Illumina’s $8 billion deal led to a proxy fight with Carl Icahn and the removal of 2 prominent Black Silicon Valley executives.
Illumina's $8 billion deal led to a proxy fight with Carl Icahn and the removal of 2 prominent Black Silicon Valley executives.
Illumina’s Epic Battle: The Rise and Fall of a Biotech Giant
Last year, the California-based biotech firm Grail released a groundbreaking test called Galleri, capable of detecting over 50 types of cancer in the DNA of completely symptom-free individuals. This test, however, has faced significant challenges to gain widespread awareness and adoption. Not only do insurance companies not cover such hyper-early diagnostic tools, but Grail has also been caught up in a legal limbo for the past two years.
In 2020, Illumina, the leading maker of whole-genome sequencing machines, expressed its intention to acquire Grail for a whopping $8 billion. Since then, Illumina has faced regulatory hurdles and market setbacks, resulting in the ultimate downfall of two prominent Black executives, former CEO Francis deSouza and former chairman John Thompson.
To supporters of the billionaire investor Carl Icahn, the ousting of deSouza and Thompson is seen as a victory that highlights Icahn’s continued relevance as a corporate raider. But while Icahn takes credit for his influence, others argue that the power struggle at Illumina has hindered the development and deployment of a potentially lifesaving cancer test. Additionally, the loss of deSouza represents a setback for diversity and inclusion in the biotech industry.
Critics who defend deSouza point out that his strategies were not as inexplicable as Icahn claimed. At worst, the CEO may have been overconfident in his ability to dominate a new market opportunity, and at best, driven by the desire to save lives by quickly integrating Galleri into mainstream medicine. They argue that external factors such as aggressive regulators and the decline in biotech stocks played a significant role in hindering the successful merger.
DeSouza’s appointment as Illumina’s president in 2013 marked a turning point for the company. With his leadership, Illumina aimed to expand its clinical business and diversify its revenue streams. One of the key breakthroughs during his tenure was the discovery that artificial intelligence could identify trace fragments of cancer in DNA, which eventually led to the development of the Galleri test. The startup attracted investments from influential billionaires such as Jeff Bezos and Bill Gates.
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As CEO, deSouza focused on expanding the clinical market, developing an overseas presence, and preparing for the launch of the NovaSeq X, a groundbreaking machine expected to significantly reduce the cost of genome sequencing. However, deSouza faced challenges in finding suitable acquisition targets to fuel the company’s growth. Illumina’s failed attempts to acquire Pacific Biosciences of California and the subsequent pursuit of Grail led to further complications.
Grail became deSouza’s holy grail, presenting an opportunity for Illumina to enter the emerging market of multi-cancer early detection tests. The merger had both noble motivations, such as saving lives and advancing cancer diagnostics, and financial incentives for Illumina. However, the high price tag and regulatory scrutiny took a toll on Illumina’s stock price and market value, providing Icahn with ammunition for his proxy battle.
DeSouza clashed with Icahn, who criticized Illumina’s increased spending on research and development and questioned deSouza’s leadership decisions. Icahn’s campaign gained traction among investors, leading to significant boardroom changes and deSouza’s eventual resignation. The battle highlighted the importance of corporate governance and brought to the forefront questions about diversity and inclusion.
With deSouza gone, Illumina’s immediate priorities include resolving the regulatory challenges surrounding the Grail acquisition and finding a new CEO. Grail continues to navigate its own path, conducting clinical studies and waiting for FDA approval. The outcome of these litigations will shape the future of both Illumina and Grail.
The repercussions of Illumina’s battle with Icahn extend beyond the company itself. It has raised concerns about the regulatory environment for biotech mergers and the potential impact on the development of groundbreaking medical technologies. The ongoing controversies have also cast a shadow over deSouza’s legacy, which is likely to be viewed as a cautionary tale of ambitious CEO leadership and its potential consequences.
The resolution of Illumina’s challenges and the success of the NovaSeq X launch will greatly influence how deSouza is perceived in the long run. Regardless, Illumina’s journey serves as a reminder of the complex dynamics within the biotech industry, the delicate balance between innovation and regulation, and the need for inclusive leadership to drive meaningful progress.
