly relevant comparable license is the non-exclusive license agreement dated April 3, 2022, between GenomeDx (as licensor) and Veridian Molecular Labs, Inc. (as licensee). Under this agreement, GenomeDx granted Veridian a non-exclusive license under the '271 and '893 Patents for use in Veridian's bladder cancer diagnostic application. The license is limited to the bladder cancer field and does not extend to prostate cancer or any other cancer type.

The material financial terms of the Veridian agreement are as follows:

• Running royalty: 15% of net revenues derived from sales of the licensed product

• Minimum annual royalty: $500,000

• Term: Co-extensive with the life of the licensed patents

• Licensed field: Limited to bladder cancer diagnostics

The Veridian license is the only known existing license under any of the patents-in-suit. It provides the most directly relevant—though imperfect—benchmark for the reasonable-royalty analysis. A detailed comparability analysis, including adjustments warranted by the significant differences between the Veridian license context and the present infringement context, is set forth in Section V below.

III. LOST-PROFITS ANALYSIS (PRIMARY DAMAGES THEORY)

A. Legal Standard

Section 284 of Title 35 of the United States Code provides that "[u]pon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer." The Supreme Court has long recognized that the Patent Act contemplates two alternative measures of compensatory damages: lost profits and reasonable royalties. Where the patent holder can demonstrate that it would have made additional sales "but for" the infringement, lost profits are the preferred measure because they more closely approximate the economic harm actually suffered by the patent holder.

The leading framework for establishing entitlement to lost profits is the four-factor test articulated by the Federal Circuit in Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152, 1156 (6th Cir. 1978). Under Panduit, a patent holder must demonstrate: (1) demand for the patented product; (2) the absence of acceptable non-infringing substitutes; (3) manufacturing and marketing capability to exploit the demand; and (4) the amount of profit the patent holder would have made. The Panduit test is not exclusive, and courts have applied it with some flexibility, but it remains the dominant analytical framework for lost-profits claims in patent cases. See, e.g., Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1545 (Fed. Cir. 1995) (en banc).

The Federal Circuit's decision in Rite-Hite is also significant to GenomeDx's damages case. In Rite-Hite, the en banc court held that lost profits may extend to sales of unpatented items that compete directly with the infringing product, provided the patent holder can demonstrate a reasonable probability that it would have made those sales but for the infringement. 56 F.3d at 1549. Although GenomeDx's primary product, the Decipher® test, directly practices the patents-in-suit, the Rite-Hite principle may be relevant to the extent GenomeDx seeks damages for lost collateral sales or services associated with the diverted test volume.

The burden of proving entitlement to lost profits rests with the patent holder. BIC Leisure Prods., Inc. v. Windsurfing Int'l, Inc., 1 F.3d 1214, 1218 (Fed. Cir. 1993). However, once the patent holder establishes entitlement, any doubt about the precise amount of damages is resolved against the infringer as the wrongdoer. Lam, Inc. v. Johns-Manville Corp., 718 F.2d 1056, 1065 (Fed. Cir. 1983). This burden-shifting principle is particularly favorable to GenomeDx if Helios fails to produce complete financial data in discovery.

B. Panduit Factor Analysis

1. Demand for the Patented Product. The first Panduit factor—demand for the patented product—is readily satisfied here. There is strong and growing demand for genomic prognostic testing in prostate cancer following radical prostatectomy. The Decipher® test has become a standard-of-care tool in post-prostatectomy clinical decision-making, and its use is recommended or referenced in clinical practice guidelines issued by the NCCN, AUA, and other authoritative bodies. The incorporation of genomic classifier testing into clinical guidelines has driven steadily increasing physician adoption and payor coverage, both of which are reflected in GenomeDx's revenue trajectory.

GenomeDx's FY 2024 revenue of $387.6 million, derived primarily from Decipher® test reimbursements, provides powerful evidence of robust market demand. The company's dominant market share of approximately 74% prior to the ProstaSignal™ launch further demonstrates that the Decipher® test—which practices the patents-in-suit—commands broad market acceptance. Additionally, Medicare reimbursement under the MolDX program (MAAA code 0047M) ensures a stable and growing revenue base, as the Medicare-eligible population for prostate cancer treatment continues to expand with demographic trends.

Moreover, the very fact that Helios chose to develop and commercialize ProstaSignal™—a test that targets the identical clinical application as Decipher® using a substantially overlapping gene set and comparable methodology—itself confirms the existence of strong demand for the patented technology. A rational commercial actor would not invest the considerable resources required to develop, validate, and launch a genomic diagnostic test absent a well-founded expectation of significant market demand.

We do not anticipate that Helios will seriously contest this factor. The record evidence of demand is overwhelming, and any effort to dispute it would be inconsistent with Helios's own commercial conduct.

2. Absence of Acceptable Non-Infringing Substitutes. The second Panduit factor—the absence of acceptable non-infringing substitutes—is the most critical and most heavily contested element of the lost-profits analysis. It is here that Helios is most likely to mount a vigorous defense, and it is therefore essential that GenomeDx develop a robust evidentiary record on this issue.

Two-Supplier Market Theory. GenomeDx will argue that the market for genomic prostate cancer prognostic classifiers designed for the post-radical prostatectomy setting was functionally a near-monopoly prior to ProstaSignal™'s entry, with GenomeDx as the overwhelmingly dominant—and, for practical purposes, sole—supplier of this specific type of test. The two-supplier market theory, recognized by the Federal Circuit in cases such as Micro Chem., Inc. v. Lextron, Inc., 317 F.3d 1387 (Fed. Cir. 2003), allows a patent holder in a two-competitor market to recover all or substantially all of the infringer's sales as lost profits, subject to appropriate allocation methodology. Here, GenomeDx's pre-infringement market share of approximately 74% in the relevant market—with the remaining approximately 26% attributable to a combination of residual competitors, tests not ordered, and institutional limitations—supports a strong allocation of Helios's test volume to GenomeDx.

Potential Non-Infringing Alternatives. Helios is likely to identify several categories of putative non-infringing alternatives. GenomeDx should be prepared to address each as follows:

(a) Non-genomic prognostic tools. Helios may point to clinical nomograms (such as the Stephenson nomogram), PSA kinetics, and other non-genomic risk assessment tools as acceptable alternatives to the Decipher® test. GenomeDx should argue that these tools are not acceptable substitutes because they do not provide equivalent genomic information, rely on fundamentally different data inputs (clinical variables alone, without gene-expression profiling), and are clinically distinct in their predictive accuracy and clinical utility. The clinical literature consistently demonstrates that genomic classifiers provide incremental prognostic value beyond clinical and pathological variables alone—a point that is central to the inventive contribution of the patents-in-suit, and particularly the '647 Patent, which claims the integration of genomic and clinical models. Physicians who order genomic classifier tests do so precisely because they seek information that non-genomic tools cannot provide. Accordingly, a non-genomic tool is not an "acceptable substitute" for a genomic classifier test in the same way that an X-ray is not an acceptable substitute for an MRI.

(b) Other genomic tests. Helios may also point to other commercially available genomic tests in the prostate cancer space, such as the 17-gene panel assay marketed for use at the biopsy or active surveillance stage (the Klein et al.-type assay). GenomeDx should argue that these tests address different clinical decision points in the patient pathway and are not direct substitutes for the post-prostatectomy prognostic niche served by both Decipher® and ProstaSignal™. The relevant clinical question is different (whether to proceed with biopsy or active surveillance versus whether to pursue adjuvant radiation therapy post-prostatectomy), the relevant patient population is different (pre-treatment versus post-surgical), and the reimbursement context is different (different MAAA codes and coverage determinations). Accordingly, these tests occupy a different segment of the clinical workflow and do not constitute acceptable non-infringing substitutes for the specific market at issue.

(c) Design-around alternatives. Perhaps the most sophisticated argument Helios may advance is that its ProstaSignal™ test could have been designed around the patents-in-suit—for example, by using fewer overlapping genes, employing a different classifier architecture, or avoiding the integration of clinical variables with genomic data. GenomeDx should be prepared to address this argument with technical expert testimony from Dr. Franklin Ogawa (proposed technical expert, Stanford University) on the difficulty and impracticality of such a design-around. In this regard, it is significant that 19 of Helios's 24 ProstaSignal™ genes overlap with GenomeDx's patented gene set. This high degree of overlap—nearly 80% of the ProstaSignal™ gene panel—reflects the scientific reality that the specific genes claimed in the patents-in-suit were identified through rigorous biomarker discovery processes and are biologically optimized for prostate cancer prognostication. Substituting arbitrary alternative genes would not merely change the product's design; it would fundamentally alter—and in all likelihood degrade—the test's prognostic performance. Dr. Ogawa should opine on the scientific constraints that limit the feasibility of a simple gene-substitution workaround and on the impracticality of developing, validating, and obtaining reimbursement for a materially different classifier in the relevant timeframe.

Risk Assessment. We acknowledge that the absence-of-acceptable-non-infringing-substitutes factor presents the greatest risk to GenomeDx's lost-profits theory. However, the narrow definition of the relevant market (post-radical prostatectomy genomic prognostic testing), the absence of any commercially available direct substitute other than the infringing product itself, and the technical constraints on design-around alternatives all weigh strongly in GenomeDx's favor. This factor will require robust expert support from both Dr. Ogawa (technical) and Dr. Tremaine (economic).

3. Manufacturing and Marketing Capability. The third Panduit factor—manufacturing and marketing capability to exploit the demand—is straightforward for GenomeDx. The company maintains a large-scale, CLIA-certified clinical laboratory and employs approximately 820 personnel, including approximately 340 laboratory and R&D staff. GenomeDx's laboratory infrastructure is designed for high-volume specimen processing, and the company has established reimbursement infrastructure, a dedicated sales force, extensive physician relationships, and the operational capacity to handle significant test volume.

There is no evidence in the record suggesting that GenomeDx faced any capacity constraints during the October 2024 through March 2025 period that would have prevented it from performing the additional approximately 6,100 tests diverted by ProstaSignal™. GenomeDx's existing test volume during FY 2024 (corresponding to approximately 92,000 tests based on $387.6M revenue ÷ $4,210/test) demonstrates that the company routinely processes testing volumes far in excess of the incremental 6,100 tests at issue. The marginal capacity required to absorb this additional volume—representing an approximately 6.6% increase in test volume—falls well within GenomeDx's operational parameters and does not implicate any meaningful capacity limitation.

GenomeDx's CFO, Thomas Brennan, should be prepared to testify regarding the company's capacity during the relevant period, including available laboratory throughput, staffing levels, and the absence of any operational bottleneck that would have precluded GenomeDx from performing additional tests.

