January 12, 2023 | In a somewhat subdued presentation compared to years past, Illumina CEO Francis deSouza kicked off his annual J.P. Morgan Healthcare Conference talk highlighting the breadth of the genomics market. deSouza sees a $120 billion total addressable market for Illumina comprising oncology testing, genetic disease testing, reproductive health, and research, with oncology testing representing more than half of the opportunity. Currently, he said, the total market is 7% penetrated, leaving ample opportunity for Illumina’s vision of making genomics the standard for clinical care.
And Illumina is uniquely positioned, deSouza argued, touting more than 9,500 customers in 155 countries and an install base of 23,000 sequencing instruments. In 2022, the company is expecting $4.5 billion in revenue (Q4 audited results come in early February), more than 80% of that, deSouza said, comes from recurring sources of consumables and services.
The challenge in translating those numbers to Illumina’s future will be GRAIL’s future and that of its Galleri multi-cancer early detection blood test, which specifically addresses the oncology testing segment that makes up such a large portion of deSouza’s estimated market. In fact, deSouza estimated that the early detection market for oncology testing would reach $44 billion by 2027 and is currently less than 1% penetrated.
In 2016, Illumina spun out a liquid biopsy company powered by Illumina sequencing technology seeking to create a multi-cancer early detection test. GRAIL quickly began raising funds and sharing data on detection of early-stage cancers via a blood test including colorectal, esophageal, head and neck, liver, ovarian, pancreatic, triple-negative breast, lung cancers and more. In late 2020, GRAIL announced a partnership with the United Kingdom’s (UK) National Health Service (NHS) to make Galleri available to UK patients starting in 2021.
Today, Galleri is the only commercially available multi-cancer early detection test in the early screening market. Galleri uses machine learning and cell-free DNA to search for abnormal patterns of DNA methylation. It can detect over 50 types of cancer, 45 of which have no other screens, deSouza emphasized. “It’s the only test which pinpoints cancer location with 89% signal-of-origin accuracy,” deSouza said. “With its breadth and precision, GRAIL is predicted to avert one in three cancer deaths over a five-year time frame.”
GRAIL had a very strong year in 2022, with customer demand for the Galleri test exceeding expectations, deSouza reported. “Galleri had the fastest first year revenue round in cancer screening test history,” he said. GRAIL has established more than 60 partnerships with health systems, delivered more than 60,000 tests, and has more than 300,000 participants currently in clinical studies as the test makes its way toward reimbursement. And next steps are coming. In 2023, GRAIL plans to launch a multi-cancer minimal residual disease (MRD) test, able to identify relapse via blood test two to three times sooner than customized tissue biopsies.
It’s no wonder that in September 2020, Illumina announced its intention to acquire GRAIL. That acquisition was completed in August 2021, though without regulatory sign-off. Among the reasons Illumina gave to bring GRAIL back in house: to increase Illumina’s directly accessible total addressable market and offer future growth opportunities. “GRAIL extends Illumina’s portfolio to include cancer screening, diagnosis and cancer monitoring, creating a portfolio of best-in-class, proprietary tests in each of the major oncology testing application areas,” according to a press release.
But in September 2022, Illumina received a decision from the European Commission (EC) prohibiting the company’s acquisition of GRAIL, even though the US Federal Trade Commission had previously approved the deal. On December 5, the EC further outlined the divestiture measures it considers necessary to dissolve the transaction. Among them: restoration of GRAIL's independence from Illumina as a viable and competitive company executed “swiftly and with sufficient certainty.”
Illumina is appealing that decision.
"We are disappointed with the European Commission's decision prohibiting us from acquiring GRAIL back to Illumina," said Charles Dadswell, General Counsel of Illumina, in a statement after the EC’s decision. "Illumina can make GRAIL's life-saving multi-cancer early detection test more available, more affordable, and more accessible – saving lives and lowering healthcare costs. As we continue to believe, this merger is pro-competitive and will accelerate innovation."
This week at J.P. Morgan, deSouza did not yet have resolution to that issue. He acknowledged the European Commission’s language calling for a “swift” restoration of GRAIL’s independence, and agreed that Illumina, also, would prefer a swift end to the process.
He also ascribed to the European Commission the highest of motivations. “They want to make sure we’re doing the right thing for GRAIL and GRAIL’s customers. They recognize the life-saving potential of the GRAIL Galleri blood test,” he said. “What they’re saying is, ‘Whatever we do, we have to make sure we protect GRAIL’s ability to be successful in the future and bring the potential life-saving benefits of that test to customers around the world.’”
Illumina is also invested in GRAIL’s success and wants the Galleri blood test to be available to as many patients as need it, of course. The company is reviewing strategic alternatives for GRAIL in the event the divestiture is not stayed pending Illumina's appeal, but Illumina’s argument thus far hinges on access.
“Illumina would accelerate GRAIL's commercial entry into the EU at scale by at least five years, saving tens of thousands of lives in the EU and billions of euros in healthcare costs,” the company said in a statement announcing its planned appeal to the EC decision. “The GRAIL merger would not only accelerate multicancer early detection in the EU but would also reduce inequity in cancer care by making early diagnosis affordable and widespread, another key priority of Europe's Beating Cancer Plan.”
deSouza named three guiding principles as Illumina proceeds: first, a swift resolution; second, continued success for GRAIL and Galleri; and finally, protection of Illumina’s own interests. “Obviously from our perspective, too, is to make sure we’re doing the right thing for Illumina shareholders,” he added.