Gene sequencing company Illumina will sell cancer test developer

Illumina, the leading manufacturer of gene sequencing machines, announced on Sunday that it would sell Grail, a cancer test developer it bought for $7.1 billion in 2021.

The move came two days after Illumina lost its case at a federal appeals court, which a Federal Trade Commission largely upheld pronunciation that Illumina should terminate its deal with Grail on antitrust grounds.

The case was seen by antitrust experts as a test of regulators’ efforts to stop big companies from buying young innovators.

The deal also hit a roadblock in Europe. In September 2022, the European Union said it would block the takeover. San Diego-based Illumina previously publicly stated that if it were not successful with appeals in either jurisdiction, it would divest the startup.

“We are committed to an early divestiture of Grail in a manner that allows its technology to continue to benefit patients,” Illumina CEO Jacob Thaysen said in a statement. “The management team and I continue to focus on our core business and supporting our customers. I am confident in Illumina’s opportunities and our long-term success.”

Grail, which has developed technology for the early detection of certain cancers, started as a research project within Illumina. It was incorporated as a separate company in 2016. While it doesn’t compete with Illumina in gene sequencing, it does use gene sequencing in its blood tests for cancer.

Illumina went ahead with the purchase of Grail despite an early complaint from the FTC, which stated that the acquisition would reduce innovation in the U.S. market and raise prices. Still, Illumina was confident it would win in court.

The sale of Grail will be carried out through a third-party sale or a capital markets transaction, the company said, with the aim of closing the deal by the end of the second quarter next year.

Now that the commission’s challenge to the deal has been accepted in court, other tech giants and dominant companies in their respective fields could see their takeover attempts curbed by the agency. Since taking office in 2021, Lina Khan, chair of the FTC, has taken a more aggressive stance on mergers that she believes could harm the economy.