4. Amount of Profit — Lost-Profits Calculation. The fourth Panduit factor requires quantification of the profits GenomeDx would have earned on the sales diverted by the infringement. The calculation proceeds as follows:

Estimated Tests Diverted to Helios. Of Helios's approximately 8,400 ProstaSignal™ tests performed during the October 2024 through March 2025 period, we estimate that approximately 6,100 tests would have been ordered from GenomeDx absent infringement. This figure derives from GenomeDx's pre-infringement market share of approximately 74% applied to the total ProstaSignal™ test volume (74% × 8,400 ≈ 6,216), with a conservative downward adjustment to approximately 6,100 tests to account for a small allocation of tests to residual competitors, market expansion effects, and tests that might not have been ordered at all in the absence of ProstaSignal™'s entry. The detailed allocation methodology is set forth in Section VI below.

GenomeDx Average Reimbursement Per Test. GenomeDx's average reimbursement per Decipher® test during 2024 was $4,210, reflecting a blended rate across Medicare, commercial payors, and institutional billing arrangements. This per-test reimbursement figure represents the revenue GenomeDx would have received for each diverted test.

Lost Revenue. The estimated lost revenue attributable to the diverted tests is:

6,100 tests × $4,210/test = $25,681,000

GenomeDx Incremental Margin. GenomeDx's incremental margin on the diverted tests is estimated at approximately 72%. This incremental margin is distinct from, and substantially higher than, GenomeDx's company-wide EBITDA margin of 14.0%. The difference reflects the distinction between average profitability (which includes the full allocation of fixed costs across all revenue) and incremental profitability (which captures only the variable costs associated with processing an additional test). In the genomic diagnostic testing business, the vast majority of costs are fixed: laboratory infrastructure and equipment, R&D expenditure, regulatory compliance, reimbursement and billing infrastructure, sales and marketing organization, and corporate overhead. The marginal cost of processing an additional specimen—comprising reagents, consumables, labor, specimen shipping and handling, and test reporting—is comparatively modest. This cost structure produces high incremental margins, which are well documented in the molecular diagnostics industry and should be substantiated through Dr. Tremaine's independent analysis.

Lost Profits. The estimated lost profits for the October 2024 through March 2025 period are:

$25,681,000 × 0.72 = $18,490,320

This figure covers only the initial six-month period of infringement. Damages will continue to accrue and will need to be updated through trial and any post-judgment period, as discussed in Section X below.

C. Data Sources and Outstanding discovery Needs

The lost-profits calculation set forth above is based on preliminary data and will require verification and refinement through multiple sources.

GenomeDx Financial Data. GenomeDx's financial data—including revenue, test volume, reimbursement rates, and cost structure—should be verified through GenomeDx's CFO, Thomas Brennan, who has been designated as GenomeDx's 30(b)(6) witness for financial and damages topics. The underlying financial data should be confirmed against GenomeDx's audited financial statements prepared by Whitfield & Garner LLP. Dr. Tremaine should receive full access to these financial records as part of her independent analysis.

Helios Financial Data. Helios's test volume and revenue data for ProstaSignal™ are essential to the damages calculation and must be obtained through discovery. GenomeDx has served Requests for Production and Interrogatories seeking Helios's revenue, cost of goods sold, and test volume data for ProstaSignal™ on a monthly basis. As discussed in Section XIII below, several categories of Helios financial data remain outstanding and are the subject of ongoing discovery disputes.

Market Share Data. The market share data used in the allocation methodology should be supplemented with third-party market research reports, payor-level data, and internal GenomeDx tracking systems. We should investigate whether any market research firms (e.g., DeciBio, Drayton Financial, or Adriatic Strategy Partners) have published reports on the genomic diagnostics market for prostate cancer that could provide independent market share estimates.

Incremental Margin Analysis. The 72% incremental margin is a preliminary estimate based on available information about GenomeDx's cost structure. Dr. Tremaine should perform an independent incremental margin analysis using GenomeDx's detailed cost accounting data, including a line-item assessment of variable costs per test (reagents, consumables, labor, shipping, reporting) against the average reimbursement per test.

IV. REASONABLE-ROYALTY ANALYSIS (ALTERNATIVE DAMAGES THEORY)

A. Legal Standard

The reasonable royalty serves as the statutory floor of patent damages under Section 284 of the Patent Act, which provides that damages shall "in no event [be] less than a reasonable royalty for the use made of the invention by the infringer." 35 U.S.C. § 284. While GenomeDx's primary damages theory is lost profits, the reasonable-royalty analysis provides an alternative measure of damages that applies either as a standalone theory (if lost profits cannot be established) or as a floor below which damages cannot fall.

The established framework for determining a reasonable royalty is the hypothetical negotiation construct, which asks what a willing licensor (GenomeDx) and a willing licensee (Helios) would have agreed to in a hypothetical arm's-length negotiation at the time infringement began. Georgia-Pacific Corp. v. United States Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y. 1970). The date of the hypothetical negotiation is the date on which infringement began—here, October 7, 2024, the date of ProstaSignal™'s commercial launch. The hypothetical negotiation is conducted with the assumption that the patents are valid and infringed (a critical assumption that eliminates the litigation risk discount that would otherwise affect real-world negotiations). Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1325 (Fed. Cir. 2009).

The Georgia-Pacific decision identified fifteen factors relevant to determining a reasonable royalty. While not every factor will be applicable or equally weighted in every case, the framework provides a comprehensive analytical structure that courts and damages experts routinely apply. We address each factor below.

B. Georgia-Pacific Factor Analysis

Factor 1: Established Royalties for the Patent. The most directly relevant established royalty is the Veridian Molecular Labs license agreement, dated April 3, 2022. Under this agreement, GenomeDx granted Veridian a non-exclusive license under the '271 and '893 Patents for use in Veridian's bladder cancer diagnostic application at a running royalty rate of 15% of net revenues, with a minimum annual royalty of $500,000. This license establishes that GenomeDx has previously determined that 15% is an appropriate royalty rate for the licensed technology—albeit in a non-competing application and covering only two of the three patents-in-suit. The Veridian license is discussed in detail in Section V below.

The 15% Veridian rate provides a useful—but imperfect—starting point for the hypothetical negotiation. Several adjustments are warranted to account for the material differences between the Veridian context and the circumstances of the present infringement, as discussed in Factors 3 through 5 and in the Veridian comparability analysis in Section V.

Factor 2: Rates Paid by the Licensee for Comparable Patents. Discovery into Helios's licensing history is ongoing. GenomeDx has served interrogatories requesting information about any licenses Helios has taken in the genomic diagnostics field, including the identity of the licensor, the licensed patents, the licensed field, and the financial terms. As of February 2026, Helios has not identified any comparable license agreements in its discovery responses, but additional document production may reveal relevant licensing activity. If Helios has taken licenses under genomic diagnostics patents from third parties, the terms of those licenses may provide additional benchmarks for the reasonable-royalty analysis.

Factor 3: Nature and Scope of the License. The Veridian license is non-exclusive and limited to the bladder cancer diagnostics field—a clinical application in which GenomeDx does not itself compete. The hypothetical license at issue here would cover the directly competitive prostate cancer application, which is the core commercial market for GenomeDx's Decipher® test. The difference in competitive overlap between the two licensing contexts is profound: the Veridian license authorized use of GenomeDx's technology in a non-competing field, whereas a license to Helios would authorize a direct competitor to use GenomeDx's technology to compete head-to-head with GenomeDx's primary revenue-generating product. This distinction supports a significant upward adjustment from the 15% Veridian rate.

Additionally, the scope of the hypothetical license would need to be broader than the Veridian license in terms of patent coverage. The Veridian license covers only the '271 and '893 Patents, whereas the infringement here implicates all three patents-in-suit, including the '647 Patent (which covers the integrated genomic-clinical model methodology). The broader patent coverage warranted by the circumstances of this case further supports an upward adjustment.

Factor 4: Licensor's Established Policy of Exclusivity. GenomeDx has maintained its Decipher® test as its primary commercial product and has not broadly licensed its prostate cancer classifier patents to direct competitors. The Veridian license was carefully crafted to ensure that Veridian's licensed use was limited to bladder cancer, a non-competing application. GenomeDx's established licensing policy thus reflects a preference for maintaining exclusivity in its core prostate cancer market while selectively licensing the underlying technology for non-competing applications. In a hypothetical negotiation with a direct competitor like Helios, GenomeDx's strong policy of maintaining market exclusivity would exert substantial upward pressure on the royalty rate. A willing licensor in GenomeDx's position would demand a significant premium to compensate for the competitive harm inherent in licensing core technology to a direct rival.

Factor 5: Commercial Relationship Between Licensor and Licensee. GenomeDx and Helios are direct competitors in the prostate cancer genomic prognostic testing market. This adversarial commercial relationship is fundamentally different from the non-competitive relationship between GenomeDx and Veridian (a bladder cancer diagnostics company). In the hypothetical negotiation framework, the adversarial competitive posture between the parties would exert upward pressure on the royalty rate, as GenomeDx would demand compensation not only for the use of its technology but also for the competitive harm—including lost sales, market share erosion, and potential price pressure—that would result from licensing a direct competitor.

Factor 6: Effect of the Licensed Product on Sales of Other Products. The ProstaSignal™ test directly diverts sales from GenomeDx's Decipher® test. As set forth in Section II.D, GenomeDx's market share declined from approximately 74% to approximately 68% following ProstaSignal™'s commercial launch—a 6 percentage-point decline that corresponds temporally with Helios's market entry. This direct market share loss demonstrates the adverse competitive impact of the infringing product on GenomeDx's core business.

Beyond direct test volume diversion, the entry of ProstaSignal™ into the market may also affect GenomeDx's broader business relationships in several ways. First, established physician referral relationships may be disrupted as Helios's sales force actively targets GenomeDx's existing customers. Second, institutional contracts—including volume-based agreements with large urology practices and academic medical centers—may come under competitive pressure. Third, the presence of a lower-priced competitor ($3,820 versus $4,210 per test) may exert downward pricing pressure on GenomeDx's reimbursement rates in future payor negotiations. These derivative effects support a higher royalty rate.

Factor 7: Duration of the Patent and License Term. The remaining terms of the patents-in-suit are substantial:

• The '271 Patent expires June 14, 2036 (approximately 10 years remaining)

• The '893 Patent expires June 14, 2036 (approximately 10 years remaining, same priority chain)

• The '647 Patent expires September 9, 2041 (approximately 15 years remaining)

The extended remaining patent life is significant for two reasons. First, it means that a license under these patents would confer a long period of competitive advantage to the licensee. Second, it means that GenomeDx would be surrendering a correspondingly long period of exclusivity—or at least a long period during which it could enforce its patents against competitors. Both considerations support a higher royalty rate to reflect the substantial temporal value of the patent rights being licensed.

Factor 8: Profitability, Commercial Success, and Popularity of the Patented Invention. GenomeDx's Decipher® test—which practices the patents-in-suit—is a commercially successful product by any measure. The test generated $387.6 million in FY 2024 revenue with $54.3 million EBITDA (14.0% margin). GenomeDx has held approximately 68–74% of the relevant market, reflecting both the clinical value of the test and the strength of GenomeDx's commercial organization. The Decipher® test has been referenced in numerous clinical guidelines, validated in dozens of peer-reviewed studies, and adopted by thousands of urologists and radiation oncologists across the United States. This strong track record of commercial success and clinical acceptance directly demonstrates the value of the patented technology and supports a higher royalty rate.

