Written by Connor Hale
Illumina will put down a total of $8 billion to reacquire its former spinout Grail, which, after nearly five years on its own, is nearing completion of a simple blood test capable of detecting 50 different cancers in their earliest stages.
Both companies expect it all to come together in 2021: The transaction is slated to close in the second half of next year—consisting of $3.5 billion in cash and $4.5 billion in Illumina stock upfront—while Grail has on its calendar two commercial launches of tumor-screening tests. Illumina has predicted the finished deal will immediately start adding to its bottom line.
The leading manufacturer of DNA sequencing hardware currently owns 14.5% of Grail, and its full takeover promises to plunge Illumina deeper into the clinical testing markets—which the company estimates could top $75 billion by 2035, growing 27% per year.
With its initial launch as a lab-developed test, Grail’s Galleri blood-based diagnostic could reach over 50 million people before being granted reimbursements, Illumina estimated—with plans to throw its global manufacturing and marketing capabilities behind the effort, aimed at integrated health systems, self-insured employers and concierge medicine services. The two companies aim for a full FDA submission and approval starting in 2023.
“Over the last four years, Grail’s talented team has made exceptional progress in developing the technology and clinical data required to launch the Galleri multi-cancer screening test,” Illumina President and CEO Francis deSouza said. “Galleri is among the most promising new tools in the fight against cancer, and we are thrilled to welcome Grail back to Illumina to help transform cancer care using genomics and our [next-generation sequencing] platform.”
“Together, we have an important opportunity to introduce routine and broadly available blood-based screening that enables early cancer detection when treatment can be more effective and less costly,” deSouza added. “Multi-cancer early detection is better for patients, their physicians, and payors.”
Illumina’s stock dipped about 6% following the official announcement, as it had last week when deal-making talks were first reported by Bloomberg.
Since its 2016 launch, Grail has grown to 436 employees and raised nearly $2 billion in venture capital money, including from Bill Gates, Jeff Bezos and many others. That funding has supported a clinical program spanning 115,000 participants, including people with and without cancer, as the company worked to build an atlas of the small, belying pieces of genetic material shed by tumors into the bloodstream.
Earlier this year, Grail demonstrated how its technology could detect more than 50 different types of cancer with a single blood draw, while identifying the tumor’s tissue of origin 93% of the time.
After the launch of Galleri—tied to a final, 6,200-person clinical validation study, which saw delays this year due to COVID-19—Grail plans to follow up with a separate diagnostic aid product for oncologists, which aims to simplify their workflow when a patient shows symptoms of cancer. Other future projects include blood-based tests for monitoring the effectiveness of treatments at eliminating residual disease.
“Cancer is one of society’s most significant challenges, with most cancer being detected too late,” said Grail CEO Hans Bishop. “We believe multi-cancer early detection technology could address a tremendous unmet need and reduce the cancer burden worldwide. Combining forces with Illumina enables broader and faster adoption of Grail’s innovative, multi-cancer early detection blood test, enhancing patient access and expanding global reach.”
The deal comes shortly after Grail filed a placeholder for a Nasdaq IPO, set at $100 million, but which could have easily topped $500 million, according to some estimates. The transaction has been approved by both companies’ boards of directors, with Grail stockholders receiving future royalty payments based on a percentage of future revenues over 12 years.
In addition, Illumina said it will continue to act as a sequencing partner for other diagnostic test makers while becoming a proprietary test provider itself, with Grail operating as a standalone division with its own leadership team.
Click here to view source.