Illumina, Inc. (NASDAQ:ILMN) announced that GRAIL has received indications of interest to invest approximately $1B for its Series B financing, primarily from undisclosed private and strategic investors. GRAIL intends to raise additional capital in the Series B financing from other investors and has engaged Goldman Sachs as a placement agent in connection with the contemplated additional financing. GRAIL intends to close the Series B prior to the end of the first quarter.
GRAIL will use the proceeds for continued development and validation of their blood-based test for cancer screening, which will require large-scale clinical trials including the previously announced Circulating Cell-free Genome Atlas study as well as other trials that are expected to sequence hundreds of thousands of patients. Additionally, proceeds will be used to repurchase a portion of Illumina’s stake.
“We founded GRAIL a year ago to enable early cancer detection via a blood-based screening test powered by Illumina sequencing technology,” said Jay Flatley, Executive Chairman of Illumina and current Chairman of GRAIL. “This raise, when completed, will provide GRAIL the resources to develop its first products and embark on the large-scale trials required to demonstrate the stringent performance requirements of a cancer screening test.”
Given the potential success of the Series B, and GRAIL’s plan to aggressively invest that capital, Illumina has decided to accelerate their path to independence, which will result in GRAIL becoming one of Illumina’s largest customers over time. Illumina will modify the supply and commercialization agreement with GRAIL to a market-based agreement and will no longer have representation on the Grail Board of Directors. As part of this transaction Illumina’s ownership will become slightly less than 20 percent and GRAIL will be treated as a cost-method investment.
“We are very excited about the progress the GRAIL team has made in the last year,” said Francis deSouza, President and Chief Executive Officer of Illumina. “This capital allows GRAIL to take on the significant technology, market, and regulatory challenges of developing and validating a blood-based cancer screening test. This outcome maximizes value to Illumina by creating one of our largest customers of sequencing instruments and consumables over time, providing royalties on future GRAIL tests and through appreciation of our ownership interest.”
GRAIL’s Chief Executive Officer, Jeff Huber, added, “We are honored to have world-class investors who support our goal of reducing global cancer mortality through early detection — especially the invaluable support we received from Illumina during our start-up phase – and we look forward to the next phase of our growth.” (Original Source)
Shares of Illumina are currently rising 4.66% to $140.83, or up $6.27 in pre-market trading Thursday. ILMN has a 1-year high of $186.88 and a 1-year low of $119.37. The stock’s 50-day moving average is $129.92 and its 200-day moving average is $150.54.
On the ratings front, Illumina has been the subject of a number of recent research reports. In a report issued on December 19, UBS analyst Jon Groberg reiterated a Buy rating on ILMN, with a price target of $180, which represents a potential upside of 33% from where the stock is currently trading. Separately, on the same day, Canaccord Genuity’s Jason Mills reiterated a Hold rating on the stock and has a price target of $135.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Jon Groberg and Jason Mills have a yearly average return of 9.3% and 5.2% respectively. Groberg has a success rate of 79% and is ranked #647 out of 4369 analysts, while Mills has a success rate of 55% and is ranked #377.
Sentiment on the street is mostly neutral on ILMN stock. Out of 14 analysts who cover the stock, 7 suggest a Hold rating , 4 suggest a Buy and 3 recommend to Sell the stock. The 12-month average price target assigned to the stock is $143.00, which represents a potential upside of 6% from where the stock is currently trading.
Illumina, Inc. develops, manufactures and markets integrated systems for the analysis of genetic variation and function. The company provides sequencing and array-based solutions for genetic analysis in addition to selling products, it provide genotyping, NIPT and whole-genome sequencing services. Its customers include leading genomic research centers, academic institutions, government laboratories, hospitals, and reference laboratories as well as pharmaceutical, biotechnology, agrigenomics, commercial molecular diagnostic, and consumer genomics companies.