Gene-sequencing firm, Illumina, has confirmed plans to cease fighting in the courts to keep cancer-detection company Grail, which it had pledged to divest if unsuccessful in overturning U.S. or European antitrust suits challenging its acquisition. Following a U.S. appeals court ruling on Friday against the Federal Trade Commission’s (FTC) case, Illumina – though not claiming a clear victory – announced its decision to avoid further litigation and to divest Grail [1].
Originating from within Illumina, Grail spun out in 2017 emerging as an independent entity pursuing the evolution of its multicancer early detection technology via a liquid biopsy, a test that investigates multiple cancer types from a single blood sample. At that point, Illumina retained a small equity stake in Grail. A few years later, in 2020, Illumina declared plans for a $7.1 billion acquisition of Grail as the latter approached the commercialisation of its test, Galleri [2]. This prompted antitrust investigations by the FTC and European Commission.
In claiming the European Commission lacked jurisdiction over a deal between two U.S. firms, Illumina proceeded to close the acquisition before regulatory clearances were obtained. Furthermore, the FTC’s case documented concerns that Illumina would possess pricing power over Grail’s competition, as it manufactured gene-sequencing tools and reagents utilised by other cancer-testing entities. A proposed solution to this by Illumina was to assure equal access and pricing for all oncology enterprises to its next-generation sequencing (NGS) services, matching the provision to Grail.
Despite the court vacating the FTC’s order and returning it for revised evaluation under suitable criteria, it agreed broadly with the FTC’s assertion that the acquisition potentially lowered competition within the budding multicancer early detection market, where Grail was the first entity offering a multicancer early detection product, but with numerous competitors closely following [3]. The Grail deal attracted criticism from activist investor Carl Icahn who noted Illumina’s share price has plunged 75% since the announcement of the deal, with only $4.7 billion in impairment charges and a €432 million European Commission fine to show for it. Icahn’s plea for changes to the board of directors and company management has resulted in Jacob Thaysen, former Agilent Technologies executive, being appointed as Illumina’s new CEO in September.
Illumina has stated that the Grail divestiture could occur via a sale to another firm or through spinning it off as an autonomous company, with formal terms scheduled to be finalised by the end of the second quarter of 2024. One potential avenue for Grail to raise capital could be through an IPO, an opportunity that was considered prior to the Illumina acquisition deal.