On Tuesday, Illumina Inc. and Grail Inc. secured transfer of venue in a lawsuit filed by the Federal Trade Commission (FTC) against the biotechnology defendants to halt their proposed merger. The District of Columbia court sided with Illumina and Grail, finding that they had “the better argument.”
The opinion explained that Illumina is a leading genetic sequencing product company, and Grail is the offshoot it created to develop a “revolutionary” multi-cancer early detection test. The work has reportedly been done, and now Grail plans to seek approval to commercialize the test from the U.S. Food and Drug Administration (FDA).
After spinning off 85.5% of the company in 2017, Illumina now seeks to reacquire its shares from well-known investors like Jeff Bezos, Bill Gates, and Johnson & Johnson. The FTC contended that the merger will have serious anticompetitive effects on the U.S. multi-cancer early detection test market. In their answer, the defendants assailed the complaint as legally misguided and a threat to bringing the first and only early cancer detection test to market expediently.
In this week’s opinion, the court weighed opposing views concerning the defendants’ motion to transfer to the case to the Southern District of California. Illumina and Grail noted that both companies are headquartered in California, which is also where the merger negotiations took place. The defendants further contended that if an in-person hearing on the motion for a preliminary injunction is held, witnesses would have an easier time getting to the Southern District than Washington, D.C.
The FTC opposed on several grounds. It claimed that its choice of forum “deserves considerable deference,” and challenged the defendants’ assertion that the Southern District would be more convenient.
The court sided with Illumina and Grail, refusing to defer to the FTC’s choice of forum on the basis that “this case lacks a meaningful connection to the District other than the fact that the Commission is located here.” The opinion also explained that to the extent the FTC suggested that the FDA approval process ties the case to Washington, D.C. because the agency is headquartered close by in Maryland, “it is wrong.” Ultimately, the private factors weighed in favor of transfer, while the public factors were neutral, leading the scale to tip in the defendants’ favor.
The FTC is represented by its own counsel. Illumina is represented by Cravath, Swaine & Moore and Buckley LLP, and Grail by Latham & Watkins LLP.
