Illumina’s antitrust troubles runneth over: The European Commission has opted for a deeper probe into the DNA sequencing giant’s $8 billion proposal for the cancer blood test maker Grail, citing concerns that the vertical takeover of its former spinout could harm R&D efforts at competing diagnostic companies.
The second phase of the commission’s investigation follows preliminary inquiries that began this past April. Now, the European competition watchdogs will have about 90 business days to make a decision on whether the deal can continue. Due by November 29, the timeline leaves little on the clock for the transaction’s original terms, which expire Dec. 20 at the latest after it was first proposed last September.
The EC’s concerns echo those aired on the other side of the pond. The U.S. Federal Trade Commission initially said it would challenge the deal, claiming that a larger stake in the clinical testing markets could tempt Illumina into throttling the availability of next-generation sequencing hardware to other nascent cancer test developers—equipment they almost certainly rely on, given Illumina’s massive international market share.
However, the FTC has decided to postpone any potential regulatory actions, taking a wait-and-see approach to the legal outcome in Europe.
“Cancer detection tests based on next-generation sequencing technologies could revolutionize how cancer is detected and thus emerge as a game-changer in the fight against the disease,” the EC’s executive vice president for competition policy, Margrethe Vestager, said in a statement. “It is very important to preserve market conditions allowing the best solutions to emerge for the tests to ultimately reach the market at affordable prices for the benefit of patients.”
Illumina responded by calling the commission’s decision to investigate “unprecedented,” given that it will apply E.U. merger regulations to two U.S.-based companies. Indeed, Illumina previously challenged the commission in court along those lines, saying it does not have jurisdiction over the deal because Grail does no business in the European Economic Area, or EEA.
First launched out of Illumina in 2016, Grail recently began a limited U.S. commercial rollout of its Galleri multicancer diagnostic, which screens blood samples for DNA that can be traced back to tumors located in different areas of the body.
“When people have access to early cancer detection, lives will be saved,” Illumina CEO Francis deSouza said in a statement.
“If this acquisition does not proceed, Grail’s European rollout will be slower, and the cost will be measured in the unnecessary loss of life,” deSouza said. “Re-uniting Grail with Illumina will accelerate availability of the Grail test by many years in the EEA and globally, saving tens of thousands of lives and leading to significant healthcare cost savings.”
The company previously said it plans to “vigorously defend its acquisition” of Grail and that the wider benefits of the test would not be realized without Illumina’s commercial muscle behind it. Currently, Illumina owns a 14.5% stake in Grail, as its largest, noncontrolling shareholder.
Illumina previously offered olive branches to international regulators, including a pledge to sign new standard contracts with oncology customers that would guarantee access to DNA sequencing hardware and consumables for at least 12 years with no price increases and a promise to not discontinue any product as long as it’s being purchased by a cancer test developer. The company also made a commitment to lower prices by at least 40% over the next four years.