Factor 9: Advantages of the Patented Invention over Alternatives. The patented multi-gene classifier methodology provides clinically significant advantages over non-genomic alternatives. Specifically, the 22+ gene expression panel, combined with a machine-learning classifier algorithm and—in the case of the '647 Patent—the integration of clinical covariates, produces a prognostic risk score with superior accuracy compared to non-genomic approaches such as clinical nomograms and PSA kinetics. The '647 Patent's combined genomic-clinical model demonstrates statistically significant improvement over genomic-only models, as established by Dr. Rajan Mehta's declaration submitted under 37 C.F.R. § 1.132 during patent prosecution. This superior prognostic accuracy is the principal clinical driver of physician adoption and payor coverage, and it reflects the core inventive contribution of the patents-in-suit. The advantages of the patented technology over available alternatives support a higher royalty rate.

Factor 10: Nature of the Patented Invention. The patents-in-suit cover the core technology underlying both the Decipher® and ProstaSignal™ tests—the gene-expression-based multi-feature classifier methodology, including the specific gene panels, the machine-learning classification algorithms, the system architecture for clinical deployment, and the integrated genomic-clinical risk stratification approach. This is not a peripheral feature or a minor improvement to an otherwise independent product. Rather, the patents cover the fundamental methodology that defines the product category. Without the patented technology, neither the Decipher® test nor the ProstaSignal™ test could function as a genomic prognostic classifier. This centrality of the patented technology to the accused product supports a higher royalty rate.

Factor 11: Extent to Which the Infringer Used the Invention. The evidence of Helios's extensive use of the patented invention is compelling. Nineteen of ProstaSignal™'s 24 genes overlap with GenomeDx's patented gene set—nearly 80% of the ProstaSignal™ gene panel. ProstaSignal™ employs the same fundamental methodology as the Decipher® test: RNA extraction from FFPE tumor tissue, gene-expression profiling using the overlapping gene set, machine-learning classification of the expression data to generate a risk score, and combination of the genomic risk score with clinical covariates for integrated risk stratification. The patented invention is not an incidental component of ProstaSignal™—it is the central and defining technology of the product. This factor weighs heavily in favor of a higher royalty rate.

Factor 12: Customary Royalty in the Industry. The Veridian license at 15% of net revenues is the most directly relevant benchmark for customary royalty rates. In the broader molecular diagnostics patent licensing industry, typical royalty rates generally range from 5% to 25%, depending on factors such as the exclusivity of the license, the degree of competitive overlap between licensor and licensee, the centrality of the patented technology to the licensed product, and the strength of the patent portfolio. The 18% rate proposed for the hypothetical negotiation in this case falls within the established range for diagnostics patent licensing and is consistent with the Veridian benchmark as adjusted for the competitive-overlap and broader-coverage factors discussed above. Dr. Tremaine should conduct independent research into industry royalty norms to further substantiate this benchmark.

Factor 13: Portion of Profit Attributable to the Invention vs. Non-Patented Elements. The patented classifier methodology is the core value driver of the ProstaSignal™ test. Without the gene-expression-based multi-feature classifier methodology covered by GenomeDx's patents, ProstaSignal™ could not function as a genomic prognostic tool. The patented technology is not merely one component among many; it is the foundational technology upon which the entire product is built.

Helios may argue that a portion of ProstaSignal™'s value derives from Helios's own proprietary contributions, including its proprietary clinical data, its independent clinical validation studies, its gradient-boosted decision tree classifier algorithm, and its commercial infrastructure (sales force, reimbursement team, laboratory operations). While GenomeDx should acknowledge that Helios has contributed some independent value through its commercial and clinical efforts, the fundamental argument is that these contributions are built on top of the patented methodology—without which they would have no product to commercialize. The analogy is straightforward: Helios may have built an attractive house, but it built it on GenomeDx's patented foundation. Accordingly, the overwhelming share of the value should be attributed to the patented technology.

Factor 14: Expert Testimony on Reasonable Royalty. Expert testimony on the appropriate reasonable royalty rate and the application of the Georgia-Pacific factors will be provided by Dr. Louise Tremaine of Ashworth Economics Group LLC. We recommend retaining Dr. Tremaine immediately to allow sufficient time for her independent analysis. Dr. Tremaine's expert report is due May 15, 2026.

Factor 15: Hypothetical Negotiation Outcome. Considering all of the foregoing factors—including the direct competitive relationship between the parties, the significant market share loss suffered by GenomeDx, the core technology overlap between the Decipher® and ProstaSignal™ tests, the extensive gene-set overlap (19 of 24 genes), the extended remaining patent life, GenomeDx's strong policy of maintaining exclusivity in its core prostate cancer market, and the Veridian benchmark of 15%—we propose a royalty rate of 18% for the hypothetical negotiation.

The 3 percentage-point increase from the 15% Veridian baseline reflects three principal adjustments:

(a) Competitive overlap premium. The hypothetical license here would authorize a direct competitor to compete head-to-head with GenomeDx's primary product in its core market. The Veridian license, by contrast, covered a non-competing bladder cancer application. The direct competitive overlap warrants a significant upward adjustment.

(b) Broader patent coverage. The Veridian license covered only the '271 and '893 Patents. The infringement here implicates all three patents-in-suit, including the '647 Patent, which covers the integrated genomic-clinical model methodology. The broader patent coverage justifies an additional premium.

(c) Litigation context. The hypothetical negotiation takes place against the backdrop of actual infringement—the parties were unable to reach a voluntary license agreement, and GenomeDx was forced to resort to litigation to enforce its patent rights. While the hypothetical negotiation assumes willing parties, the reality of the adversarial relationship and the compulsory nature of the "license" support an upward adjustment from a rate that was negotiated in a truly voluntary, non-adversarial context.

C. Reasonable-Royalty Calculation

The reasonable-royalty damages calculation is as follows:

Royalty Base. The appropriate royalty base is Helios's total ProstaSignal™ revenue for the October 2024 through March 2025 period:

8,400 tests × $3,820/test = $32,088,000

Proposed Royalty Rate. 18%, as derived from the Georgia-Pacific analysis above.

Reasonable Royalty Damages:

$32,088,000 × 0.18 = $5,775,840

This figure represents the damages floor under Section 284. GenomeDx's lost-profits claim of $18,490,320 is significantly higher and should be pursued as the primary damages theory. The reasonable-royalty calculation serves as an important backstop in the event that GenomeDx is unable to establish one or more of the Panduit factors or if the court determines that a portion of Helios's test volume does not represent diverted GenomeDx sales. Even under the reasonable-royalty theory, GenomeDx is entitled to substantial damages.

V. VERIDIAN LICENSE — DETAILED COMPARABILITY ANALYSIS

The Veridian Molecular Labs license agreement is the cornerstone of GenomeDx's reasonable-royalty analysis. A detailed comparability assessment is essential both to establish the admissibility and relevance of the Veridian license as a benchmark and to justify the upward adjustments necessary to derive the hypothetical negotiation rate for the present infringement.

License Details:

• Date: April 3, 2022

• Parties: GenomeDx Therapeutics Inc. (licensor) and Veridian Molecular Labs, Inc. (licensee)

• Licensed Patents: U.S. Patent Nos. 10,438,271 and 11,204,893 (the '271 and '893 Patents)

• Scope: Non-exclusive license for use of the licensed patents in Veridian's bladder cancer diagnostic application only

• Running Royalty: 15% of net revenues derived from sales of the licensed product

• Minimum Annual Royalty: $500,000

• Term: Co-extensive with the life of the licensed patents

• Licensed Field: Limited to bladder cancer diagnostics

Comparability Strengths. The Veridian license exhibits several characteristics that make it a strong comparable for the present hypothetical negotiation:

• Same licensor. GenomeDx is the licensor in both the Veridian agreement and the hypothetical negotiation. This ensures consistency in the licensor's valuation of its patent rights and licensing practices.

• Same patents. The Veridian license covers two of the three patents-in-suit (the '271 and '893 Patents), providing a direct benchmark for the value of those specific patent rights.

• Same technology platform. Both the Veridian license and the present infringement involve the same underlying technology—gene-expression-based multi-feature classifier methodology. The licensed product in the Veridian agreement (a bladder cancer diagnostic) and the accused product here (ProstaSignal™) both employ the patented classifier approach, albeit for different cancer types.

• Same product type. Both the Veridian licensed product and ProstaSignal™ are laboratory-developed genomic tests performed in CLIA-certified laboratories. The business model, reimbursement structure, and commercial dynamics are substantially similar.

Comparability Weaknesses and Adjustments. Several material differences between the Veridian license context and the present infringement context warrant upward adjustments from the 15% Veridian baseline:

(a) Different clinical application—competitive overlap. The Veridian license covers bladder cancer diagnostics, a clinical application in which GenomeDx does not compete. The present infringement involves prostate cancer genomic prognostic testing—GenomeDx's core market, where the Decipher® test generates substantially all of the company's $387.6 million annual revenue. A license in a non-competing field carries a materially lower cost to the licensor than a license in the licensor's own competitive market. This is the single most important distinction between the Veridian license and the hypothetical license at issue, and it warrants a significant upward adjustment.

(b) Narrower patent coverage in Veridian license. The Veridian license covers only the '271 and '893 Patents. The present infringement implicates all three patents-in-suit, including the '647 Patent, which covers the improved integrated genomic-clinical model methodology. The '647 Patent extends patent coverage through September 2041—five years beyond the expiration of the '271 and '893 Patents—and covers a commercially significant technological improvement. The inclusion of the '647 Patent in the hypothetical license would provide the licensee with broader and longer-lasting patent coverage, warranting an upward adjustment.

(c) Non-exclusive license in a non-competing field. The Veridian license is non-exclusive and limited to a field in which GenomeDx does not compete. A hypothetical license to Helios would effectively authorize a direct competitor to operate in GenomeDx's core market using GenomeDx's core technology. Even if the hypothetical license were characterized as non-exclusive, its practical effect would be to legitimize a direct competitive threat. This warrants a premium beyond what was agreed in the non-competitive Veridian context.

(d) Different negotiating dynamics. At the time of the Veridian license (April 2022), Veridian had no existing product in the market and was in a development-stage posture. Veridian's negotiating leverage was accordingly limited, and the voluntary nature of the negotiation reduced the urgency and risk premium that would be demanded by a licensor facing an existing competitive threat. By contrast, in the hypothetical negotiation with Helios (October 2024), Helios had already developed ProstaSignal™ and was on the verge of commercial launch. The parties' respective negotiating positions would be materially different, with GenomeDx possessing significant leverage as the holder of valid patents covering a product about to enter the market.

