Accelerates Commercialization and Adoption of
Transformative Multi-Cancer Screening Test with Potential to Detect
More Cancers Earlier and Enable Better Outcomes
Adds Multi-Disciplinary Team and Capabilities
Harnessing the Power of Next-Generation Sequencing (NGS),
Population Scale Clinical Studies, and Machine Learning to Address
One of Medicine’s Greatest Challenges
Brings Significant New Growth Opportunities in
the Clinical Setting
NGS Oncology Testing Total Addressable Market
Anticipated to Grow to $75 Billion by 2035
Illumina, Inc. (NASDAQ: ILMN) and GRAIL, a healthcare company
whose mission is focused on multi-cancer early detection, today
announced they have entered into a definitive agreement under which
Illumina will acquire GRAIL for cash and stock consideration of $8
billion upon closing of the transaction. In addition, GRAIL
stockholders will receive future payments representing a tiered
single digit percentage of certain GRAIL-related revenues. The
agreement has been approved by the Boards of Directors of Illumina
and GRAIL.
“Over the last four years, GRAIL’s talented team has made
exceptional progress in developing the technology and clinical data
required to launch the GalleriTM multi-cancer screening test.
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 NGS platform,”
said Francis deSouza, Illumina’s President and Chief Executive
Officer. “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. Multi-cancer early detection is better for patients,
their physicians, and payors. As we accelerate our path to clinical
leadership and the path to multi-cancer early detection, we will
continue to drive significant value creation for our
stockholders.”
“Cancer is one of society’s most significant challenges, with
most cancer being detected too late,” said Hans Bishop, Chief
Executive Officer of GRAIL. “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. We are excited about this next step in
our journey to transform cancer detection and outcomes and create
value for patients and their families and communities, health care
providers and payors, employers, and stockholders.”
GRAIL was founded by Illumina in 2016 and was spun out as a
standalone company, powered by Illumina’s NGS technology, to
develop state-of-the-art data science and machine learning and
create the atlas of cancer signals in the blood, enabling
multi-cancer early detection tests. GRAIL raised approximately $2
billion to support its innovative technology platform and develop
Galleri. An earlier version of Galleri was able to detect more than
50 cancer types, over 45 of which have no recommended screening in
the United States. Galleri is expected to launch commercially in
2021 as a multi-cancer, laboratory developed test for early cancer
detection from blood. GRAIL plans to follow Galleri with future
blood-based tests for cancer diagnosis, detection and
post-treatment monitoring of cancer patients.
Strategic Benefits
- Increases Illumina’s Directly Accessible Total Addressable
Market and Offers Multiple Future Growth Opportunities. GRAIL
extends Illumina’s portfolio to include cancer screening, diagnosis
and cancer monitoring, creating a portfolio of best-in-class,
proprietary tests in each of the major oncology testing application
areas. Oncology test utilization and payor coverage is
accelerating, and the total NGS oncology opportunity is expected to
grow at a CAGR of 27% to $75 billion in 2035.
- Accelerates Adoption of NGS-Based Early Multi-Cancer
Detection Test to Reach More Patients Faster. Illumina plans to
leverage its global scale, manufacturing and clinical capabilities
to support GRAIL’s commercialization efforts, realize the total
addressable market potential and drive significant growth in the
clinical value chain.
- Enhances Illumina’s Position in Clinical Genomics. NGS
is poised to revolutionize oncology care, and this acquisition
allows Illumina to participate more fully in the high value
clinical solutions that are enabled by its NGS sequencing
technology. With GRAIL, Illumina will continue as a leading
sequencing innovator and partner, while also becoming a proprietary
test provider.
Transaction Details
Under the terms of the agreement, at closing, GRAIL stockholders
(including Illumina) will receive total consideration of $8
billion, consisting of $3.5 billion in cash and $4.5 billion in
shares of Illumina common stock, subject to a collar. Illumina
currently holds 14.5% of GRAIL’s shares outstanding, and
approximately 12% on a fully diluted basis.
The collar on the stock consideration will ensure that GRAIL
stockholders excluding Illumina receive a number of Illumina shares
equal to approximately $4 billion in value if the 20-trading-day
volume weighted average price of Illumina stock as of 10 trading
days prior to closing is between $295 and $399. GRAIL stockholders
excluding Illumina will receive approximately 9.9 million Illumina
shares if the 20-trading-day volume weighted average price of
Illumina stock as of 10 trading days prior to closing is above $399
and approximately 13.4 million Illumina shares if the
20-trading-day volume weighted average price of Illumina stock as
of 10 trading days prior to closing is below $295. Upon closing of
the transaction, current Illumina stockholders are expected to own
approximately 93% of the combined company, while GRAIL stockholders
are expected to own approximately 7% based on the mid-point of the
collar.
