Guess you can’t always go home again. The Federal Trade Commission (FTC) said it would intervene in Illumina’s $8 billion acquisition plans for its former spinout, the multi-cancer blood test developer Grail.
On paper, the deal seems simple: Grail has spent the past five years on its own developing a diagnostic capable of screening for 50 different cancers at once—a test set to launch this year—while the DNA sequencing giant makes the hardware that performs those tests.
The buyout would give Illumina an opportunity to move deeper into the clinical market with its own proprietary diagnostic—with Grail operating as a standalone division with its own leadership—while also continuing to serve as a sequencing partner for other test makers.
Therein lies the rub. The FTC said this vertical merger could harm the development of other multi-cancer early detection tests, as Illumina would have the ability to raise the price of its hardware for Grail’s potential competitors.
And for many, Illumina’s next-generation sequencing instruments and consumables may be the only game in town. Even if a viable substitute entered the market, the agency said, it could take years for developers to reconfigure and validate their tests for a new platform.
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The federal competition watchdog called Grail’s technology a “game changer” with the potential to catch the dozens of tumors that aren’t found until symptoms become obvious—which is sometimes after the window for early treatment has closed.
“If this acquisition is consummated, it would likely reduce innovation in this critical area of healthcare, diminish the quality of [multi-cancer early detection] tests, and make them more expensive,” FTC Acting Chairwoman Rebecca Kelly Slaughter said in a statement.
This isn’t the first time the FTC has moved to block Illumina’s expansion. In late 2019, the agency put the brakes on its proposed $1.2 billion deal for its long-read sequencing rival, Pacific Biosciences, saying it would lead to a DNA-reading monopoly. After saying it would explore its options, Illumina dropped the acquisition less than a month later.
RELATED: Illumina calls it quits after FTC blocks its $1.2B offer for PacBio
But this time, the company appears more determined, putting out a statement saying its “committed to pursuing Grail” and will oppose the FTC’s challenge.
“We have a deeply vested interest in ensuring that all organizations have equal and fair access to high-quality, reliable and cost-effective sequencing to enable them to develop breakthrough products, such as liquid biopsy, and make them accessible to the greatest number of patients possible, quickly and safely,” said Francis deSouza, CEO of Illumina, which already owns more than 14% of Grail.
The company said it plans to pursue all legal options to close the deal while offering new standard contracts and guarantees to sequencing access for its clinical oncology customers, alongside a commitment to lower prices by more than 40% over the next four years.
The contracts include 12 years’ supply of sequencing instruments and consumables, with no price increases over the term, and a promise to not discontinue the sale of any product as long as it's purchased by a cancer test developer.