FTC calls out Il­lu­mi­na as 'mo­nop­o­list,' moves to block $1.2B ac­qui­si­tion of PacBio

When se­quenc­ing gi­ant Il­lu­mi­na re­vealed that it’s ac­quir­ing small­er ri­val Pa­cif­ic Bio­sciences for $1.2 bil­lion last year, CEO Fran­cis deS­ouza said the com­bi­na­tion of their own short-read tech­nol­o­gy and the small­er ri­val’s long-read ap­proach “will give con­sumers a more per­fect view of the genome.”

Per­haps too per­fect, the Fed­er­al Trade Com­mis­sion sug­gests, for a sin­gle com­pa­ny to hawk.

The FTC’s five com­mis­sion­ers vot­ed unan­i­mous­ly to chal­lenge Il­lu­mi­na’s pro­posed takeover, set­ting an ad­min­is­tra­tive tri­al for Au­gust 18, 2020, while mov­ing to seek a tem­po­rary re­strain­ing or­der and pre­lim­i­nary in­junc­tion in fed­er­al court.

“When a mo­nop­o­list buys a po­ten­tial ri­val, it can harm com­pe­ti­tion,” Gail Levine, FTC Bu­reau of Com­pe­ti­tion deputy di­rec­tor, said in a state­ment. “These deals help mo­nop­o­lists main­tain pow­er. That’s why we’re chal­leng­ing this ac­qui­si­tion.”

The chal­lenge comes just a day af­ter the FTC cleared Roche’s $4.3 bil­lion buy­out of gene ther­a­py play­er Spark, af­ter tak­ing sev­er­al months to con­clude that their union won’t hurt com­pe­ti­tion in treat­ing he­mo­phil­ia A. The 10-month de­lay for a deal that was gen­er­al­ly per­ceived as sim­ple and straight­for­ward struck bio­phar­ma play­ers and in­vestors as a wor­ry­ing sign of the com­mis­sion’s tight­en­ing stan­dards — con­cerns that built on pre­vi­ous re­marks by De­mo­c­ra­t­ic ap­pointees and in­ten­si­fy­ing po­lit­i­cal rhetoric.

Fran­cis deS­ouza

That wor­ry may be rip­pling out to the se­quenc­ing in­dus­try. Il­lu­mi­na shares $ILMN are down 1.31% to $323.45 while PacBio is trad­ing at $5 pre­mar­ket, down 35% from the high im­me­di­ate­ly fol­low­ing the buy­out an­nounce­ment.

“We strong­ly dis­agree with the FTC’s de­ci­sion and will con­tin­ue to work through the reg­u­la­to­ry ap­proval process as we con­sid­er next steps,” Il­lu­mi­na spokesman Er­ic En­di­cott said in a state­ment pro­vid­ed to End­points News. “We be­lieve that the ac­qui­si­tion will ben­e­fit the in­dus­try and cus­tomers, and the facts of our pro­posed trans­ac­tion sup­port this.”

Il­lu­mi­na orig­i­nal­ly ex­pect­ed to close its ac­qui­si­tion of PacBio in mid-2019. But the UK’s Com­pe­ti­tion and Mar­kets Au­thor­i­ty launched an in­ves­ti­ga­tion in April and pro­ceed­ed to Phase 2 re­view in June.

Then in Oc­to­ber, the CMA — which gave its bless­ing to the Roche/Spark deal hours be­fore the FTC — de­cid­ed the deal in­deed rais­es an­ti­com­pet­i­tive con­cerns.

Here’s the case the US an­titrust watch­dog laid out in its com­plaint, which is rough­ly sim­i­lar to its UK coun­ter­part’s:

PacBio is one of three oth­er com­pa­nies that man­u­fac­ture and sell next-gen­er­a­tion se­quenc­ing sys­tems to ri­val Il­lu­mi­na in the US; Its tech, which al­lows cus­tomers to read much longer pieces of DNA at a time, has im­proved and ap­pears to be snatch­ing cus­tomers from Il­lu­mi­na; and the ac­qui­si­tion would re­duce the com­bined firm’s in­cen­tive to de­vel­op new prod­ucts.

Fur­ther­more, the CMA found that oth­er com­pet­ing tech­nolo­gies posed lim­it­ed chal­lenges in com­par­i­son — a claim that BGI, Ox­ford Nanopore and Ther­mo Fish­er may well dis­pute.

In an at­tempt to per­suade the CMA to give the green light, Il­lu­mi­na had of­fered to open se­quenc­ing-re­lat­ed IP to com­peti­tors. But with the FTC’s strong­ly word­ed let­ter, “there ap­pears to be lim­it­ed chance that the deal would go through,” SVB Leerink an­a­lyst Puneet Sou­da wrote.

The fall­out here would, in fact, mean a loss of in­no­va­tion, he ar­gued.

“Though the ma­jor­i­ty of the se­quenc­ing mar­ket cen­ters around the short-read tech­nol­o­gy from ILMN – which is both fast and eco­nom­i­cal, the long-read tech­nol­o­gy caters to more ac­cu­ra­cy, re­frac­to­ry/re­peat ge­nom­ic re­gions, and struc­tur­al ge­nomics ap­pli­ca­tions – at a slow­er speed and high­er price tag,” he wrote. “ILMN could re­duce the cost of long read over time, open­ing up new mar­kets and ap­pli­ca­tions for PACB’s tech­nol­o­gy.”

A new chap­ter in the de­cen­tral­ized clin­i­cal tri­al ap­proach

Despite the promised decentralized trial revolution, we haven’t yet moved the needle in a significant way, although we are seeing far bolder commitments to this as we continue to experience the pandemic restrictions for some time to come. The vision of grandeur is one thing, but operationalizing and execution are another and recognising that change, particularly mid-flight on studies, is worthy of thorough evaluation and consideration in order to achieve success. Here we will discuss one of the critical building blocks of a Decentralized and Remote Trial strategy: TeleConsent; more than paper under glass, it is a paradigm change and key digital enabler.

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Daniel O'Day, Gilead CEO (Kevin Dietsch/UPI/Bloomberg via Getty Images)

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