Recommended Adjustment. Based on the foregoing analysis, we recommend an upward adjustment from the 15% Veridian baseline to an 18% hypothetical negotiation rate. This 3 percentage-point increase reflects the cumulative impact of the competitive-overlap premium, broader patent coverage, and the adversarial commercial context. The adjustment is conservative and well within the range that a damages expert could defend at deposition and trial. Dr. Tremaine should conduct her own independent assessment of the appropriate adjustment based on the full evidentiary record.

A separate Veridian License Comparability Analysis Memorandum is under preparation and will provide a more detailed treatment of each comparability factor, including a quantitative analysis of the competitive-overlap premium where feasible.

VI. TWO-SUPPLIER MARKET ANALYSIS

A. Market Definition

The relevant market for purposes of the lost-profits analysis is genomic prognostic testing for prostate cancer post-radical prostatectomy in the United States. This market definition is carefully tailored to capture the specific competitive dynamic at issue—the diversion of test orders from GenomeDx's Decipher® test to Helios's ProstaSignal™ test.

The key characteristics of this market are as follows:

(a) Medicare reimbursement-driven. The majority of genomic prognostic tests for prostate cancer are reimbursed through the Medicare program, which covers the largest patient population for radical prostatectomy (men aged 65 and older). Medicare coverage and reimbursement rates—administered through the MolDX program—are the primary economic drivers of the market.

(b) CLIA-certified laboratory-performed. Genomic prognostic tests for prostate cancer are laboratory-developed tests performed in CLIA-certified clinical laboratories. The test is ordered by the treating physician, the specimen is shipped to the laboratory, and the laboratory performs the assay and issues a report to the ordering physician. The CLIA certification requirement and the laboratory infrastructure necessary to perform these tests create meaningful barriers to entry.

(c) Physician-ordered based on clinical guidelines. The decision to order a genomic prognostic test is made by the treating urologist or radiation oncologist, typically guided by clinical practice guidelines from the NCCN, AUA, and other professional organizations. Physician adoption is a critical driver of market share.

(d) MAAA code required for billing. Each genomic prognostic test requires a unique Multianalyte Assays with Algorithmic Analyses (MAAA) code (also known as a proprietary laboratory analysis code) for Medicare and commercial payor billing. The process of obtaining an MAAA code is time-consuming and requires demonstrated clinical utility. GenomeDx's Decipher® test holds MAAA code 0047M; Helios's ProstaSignal™ holds MAAA code 0239M.

B. Market Participants

Within the defined market of genomic prognostic testing for prostate cancer post-radical prostatectomy, the principal participants are:

GenomeDx Therapeutics Inc. GenomeDx's Decipher® test (MAAA code 0047M) is the dominant product in this market, with a pre-infringement market share of approximately 74%. GenomeDx has been the market leader since the commercial establishment of the Decipher® test and has built a substantial competitive moat through clinical validation, guideline incorporation, physician relationships, and reimbursement infrastructure.

Helios Precision Diagnostics, Inc. Helios's ProstaSignal™ test (MAAA code 0239M) entered the market on October 7, 2024. ProstaSignal™ is the most significant new entrant in the post-prostatectomy genomic prognostic testing market in recent years and is the product most directly competitive with the Decipher® test.

Other Participants. Our investigation has not identified any other commercially available genomic prognostic tests that are specifically designed and validated for the post-radical prostatectomy clinical decision point and that operate through the same mechanism—i.e., gene-expression profiling from FFPE prostate tumor tissue with machine-learning classification and risk stratification. Certain other genomic tests exist in the broader prostate cancer space, but they address different clinical decision points and are not direct substitutes for the Decipher® or ProstaSignal™ tests. Specifically:

• The Klein et al.-type 17-gene assay is designed for use at the biopsy or active surveillance decision point, not the post-prostatectomy adjuvant therapy decision point. It serves a different patient population (men considering biopsy or on active surveillance, versus men who have already undergone radical prostatectomy), addresses a different clinical question, and occupies a different reimbursement category. It is not a direct substitute for the Decipher® or ProstaSignal™ tests in the post-prostatectomy setting.

• Other genomic and molecular tests (e.g., gene fusion assays, protein-based biomarkers) similarly address different clinical questions, use different methodologies, and are not interchangeable with the gene-expression-based multi-feature classifier tests at issue in this case.

The relevant market is therefore functionally a two-supplier market for the specific post-prostatectomy genomic prognostic testing niche. GenomeDx and Helios are the only two companies offering commercially available gene-expression-based prognostic classifier tests specifically designed and validated for use post-radical prostatectomy. This two-supplier market structure strongly supports GenomeDx's lost-profits claim, as it enables the allocation of substantially all of Helios's ProstaSignal™ test volume to GenomeDx on a "but for" basis.