The cash consideration to GRAIL stockholders excluding Illumina
of approximately $3.1 billion is expected to be funded using
balance sheet cash of both Illumina and GRAIL plus up to $1 billion
in capital raised through either a debt or equity issuance. In
advance of this anticipated issuance, Illumina has obtained
financing commitments for a $1.0 billion bridge facility with
Goldman Sachs Bank USA.
In connection with the transaction, GRAIL stockholders will also
receive contingent value rights, which will entitle holders to
receive future payments representing a pro rata portion of certain
GRAIL-related revenues each year for a 12-year period. This will
reflect a 2.5% payment right to the first $1 billion of revenue
each year for 12 years. Revenue above $1 billion each year would be
subject to a 9% contingent payment right during this same period.
Illumina will offer GRAIL stockholders the option to receive
additional cash and/or stock consideration, in an amount to be
determined prior to closing, in lieu of the contingent value
rights.
We expect the transaction will be accretive to Illumina revenue
starting in 2021, and to meaningfully accelerate revenue growth
over time.
Structure and Approvals
The transaction is subject to customary closing conditions,
including applicable regulatory approvals. Illumina expects to
close the transaction in the second half of 2021.
Following the completion of the transaction, GRAIL will operate
as a standalone division within Illumina with a dedicated
leadership team to ensure continuation of GRAIL’s success.
Advisors
Goldman Sachs & Co. LLC is serving as exclusive financial
advisor and Cravath, Swaine & Moore LLP is serving as legal
advisor to Illumina. Morgan Stanley & Co. LLC is serving as
exclusive financial advisor and Latham & Watkins LLP is serving
as legal advisor to GRAIL.
Conference Call Information
Illumina will host a conference call to discuss the transaction
today, September 21, 2020 at 8:00 a.m. EDT.
Interested parties may access the live teleconference through
the Investor Relations section of Illumina’s web site under the
“company” tab at www.illumina.com. Alternatively, individuals can
access the call by dialing the Toll-Free Dial-In Number: (866)
211-4597, or the International Dial-In Number: (647) 689-6853
outside North America, both with passcode 2245817. Following the
call, a replay will be posted on Illumina website and will be
available for at least 30 days following posting.
About GRAIL
GRAIL is a healthcare company whose mission is to detect cancer
early, when it can be cured. GRAIL is focused on saving lives and
improving health by pioneering new technologies for early cancer
detection. The company is using the power of next-generation
sequencing, population-scale clinical studies, and state-of-the-art
computer science and data science to overcome one of medicine’s
greatest challenges. GRAIL is headquartered in Menlo Park,
California, with locations in Washington, D.C., North Carolina, and
the United Kingdom. It is supported by leading global investors and
pharmaceutical, technology, and healthcare companies.
About Illumina
Illumina is improving human health by unlocking the power of the
genome. Our focus on innovation has established us as the global
leader in DNA sequencing and array-based technologies, serving
customers in the research, clinical and applied markets. Our
products are used for applications in the life sciences, oncology,
reproductive health, agriculture and other emerging segments. To
learn more, visit www.illumina.com and connect with us on Twitter,
Facebook, LinkedIn, Instagram, and YouTube.
Additional Information and Where to
Find It
In connection with the proposed transaction, Illumina intends to
file with the SEC a registration statement on Form S-4 that will
include a preliminary prospectus with respect to Illumina’s common
stock and contingent value rights to be issued in the proposed
transaction and a consent solicitation statement of GRAIL in
connection with the proposed transaction. Illumina may also file
other documents with the SEC regarding the proposed transaction.
This document is not a substitute for consent solicitation
statement/prospectus or registration statement or any other
document which Illumina may file with the SEC. INVESTORS AND
SECURITY HOLDERS OF GRAIL ARE URGED TO READ THE REGISTRATION
STATEMENT, WHICH WILL INCLUDE THE CONSENT SOLICITATION
STATEMENT/PROSPECTUS, AND ANY OTHER RELEVANT DOCUMENTS THAT ARE
FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR
SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY
BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT
THE PROPOSED TRANSACTION AND RELATED MATTERS. Investors and
security holders may obtain free copies of the registration
statement on Form S-4 (when available), which will include the
consent solicitation statement/prospectus, and other documents
filed with the SEC by Illumina through the website maintained by
the SEC at www.sec.gov, through Illumina’s Investor Relations page
(investor.Illumina.com) or by writing to Illumina Investor
Relations, 5200 Illumina Way, San Diego, CA 92122.
