“Genomics Google” meets antitrust techies

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IN 2013 MEREDITH HALKS MILLER, a lab director at Illumina, the world’s largest gene sequencing company, spotted something strange as she examined the blood of pregnant women, looking for abnormalities in the fetuses they were carrying. In some cases, the DNA of unborn children was normal, but not that of mothers. Suspecting that the women had cancer, she went to her superiors, but was greeted with skepticism. She pushed anyway. “I was determined to bring this to light. As a doctor, I really wanted to help these women, ”she says. His intuition turned out to be correct. “Sure enough, every person I predicted had cancer had cancer. “

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His intuition led to the founding of Grail, a pioneering company focused on detecting cancer using blood tests even before symptoms appear. Illumina spun it in 2016 (tech moguls such as Jeff Bezos and Bill Gates were the original backers), only to buy it back again in a $ 7 billion deal last month, little soon after Grail published a test in America that finds up to 50 cancers from a blood sample. And yet, until a recent blog post by his daughter, noting how rarely women scientists are given credit for their work, Dr Halks Miller’s role has been mostly relegated to the airbrush. Grailthe story of. When contacted by your columnist, she says she hasn’t received any bonuses or additional promotions for her efforts. Even today, Francis deSouza, Illumina’s CEO, refers to her simply as Meredith, and when asked about her, only says that she has retired.

Nonetheless, his original idea is now firmly in the spotlight. GrailIllumina’s return is intriguing for three reasons. First, by acquiring it, Illumina, described by its biggest investor, Baillie Gifford, a Scottish asset manager, as the ‘Google of genomics’, hopes to become a colossus in the fight against cancer. In short, he wants to make screening the new research. Second, like Google, Illumina faces a showdown with trustbusters in America and Europe, upset by how similar early-stage acquisitions spawned today’s tech giants. Third, Illumina defiantly launched the transaction before regulators gave it the green light. The battle pits a buying company on the technological frontier against trustbusters eager to rewrite the rules of technological competition.

There is no doubt that Illumina, worth $ 73 billion, is leading the world of gene sequencing. Its machines control 90% of the market in America. Its vast global share is reflected in the fact that Chinese scientists used it for the first sequencing of the SARSVSoV-2 genome at the start of the covid-19 pandemic. Using technology acquired during the 2007 takeover of Solexa, a British company, it supplies gene sequencing tools to genomics companies, particularly those developing liquid biopsies or blood tests for cancer. DeSouza estimates that the global cancer gene sequencing market could be worth $ 75 billion by 2035. This looks promising for a gene sequencing supplier. Even more if Grail can change the efficiency and economics of cancer care. Mr deSouza argues that Illumina’s global weight and ability to convince insurers to cover the cost of genomic testing will help Grail do this. Far from stifling competition, the takeover will stimulate it, he says. Money is pouring into startups trying to catch up Grail.

Trustbusters see it differently. Last year, the Federal Trade Commission (FTC), the US antitrust agency, blocked Illumina’s acquisition of another sequencer, Pacific Biosciences, on the grounds that it would be anti-competitive. Now the FTC says that Illumina’s takeover of Grail will undermine innovation in the burgeoning early cancer detection market. The European Commission (THIS) launched a parallel investigation, alleging that Illumina could restrict Grailrivals for access to its gene sequencing technology. On August 18, Illumina challenged the Europeans, saying that because a THIS decision was not expected until after the deal expired, it would complete the deal anyway, even if it owned Grail separately. He questions the THIS before a Luxembourg court, arguing that the EUThe executive branch of does not have jurisdiction over the merger. Additionally, the commission challenged the deal using an untested and controversial mechanism called Article 22. Illumina’s strategy is bold, some would say reckless. Its stock price has plummeted since the deal closed, in part because investors fear it will cause a nest of regulatory hornets.

Antitrust concerns can be viewed narrowly or broadly. From a narrow perspective, Illumina customers who hope to compete Grail during the tests, one can fear that Illumina will charge them higher prices for the sequencers. it could give Grail, if it has lower sequencing costs, an advantage. Illumina retorts that she has no incentive to harm her clients, as she makes a lot more money selling sequencers than selling tests. It has also undertaken to provide them with sequencers under the same conditions as Grail. More generally, even as Illumina continues to reduce the cost of genetic sequencing, the focus by regulators on non-financial factors such as innovation may reflect a new approach to antitrust that goes beyond the duty to protect. consumer wallets. In the event of bad timing or bad luck, Illumina has thrown the gauntlet at the trustbusters as they are determined to show they won’t be doormats. It will be up to the courts to decide.

Hold on to your guns

Regulators are not the only ones affected. According to Doug Schenkel of Cowen, an investment bank, some Illumina shareholders say the uncertainty over the outlook for the Grail the acquisition and the implication that there could be increased risk to the company’s position as an “arms dealer” for the genomics industry weighs on the shares. The same applies to whether Illumina is the best option to bring Grailblood diagnostics on the market. Some fear that this is the latest example of a hardware company spoiling the switch to software and services. That said, it’s a long-term bet and Dr. Halks Miller, for his part, is excited. She says GrailThe new test is “incredibly powerful”. She relishes her success and has no regrets, even if she reap few rewards for it.

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This article appeared in the Business section of the print edition under the title “Illumina and the Saint GRAIL”


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