Forget the IPO, Illumina is nearing a buyout of $1.9B liquid biopsy startup Grail — report
Grail, the $1.9 billion, Jeff Bezos-backed liquid biopsy startup, may not be going public after all.
Wednesday morning, a week after the biotech filed for an IPO, Bloomberg reported that Illumina was closing in on a deal for the vaunted spinout. Grail spun out of the sequencing giant in 2017 and subsequently landed just under $2 billion from big-name investors on the promise of developing a blood test to detect cancer far earlier and less invasively than currently possible.
Given the cash that has already poured into the California biotech and how near they apparently are to making their test commercial, the dollar figure for such an acquisition would have to be considerable, although Illumina already owns 14.6% of the company. It was not clear how much Grail intended to raise in its IPO. They had penciled in $100 million in their initial filing, but it was widely viewed as a temporary placeholder for a much larger figure.
Grail, which is in a race with well-heeled Thrive and a few other smaller biotechs to develop the first early cancer blood test, disclosed in their S-1 that they had already tested their technology on over 100,000 people — far more than had previously been disclosed — and were eyeing a commercial launch for two separate products in 2021. They acknowledged that it could take longer to get payer reimbursement.
For Illumina, the deal would be the first major acquisition since the FTC shot down their $1.2 billion buyout of sequencing rival PacBio in January. The company has been known to buy out competition — the FTC called them a “monopolist” in a PacBio decision — but it has in recent years increasingly moved into a new space: diagnostics. It’s signed contracts with companies such as Adaptive Biotechnologies and is now working with Ginkgo on an ambitious sequencing-based Covid-19 testing plan.
Acquiring Grail would give them the arguable frontrunner in the industry’s closest diagnostics race.
Such a deal would likely pay off handsomely for a handful of early investors who went in big on the company’s technology. That includes Bob Nelsen’s Arch Ventures, which owns 63.7 million shares, J&J’s venture arm, which owns 50 million. Founding CEO Jeff Huber and co-founder Rick Klausner own 34 million and 27 million shares, respectively.