Illumina wants to bring liquid biopsy spinout Grail back in-house; report

Cancer diagnosis firm Grail could be re-joining Illumina, the company it was spun out of in 2016, despite filing for an initial public offering (IPO) just a few days ago.

Bloomberg says that Illumina is closing in on a multibillion merger deal for Grail, which has been gathering momentum and high-powered investors – including Amazon CEO Jeff Bezos and former Microsoft head Bill Gates – on the strength of its liquid biopsy platform.

Rather than diagnosing cancer using invasive procedures like tissue biopsies, Grail’s liquid biopsies aim to do so with a simple blood test, which could be quicker and allow treatment to start earlier if needed. The report says Illumina is putting an $8 billion value on the company.

Grail has raised around $1.9 billion from investors since exiting Illumina, a group which also includes Arch Ventures and Johnson & Johnson’s venture capital unit. It has used that money to pare down Illumina’s shareholdings, initially a majority stake but now below 15%.

There’s no guarantee of a deal being agreed, and Illumina has already had one takeover shot down this year due to antitrust concerns.

It was pursuing a $1.2 billion merger with fellow DNA sequencing company Pacific Biosciences until it decided to abandon the deal in January in the face of opposition from US and UK financial authorities which were concerned it would create a monopolistic position.

A merger with Grail would be much less likely to encounter that sort of problem as the spinout’s tech platform lies outside Illumina’s core areas, although it has been steadily expanding its position in clinical diagnostics in recent years.

In January, for example, Illumina joined forces with Roche on a 15-year alliance focusing on using genomics to diagnose cancer and direct treatment decisions. Roche had made a $6.8 billion hostile bid to buy Illumina in 2012 but was rebuffed.

Grail is one of a clutch of biotechs focusing on liquid biopsies for cancer, with rivals including Angle, Guardant Health, Thrive, Foundation Medicine and Epic Sciences, amongst others. It is poised to bring its first commercial product to market next year, according to the IPO prospectus.

Grail says its liquid biopsy – codenamed Galleri – can detect more than 50 cancer types in their early stages, including some which aren’t detectable using current screening technologies.

Shares in Illumina fell more than 6% in the wake of the Bloomberg article and continued to decline after hours, suggesting some investors at least are uncomfortable with the move.