Illumina appeals FTC’s order to divest Grail with plea for cancer screening test

Dive Brief:

DNA sequencer Illumina on Monday appealed the Federal Trade Commission’s April order to divest cancer test maker Grail, saying the government overreached in its efforts to scuttle a merger that Illumina claims will speed adoption of a revolutionary cancer screening technology and save countless lives.
In its brief filed in the 5th U.S. Circuit Court of Appeals, Illumina argued the FTC should have cleared the Grail transaction long ago, but did not properly apply antitrust laws.
Illumina accused the FTC of going to “unprecedented lengths” to kill the Grail transaction, including “colluding” with European regulators to evade scrutiny from the U.S. court system.

Dive Insight:

Illumina, which closed its $8 billion acquisition of Grail in 2021 while still facing antitrust challenges in both the U.S. and Europe, vowed to appeal the FTC’s finding in April that the deal would harm innovation in the U.S. market for multi-cancer early detection tests.

That opinion overturned an administrative law judge’s decision dismissing the initial antitrust charges brought in a complaint by FTC staff.

Illumina’s battle to hold onto Grail was at the center of a proxy contest between Illumina and activist investor Carl Icahn that led to the ouster last month of Illumina board chair John Thompson.

Grail makes a blood-based “liquid biopsy” test that can screen for multiple types of cancer at early stages using DNA sequencing. It is one of several competitors racing to develop and commercialize such tests.

The FTC contends that Illumina, as the dominant producer of next-generation sequencing platforms used to analyze genetic material from the tests’ blood samples, could thwart competition in the liquid biopsy market by raising costs or withholding access to its technologies and services.

Illumina argues in its brief that the Grail transaction is a vertical merger between non-competitors. The San Diego-based company said it would make no economic sense for it to “engage in foreclosure” against other liquid biopsy producers, and its binding supply agreements with customers prevent it from doing so.

“The transaction at the heart of this case easily passes antitrust muster,” Illumina said, calling the FTC’s order a “case of flagrant government overreach.”

Illumina said commercialization of Grail’s Galleri test would be further along in its progress if the FTC had approved the merger.

The company also alleges that the FTC’s administrative proceedings were an unconstitutional delegation of legislative power.

“FTC’s actions have brought longstanding constitutional defects in the agency’s structure and proceedings into sharp focus. Now that the case is before an Article III court, those defects should be quickly addressed so Illumina/Grail can make Galleri available to as many people as possible,” Illumina said.

An FTC spokesperson declined to comment on the Illumina filing.

The 5th circuit court on Monday denied the FTC’s request to have the case removed from its expedited calendar and gave the agency an additional month to prepare its brief in the case. Oral arguments are scheduled for Aug. 9.