C. Allocation Methodology

The allocation of Helios's ProstaSignal™ test volume to Ge

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
MEMORANDUM
February 2026
FROM: Peter Vassiliev, Lead Associate, intellectual Property, Calderwood & Harkness LLP
TO: Catherine Bloom, Responsible Partner, intellectual Property, Calderwood & Harkness LLP Alan Ngo, Billing Partner, intellectual Property, Calderwood & Harkness LLP
CC: Wendy Schultz, Working Associate, intellectual Property, Calderwood & Harkness LLP
RE: Preliminary Damages Analysis — Genome Dx Therapeutics Inc. v. Helios Precision Diagnostics, Inc., Case No. 3:25-cv-01847-JWL (N.D. Cal.)
PURPOSE: This memorandum sets forth an internal analysis of GenomeDx's damages theories for its patent infringement claims asserting U.S. Patent Nos. 10,438,271; 11,204,893; and 11,891,647 against Helios Precision Diagnostics, Inc.'s ProstaSignal™ Genomic Classifier. The memorandum is intended to serve two primary functions. First, it will inform expert engagement discussions with Dr. Louise Tremaine of Ashworth Economics Group LLC, whom we recommend retaining as GenomeDx's damages expert. Second, it will guide the development of GenomeDx's damages case through expert reports (deadline: May 15, 2026) and trial (currently set for February 2027). All figures and analyses herein are preliminary, based on data available as of February 2026, and will require refinement as discovery progresses and additional financial data becomes available.
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I. EXECUTIVE SUMMARY
GenomeDx possesses two principal damages theories in this matter, which we expect to present as complementary but hierarchically ordered components of a comprehensive damages case. The primary theory is a claim for lost profits, which, as the preferred measure of damages under the Patent Act where the patent holder is also a competitor, seeks to place GenomeDx in the economic position it would have occupied but for Helios's infringement. The alternative theory—functioning both as a standalone damages measure and as a statutory floor—is a reasonable royalty.
Based on the preliminary data available as of this writing, the lost-profits analysis yields estimated damages of $18,490,320 for the initial infringement period of October 2024 through March 2025. This figure derives from an estimated 6,100 diagnostic tests diverted from GenomeDx's Decipher® test to Helios's ProstaSignal™ test, valued at GenomeDx's average reimbursement of $4,210 per test and applied against a 72% incremental margin. The incremental margin reflects the high marginal profitability characteristic of genomic diagnostic testing, where fixed costs—including laboratory infrastructure, R&D investment, regulatory compliance, and reimbursement infrastructure—are already covered, and the marginal cost of processing an additional specimen is comparatively low.
The reasonable-royalty analysis yields estimated damages of $5,775,840 for the same period, based on an 18% royalty rate applied to Helios's ProstaSignal™ revenue of $32,088,000 (approximately 8,400 tests at an average reimbursement of $3,820 per test). The 18% rate represents a 3 percentage-point upward adjustment from the 15% running royalty established in GenomeDx's existing license agreement with Veridian Molecular Labs, Inc., reflecting the directly competitive nature of the prostate cancer application at issue here, the broader patent coverage implicated (three patents versus two in the Veridian agreement), and the adversarial relationship between the parties.
In addition to past damages, GenomeDx should pursue a permanent injunction against continued infringement. Should the court decline to issue a permanent injunction under the Cascade Holdings framework, GenomeDx should seek an ongoing royalty at a rate of 20–25%, reflecting the enhanced value of the adjudicated patent rights and the absence of the injunction threat as a negotiating tool. Enhanced damages under 35 U.S.C. § 284 may also be available depending on the willfulness evidence developed through discovery, which remains ongoing. The pre-launch knowledge and freedom-to-operate analysis evidence sought in GenomeDx's pending motion to compel will be central to this theory.
All damages figures are preliminary and cover only the first six months of infringement. Damages will continue to accrue through trial and any post-judgment period. Annualized lost-profits damages, if current volumes and reimbursement rates hold, would be approximately $36.98 million. These projections will need to be updated as additional discovery is completed and as market conditions evolve.
We recommend the formal retention of Dr. Louise Tremaine at Ashworth Economics Group LLC as GenomeDx's damages expert. Dr. Tremaine's engagement should be finalized immediately to allow sufficient time for independent analysis and preparation of her expert report, which is due May 15, 2026.
II. FACTUAL BACKGROUND RELEVANT TO DAMAGES
A. The Parties and Their Products
GenomeDx Therapeutics Inc. GenomeDx is a Delaware corporation headquartered at 4750 Torrey Pines Road, Suite 300, San Diego, California 92130. The company is a molecular diagnostics company focused on developing and commercializing genomic tests for cancer prognosis and treatment decision-making. GenomeDx is a portfolio company of Pinnacle Biosciences Capital, LP, which holds approximately 62.4% of GenomeDx's equity. The company's leadership includes Dr. Miriam Langford (Chief Executive Officer), Dr. Rajan Mehta (Chief Technology Officer), Thomas Brennan (Chief Financial Officer), Victoria Sung (General Counsel), and Dr. Kevin Ostrowski (Vice President, intellectual Property).
GenomeDx's primary commercial product is the Decipher® Prostate genomic classifier test, a 22-gene expression-based prognostic test designed for prostate cancer patients who have undergone radical prostatectomy. The Decipher® test analyzes gene expression from formalin-fixed paraffin-embedded (FFPE) prostate tumor tissue to generate a prognostic score that classifies patients into risk categories, thereby informing post-surgical treatment decisions—including whether to proceed with adjuvant radiation therapy, active surveillance, or other therapeutic approaches. The Decipher® test is reimbursed under the Medicare MolDX program and has been assigned MAAA code 0047M, which GenomeDx obtained in 2018. GenomeDx has submitted an FDA De Novo classification application for the Decipher® test, filed on August 15, 2024, which remains pending as of this writing. The Decipher® test has been extensively validated through peer-reviewed clinical studies and is referenced in multiple clinical practice guidelines, including those issued by the National Comprehensive Cancer Network (NCCN) and the American Urological Association (AUA).
Helios Precision Diagnostics, Inc. Helios is a Delaware corporation headquartered at 200 CambridgePark Drive, Suite 600, Cambridge, Massachusetts 02140. Founded in 2019, Helios operates a CLIA-certified clinical laboratory located at 9830 Mesa Rim Road, Suite 140, San Diego, California 92121. The company's leadership includes Dr. Nathan Ashford (Chief Executive Officer), Dr. Elaine Kossack (Chief Scientific Officer), and Derek Mallinson (Vice President, Commercial). Helios is majority owned by Corinth Ventures Fund III, LP, which holds approximately 58.7% of Helios's equity.
Helios's accused product in this litigation is the ProstaSignal™ Genomic Classifier, a 24-gene expression-based prognostic test for prostate cancer patients post-radical prostatectomy. Like GenomeDx's Decipher® test, ProstaSignal™ analyzes gene expression from FFPE prostate tumor tissue to generate a prognostic risk classification intended to guide post-surgical treatment decisions. ProstaSignal™ was commercially launched on October 7, 2024. Helios obtained MAAA code 0239M in September 2024, approximately one month prior to commercial launch. The temporal proximity of these events, and the striking similarity between ProstaSignal™ and the Decipher® test in terms of clinical application, sample type, gene-expression methodology, and classifier architecture, are central to GenomeDx's infringement allegations and are also relevant to the willfulness analysis discussed in Section VII below.
B. Patents-in-Suit. GenomeDx asserts three United States patents against Helios's ProstaSignal™ test. These patents share a common technological foundation in multi-gene expression-based prognostic classification for cancer, but address different aspects and improvements of that core technology.
U.S. Patent No. 10,438,271 (the "'271 Patent"). The '271 Patent was filed on June 14, 2016, and issued on October 8, 2019. It expires on June 14, 2036. The '271 Patent is directed to methods for predicting prostate cancer outcomes using multi-gene expression classifiers. GenomeDx asserts claims 1, 3, 5, 7, 12, and 18 of the '271 Patent. These claims cover methods involving the extraction of RNA from prostate tumor tissue, quantification of gene expression levels for a specified panel of genes, application of a machine-learning classifier to the expression data, and generation of a prognostic risk score. The '271 Patent represents the foundational patent in GenomeDx's asserted portfolio for this matter.
U.S. Patent No. 11,204,893 (the "'893 Patent"). The '893 Patent was filed on March 22, 2019, and issued on December 21, 2021. It expires on June 14, 2036, sharing a common priority chain with the '271 Patent. The '893 Patent is directed to genomic classifier systems for post-surgical cancer prognosis, with a particular emphasis on the system architecture—including the computational platform, database components, and reporting modules—that enable clinical deployment of the classifier methodology. GenomeDx asserts claims 1, 2, 9, 14, and 20 of the '893 Patent.
U.S. Patent No. 11,891,647 (the "'647 Patent"). The '647 Patent was filed on September 9, 2021, and issued on February 6, 2024. It expires on September 9, 2041. The '647 Patent is directed to improved methods for genomic risk stratification that combine biomarker expression data with clinical variable models—such as Gleason score, tumor stage, and margin status—to produce an integrated risk classification with enhanced prognostic accuracy. GenomeDx asserts claims 1, 4, 6, 11, and 15 of the '647 Patent. The '647 Patent represents the most recent addition to GenomeDx's portfolio and extends patent coverage through 2041, approximately five years beyond the expiration of the '271 and '893 Patents.
C. Market and Financial Data
The following financial data provides the foundation for the damages calculations presented in this memorandum. These figures are based on GenomeDx's internal financial reporting, publicly available information, and preliminary discovery productions. All figures will require verification through GenomeDx's audited financial statements prepared by Whitfield & Garner LLP and through Helios's discovery responses.
GenomeDx Financial Data:
• FY 2024 Revenue: $387.6 million (primarily from Decipher® test reimbursements, with a small contribution from ancillary services and collaborative research agreements)
• FY 2024 EBITDA: $54.3 million (14.0% margin: $54.3M ÷ $387.6M)
• Average reimbursement per Decipher® test: $4,210 (2024 average, reflecting blended rates across Medicare, commercial payors, and direct institutional billing)
• Employees: approximately 820, including approximately 340 laboratory and R&D staff
• Auditor: Whitfield & Garner LLP
• Primary lender: Meridian Commercial Bank, N.A. ($75 million revolving credit facility)
Helios Financial Data:
• FY 2024 Revenue: $71.2 million (including revenue from ProstaSignal™ and other Helios products, if any; clarification needed from discovery)
• Employees: approximately 215
ProstaSignal™-Specific Financial Data (October 2024 – March 2025):
• Test volume: approximately 8,400 tests
• Average reimbursement per test: $3,820
• Estimated revenue for the period: 8,400 × $3,820 = $32,088,000
The $390 per-test differential between GenomeDx's average reimbursement ($4,210) and Helios's average reimbursement ($3,820) is notable and may reflect differences in payor mix, negotiated rates, introductory pricing strategies, or reimbursement challenges associated with a newer test. This differential is relevant to both the lost-profits and reasonable-royalty analyses.
D. Market Share Data
GenomeDx held approximately 74% of the market for genomic prostate cancer prognostic testing in the United States prior to Helios's commercial launch of ProstaSignal™ in October 2024. This dominant market position was the product of years of clinical validation, guideline incorporation, payor relationships, and physician adoption of the Decipher® test.
Following the ProstaSignal™ commercial launch, GenomeDx's market share declined to approximately 68%, a decline of approximately 6 percentage points. This decline corresponds temporally with the introduction of ProstaSignal™ and is consistent with the thesis that ProstaSignal™ diverted test orders that would otherwise have been fulfilled by GenomeDx's Decipher® test. The temporal correlation between the market share decline and ProstaSignal™'s entry, in the absence of any other material market development during the same period, strongly supports GenomeDx's "but for" causation argument.
The market share data will need to be further substantiated through GenomeDx's internal tracking systems, third-party market research reports (to the extent available), and payor-level data. Dr. Louise Tremaine's analysis should include an independent market share assessment using multiple data sources.
E. Comparable License
The most directly relevant comparable license is the non-exclusive license agreement dated April 3, 2022, between GenomeDx (as licensor) and Veridian Molecular Labs, Inc. (as licensee). Under this agreement, GenomeDx granted Veridian a non-exclusive license under the '271 and '893 Patents for use in Veridian's bladder cancer diagnostic application. The license is limited to the bladder cancer field and does not extend to prostate cancer or any other cancer type.
The material financial terms of the Veridian agreement are as follows:
• Running royalty: 15% of net revenues derived from sales of the licensed product
• Minimum annual royalty: $500,000
• Term: Co-extensive with the life of the licensed patents
• Licensed field: Limited to bladder cancer diagnostics
The Veridian license is the only known existing license under any of the patents-in-suit. It provides the most directly relevant—though imperfect—benchmark for the reasonable-royalty analysis. A detailed comparability analysis, including adjustments warranted by the significant differences between the Veridian license context and the present infringement context, is set forth in Section V below.
III. LOST-PROFITS ANALYSIS (PRIMARY DAMAGES THEORY)
A. Legal Standard
