Bruce Lee once said, “Empty your cup, so that it may be filled.” With its legal options running dry, Illumina will look to start fresh as it sets a timeline to completely relieve itself of Grail and its cancer-detecting blood test.
The DNA sequencing giant announced it will aim to finalize the details of the divestiture within the first six months of the new year—whether it be through a sale to an interested suitor or by having Grail take itself public.
The decision came over the weekend after a U.S. appeals court handed down its ruling Friday on a lawsuit from Illumina against the Federal Trade Commission. The lawsuit had sought to reverse the agency’s order from this past April directing the company to fully unravel its ownership of Grail.
While the Fifth Circuit did indeed vacate the FTC’s order—with its opinion saying the agency had applied an “erroneous legal standard” during its analysis—the panel of judges determined the commission still “had substantial evidence to support its conclusion” that its antitrust concerns were valid: namely, that if Illumina were to own Grail and its genomic cancer test, there would be a temptation for it to throttle the usage of its DNA sequencers by rival diagnostic developers in a market potentially worth tens of billions of dollars.
The circuit court ultimately sent the decision back to the FTC, saying it could reconsider the case under the proper legal standard. Illumina said it would not pursue further appeals.
“We are committed to an expeditious divestiture of Grail in a manner that allows its technology to continue benefitting patients. The management team and I continue to focus on our core business and supporting our customers,” said Illumina CEO Jacob Thaysen. He took the job in September after his predecessor, Francis deSouza, departed the company following a proxy fight led by billionaire activist investor Carl Icahn, which had also resulted in the ousting of the chairman of the board.
The $8 billion plan to acquire Grail, originally a spinout from Illumina, was first proposed in late 2020. The deal was closed in August 2021 despite misgivings from antitrust regulators on both sides of the Atlantic and without their official green lights. Illumina has also sued the European Commission, claiming it didn’t have any jurisdiction to deny the acquisition.
The EU would go on to levy a record-setting fine of 432 million euros, or about $476 million, against Illumina for jumping the regulatory gun on the Grail deal. It handed down its official divestment order in mid-October.
The yearslong saga has resulted in a 75% decline in Illumina’s share price, erasing about $55 billion off its market cap, according to Icahn—who isn’t resting and has now set his sights on removing the remaining members of the company’s board.
In a blog post, the investor argued that the current board members who oversaw the acquisition should not be in charge of selling off Grail or seeing it go public: “Put simply, the fox should not guard the henhouse.”
“We have major misgivings that as long as this current board remains in power, even if there is a divestiture, it will come with far too many strings attached,” Icahn said. “We believe that, without the influence of the legacy directors, CEO Jacob Thaysen, the new directors and Illumina’s employees will restore Illumina back to the great company it once was and can be again.”