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Grail bets big on flagship cancer test after spin-off from Illumina

By Julie Steenhuysen

CHICAGO (Reuters) - U.S. cancer diagnostic test maker Grail, which will list its shares on the Nasdaq on Tuesday after being spun out of Illumina, is betting that commercial partnerships with health systems, employers and life insurance companies of its flagship cancer-detection test will power its near-term growth as an independent company.

The blood test, called Galleri, can detect multiple types of cancer early and looks for 80% of the cancers that are currently not screened for, Grail CEO Bob Ragusa said in a telephone interview on Monday.

“The long game is to get that technology out with broad access around the world," said Ragusa, adding that that will come with regulatory approvals in the U.S. and elsewhere.

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Ragusa estimates there are about 100 million people in the U.S. that are at elevated risk of being diagnosed with cancer, with another 90 million in the UK, 160 million across the EU and almost 50 million in Japan.

“It's really an enormous opportunity that we're looking at, and so we'll be doing the work to unlock that opportunity over the next couple of years," said Ragusa.

Galleri is a so-called lab-developed test and currently only sold in the U.S., with a test priced at $949.

The company promotes the test as a way of detecting cancers at an earlier stage, when it is more likely to be cured. The company is running two large clinical trials, including one in the UK, which it will use to submit for FDA approval in early 2026. U.S. approval could lead to broader adoption of its test.

However, some groups, including the American Cancer Society, want proof that Grail's test prevents cancer deaths, something Grail's studies are not powered to prove.

Grail currently has more than 100 commercial partnerships that span health systems, employers, and life insurance companies, Ragusa said.

During Illumina’s fight with antitrust authorities in U.S. and Europe, Grail initiated large-scale clinical trials, has delivered over 180,000 commercial tests, and scaled up its lab infrastructure, Ragusa added.

Illumina founded Grail and spun it off in 2016. Grail went on to raise funding from investors such as Bill Gates and Jeff Bezos. Illumina was left with a 12% stake, and decided in 2021 to acquire Grail to enter the cancer early-detection market.

The deal was opposed by antitrust regulators over concerns Illumina would stop Grail's rivals from accessing its technology to develop competing blood-based early cancer detection tests.

Illumina proceeded with the acquisition regardless, only to be slapped with a 432 million euro ($463.19 million) fine by the European Commision, which ordered the company to sell Grail.

In December, Illumina said it would divest Grail through either an outright sale to a buyer or by spinning it off.

As part of the spin-off, Illumina has provided Grail with funding to pursue its long-term strategy. Illumina will hold a minority stake of 14.5% in Grail, following the spin-off.

Grail's shares will begin trading on the Nasdaq on Tuesday under the symbol 'GRAL'.

Morgan Stanley and law firm Latham & Watkins advised Grail on its spin-off from Illumina.

($1 = 0.9327 euros)

(Reporting by Julie Steenhuysen in Chicago; Editing by Anirban Sen and Josie Kao)