Section 284 of Title 35 of the United States Code provides that "[u]pon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer." The Supreme Court has long recognized that the Patent Act contemplates two alternative measures of compensatory damages: lost profits and reasonable royalties. Where the patent holder can demonstrate that it would have made additional sales "but for" the infringement, lost profits are the preferred measure because they more closely approximate the economic harm actually suffered by the patent holder.
The leading framework for establishing entitlement to lost profits is the four-factor test articulated by the Federal Circuit in Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152, 1156 (6th Cir. 1978). Under Panduit, a patent holder must demonstrate: (1) demand for the patented product; (2) the absence of acceptable non-infringing substitutes; (3) manufacturing and marketing capability to exploit the demand; and (4) the amount of profit the patent holder would have made. The Panduit test is not exclusive, and courts have applied it with some flexibility, but it remains the dominant analytical framework for lost-profits claims in patent cases. See, e.g., Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1545 (Fed. Cir. 1995) (en banc).
The Federal Circuit's decision in Rite-Hite is also significant to GenomeDx's damages case. In Rite-Hite, the en banc court held that lost profits may extend to sales of unpatented items that compete directly with the infringing product, provided the patent holder can demonstrate a reasonable probability that it would have made those sales but for the infringement. 56 F.3d at 1549. Although GenomeDx's primary product, the Decipher® test, directly practices the patents-in-suit, the Rite-Hite principle may be relevant to the extent GenomeDx seeks damages for lost collateral sales or services associated with the diverted test volume.
The burden of proving entitlement to lost profits rests with the patent holder. BIC Leisure Prods., Inc. v. Windsurfing Int'l, Inc., 1 F.3d 1214, 1218 (Fed. Cir. 1993). However, once the patent holder establishes entitlement, any doubt about the precise amount of damages is resolved against the infringer as the wrongdoer. Lam, Inc. v. Johns-Manville Corp., 718 F.2d 1056, 1065 (Fed. Cir. 1983). This burden-shifting principle is particularly favorable to GenomeDx if Helios fails to produce complete financial data in discovery.
B. Panduit Factor Analysis
1. Demand for the Patented Product. The first Panduit factor—demand for the patented product—is readily satisfied here. There is strong and growing demand for genomic prognostic testing in prostate cancer following radical prostatectomy. The Decipher® test has become a standard-of-care tool in post-prostatectomy clinical decision-making, and its use is recommended or referenced in clinical practice guidelines issued by the NCCN, AUA, and other authoritative bodies. The incorporation of genomic classifier testing into clinical guidelines has driven steadily increasing physician adoption and payor coverage, both of which are reflected in GenomeDx's revenue trajectory.
GenomeDx's FY 2024 revenue of $387.6 million, derived primarily from Decipher® test reimbursements, provides powerful evidence of robust market demand. The company's dominant market share of approximately 74% prior to the ProstaSignal™ launch further demonstrates that the Decipher® test—which practices the patents-in-suit—commands broad market acceptance. Additionally, Medicare reimbursement under the MolDX program (MAAA code 0047M) ensures a stable and growing revenue base, as the Medicare-eligible population for prostate cancer treatment continues to expand with demographic trends.
Moreover, the very fact that Helios chose to develop and commercialize ProstaSignal™—a test that targets the identical clinical application as Decipher® using a substantially overlapping gene set and comparable methodology—itself confirms the existence of strong demand for the patented technology. A rational commercial actor would not invest the considerable resources required to develop, validate, and launch a genomic diagnostic test absent a well-founded expectation of significant market demand.
We do not anticipate that Helios will seriously contest this factor. The record evidence of demand is overwhelming, and any effort to dispute it would be inconsistent with Helios's own commercial conduct.
2. Absence of Acceptable Non-Infringing Substitutes. The second Panduit factor—the absence of acceptable non-infringing substitutes—is the most critical and most heavily contested element of the lost-profits analysis. It is here that Helios is most likely to mount a vigorous defense, and it is therefore essential that GenomeDx develop a robust evidentiary record on this issue.
Two-Supplier Market Theory. GenomeDx will argue that the market for genomic prostate cancer prognostic classifiers designed for the post-radical prostatectomy setting was functionally a near-monopoly prior to ProstaSignal™'s entry, with GenomeDx as the overwhelmingly dominant—and, for practical purposes, sole—supplier of this specific type of test. The two-supplier market theory, recognized by the Federal Circuit in cases such as Micro Chem., Inc. v. Lextron, Inc., 317 F.3d 1387 (Fed. Cir. 2003), allows a patent holder in a two-competitor market to recover all or substantially all of the infringer's sales as lost profits, subject to appropriate allocation methodology. Here, GenomeDx's pre-infringement market share of approximately 74% in the relevant market—with the remaining approximately 26% attributable to a combination of residual competitors, tests not ordered, and institutional limitations—supports a strong allocation of Helios's test volume to GenomeDx.
Potential Non-Infringing Alternatives. Helios is likely to identify several categories of putative non-infringing alternatives. GenomeDx should be prepared to address each as follows:
(a) Non-genomic prognostic tools. Helios may point to clinical nomograms (such as the Stephenson nomogram), PSA kinetics, and other non-genomic risk assessment tools as acceptable alternatives to the Decipher® test. GenomeDx should argue that these tools are not acceptable substitutes because they do not provide equivalent genomic information, rely on fundamentally different data inputs (clinical variables alone, without gene-expression profiling), and are clinically distinct in their predictive accuracy and clinical utility. The clinical literature consistently demonstrates that genomic classifiers provide incremental prognostic value beyond clinical and pathological variables alone—a point that is central to the inventive contribution of the patents-in-suit, and particularly the '647 Patent, which claims the integration of genomic and clinical models. Physicians who order genomic classifier tests do so precisely because they seek information that non-genomic tools cannot provide. Accordingly, a non-genomic tool is not an "acceptable substitute" for a genomic classifier test in the same way that an X-ray is not an acceptable substitute for an MRI.
(b) Other genomic tests. Helios may also point to other commercially available genomic tests in the prostate cancer space, such as the 17-gene panel assay marketed for use at the biopsy or active surveillance stage (the Klein et al.-type assay). GenomeDx should argue that these tests address different clinical decision points in the patient pathway and are not direct substitutes for the post-prostatectomy prognostic niche served by both Decipher® and ProstaSignal™. The relevant clinical question is different (whether to proceed with biopsy or active surveillance versus whether to pursue adjuvant radiation therapy post-prostatectomy), the relevant patient population is different (pre-treatment versus post-surgical), and the reimbursement context is different (different MAAA codes and coverage determinations). Accordingly, these tests occupy a different segment of the clinical workflow and do not constitute acceptable non-infringing substitutes for the specific market at issue.
(c) Design-around alternatives. Perhaps the most sophisticated argument Helios may advance is that its ProstaSignal™ test could have been designed around the patents-in-suit—for example, by using fewer overlapping genes, employing a different classifier architecture, or avoiding the integration of clinical variables with genomic data. GenomeDx should be prepared to address this argument with technical expert testimony from Dr. Franklin Ogawa (proposed technical expert, Stanford University) on the difficulty and impracticality of such a design-around. In this regard, it is significant that 19 of Helios's 24 ProstaSignal™ genes overlap with GenomeDx's patented gene set. This high degree of overlap—nearly 80% of the ProstaSignal™ gene panel—reflects the scientific reality that the specific genes claimed in the patents-in-suit were identified through rigorous biomarker discovery processes and are biologically optimized for prostate cancer prognostication. Substituting arbitrary alternative genes would not merely change the product's design; it would fundamentally alter—and in all likelihood degrade—the test's prognostic performance. Dr. Ogawa should opine on the scientific constraints that limit the feasibility of a simple gene-substitution workaround and on the impracticality of developing, validating, and obtaining reimbursement for a materially different classifier in the relevant timeframe.
Risk Assessment. We acknowledge that the absence-of-acceptable-non-infringing-substitutes factor presents the greatest risk to GenomeDx's lost-profits theory. However, the narrow definition of the relevant market (post-radical prostatectomy genomic prognostic testing), the absence of any commercially available direct substitute other than the infringing product itself, and the technical constraints on design-around alternatives all weigh strongly in GenomeDx's favor. This factor will require robust expert support from both Dr. Ogawa (technical) and Dr. Tremaine (economic).
3. Manufacturing and Marketing Capability. The third Panduit factor—manufacturing and marketing capability to exploit the demand—is straightforward for GenomeDx. The company maintains a large-scale, CLIA-certified clinical laboratory and employs approximately 820 personnel, including approximately 340 laboratory and R&D staff. GenomeDx's laboratory infrastructure is designed for high-volume specimen processing, and the company has established reimbursement infrastructure, a dedicated sales force, extensive physician relationships, and the operational capacity to handle significant test volume.
There is no evidence in the record suggesting that GenomeDx faced any capacity constraints during the October 2024 through March 2025 period that would have prevented it from performing the additional approximately 6,100 tests diverted by ProstaSignal™. GenomeDx's existing test volume during FY 2024 (corresponding to approximately 92,000 tests based on $387.6M revenue ÷ $4,210/test) demonstrates that the company routinely processes testing volumes far in excess of the incremental 6,100 tests at issue. The marginal capacity required to absorb this additional volume—representing an approximately 6.6% increase in test volume—falls well within GenomeDx's operational parameters and does not implicate any meaningful capacity limitation.
GenomeDx's CFO, Thomas Brennan, should be prepared to testify regarding the company's capacity during the relevant period, including available laboratory throughput, staffing levels, and the absence of any operational bottleneck that would have precluded GenomeDx from performing additional tests.
4. Amount of Profit — Lost-Profits Calculation. The fourth Panduit factor requires quantification of the profits GenomeDx would have earned on the sales diverted by the infringement. The calculation proceeds as follows:
Estimated Tests Diverted to Helios. Of Helios's approximately 8,400 ProstaSignal™ tests performed during the October 2024 through March 2025 period, we estimate that approximately 6,100 tests would have been ordered from GenomeDx absent infringement. This figure derives from GenomeDx's pre-infringement market share of approximately 74% applied to the total ProstaSignal™ test volume (74% × 8,400 ≈ 6,216), with a conservative downward adjustment to approximately 6,100 tests to account for a small allocation of tests to residual competitors, market expansion effects, and tests that might not have been ordered at all in the absence of ProstaSignal™'s entry. The detailed allocation methodology is set forth in Section VI below.
GenomeDx Average Reimbursement Per Test. GenomeDx's average reimbursement per Decipher® test during 2024 was $4,210, reflecting a blended rate across Medicare, commercial payors, and institutional billing arrangements. This per-test reimbursement figure represents the revenue GenomeDx would have received for each diverted test.
Lost Revenue. The estimated lost revenue attributable to the diverted tests is:
6,100 tests × $4,210/test = $25,681,000
GenomeDx Incremental Margin. GenomeDx's incremental margin on the diverted tests is estimated at approximately 72%. This incremental margin is distinct from, and substantially higher than, GenomeDx's company-wide EBITDA margin of 14.0%. The difference reflects the distinction between average profitability (which includes the full allocation of fixed costs across all revenue) and incremental profitability (which captures only the variable costs associated with processing an additional test). In the genomic diagnostic testing business, the vast majority of costs are fixed: laboratory infrastructure and equipment, R&D expenditure, regulatory compliance, reimbursement and billing infrastructure, sales and marketing organization, and corporate overhead. The marginal cost of processing an additional specimen—comprising reagents, consumables, labor, specimen shipping and handling, and test reporting—is comparatively modest. This cost structure produces high incremental margins, which are well documented in the molecular diagnostics industry and should be substantiated through Dr. Tremaine's independent analysis.
Lost Profits. The estimated lost profits for the October 2024 through March 2025 period are:
$25,681,000 × 0.72 = $18,490,320
This figure covers only the initial six-month period of infringement. Damages will continue to accrue and will need to be updated through trial and any post-judgment period, as discussed in Section X below.
C. Data Sources and Outstanding discovery Needs
The lost-profits calculation set forth above is based on preliminary data and will require verification and refinement through multiple sources.
GenomeDx Financial Data. GenomeDx's financial data—including revenue, test volume, reimbursement rates, and cost structure—should be verified through GenomeDx's CFO, Thomas Brennan, who has been designated as GenomeDx's 30(b)(6) witness for financial and damages topics. The underlying financial data should be confirmed against GenomeDx's audited financial statements prepared by Whitfield & Garner LLP. Dr. Tremaine should receive full access to these financial records as part of her independent analysis.