No Offer or Solicitation
This communication is for informational purposes only and is not
intended to and does not constitute an offer to subscribe for, buy
or sell, or the solicitation of an offer to subscribe for, buy or
sell, or an invitation to subscribe for, buy or sell any securities
or a solicitation of any vote or approval in any jurisdiction, nor
shall there be any sale, issuance or transfer of securities in any
jurisdiction in which such offer, invitation, sale or solicitation
would be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended, and otherwise in accordance with applicable law.
Cautionary Notes on Forward-Looking
Statements
This communication contains “forward-looking statements” within
the meaning of the federal securities laws, including Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. In this context,
forward-looking statements often address expected future business
and financial performance and financial condition, and often
contain words such as “expect,” “anticipate,” “intend,” “plan,”
“believe,” “seek,” “see,” “will,” “would,” “may,” “target,” similar
expressions and variations or negatives of these words.
Forward-looking statements by their nature address matters that
are, to different degrees, uncertain, such as statements about the
consummation of the proposed transaction and the anticipated
benefits thereof. These and other forward-looking statements are
not guarantees of future results and are subject to risks,
uncertainties and assumptions that could cause actual results to
differ materially from those expressed in any forward-looking
statements, including the failure to consummate the proposed
transaction or to make any filing or take other action required to
consummate such transaction in a timely matter or at all. Important
risk factors that may cause such a difference include, but are not
limited to: (i) the proposed transaction may not be completed on
anticipated terms and timing, (ii) a condition to closing of the
transaction may not be satisfied, including obtaining regulatory
approvals, (iii) the potential impact of unforeseen liabilities,
future capital expenditures, revenues, costs, expenses, earnings,
synergies, economic performance, indebtedness, financial condition
and losses on the future prospects, business and management
strategies for the management, expansion and growth of Illumina’s
business after the consummation of the transaction, (iv) potential
adverse reactions or changes to business relationships resulting
from the announcement or completion of the transaction, (v) any
negative effects of the announcement, pendency or consummation of
the transaction on the market price of Illumina’s common stock and
on Illumina’s operating results (vi) the risks and costs associated
with the integration of, and the ability of Illumina to integrate,
GRAIL’s business successfully and to achieve anticipated synergies,
(vii) risks associated with third-party contracts containing
consent and/or other provisions that may be triggered by the
proposed transaction, (viii) the risks and costs associated with
the development and commercialization of, and Illumina’s ability to
develop and commercialize, GRAIL’s products; (ix) the risk that
disruptions from the proposed transaction will harm Illumina’s
business, including current plans and operations, (x) legislative,
regulatory and economic developments, (xi) the other risks
described in Illumina’s most recent annual reports on Form 10-K and
quarterly reports on Form 10-Q and in the registration statement on
Form S-1 filed with the SEC by GRAIL on September 9, 2020, as
amended on September 17, 2020, and (xii) management’s response to
any of the aforementioned factors.
These risks, as well as other risks associated with the proposed
transaction, will be more fully discussed in the consent
solicitation statement/prospectus that will be included in the
registration statement on Form S-4 that will be filed with the SEC
in connection with the proposed transaction. While the list of
factors presented here is, and the list of factors to be presented
in the registration statement on Form S-4 are, considered
representative, no such list should be considered to be a complete
statement of all potential risks and uncertainties. Unlisted
factors may present significant additional obstacles to the
realization of forward-looking statements. Consequences of material
differences in results as compared with those anticipated in the
forward-looking statements could include, among other things,
business disruption, operational problems, financial loss, legal
liability to third parties and similar risks, any of which could
have a material adverse effect on Illumina’s financial condition,
results of operations, credit rating or liquidity. Illumina does
not assume any obligation to publicly provide revisions or updates
to any forward-looking statements, whether as a result of new
information, future developments or otherwise, should circumstances
change, except as otherwise required by securities and other
applicable laws.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200921005256/en/
Media: Karen Birmingham, PhD 646-355-2111
kbirmingham@illumina.com
Matt Burns 518-423-5907 mburns@grailbio.com
Investors: Jacquie Ross, CFA 858-882-2172 ir@illumina.com
For GRAIL Stockholders: John Craighead, PhD 650-484-0690
jcraighead@grailbio.com
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