Illumina to Acquire Cancer Diagnostics Developer Grail in $8B Deal

Xconomy San Francisco — 

[Updated, 3:45 pm ET.] Grail is set to be acquired for $8 billion by Illumina, the gene sequencing giant that formed the cancer diagnostics developer and spun it out as a separate company four years ago. The announcement comes less than two weeks after Menlo Park, CA-based Grail revealed its plans for an IPO to support commercialization of its first test next year.

Speaking on a conference call Monday, Illumina (NASDAQ: ILMN) CEO Francis deSouza said that the Grail acquisition enables his company to secure a place in the next phase of genomics: sequencing as a standard of care. [Story updated throughout with details from the conference call.]

“Early cancer detection represents the largest genomic application by far, we believe, over the next decade,” deSouza said. “Because cancer screening impacts a very large part of the population, it ushers in an era where regular genomic testing is the norm for a population. We accelerate this vision by acquiring Grail.”

For its part, Grail says that Illumina’s global footprint, and regulatory and commercial experience, will help it reach more cancer patients across the world faster than it would be able to do on its own.

Grail is developing liquid biopsies, tests that detect cancer from tiny pieces of genetic material that tumors shed into the blood. The goal is to diagnose cancer at its earliest stages, before symptoms manifest, when an earlier intervention has the best chance to stop the disease. The company’s tests are based on next-generation DNA sequencing (NGS) technology of Illumina.

The research underpinning Grail stems from non-invasive prenatal testing that Illumina was doing in its clinical labs years ago. One test revealed abnormalities in the DNA of the mother, who was later found to have cancer that she did not know about, deSouza said on the call. It was unclear at the time whether Illumina’s finding could translate into a cancer diagnostic, and if so, what types of cancers it could detect. In 2016, Illumina formed Grail as “a company that could go after this moonshot mission,” deSouza said.

Hans Bishop, Grail’s CEO, says that his company’s cancer-detecting technology is designed to target the most informative regions of the human genome, then apply machine-learning algorithms to detect the presence of cancer and identify the tumor’s tissue of origin. Grail’s first test, Galleri, was designed to screen asymptomatic people older than 50. It’s a multi-cancer test that screens for more than 50 types of cancer. In the 12 deadliest types of cancer in the US, the sensitivity rate—how well it detects disease—was 67 percent, Bishop said. Even though the sensitivity rate dropped to 44 percent as Galleri expanded to 50 plus cancers, Bishop said the test is important because it detects cancers that can’t be screened at all with current technologies.

“When you think about the medical need, 70 percent of deaths in this country from cancer occur in cancer where there is no screening—this test will detect the vast majority of those,” he said. “That’s why it’s the right thing to have a test that can detect the maximum number of cancers possible.”

The company is currently evaluating Galleri in a clinical trial enrolling about 6,000. Patients in the study whose cancer was detected are provided the results of their tests, and then subsequently worked up by physicians. In addition to confirming the results from earlier studies of the diagnostic, Bishop said the latest clinical trial will provide additional insight into how the testing process translates to clinical practice. In its IPO filing, Grail stated it plans to launch Galleri in 2021 as a laboratory developed test.

With Grail’s technology tested in tens of thousands of patients and plans in the works for the commercial launch of its first test next year, deSouza said that now is the right time to acquire the company. Grail is Illumina’s largest acquisition since the $600 million Solexa buyout in 2006 that brought the … Next Page »

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