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US sues to block Illumina’s acquisition of liquid biopsy group

The Federal Trade Commission has sought to block Illumina’s planned $7.1bn acquisition of Grail, the cancer screening start-up backed by Jeff Bezos and Bill Gates, citing concerns that it will harm competition in the US market. 

The agency filed a lawsuit on Tuesday to stop the deal, a rare move for two companies that are not direct competitors, saying it would slow innovations for novel tests designed to detect cancer early.

Grail is among a number of companies that specialises in the emerging field of liquid biopsy, where blood samples are used to screen for cancer. 

Illumina, which founded Grail less than six years ago and owns a near-15 per cent stake in the company, sells genetic sequencing machines used to run the tests. That has raised concerns at the FTC that the San Diego-based biotech company could increase prices for Grail’s rivals and snuff out competition. 

“Vertical mergers in the healthcare sector can choke off competition, kill off new discoveries, and jack up prices for patients,” FTC commissioner Rohit Chopra said on Twitter.

Illumina said it would oppose the action and proceed with the transaction. Chief executive Francis deSouza said the company has a “deeply vested interest in ensuring that all organizations have equal and fair access to high quality, reliable and cost-effective sequencing”.

Grail chief executive Hans Bishop said the combination would “enable more patients in both the United States and worldwide to garner access to Grail’s test faster”.

Illumina initially set up Grail as a separate company in 2015, taking a majority stake in the new venture. Grail went on to raise capital from investors such as Johnson & Johnson, the Canada Pension Plan Investment Board and Arch Venture Partners.

Illumina announced a deal to acquire Grail in September, agreeing to give up a portion of the start-up’s future revenues to its existing shareholders for 12 years.

Before striking the deal, Grail had filed for an initial public offering that it said would raise $100m. The company has raised a total of $2bn from investors, according to PitchBook data.

The action is not the first time the FTC has taken aim at Illumina. In 2019, the agency challenged the company’s $1.2bn proposed acquisition of the gene sequencing systems company Pacific Biosciences, leading to the companies abandoning the transaction.

Shares in Illumina fell more than 7 per cent on the news of the lawsuit.


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