On Thursday, the two companies cited a lengthy regulatory approval process and “continued uncertainty” of the outcome of the merger as the primary reasons behind the termination of the deal that was initially announced Nov. 1, 2018. The two companies said the decision was mutual and in the best interest of shareholders of both companies. As a result of the mutual decision to terminate the agreement, sequencing giant Illumina will pay Pacific Biosciences a $98 million termination fee.
When the merger was announced last year, the two companies said the combination of their technologies would pave “the path to a more perfect view of a genome.” At the time the deal was made public, Illumina said its short-read sequencing platforms address the majority of sequencing applications, there are some applications that are better addressed with long-reads, such as de novo sequencing and sequencing of highly homologous regions of genomes. Harnessing the Pacific Bio technology, was expected to position Illumina to “provide integrated workflows and novel innovations that bring together the best of both technologies to help researchers advance their discoveries faster and clinicians offer new tests economically.”
But, following intense scrutiny from regulatory agencies over antitrust concerns, similar to the examination Roche and Spark Therapeutics underwent ahead of the merger of those companies, Illumina and Pacific Bio have called off their deal. In December, the Federal Trade Commission filed to block the merger of the two companies. The FTC raised concern over a potential monopoly in the U.S. for next-generation DNA sequencing systems. The commission said by acquiring Pacific Biosciences, Illumina was removing competition. Illumina fought back and argued that the two approaches are not competitive, but complementary.
Expressing his disappointment, Francis deSouza, president and chief executive officer of Illumina, said the combination of the two companies would have “increased the clinical utility and impact of sequencing. deSouza said as Illumina moves forward, it will “continue to look for ways to increase the impact and benefit of sequencing technologies for researchers, clinicians, and most importantly, patients.”
Likewise, Michael Hunkapiller, the CEO of Pacific Bio, said he was dismayed at the turn of events. In a brief statement, Hunkapiller said the company is disappointed that its customers and stakeholders “will not realize the powerful advantages of integrating the sequencing capabilities of our two companies.” And, much like Illumina, he said that his company will also “continue to pursue improved sequencing accuracy and throughput that can be utilized in an ever-expanding number of applications.”