Grail to become an Illumina spinout once again, with plans to go public

Illumina’s multibillion-dollar quest for Grail—high-reaching, yet ultimately doomed—is nearing its conclusion. The DNA sequencing giant has landed on a plan to spin out the cancer blood test company as an independent operation.

The company’s board of directors has approved the plan for Grail to join the Nasdaq, under the ticker “GRAL,” before the end of this month.

“Today's announcement marks a milestone for Illumina and signals an important step forward for the company, since the divestiture of Grail is one of our 2024 priorities,” Illumina CEO Jacob Thaysen, Ph.D., said in a statement.

Grail’s roundabout journey originally began as an Illumina spinout nearly a decade ago. The company and former Fierce 15 winner raised more than $2 billion in venture capital to fund the development of its Galleri multicancer early detection test, capable of identifying more than 50 cancers from a single blood draw, and to validate its performance in large-scale clinical trials.

Illumina announced that Grail would come home in September 2020, with an $8 billion proposal to acquire its remaining stake in the company. 

Less than a year later—despite the transaction falling under the microscopes of antitrust authorities in the U.S. and Europe—Illumina said it was moving forward and closing the deal anyway.

Put simply, the Federal Trade Commission (FTC) and the EU’s competition watchdog took issue with that decision, with the latter levying a record fine against Illumina of 432 million euros, or about $476 million, in addition to declaring that the company would have to unwind its ownership. The FTC followed up in April 2023 with an order of its own

While court cases and challenges worked their way on both sides of the Atlantic, another front opened up in Illumina’s fight through a proxy battle with activist investor Carl Icahn. 

The billionaire called for a change in Illumina’s leadership following declines in its stock price, and he got it: CEO Francis deSouza stepped down, as did board chair John Thompson, who was replaced with Icahn nominee Andrew Teno. Icahn has since sued Illumina, calling for the rest of the board to be replaced.

The European Commission officially ordered Illumina to cut ties with Grail last October—allowing it a choice between spinning out the company once more or selling it outright—along with a directive that had required Illumina to “restore the competitive situation prevailing before the completion of the transaction.” 

That meant providing Grail with two and a half years’ worth of funding, or an amount estimated to be about $1 billion based on its operating plan.

“As we prepare to lead the next era of genomics innovation, we believe Grail will play an important role in advancing the industry and improving human health,” Thaysen said, adding that Illumina will once again maintain a minority share in Grail totaling 14.5%, as it did before the acquisition.

Under the spinoff plan, Illumina stockholders will be entitled to one share of Grail for every six shares of Illumina held at the close of business June 13. Grail stock will fully begin trading on the Nasdaq June 25.