Sequencing Firm Illumina to Pay $7.1 Billion for Liquid-Biopsy Firm Grail -- Update
By Jonathan D. Rockoff
Illumina Inc., a leading maker of the machines that sequence
genes, said Monday it will pay $7.1 billion in cash and stock for a
developer of a long-sought blood test that promises to detect
The deal for the part of Grail Inc. that Illumina doesn't
already own will move the company deeper into the application of
its gene-sequencing technology to the diagnosis and treatment of
patients, a potential multibillion-dollar market.
Illumina founded Grail four years ago and owns a large stake in
the company. Under the terms of the agreement, Grail owners
excluding Illumina will get $3.1 billion in cash and shares in the
gene-sequencer maker valued at the remaining $4 billion, Illumina
The owners will also have the option to receive additional cash
or stock, or get contingent value rights to a portion of Grail's
annual revenue for the next 12 years, Illumina said.
Owners who choose to get the rights will get about 2.2% of
Grail's first $1 billion in revenue each year and roughly 7.9% of
any Grail-related revenue above $1 billion, Illumina said.
The Wall Street Journal earlier reported that Illumina had
agreed to buy Grail. Last week, Bloomberg reported Illumina was
nearing a deal for Grail. The agreement comes as Grail was laying
the groundwork to go public.
The purchase will be Illumina's biggest acquisition and propel
it further into the clinical applications of its gene sequencers
and related products and services, which have rung up $1.3 billion
of the company's $1.5 billion in total revenue during the first
half of this year.
Over the past several years, San Diego-based Illumina has been
seeking a larger position in the faster-growing genomic-application
"We believe early detection of cancer could be one of the
largest applications of genomics over the next 15 years," Grail
Chief Executive Francis deSouza said in an interview.
By 2035, early-detection testing could account for $46 billion
of the $75 billion world-wide market for cancer genetic sequencing,
which is growing at a compounded annual rate of 27%, according to
For entry into that market, Illumina is paying up for a company
that doesn't have any revenue. The deal's success will depend on
Illumina successfully launching Grail's cancer-detection blood test
and persuading health insurers to pay for it.
Illumina has a small genomic-application business, selling
molecular tests that help doctors diagnose genetic diseases and
pick cancer therapies. In 2013, Illumina bought the company
Verinata Health and its test that looks in the blood of pregnant
women for fetal chromosomal disorders like Down syndrome.
Grail grew out of Illumina's discovery of signs of cancers in
the maternal blood samples.
Ever since, the Menlo Park, Calif., company has been on the
front lines of efforts by a number of companies seeking to build a
blood test that detects tumors in patients even before they show
symptoms. Such tests are often referred to as "liquid
Identifying cancer so quickly has been a long-sought but elusive
goal of doctors and researchers because it promises the opportunity
for earlier and more effective treatment.
The research has proven challenging. The tests need to look for
a range of molecular cancer markers if they were going to identify
a variety of different tumors. To avoid false positives, the tests
also need to distinguish between mutated DNA shed by tumors and by
Grail has been planning to launch its test, called Galleri, next
year. Studies found it could detect more than 50 different cancers,
and it generated false positives less than 1% of the time,
according to the company. Studies also found the test often
identified the cancer type.
The test is expected to appeal to patients and doctors, but
analysts have said its commercial potential will depend on gaining
reimbursement. Grail has been planning to target the test initially
for sale to buyers such as concierge-medicine practices and
Grail's test may be the first liquid biopsy that detects cancer
early to go on sale, Mr. deSouza said. Grail is "getting ready to
launch the product in 2021, and we feel we can accelerate their
plans," including to expand its sale to health insurers, he
Illumina said it expects to close the deal in the second half of
Write to Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com
(END) Dow Jones Newswires
September 21, 2020 07:53 ET (11:53 GMT)
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