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Illumina Says Grail Deal Won’t Hold Back New Cancer Tests

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(Bloomberg) -- Illumina Inc.’s lawyers said that its takeover of cancer detection upstart Grail Inc. would not hamper competition in the nascent field of early-stage testing, as the gene sequencing giant sought to overcome a US antitrust challenge.

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In closing trial arguments Wednesday in a suit brought by the Federal Trade Commission, government attorneys said the acquisition threatens to slow progress toward earlier cancer diagnosis, as Grail’s rivals also rely on Illumina’s sequencing services.

“Illumina will have the power to pick the winners and the losers,” an FTC attorney said.

With its already wide sway in the DNA sequencing industry, Illumina has sought to expand its reach with deals like the one entered in 2020 that valued Grail at $8 billion. Antitrust regulators in both the US and Europe quickly moved to block the purchase, saying it could hurt competition and result in huge numbers of patients losing access to potentially life-saving technology.

In an unusual move, Illumina finalized the Grail purchase in August 2021 despite active complaints from regulators on both continents. The EU ordered last October that Grail be kept separate from Illumina until the deal was approved. A court in Luxembourg is expected to rule in July on whether regulators in the European Union, where Grail has no operations, can scrutinize the deal.

No Preference

FTC lawyers argued on Wednesday that Illumina should fully divest itself of Grail. That would still allow Illumina to retain the 12% stake in Grail it had prior to the merger.

Illumina said that it has no reason to put the sequencing needs of Grail ahead of its competitors. Grail, it argued, is far from profitable and sequencing still accounts for the majority of Illumina’s business. The company has sought to appease regulators by offering to ensure supply, technology access and reduced prices for rivals and customers.

“We don’t have an incentive to undertake a bunch of nefarious actions,” an Illumina attorney said Wednesday. “To do that is to shoot ourselves in the foot.”

Grail’s early-stage cancer blood test would allow Illumina to grow its diagnostics business, a potential multimillion-dollar industry. Yet the announcement of the deal drew initial skepticism from investors, who worried that Grail’s test was still too early in the development stage.

Data published by Grail has suggested the test has potential to detect more than 50 types of cancer and gives false reports of cancer 1% of the time. The test is available on the market — Grail recently entered a partnership with Utah-based hospital chain Intermountain Healthcare to offer it to patients.

Testing Trials

The test is also currently undergoing large-scale trials through a partnership with the UK’s National Health Service. Illumina already has a small business selling diagnostic tests for genetic diseases and cancer therapy identification. The challenge for the company will be scaling the test business and gaining insurance coverage for Grail’s test.

A decision is expected within the next several months.

Grail was founded by Illumina and later spun out, with a list of high-profile investors that included billionaires Bill Gates and Jeff Bezos. The startup grew out of a discovery at Illumina that signs of cancer were detectable in maternal blood samples.

These liquid biopsies are a long-sought goal in the world of biomedical research, but developing them has been difficult: They must look for many different markers that may signal different types of tumors, while avoiding inaccurately signaling the presence of cancer.

This is not the first time antitrust regulators have sought to block an Illumina acquisition. An FTC challenge to Illumina’s proposed acquisition of sequencing firm Pacific Biosciences led the companies to abandon the deal in 2020.

(Updates with EU court’s expected decision in fifth paragraph.)

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