As time is pressing for a large acquisition that is still facing legal and regulatory review, Illumina has taken bold steps closure Acquired Grail, a cancer diagnostic company, for USD 8 billion. The acquisition agreement reached nearly a year ago will expire on December 20. If the transaction is not completed by that time, Illumina may have to pay a termination fee of $300 million. At the same time, a U.S. trial seeking to block the transaction is scheduled to begin next week, and a European regulatory review is underway. Both of these lawsuits are expected to continue until 2022.
Grail has already started commercializing its cancer test. Currently, Grail’s business will not be integrated into lllumina. Illumina CEO Francis deSouza now sees the end of the acquisition as a way to support Grail’s commercialization efforts, while also providing a way to comply with any legal and regulatory decisions reached.
“We decided to acquire Grail and separate it until we get regulatory approval, because it is clear that we will most likely not get a decision from the regulatory agency before the agreement expires in December,” deSouza said in an interview. Conference call on Wednesday night. “The stakes here are high because, in simple terms, this transaction can save lives, and we feel an ethical obligation to ensure that the transaction is fully reviewed.”
Grail has developed a cancer detection method that can diagnose cancer from a small amount of blood samples before a patient develops symptoms. The goal of these so-called liquid biopsies is to detect cancer early when it is easier to treat. The science of Grail began with an Illumina research project. In 2016, the San Diego gene sequencing giant split this research into an independent company. Since then, liquid biopsy has become a viable technology, and more and more companies have formed an increasingly competitive market for the development and commercialization of such tests.
The Grail test is called Galleri and is designed to detect more than 50 types of cancer from a small amount of blood samples from patients. Grail is in the process of reaching an agreement with health system, medical practice, and self-insurance employers to provide a prescription test for $950. Although deSouza said his company can help with the test to obtain insurance, it is not yet covered by the insurance. Last year, when Grail was preparing to launch Galleri, Illumina announces acquisition of the company for $8 billion.
The cancer detections provided by liquid biopsy companies, including Grail, are processed using Illumina reagents and sequencing equipment. An arrangement recognized by the Federal Trade CommissionIn a complaint filed in March, regulators stated that Illumina’s Grail acquisition made the gene sequencing giant Pricing power Exceed the equipment and reagents required by Grail’s competitors. As far as Illumina is concerned, it said it will provide its cancer testing customers with guarantees of equal and fair access to the company’s genetic sequencing products.
European regulators are also reviewing Grail’s acquisition. In late July, the European Commission officially opened its ask, The reason is that the transaction “may reduce competition and innovation in the development and commercialization of cancer detection tests based on sequencing technology in emerging markets.” Regulatory filingIllumina revealed that by advancing and completing the acquisition before the EC review, the company may face fines of up to 10% of its annual revenue. Illumina reports more than $3.2 billion in revenue for 2020. The document also pointed out that EC, FTC and other government or regulatory agencies may impose other fines or penalties.
Illumina opposed the EC investigation on grounds of jurisdiction. Charles Dadswell, Illumina’s general counsel, stated that neither the EC nor any EU member has the right to deal with issues between the two US companies. In addition, Grail has no plans to launch Galleri in Europe at present or in the next 10 years, deSouza said. Illumina filed its own complaint with the European Union in April to challenge the EC’s jurisdiction. The date of the hearing has not yet been determined. Dadswell said that Illumina expects to hold a hearing in the fall and then make a decision at the end of this year or early 2022.
The FTC trial is Reserve It will start at 10 a.m. Eastern time on August 24. Although such lawsuits are public and usually held at FTC headquarters, the agency said that public health restrictions due to the pandemic mean that the trial will be virtual.
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