Biotechnology company Illumina has signed a definitive agreement to acquire multi-cancer blood test developer Grail for cash and stock consideration of $8bn.

The deal consists of $3.5bn in cash and $4.5bn in shares of Illumina common stock, subject to a collar. Additionally, Illumina will make future payments to Grail stockholders, representing a tiered single-digit percentage of certain Grail-related revenues.

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Illumina currently owns 14.5% of Grail’s outstanding shares and approximately 12% on a fully diluted basis. Grail was established by Illumina in 2016 and became a spin-out later. The company specialises in the development of blood tests for the early detection of various cancer types.

The company raised approximately $2bn to fund the development of its technology platform and multi-cancer screening test Galleri. An older version of the test was able to identify over 50 cancer types, including those, which have no recommended screening in the US.

The acquisition of the Grail will expand Illumina’s portfolio with the addition of cancer screening, diagnosis and cancer monitoring solutions. It is also expected to enhance the position of the company in clinical genomics.

Illumina president and CEO Francis deSouza said: “Over the last four years, Grail’s talented team has made exceptional progress in developing the technology and clinical data required to launch the Galleri multi-cancer screening test. Galleri is among the most promising new tools in the fight against cancer, and we are thrilled to welcome Grail back to Illumina to help transform cancer care, using genomics and our NGS platform.”

Galleri is expected to launch commercially next year as a multi-cancer, laboratory-developed test for early cancer detection from the blood. Illumina plans to support Grail’s commercialisation efforts by offering its clinical and manufacturing capabilities.

Grail also has plans to develop additional blood-based tests for cancer diagnosis, detection and post-treatment monitoring of cancer patients. The company will operate as a standalone division within Illumina after the closing of the transaction.

Grail CEO Hans Bishop said: “We believe multi-cancer early detection technology could address a tremendous unmet need and reduce the cancer burden worldwide. Combining forces with Illumina enables broader and faster adoption of Grail’s innovative, multi-cancer early detection blood test, enhancing patient access and expanding global reach.”

The transaction is expected to close in the second half of the next year. It is subject to customary closing conditions, including applicable regulatory approvals.