San Diego gene-sequencer Illumina spins off blood testing startup Grail – for the second time – San Diego Union-Tribune
San Diego gene-sequencer Illumina spins off blood testing startup Grail – for the second time – San Diego Union-Tribune
Author: Natallie Rocha
Published on: 2024-06-04 19:31:41
Source: Technology – San Diego Union-Tribune
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San Diego gene-sequencing giant Illumina said Monday that its board approved the spinoff of early cancer-detecting startup Grail. The move brings the local biotechnology company one step closer to unwinding its failed acquisition of Grail, which crumbled under the scrutiny of antitrust regulators and activist investor Carl Icahn.
History is now repeating itself as this is not the first time Illumina has set the Menlo Park startup off on its own.
Grail, which makes a diagnostic blood test that screens for 50 types of cancer, was founded in 2015 as a spinoff firm of Illumina. The local company announced in September 2020 that it would buy Grail for $7.1 billion to bring its cancer-detecting test to market.
However, the deal ignited a fight with U.S. and European regulators over antitrust concerns. Regulators contended that Illumina’s gene-sequencing technology is essential to the development of early cancer-detecting blood tests like Grail’s and that the deal could stifle competitors.
Illumina pushed back against the regulatory challenges and closed the acquisition in 2021. Company leadership also battled with investors over their handling of the deal and Illumina’s declining stock value.
At its peak in August 2021 — days before the Grail deal closed — Illumina’s stock was worth $517.32 per share. On Tuesday, Illumina closed at about $103 per share.
A proxy fight last year led by Icahn ultimately led to the resignation of Illumina’s longtime CEO.
In December, Illumina — led by a new CEO — announced that it would divest Grail through either a spinoff or sale.
Illumina will divest Grail after losing battle with FTC. How did the San Diego biotech’s $7B deal unravel?Illumina’s board approved the move that will make Grail a separate company effective June 24. The next day, Grail will begin trading on the Nasdaq Global Select Market under the ticker symbol “GRAL.”
“Today’s announcement marks a milestone for Illumina and signals an important step forward for the company, since the divestiture of Grail is one of our 2024 priorities,” said Jacob Thaysen, CEO of Illumina, in a statement. “As we prepare to lead the next era of genomics innovation, we believe Grail will play an important role in advancing the industry and improving human health.”
It will cost Illumina $35 million to $50 million to unwind its ties to Grail, with much of that sum going toward legal and advising fees. These charges will be incurred by Illumina during the second and third quarters of this year.
Illumina shareholders will receive one share of Grail for every six shares of Illumina stock, the company’s 8-K filing said. After the spinoff is complete, Illumina will retain a 14.5 percent stake in Grail.
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