A merger between two genetic sequencing companies has been called off in the wake of a challenge by federal regulators.
San Diego-based Illumina and Menlo Park, California-based Pacific Biosciences of California said Thursday afternoon that they were terminating a deal whereby Illumina would buy PacBio for $1.2 billion, originally announced in November 2018.
Shares of PacBio were up 2% on the Nasdaq shortly after markets opened Friday. Illumina’s shares were down about 1% on the Nasdaq.
“We believe this proposed combination would have broadened access to Pacific Biosciences sequencing technology, significant expanded and accelerated innovation and ultimately increased the clinical utility and impact of sequencing,” Illumina CEO Francis deSouza said in a statement.
The Federal Trade Commission last month took action to block the deal, with five members voting unanimously to authorize a restraining order and preliminary injunction against it. The agency alleged that Illumina was seeking to maintain a monopoly on next-generation sequencing systems and extinguish PacBio as a competitor.
“This deal threatened to let a monopolist extinguish nascent competition in a growing healthcare market: next-generation DNA sequencing,” said Gail Levine, deputy director of the FTC’s Bureau of Competition, in a statement following the companies’ Thursday announcement. “Customers across the United States and the world will now continue to benefit from the independent innovative efforts of these companies to develop faster, better and less expensive next-generation sequencing technologies.”
NGS is a rapidly growing area of diagnostics, particularly in cancers, as it enables clinicians to identify biomarkers amenable to targeted therapies. That, in turn, has enabled the development of “tumor-agnostic” drugs designed to treat tumors based on expression of genetic anomalies rather than which tissue of the body they affect.
Technically, Illumina and PacBio are involved in different areas of NGS, respectively known as short-read and long-read sequencing. Long-read NGS enables the retrieval of sequences that can be thousands of base pairs longer than those retrieved through short-read NGS. Still, while acknowledging the differences between the two companies’ technologies, the FTC still regarded the deal as anti-competitive.
Photo: Streeter Lecka, Getty Images