Dx Deal Roundup: A Major Proteomics Merger, Ginkgo Makes Pharma Inroads, and More Legal Woes for Illumina

Following perennial patterns, diagnostic dealmaking picked up in the early fall in terms of both deal volume and value. Meanwhile, Illumina appears to be in even deeper legal trouble over its ill-fated GRAIL acquisition. Here’s a look at what G2 Intelligence considers the top three strategic deal stories in the period from mid-August to the end of the first week of October.

1. SEC Probes Illumina Over GRAIL Acquisition

Already facing massive fines in Europe and the US for acquiring former liquid biopsy spinoff GRAIL without antitrust approval, Illumina revealed that it is now also being investigated by the U.S. Securities and Exchange Commission (SEC). According to the firm’s most recent SEC Form 10-Q, the company received a letter from the agency in July 2023 providing notice of the investigation and requesting documents related to the acquisition, the statements and disclosures it made in connection with the deal, and “the conduct and compensation of certain members of Illumina and GRAIL management.”¹  

Neither the SEC nor Illumina have commented on the investigation, although the 10-Q indicates that Illumina is cooperating with the SEC. The legal controversy over the GRAIL acquisition has so far focused on antitrust issues and the stifling of competition in the cancer genetics testing market. The SEC probe opens a whole new liability front—federal laws governing how public corporations trade in securities and maintain transparency with investors.

Involvement of the SEC is another blow to the beleaguered genetic sequencing giant. The day after Illumina disclosed the investigation, its share prices fell 4 percent.² The European Commission has already slapped Illumina with a record $476 million fine for closing the GRAIL acquisition prematurely and recently ordered the company to unwind it.^3,4 The US Federal Trade Commission (FTC) has also ordered Illumina to divest itself of GRAIL.⁵ Since the ill-fated deal’s closing in August 2021, Illumina’s market value has plunged from roughly $75 billion to $28 billion, according to CNBC.⁶

2. SomaLogic and Standard BioTools Form $1 Billion Multi-Omics Powerhouse

On October 4, two major life science companies, Standard BioTools (formerly known as Fluidigm) and SomaLogic announced that they had agreed to combine to create a new multi-omics technology company. Under the all-stock deal, current SomaLogic shareholders will receive 1.1 shares of Standard BioTools for each SomaLogic share they own. Upon closing, they will own roughly 57 percent of the new company with Standard BioTools’ shareholders owning the remaining 43 percent.⁷

The new company will do business under the name Standard BioTools with Standard BioTools’ current CEO, Michael Egholm, at the helm and a pro forma equity value of over $1 billion. It promises to be a formidable combination. SomaLogic is a leading developer of proteomics tools that detect and analyze proteins in blood samples for use in disease research, making it a good fit for Standard BioTools’ life science platform for biomedical research. SomaLogic also brings another valuable asset to the table, namely, a longstanding proteomics-genomics commercial partnership with Illumina. The companies expect the merger to generate $80 million in annual cost synergies by 2026, while giving the new company over $500 million in cash and cash equivalents on day one.⁷

3. Ginkgo Bioworks Teams with Pfizer for Drug Development RNA Discovery

Ginkgo Bioworks stands to make up to $331 million under a newly announced collaboration aimed at discovering novel RNA-based drug candidates for Pfizer. “RNA therapeutics that encode proteins with the potential to treat or cure diseases represent an exciting new approach in medicine with the possibility of far-reaching application,” the company said in a statement. The plan calls for Pfizer to use Ginkgo’s RNA technology to enable discovery of natural and synthetic elements tailored for specific applications to discover new RNA molecules across three of its programs.⁸

Already one of the largest privately held biotech companies in the world, Ginkgo will receive upfront payments of an undisclosed amount from Pfizer. Gingko will also be eligible for research fees, milestone payments based on the achievement of certain developmental and commercial goals, and royalties on sales of any resulting drug products. Ginkgo has established a foothold within the pharmaceutical industry. Last May, the self-proclaimed “Organism Company” inked a drug discovery deal worth up to $406 million with German pharma company Boehringer Ingelheim.⁹

References:

1. 1. https://d18rn0p25nwr6d.cloudfront.net/CIK-0001110803/cc3b5920-8de9-4ecb-9681-b00ef121194a.pdf

1. 1. https://www.morningstar.com/news/dow-jones/202308117920/illumina-shares-fall-after-disclosing-sec-investigation-into-grail-deal

1. 1. https://ec.europa.eu/commission/presscorner/detail/en/ip_23_3773

1. 1. https://ec.europa.eu/commission/presscorner/detail/en/ip_23_4872

1. 1. https://www.ftc.gov/system/files/ftc_gov/pdf/d09401commissionfinalopinion.pdf

1. 1. https://www.cnbc.com/2023/08/11/sec-investigating-illumina-grail-acquisition.html

1. 1. https://investors.standardbio.com/news-releases/news-release-details/standard-biotools-and-somalogic-combine-all-stock-merger

1. 1. https://www.ginkgobioworks.com/2023/09/27/multi-target-rna-discovery-collaboration-with-pfizer/

1. https://www.prnewswire.com/news-releases/ginkgo-bioworks-partners-with-boehringer-ingelheim-to-develop-breakthrough-therapies-for-hard-to-treat-diseases-301817422.html

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Here’s a summary of other key strategic diagnostic deals announced during the period from late August to early October 2023:

Mergers, Acquisitions, and Asset Sales

Strategic Alliances, Partnerships, and Collaborations

Distribution, Sales, and Marketing Agreements

Licenses

Government Contracts