Illumina gets go-ahead from European Commission to part ways with Grail

Illumina has received a green light from the European Commission to proceed with unwinding its ownership of Grail, though the details of that plan have yet to be unveiled.

The DNA sequencing giant still has the freedom to choose between selling the cancer blood test developer to another party outright or supporting its journey to the public markets as an independent spinout—and previously set a deadline for that decision at the end of June, after missing out on appeal in U.S. courts last December.

The commission officially ordered Illumina to cut ties with Grail last October, more than a year after the companies completed their $8 billion takeover deal ahead of clearing the European Union’s antitrust review process. The U.S. Federal Trade Commission delivered a similar edict last year on its side of the pond.

The European directive also requires that Illumina wind back the clock, and “restore the competitive situation prevailing before the completion of the transaction.” That means starting Grail out on strong footing if the company strikes out on its own. 

According to Illumina, if it opts for a capital markets transaction, the company “must capitalize Grail with two-and-a-half years of funding, which is estimated at approximately $1 billion based on Grail's long-range plan.”

“Today’s decision marks another important step towards restoring competition in the market for the development of early cancer detection tests,” Margrethe Vestager, the EC’s executive vice-president in charge of competition policy, said in a statement. 

“Illumina’s divestment plan sets out a timely path towards Grail’s independence, by ensuring it continues to be a viable competitor in this important innovation race,” Vestager added. Illumina said it will continue work with the commission to approve the final terms of the split.

The Galleri blood test developed by Grail—which began life as an Illumina spinout itself—aims to detect the genetic signatures of more than 50 different types of cancer from a single sample, and then help trace them back to their organs of origin. 

U.S. and European antitrust watchdogs objected to the acquisition, saying that ownership of Grail could tempt Illumina into throttling back the research work of potential competitors, who would be forced to rely on Illumina’s DNA sequencing machines in the face of the company’s overwhelming market share.

The transatlantic legal issues ultimately sparked a proxy fight led by activist billionaire investor Carl Icahn, leading to the ouster of Illumina’s previous CEO and board chair.

Separately, Illumina named a new chief financial officer earlier this week. Ankur Dhingra joined the company after serving as CFO at Summit Therapeutics and CAREDx; prior to that, he was VP of investor relations at Agilent. 

Dhingra will take the place of Joydeep Goswami, who will hold an advisory role through June 30 and presumably the announcement of Grail’s final divestiture arrangement. 

Goswami also held the role of chief strategy and corporate development officer; those responsibilities will transfer to Jakob Wedel, who came to Illumina in November 2023 as the CEO’s chief of staff. Wedel was previously a partner at EY and co-lead their global life science practice, and has also held roles at McKinsey & Company and Bain & Company.

Illumina has scheduled its first-quarter earnings presentation for May 2.