Helios Financial Data. Helios's test volume and revenue data for ProstaSignal™ are essential to the damages calculation and must be obtained through discovery. GenomeDx has served Requests for Production and Interrogatories seeking Helios's revenue, cost of goods sold, and test volume data for ProstaSignal™ on a monthly basis. As discussed in Section XIII below, several categories of Helios financial data remain outstanding and are the subject of ongoing discovery disputes.
Market Share Data. The market share data used in the allocation methodology should be supplemented with third-party market research reports, payor-level data, and internal GenomeDx tracking systems. We should investigate whether any market research firms (e.g., DeciBio, Drayton Financial, or Adriatic Strategy Partners) have published reports on the genomic diagnostics market for prostate cancer that could provide independent market share estimates.
Incremental Margin Analysis. The 72% incremental margin is a preliminary estimate based on available information about GenomeDx's cost structure. Dr. Tremaine should perform an independent incremental margin analysis using GenomeDx's detailed cost accounting data, including a line-item assessment of variable costs per test (reagents, consumables, labor, shipping, reporting) against the average reimbursement per test.
IV. REASONABLE-ROYALTY ANALYSIS (ALTERNATIVE DAMAGES THEORY)
A. Legal Standard
The reasonable royalty serves as the statutory floor of patent damages under Section 284 of the Patent Act, which provides that damages shall "in no event [be] less than a reasonable royalty for the use made of the invention by the infringer." 35 U.S.C. § 284. While GenomeDx's primary damages theory is lost profits, the reasonable-royalty analysis provides an alternative measure of damages that applies either as a standalone theory (if lost profits cannot be established) or as a floor below which damages cannot fall.
The established framework for determining a reasonable royalty is the hypothetical negotiation construct, which asks what a willing licensor (GenomeDx) and a willing licensee (Helios) would have agreed to in a hypothetical arm's-length negotiation at the time infringement began. Georgia-Pacific Corp. v. United States Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y. 1970). The date of the hypothetical negotiation is the date on which infringement began—here, October 7, 2024, the date of ProstaSignal™'s commercial launch. The hypothetical negotiation is conducted with the assumption that the patents are valid and infringed (a critical assumption that eliminates the litigation risk discount that would otherwise affect real-world negotiations). Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1325 (Fed. Cir. 2009).
The Georgia-Pacific decision identified fifteen factors relevant to determining a reasonable royalty. While not every factor will be applicable or equally weighted in every case, the framework provides a comprehensive analytical structure that courts and damages experts routinely apply. We address each factor below.
B. Georgia-Pacific Factor Analysis
Factor 1: Established Royalties for the Patent. The most directly relevant established royalty is the Veridian Molecular Labs license agreement, dated April 3, 2022. Under this agreement, GenomeDx granted Veridian a non-exclusive license under the '271 and '893 Patents for use in Veridian's bladder cancer diagnostic application at a running royalty rate of 15% of net revenues, with a minimum annual royalty of $500,000. This license establishes that GenomeDx has previously determined that 15% is an appropriate royalty rate for the licensed technology—albeit in a non-competing application and covering only two of the three patents-in-suit. The Veridian license is discussed in detail in Section V below.
The 15% Veridian rate provides a useful—but imperfect—starting point for the hypothetical negotiation. Several adjustments are warranted to account for the material differences between the Veridian context and the circumstances of the present infringement, as discussed in Factors 3 through 5 and in the Veridian comparability analysis in Section V.
Factor 2: Rates Paid by the Licensee for Comparable Patents. Discovery into Helios's licensing history is ongoing. GenomeDx has served interrogatories requesting information about any licenses Helios has taken in the genomic diagnostics field, including the identity of the licensor, the licensed patents, the licensed field, and the financial terms. As of February 2026, Helios has not identified any comparable license agreements in its discovery responses, but additional document production may reveal relevant licensing activity. If Helios has taken licenses under genomic diagnostics patents from third parties, the terms of those licenses may provide additional benchmarks for the reasonable-royalty analysis.
Factor 3: Nature and Scope of the License. The Veridian license is non-exclusive and limited to the bladder cancer diagnostics field—a clinical application in which GenomeDx does not itself compete. The hypothetical license at issue here would cover the directly competitive prostate cancer application, which is the core commercial market for GenomeDx's Decipher® test. The difference in competitive overlap between the two licensing contexts is profound: the Veridian license authorized use of GenomeDx's technology in a non-competing field, whereas a license to Helios would authorize a direct competitor to use GenomeDx's technology to compete head-to-head with GenomeDx's primary revenue-generating product. This distinction supports a significant upward adjustment from the 15% Veridian rate.
Additionally, the scope of the hypothetical license would need to be broader than the Veridian license in terms of patent coverage. The Veridian license covers only the '271 and '893 Patents, whereas the infringement here implicates all three patents-in-suit, including the '647 Patent (which covers the integrated genomic-clinical model methodology). The broader patent coverage warranted by the circumstances of this case further supports an upward adjustment.
Factor 4: Licensor's Established Policy of Exclusivity. GenomeDx has maintained its Decipher® test as its primary commercial product and has not broadly licensed its prostate cancer classifier patents to direct competitors. The Veridian license was carefully crafted to ensure that Veridian's licensed use was limited to bladder cancer, a non-competing application. GenomeDx's established licensing policy thus reflects a preference for maintaining exclusivity in its core prostate cancer market while selectively licensing the underlying technology for non-competing applications. In a hypothetical negotiation with a direct competitor like Helios, GenomeDx's strong policy of maintaining market exclusivity would exert substantial upward pressure on the royalty rate. A willing licensor in GenomeDx's position would demand a significant premium to compensate for the competitive harm inherent in licensing core technology to a direct rival.
Factor 5: Commercial Relationship Between Licensor and Licensee. GenomeDx and Helios are direct competitors in the prostate cancer genomic prognostic testing market. This adversarial commercial relationship is fundamentally different from the non-competitive relationship between GenomeDx and Veridian (a bladder cancer diagnostics company). In the hypothetical negotiation framework, the adversarial competitive posture between the parties would exert upward pressure on the royalty rate, as GenomeDx would demand compensation not only for the use of its technology but also for the competitive harm—including lost sales, market share erosion, and potential price pressure—that would result from licensing a direct competitor.
Factor 6: Effect of the Licensed Product on Sales of Other Products. The ProstaSignal™ test directly diverts sales from GenomeDx's Decipher® test. As set forth in Section II.D, GenomeDx's market share declined from approximately 74% to approximately 68% following ProstaSignal™'s commercial launch—a 6 percentage-point decline that corresponds temporally with Helios's market entry. This direct market share loss demonstrates the adverse competitive impact of the infringing product on GenomeDx's core business.
Beyond direct test volume diversion, the entry of ProstaSignal™ into the market may also affect GenomeDx's broader business relationships in several ways. First, established physician referral relationships may be disrupted as Helios's sales force actively targets GenomeDx's existing customers. Second, institutional contracts—including volume-based agreements with large urology practices and academic medical centers—may come under competitive pressure. Third, the presence of a lower-priced competitor ($3,820 versus $4,210 per test) may exert downward pricing pressure on GenomeDx's reimbursement rates in future payor negotiations. These derivative effects support a higher royalty rate.
Factor 7: Duration of the Patent and License Term. The remaining terms of the patents-in-suit are substantial:
• The '271 Patent expires June 14, 2036 (approximately 10 years remaining)
• The '893 Patent expires June 14, 2036 (approximately 10 years remaining, same priority chain)
• The '647 Patent expires September 9, 2041 (approximately 15 years remaining)
The extended remaining patent life is significant for two reasons. First, it means that a license under these patents would confer a long period of competitive advantage to the licensee. Second, it means that GenomeDx would be surrendering a correspondingly long period of exclusivity—or at least a long period during which it could enforce its patents against competitors. Both considerations support a higher royalty rate to reflect the substantial temporal value of the patent rights being licensed.
Factor 8: Profitability, Commercial Success, and Popularity of the Patented Invention. GenomeDx's Decipher® test—which practices the patents-in-suit—is a commercially successful product by any measure. The test generated $387.6 million in FY 2024 revenue with $54.3 million EBITDA (14.0% margin). GenomeDx has held approximately 68–74% of the relevant market, reflecting both the clinical value of the test and the strength of GenomeDx's commercial organization. The Decipher® test has been referenced in numerous clinical guidelines, validated in dozens of peer-reviewed studies, and adopted by thousands of urologists and radiation oncologists across the United States. This strong track record of commercial success and clinical acceptance directly demonstrates the value of the patented technology and supports a higher royalty rate.
Factor 9: Advantages of the Patented Invention over Alternatives. The patented multi-gene classifier methodology provides clinically significant advantages over non-genomic alternatives. Specifically, the 22+ gene expression panel, combined with a machine-learning classifier algorithm and—in the case of the '647 Patent—the integration of clinical covariates, produces a prognostic risk score with superior accuracy compared to non-genomic approaches such as clinical nomograms and PSA kinetics. The '647 Patent's combined genomic-clinical model demonstrates statistically significant improvement over genomic-only models, as established by Dr. Rajan Mehta's declaration submitted under 37 C.F.R. § 1.132 during patent prosecution. This superior prognostic accuracy is the principal clinical driver of physician adoption and payor coverage, and it reflects the core inventive contribution of the patents-in-suit. The advantages of the patented technology over available alternatives support a higher royalty rate.
Factor 10: Nature of the Patented Invention. The patents-in-suit cover the core technology underlying both the Decipher® and ProstaSignal™ tests—the gene-expression-based multi-feature classifier methodology, including the specific gene panels, the machine-learning classification algorithms, the system architecture for clinical deployment, and the integrated genomic-clinical risk stratification approach. This is not a peripheral feature or a minor improvement to an otherwise independent product. Rather, the patents cover the fundamental methodology that defines the product category. Without the patented technology, neither the Decipher® test nor the ProstaSignal™ test could function as a genomic prognostic classifier. This centrality of the patented technology to the accused product supports a higher royalty rate.
Factor 11: Extent to Which the Infringer Used the Invention. The evidence of Helios's extensive use of the patented invention is compelling. Nineteen of ProstaSignal™'s 24 genes overlap with GenomeDx's patented gene set—nearly 80% of the ProstaSignal™ gene panel. ProstaSignal™ employs the same fundamental methodology as the Decipher® test: RNA extraction from FFPE tumor tissue, gene-expression profiling using the overlapping gene set, machine-learning classification of the expression data to generate a risk score, and combination of the genomic risk score with clinical covariates for integrated risk stratification. The patented invention is not an incidental component of ProstaSignal™—it is the central and defining technology of the product. This factor weighs heavily in favor of a higher royalty rate.
Factor 12: Customary Royalty in the Industry. The Veridian license at 15% of net revenues is the most directly relevant benchmark for customary royalty rates. In the broader molecular diagnostics patent licensing industry, typical royalty rates generally range from 5% to 25%, depending on factors such as the exclusivity of the license, the degree of competitive overlap between licensor and licensee, the centrality of the patented technology to the licensed product, and the strength of the patent portfolio. The 18% rate proposed for the hypothetical negotiation in this case falls within the established range for diagnostics patent licensing and is consistent with the Veridian benchmark as adjusted for the competitive-overlap and broader-coverage factors discussed above. Dr. Tremaine should conduct independent research into industry royalty norms to further substantiate this benchmark.
Factor 13: Portion of Profit Attributable to the Invention vs. Non-Patented Elements. The patented classifier methodology is the core value driver of the ProstaSignal™ test. Without the gene-expression-based multi-feature classifier methodology covered by GenomeDx's patents, ProstaSignal™ could not function as a genomic prognostic tool. The patented technology is not merely one component among many; it is the foundational technology upon which the entire product is built.
