Shares of Illumina (NASDAQ:ILMN) gained 17% last month, according to S&P Global Market Intelligence. The stock climbed steadily throughout the month after its Grail spinoff presented impressive data from its liquid-biopsy test at the American Society of Clinical Oncology (ASCO) meeting.
The test, called Galleri, is available by prescription and offers screening for more than 50 different types of cancer from a single blood sample. The study was conducted with 6,629 patients aged 50 years or older.
Other companies like Guardant Health and Freenome are also working on liquid biopsies. The tests could transform cancer treatment by catching the disease before any symptoms arise.
After spinning Grail off in 2016, Illumina retains a nearly 15% ownership stake in the company. In September, it announced its intention to bring it back under the corporate umbrella via acquisition. So far, regulators in the U.S. and Europe are blocking the path.
The agencies say Illumina’s 75% market share in sequencing instruments and consumables, when combined with Grail’s test, would give the company an unfair advantage over other test makers. The clock is ticking.
The terms of the $8 billion deal set Dec. 20 as the deadline for a transaction. For its part, the Europe Commission (EC) has said it will rule by July 27.
It’s an unusual action from the EC, since Grail currently does no business in Europe. Even if that agency clears the deal, the Federal Trade Commission is waiting to pick up its case to stop the purchase. It doesn’t look promising.
Either way, Illumina will remain the leader in the sequencing market for the foreseeable future. Grail could add a lucrative services element to the business, but win or lose, Illumina will continue to benefit as Grail’s largest stakeholder.
If the deal does fall through, expect an initial public offering to allow insiders like Jeff Bezos to cash out. That was the plan last fall, prior to the tie-up with Illumina.
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