EU Regulators Order Illumina to Divest Grail

European regulators have ordered Illumina to divest Grail, an early cancer detection firm. The ruling comes a little more than two years after Grail was acquired by the gene-sequencing specialist. It also comes a little more than a year after the European Commission ruled the $8 billion deal violated antitrust rules.

On Friday, Illumina said it would divest Grail in 12 months if it does not win its challenge in court, according to a report from Reuters. In a release, Illumina said it “maintains that the Commission does not have jurisdiction over this acquisition.”

Consistent with the previous interim measures orders, Illumina said it is required to continue funding Grail until any divestiture. In the instance of a capital markets transaction, Illumina must capitalize Grail at the time of the transaction with two-and-a-half years of funding based on Grail's long-range plan. The order also provides for Illumina to retain a stake in Grail of up to 14.5% and re-establish the royalty arrangement it previously had in place with Grail.

The EU initially opposed the deal because Illumina could have an incentive to prevent Grail’s competitors from using its technology to develop early-cancer detection tests, according to Reuter’s Report.

The fallout from the acquisition caused a proxy fight, which in turn led to Francis deSouza resigning from his position as CEO. A few months after deSouza stepped down Jacob Thayen was appointed Illumina CEO.

The controversy has done little to slow Grail down. Earlier this month, the Menlo Park, CA-based company said detailed findings from the PATHFINDER study of its multi-cancer early detection (MCED) blood test have been published in The Lancet.

The study, conducted in 6,662 adults over the age of 50 without symptoms suggestive of cancer, demonstrated that an earlier version of Grail’s MCED test identified many cancer types that do not currently have recommended screening tests, enabled targeted cancer diagnostic evaluations, and supported diagnostic resolution for the majority of participants in less than three months.  

Ironically, Illumina spun out Grail in 2016. Prior to Illumina acquiring Grail, the cancer test maker was going to go public through an IPO.