NEXT CHAPTER OF FTC’S BATTLE WITH ILLUMINA TO PLAY OUT IN SAN DIEGO
Panel says bid to acquire diagnostic company Grail would limit competition
A federal judge has agreed to Illumina’s request to hold an injunction hearing in San Diego rather than Washington, D.C., as the Federal Trade Commission moves to temporarily prevent the sequencing giant from acquiring cancer diagnostic firm Grail.
It’s the latest development in an ongoing feud between Illumina and the FTC. The FTC argues that the San Diego company’s $7.1 billion bid to buy Grail would prevent other companies from launching their own early detection cancer tests. Illumina denies that claim, adding that it has the expertise needed to help Grail get its diagnostic test ready for prime time.
Both sides agree on one thing: They think their position is the one that will save lives.
The FTC requested a preliminary injunction to block the acquisition until an administrative trial set to begin Aug. 24 decides whether the deal would violate antitrust laws. A federal court in the District of Columbia was initially tapped to hold the injunction hearing, which will now be held in the Southern District of California.
In an opinion penned Tuesday, United States District Judge Rudolph Contreras essentially argued that because Illumina and Grail are both based in California it would be easier for their witnesses
to attend an in-state hearing rather than travel to Washington.
“We are pleased with the court’s decision to transfer this case to San Diego,” said Illumina in a statement. “The Southern District of California is a more convenient forum for the witnesses, and we look forward to a timely resolution of this matter.”
Contreras noted that the injunction hearing will likely happen in July or August. The administrative hearing will still be held in Washington.
FTC and Illumina are fighting over what was supposed to be a homecoming of sorts. In 2016, Grail spun out of Illumina and relocated to the Bay Area to develop a blood test that could catch cancer in people who don’t yet have symptoms. Researchers and physicians have sought such a test for years, as early diagnosis is often the key to successful treatment. The company’s name is an allusion to that search, which many have compared to the quest for the Holy Grail.
Grail has raised more than $2 billion, including from such notable backers as Jeff Bezos and Bill Gates. The company’s Galleri test can detect 50 types of cancer from a blood sample. Tumors shed small bits of DNA that show up in the blood; the company’s test identifies chemical modifications to DNA that give away that a person has cancer and reveal where that tumor is located.
The Menlo Park company is already offering Galleri as a lab-developed test, meaning that all samples must be processed in Grail’s own facility. The test has not yet been approved by the Food and Drug Administration. That means that patients may need to pay out of pocket for the $949 test, as insurance companies generally don’t cover diagnostic tests that haven’t been approved by the FDA.
Illumina believes it can help get the test approved and that widespread adoption of Galleri could avoid 100,000 cancer-related deaths a year.
“Galleri has the potential to reduce the cancer burden in the U.S. and worldwide,” wrote the company’s attorneys in response to the FTC’s complaint. “This transaction thus means saving thousands of lives by reducing that burden sooner and at lower costs.”
The FTC, however, claims that preserving competition is the real key to helping patients by keeping costs low and increasing their options. The commission argues that Grail’s would-be competitors rely on Illumina’s sequencing tools, putting them in a precarious position.
“Rivals have no alternative to using Illumina’s (sequencing) platform to develop and commercialize their (cancer detection) tests,” alleged the FTC in its complaint. “As a result, after the acquisition, Illumina will control the fate of every potential rival to Grail for the foreseeable future.
The bipartisan FTC voted 4-0 in March to oppose the acquisition and to seek a preliminary injunction.
Illumina has refuted the federal government’s claims. The company says that, since no multi-cancer tests are on the market, it’s pure speculation to say that the Grail acquisition would limit competition. Moreover, Illumina has already offered to strike a deal with its cancer research customers. The deal ensures that those customers would have a steady supply of sequencing devices and supplies during a 12-year period, without price hikes, along with other terms meant to allay concerns.
The FTC was not impressed. “These agreements cannot account for each and every current and future method by which Illumina may foreclose, raise the costs of, or otherwise disadvantage Grail’s rivals,” wrote the commission in its complaint.
The case may ultimately hinge on whether Grail’s competitors feel the same way.