United States Court of Appeals United States Court of Appeals

for the Fifth Circuit Fifth Circuit

FILED ____________ December 15, 2023

No. 23-60167 Lyle W. Cayce Clerk ____________

Illumina, Incorporated; GRAIL, Incorporated, now known as GRAIL, L.L.C.,

Petitioners,

versus

Federal Trade Commission,

Respondent. ______________________________

Appeal from the Federal Trade Commission Agency No. 9401 ______________________________

Before Clement, Graves, and Higginson, Circuit Judges. Edith Brown Clement, Circuit Judge: The Federal Trade Commission determined that Illumina, Inc.’s acquisition of Grail, Inc. violated Section 7 of the Clayton Act, and therefore ordered that the merger be unwound. Because the Commission applied an erroneous legal standard at the rebuttal stage of its analysis, we VACATE the Commission’s order and REMAND for further proceedings. Case: 23-60167 Document: 00517004299 Page: 2 Date Filed: 12/15/2023

No. 23-60167

I. A. Founded in 1998, Illumina is a publicly traded, for-profit corporation that specializes in the manufacture and sale of next-generation sequencing (“NGS”) platforms. NGS is a method of DNA sequencing that is used in a variety of medical applications. In September 2015, Illumina founded a wholly-owned subsidiary, Grail, which was so-named because its goal was to reach the “Holy Grail” of cancer research—the creation of a multi-cancer early detection (“MCED”) test that could identify the presence of multiple types of cancer from a single blood sample. Grail was incorporated as a separate entity in January 2016. Illumina maintained a controlling stake in the company until February 2017 when, to raise the capital needed to move Grail’s MCED test from concept to clinical trials, Illumina decided to bring in outside investors. This spin-off reduced Illumina’s equity stake in Grail to 12%. By September 2020, Grail had raised $1.9 billion through a combination of venture capital and strategic partners. Then, on September 20, 2020, Illumina entered into an agreement to re- acquire Grail for $8 billion, with the goal of bringing Grail’s now-developed MCED test to market. The MCED-test industry had changed dramatically between February 2017—when Illumina spun Grail off—and September 2020—when Illumina agreed to re-acquire Grail. Grail’s MCED test—which it named Galleri—had acquired a breakthrough device designation from the U.S. Food and Drug Administration (“FDA”), and Grail had published promising results from a clinical study concerning the initial version of Galleri and was undergoing additional clinical studies to validate its updated version. Meanwhile, Thrive Earlier Detection Corporation had announced that the initial version of its own MCED test—CancerSEEK—had also been

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No. 23-60167

clinically validated. And other MCED tests—including Singlera Genomics, Inc.’s PanSeer—wer