Helios may argue that a portion of ProstaSignal™'s value derives from Helios's own proprietary contributions, including its proprietary clinical data, its independent clinical validation studies, its gradient-boosted decision tree classifier algorithm, and its commercial infrastructure (sales force, reimbursement team, laboratory operations). While GenomeDx should acknowledge that Helios has contributed some independent value through its commercial and clinical efforts, the fundamental argument is that these contributions are built on top of the patented methodology—without which they would have no product to commercialize. The analogy is straightforward: Helios may have built an attractive house, but it built it on GenomeDx's patented foundation. Accordingly, the overwhelming share of the value should be attributed to the patented technology.
Factor 14: Expert Testimony on Reasonable Royalty. Expert testimony on the appropriate reasonable royalty rate and the application of the Georgia-Pacific factors will be provided by Dr. Louise Tremaine of Ashworth Economics Group LLC. We recommend retaining Dr. Tremaine immediately to allow sufficient time for her independent analysis. Dr. Tremaine's expert report is due May 15, 2026.
Factor 15: Hypothetical Negotiation Outcome. Considering all of the foregoing factors—including the direct competitive relationship between the parties, the significant market share loss suffered by GenomeDx, the core technology overlap between the Decipher® and ProstaSignal™ tests, the extensive gene-set overlap (19 of 24 genes), the extended remaining patent life, GenomeDx's strong policy of maintaining exclusivity in its core prostate cancer market, and the Veridian benchmark of 15%—we propose a royalty rate of 18% for the hypothetical negotiation.
The 3 percentage-point increase from the 15% Veridian baseline reflects three principal adjustments:
(a) Competitive overlap premium. The hypothetical license here would authorize a direct competitor to compete head-to-head with GenomeDx's primary product in its core market. The Veridian license, by contrast, covered a non-competing bladder cancer application. The direct competitive overlap warrants a significant upward adjustment.
(b) Broader patent coverage. The Veridian license covered only the '271 and '893 Patents. The infringement here implicates all three patents-in-suit, including the '647 Patent, which covers the integrated genomic-clinical model methodology. The broader patent coverage justifies an additional premium.
(c) Litigation context. The hypothetical negotiation takes place against the backdrop of actual infringement—the parties were unable to reach a voluntary license agreement, and GenomeDx was forced to resort to litigation to enforce its patent rights. While the hypothetical negotiation assumes willing parties, the reality of the adversarial relationship and the compulsory nature of the "license" support an upward adjustment from a rate that was negotiated in a truly voluntary, non-adversarial context.
C. Reasonable-Royalty Calculation
The reasonable-royalty damages calculation is as follows:
Royalty Base. The appropriate royalty base is Helios's total ProstaSignal™ revenue for the October 2024 through March 2025 period:
8,400 tests × $3,820/test = $32,088,000
Proposed Royalty Rate. 18%, as derived from the Georgia-Pacific analysis above.
Reasonable Royalty Damages:
$32,088,000 × 0.18 = $5,775,840
This figure represents the damages floor under Section 284. GenomeDx's lost-profits claim of $18,490,320 is significantly higher and should be pursued as the primary damages theory. The reasonable-royalty calculation serves as an important backstop in the event that GenomeDx is unable to establish one or more of the Panduit factors or if the court determines that a portion of Helios's test volume does not represent diverted GenomeDx sales. Even under the reasonable-royalty theory, GenomeDx is entitled to substantial damages.
V. VERIDIAN LICENSE — DETAILED COMPARABILITY ANALYSIS
The Veridian Molecular Labs license agreement is the cornerstone of GenomeDx's reasonable-royalty analysis. A detailed comparability assessment is essential both to establish the admissibility and relevance of the Veridian license as a benchmark and to justify the upward adjustments necessary to derive the hypothetical negotiation rate for the present infringement.
License Details:
• Date: April 3, 2022
• Parties: GenomeDx Therapeutics Inc. (licensor) and Veridian Molecular Labs, Inc. (licensee)
• Licensed Patents: U.S. Patent Nos. 10,438,271 and 11,204,893 (the '271 and '893 Patents)
• Scope: Non-exclusive license for use of the licensed patents in Veridian's bladder cancer diagnostic application only
• Running Royalty: 15% of net revenues derived from sales of the licensed product
• Minimum Annual Royalty: $500,000
• Term: Co-extensive with the life of the licensed patents
• Licensed Field: Limited to bladder cancer diagnostics
Comparability Strengths. The Veridian license exhibits several characteristics that make it a strong comparable for the present hypothetical negotiation:
• Same licensor. GenomeDx is the licensor in both the Veridian agreement and the hypothetical negotiation. This ensures consistency in the licensor's valuation of its patent rights and licensing practices.
• Same patents. The Veridian license covers two of the three patents-in-suit (the '271 and '893 Patents), providing a direct benchmark for the value of those specific patent rights.
• Same technology platform. Both the Veridian license and the present infringement involve the same underlying technology—gene-expression-based multi-feature classifier methodology. The licensed product in the Veridian agreement (a bladder cancer diagnostic) and the accused product here (ProstaSignal™) both employ the patented classifier approach, albeit for different cancer types.
• Same product type. Both the Veridian licensed product and ProstaSignal™ are laboratory-developed genomic tests performed in CLIA-certified laboratories. The business model, reimbursement structure, and commercial dynamics are substantially similar.
Comparability Weaknesses and Adjustments. Several material differences between the Veridian license context and the present infringement context warrant upward adjustments from the 15% Veridian baseline:
(a) Different clinical application—competitive overlap. The Veridian license covers bladder cancer diagnostics, a clinical application in which GenomeDx does not compete. The present infringement involves prostate cancer genomic prognostic testing—GenomeDx's core market, where the Decipher® test generates substantially all of the company's $387.6 million annual revenue. A license in a non-competing field carries a materially lower cost to the licensor than a license in the licensor's own competitive market. This is the single most important distinction between the Veridian license and the hypothetical license at issue, and it warrants a significant upward adjustment.
(b) Narrower patent coverage in Veridian license. The Veridian license covers only the '271 and '893 Patents. The present infringement implicates all three patents-in-suit, including the '647 Patent, which covers the improved integrated genomic-clinical model methodology. The '647 Patent extends patent coverage through September 2041—five years beyond the expiration of the '271 and '893 Patents—and covers a commercially significant technological improvement. The inclusion of the '647 Patent in the hypothetical license would provide the licensee with broader and longer-lasting patent coverage, warranting an upward adjustment.
(c) Non-exclusive license in a non-competing field. The Veridian license is non-exclusive and limited to a field in which GenomeDx does not compete. A hypothetical license to Helios would effectively authorize a direct competitor to operate in GenomeDx's core market using GenomeDx's core technology. Even if the hypothetical license were characterized as non-exclusive, its practical effect would be to legitimize a direct competitive threat. This warrants a premium beyond what was agreed in the non-competitive Veridian context.
(d) Different negotiating dynamics. At the time of the Veridian license (April 2022), Veridian had no existing product in the market and was in a development-stage posture. Veridian's negotiating leverage was accordingly limited, and the voluntary nature of the negotiation reduced the urgency and risk premium that would be demanded by a licensor facing an existing competitive threat. By contrast, in the hypothetical negotiation with Helios (October 2024), Helios had already developed ProstaSignal™ and was on the verge of commercial launch. The parties' respective negotiating positions would be materially different, with GenomeDx possessing significant leverage as the holder of valid patents covering a product about to enter the market.
Recommended Adjustment. Based on the foregoing analysis, we recommend an upward adjustment from the 15% Veridian baseline to an 18% hypothetical negotiation rate. This 3 percentage-point increase reflects the cumulative impact of the competitive-overlap premium, broader patent coverage, and the adversarial commercial context. The adjustment is conservative and well within the range that a damages expert could defend at deposition and trial. Dr. Tremaine should conduct her own independent assessment of the appropriate adjustment based on the full evidentiary record.
A separate Veridian License Comparability Analysis Memorandum is under preparation and will provide a more detailed treatment of each comparability factor, including a quantitative analysis of the competitive-overlap premium where feasible.
VI. TWO-SUPPLIER MARKET ANALYSIS
A. Market Definition
The relevant market for purposes of the lost-profits analysis is genomic prognostic testing for prostate cancer post-radical prostatectomy in the United States. This market definition is carefully tailored to capture the specific competitive dynamic at issue—the diversion of test orders from GenomeDx's Decipher® test to Helios's ProstaSignal™ test.
The key characteristics of this market are as follows:
(a) Medicare reimbursement-driven. The majority of genomic prognostic tests for prostate cancer are reimbursed through the Medicare program, which covers the largest patient population for radical prostatectomy (men aged 65 and older). Medicare coverage and reimbursement rates—administered through the MolDX program—are the primary economic drivers of the market.
(b) CLIA-certified laboratory-performed. Genomic prognostic tests for prostate cancer are laboratory-developed tests performed in CLIA-certified clinical laboratories. The test is ordered by the treating physician, the specimen is shipped to the laboratory, and the laboratory performs the assay and issues a report to the ordering physician. The CLIA certification requirement and the laboratory infrastructure necessary to perform these tests create meaningful barriers to entry.
(c) Physician-ordered based on clinical guidelines. The decision to order a genomic prognostic test is made by the treating urologist or radiation oncologist, typically guided by clinical practice guidelines from the NCCN, AUA, and other professional organizations. Physician adoption is a critical driver of market share.
(d) MAAA code required for billing. Each genomic prognostic test requires a unique Multianalyte Assays with Algorithmic Analyses (MAAA) code (also known as a proprietary laboratory analysis code) for Medicare and commercial payor billing. The process of obtaining an MAAA code is time-consuming and requires demonstrated clinical utility. GenomeDx's Decipher® test holds MAAA code 0047M; Helios's ProstaSignal™ holds MAAA code 0239M.
B. Market Participants
Within the defined market of genomic prognostic testing for prostate cancer post-radical prostatectomy, the principal participants are:
GenomeDx Therapeutics Inc. GenomeDx's Decipher® test (MAAA code 0047M) is the dominant product in this market, with a pre-infringement market share of approximately 74%. GenomeDx has been the market leader since the commercial establishment of the Decipher® test and has built a substantial competitive moat through clinical validation, guideline incorporation, physician relationships, and reimbursement infrastructure.
Helios Precision Diagnostics, Inc. Helios's ProstaSignal™ test (MAAA code 0239M) entered the market on October 7, 2024. ProstaSignal™ is the most significant new entrant in the post-prostatectomy genomic prognostic testing market in recent years and is the product most directly competitive with the Decipher® test.
Other Participants. Our investigation has not identified any other commercially available genomic prognostic tests that are specifically designed and validated for the post-radical prostatectomy clinical decision point and that operate through the same mechanism—i.e., gene-expression profiling from FFPE prostate tumor tissue with machine-learning classification and risk stratification. Certain other genomic tests exist in the broader prostate cancer space, but they address different clinical decision points and are not direct substitutes for the Decipher® or ProstaSignal™ tests. Specifically:
• The Klein et al.-type 17-gene assay is designed for use at the biopsy or active surveillance decision point, not the post-prostatectomy adjuvant therapy decision point. It serves a different patient population (men considering biopsy or on active surveillance, versus men who have already undergone radical prostatectomy), addresses a different clinical question, and occupies a different reimbursement category. It is not a direct substitute for the Decipher® or ProstaSignal™ tests in the post-prostatectomy setting.
• Other genomic and molecular tests (e.g., gene fusion assays, protein-based biomarkers) similarly address different clinical questions, use different methodologies, and are not interchangeable with the gene-expression-based multi-feature classifier tests at issue in this case.
The relevant market is therefore functionally a two-supplier market for the specific post-prostatectomy genomic prognostic testing niche. GenomeDx and Helios are the only two companies offering commercially available gene-expression-based prognostic classifier tests specifically designed and validated for use post-radical prostatectomy. This two-supplier market structure strongly supports GenomeDx's lost-profits claim, as it enables the allocation of substantially all of Helios's ProstaSignal™ test volume to GenomeDx on a "but for" basis.
C. Allocation Methodology
The allocation of Helios's ProstaSignal™ test volume to Ge

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

MEMORANDUM

I. EXECUTIVE SUMMARY

II. FACTUAL BACKGROUND RELEVANT TO DAMAGES

III. LOST-PROFITS ANALYSIS (PRIMARY DAMAGES THEORY)

IV. REASONABLE-ROYALTY ANALYSIS (ALTERNATIVE DAMAGES THEORY)

VI. TWO-SUPPLIER MARKET ANALYSIS

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