Illumina, the leading name in sequencing technology, is bracing for a hefty financial blow following its spinoff of cancer testing firm Grail. The company revealed in a recent SEC filing that it expects to take a substantial hit of $1.47 billion in goodwill impairment charges for the second quarter of 2024, along with an additional $420 million impairment charge related to Grail’s in-process research and development intangible assets.
These impairment charges, outlined in Thursday’s announcement, come hot on the heels of Illumina’s successful spinoff of Grail, which finally concluded after years of regulatory hurdles. Grail made its debut on the Nasdaq Global Select Market earlier this week under the ticker symbol GRAL.
The separation between Illumina and Grail appears amicable, with Illumina providing undisclosed funding to support Grail’s future endeavors. Despite relinquishing majority ownership, Illumina retains a minority stake of 14.5% in the cancer detection company.
The saga began in September 2020 when Illumina embarked on acquiring Grail for $8 billion, aiming to harness Grail’s Galleri multi-cancer screening test in the fight against cancer. However, the merger attracted intense scrutiny from U.S. and European antitrust regulators. The Federal Trade Commission (FTC) and the European Commission (EC) raised concerns about potential market dominance and issued fines and regulatory constraints.
Internally, the acquisition stirred controversy within Illumina, culminating in CEO Francis deSouza stepping down amid pressure from activist investor Carl Icahn. Icahn has been vocal in his criticism of Illumina’s management and board composition, advocating for significant changes.
Despite the financial setbacks, Illumina remains a pivotal player in the biotech sector, continuing its focus on advancing genetic sequencing technologies amid evolving regulatory landscapes.