GRAIL, the cancer blood test developer launched last year by Illumina with investors that included Bill Gates and Jeff Bezos, plans to raise approximately $1 billion in Series B financing during the first quarter.
GRAIL will use the proceeds for continued development and validation of its cancer test, designed to measure circulating tumor DNA (ctDNA) in the blood by applying Illumina sequencing technology, according to the company, which disclosed the financing yesterday.
“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,” Jay Flatley, GRAIL’s chairman and Illumina’s executive chairman and former CEO, said in a statement.
The cancer screening test 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, Illumina said.
In addition, proceeds will be used toward the repurchase of an unspecified portion of Illumina's stake in GRAIL.
Illumina’s stake will decrease to “slightly less than” 20% following the Series B financing—one of several actions by the sequencing giant to accelerate GRAIL’s independence. Illumina said it will no longer have representation on GRAIL’s Board of Directors, will modify its supply and commercialization agreement with the cancer-screening company to a market-based agreement, and will reclassify its spending in GRAIL as a cost-method investment.
“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,” Illumina President and CEO Francis deSouza stated.
GRAIL was launched last year with more than $100 million in Series A financing. Illumina and ARCH Venture Partners led the financing, with participating investors that, in addition to Gates and Bezos’ investment vehicle Bezos Expeditions, included Sutter Hill Ventures and GV (formerly Google Ventures).
The $1 billion will be raised “primarily” from undisclosed private and strategic investors, with additional money to come from other investors that were also undisclosed. GRAIL said it intends to raise additional capital in the Series B financing from other investors and has hired Goldman Sachs as a placement agent for the contemplated additional financing.