The Federal Trade Commission has sought to block Illumina’s planned $ 7.1 billion acquisition of Grail, the cancer screening start-up backed by Jeff Bezos and Bill Gates, over concern that it will hurt competition in the US market.
The agency filed a lawsuit on Tuesday to stop the deal, a rare move for two companies that aren’t direct competitors, as it would delay innovations for new tests designed to detect cancer early.
Grail is one of a number of companies specializing in the emerging field of liquid biopsy, which uses blood samples to screen for cancer.
Illumina, which Grail founded less than six years ago and has a nearly 15 percent stake in the company, sells genetic sequencing machines used to run the tests. That has raised concerns in the FTC that the San Diego-based biotech company could raise prices for Grail’s rivals and knock out competition.
“Vertical mergers in healthcare can stifle competition, ruin new discoveries and drive up prices for patients,” FTC Commissioner Rohit Chopra said on Twitter.
Illumina said it would oppose the action and go ahead with the transaction. Chief executive Francis deSouza said the company has a “deep-seated interest in ensuring that all organizations have equal and fair access to high-quality, reliable and cost-effective sequencing.”
Graals CEO Hans Bishop said the combination would “enable more patients in both the United States and worldwide to access Grail’s test more quickly.”
Illumina initially founded Grail as a separate company in 2015 and took a majority stake in the new company. Grail then raised capital from investors such as Johnson & Johnson, the Canada Pension Plan Investment Board and Arch Venture Partners.
Illumina announced a deal to acquire Grail in September and agreed to cede some of the start-up’s future earnings to its existing shareholders for 12 years.
Before closing the deal, Grail had filed for an IPO that he said would bring in $ 100 million. According to data from PitchBook, the company has raised a total of $ 2 billion from investors.
The promotion isn’t the first time the FTC has targeted Illumina. In 2019, the agency challenged Pacific Biosciences’ proposed $ 1.2 billion acquisition of gene sequencing systems, prompting the companies to close the transaction.
Shares in Illumina fell more than 7 percent on news of the lawsuit.