Alex Dickinson’s Post

Alright, let's table the REIT conjecture, and get back to basics. By using GRAIL/Helix disclosures filed in CA to complement SEC filings, you can see a "fraud" story take shape and how Illumina insiders could accumulate an undisclosed stake in GRAIL without needing to believe anything crazy. A strong disclosure-based case can be made that GRAIL was a self-enrichment scheme enacted by Illumina insiders which relied upon fraud (i.e. accounting fraud, misleading statements, etc.) to pull off, and Helix Holdings I, LLC was a key part of making that possible The implication that Illumina insiders used Helix Holdings I, LLC to accumulate a material undisclosed stake in GRAIL - which likely influenced their decision to defy regulators and complete the GRAIL acquisition - is a legitimate story worthy of news coverage and a historic scandal that doesn’t require believing any crazy assumptions nor the existence of a REIT. https://lnkd.in/g4mDbvwM

Public company boards have a bunch of committees and they're very open about who sits on each committee: check out Illumina's committee map below. Of course when you think about it, that's governance 101: imagine if the membership of the audit committee was a secret - it would be pretty suspicious, right? Anyhoo, the Illumina board just formed a special committee to oversee the Grail divestiture with Jacob Thaysen as the chair, but the VERY weird thing is the company refuses (analyst Vijay Kumar has asked repeatedly) to name the other 3 members. That is to say, the identity of the rest of the committee is, ah, secret. Common sense (🙄) suggests Illumina would (a) given its history go to great pains to be transparent over Grail-related decision making (b) select the committee's members from amongst the four new, unconflicted members that weren't involved in the Grail acquisition decision. But no, my thinking on Illumina governance is wrong yet again. Sigh. It's hard to draw a conclusion other than the committee is comprised of legacy conflicted members and the company doesn't simply doesn't want investors to know 🤔🤔🤔

🤯🤯🤯 Bombshell incredibly well researched 214 page class action lawsuit against Illumina, GRAIL and a key set of executives filed in the US Federal Court, Southern District of California. Requesting a jury trial (just up the road from me!) 🍿🍿🍿 Defendants in this suit are key execs (rather then the ILMN Board - the focus in the Delaware suits). They are: deSouza, Thompson, Samad, Febbo, Aravanis, Bishop, Ofman, and Klausner. Most of the allegations relate to making unfounded claims of GRAIL's clinical and financial performance made to pump up Illumina's stock price, which caused financial damage to ILMN investors. The most dramatic allegation: "Defendants were personally motivated to carry out the GRAIL acquisition and surrounding fraud, as it enabled them to secretly reap hundreds of millions of dollars in proceeds through their undisclosed financial interests in the form of GRAIL’s missing equity and Milky Way, Defendant Klausner’s investment vehicle that he used to exploit his inside knowledge of the GRAIL acquisition. As detailed above, the missing equity at the time of the close of the GRAIL acquisition totaled over $830 million." [There have been social media accusations similar to this before but I've not reposted them. But this filing is by a highly reputable the firm: BLB&G is often appointed by state, local and union pension funds to run shareholder lawsuits and they won $1.4 billion (😳) in settlements in 2021-22.] Some other quotes: "The truth about Galleri’s ineffectiveness and Illumina’s inability to commercialize such an expensive and clinically useless product was no secret to Illumina’s senior leadership. Defendant deSouza himself internally acknowledged that neither he nor Illumina had any actual evidence that Galleri could save lives." "As reported by one former Illumina employee, in 2023, deSouza directed an effort to identify an independent scientist or other backer to publicly praise the GRAIL acquisition and provide legitimacy to deSouza’s statements that Illumina would “accelerate” Galleri’s adoption and “save lives.” But despite weeks of work and outreach, Illumina was unable to identify anyone willing to publicly make that representation—enraging deSouza." "Other former employees reported the same concern, and said that the commercial plan for GRAIL was “preposterous” and based on “dreams and magic” because private payors demanded evidence (such as FDA approval) that the test actually worked—which GRAIL simply did not have." "It was also materially false and misleading for Defendant deSouza to state that acceleration would “save tens of thousands of lives.” In truth, and as the FDA informed Defendants before the start of the Class Period, the clinical data for Galleri developed to date was “insufficient,” and even the clinical trials GRAIL proposed to run to seek FDA approval would not establish its effectiveness." [Lots more to come on this case, there's a huge amount of info in the filing]

From the Blogosphere: The Federal Trade Commission recently celebrated a significant victory in its efforts to safeguard competition in the healthcare sector when Illumina, Inc. announced its decision to divest GRAIL, Inc. in compliance with a divestiture order from the European Commission. In this piece, authors Jon Dubrow, Stephen Wu, Matt Evola & Bailey Sanders, PhD (McDermott Will & Emery) look at the victories and setbacks encountered by US antitrust enforcers and their broader campaign to establish a rigorous standard for parties defending transactions through contracts related to competition... #antitrust #antitrustlaw #competitionlaw #parties #europeanunion #illumina #doj #ftc

Better safe than sorry! See the comment section for more on how Carta can help optimize founder, investor, and employee gains and unlock even more value from equity ownership.

Risk factors that are often overlooked in IPO papers Governance risks in red herring prospectuses include promoters in similar businesses, high related party transactions such as Cello World’s 53% FY23 revenue, regulatory investigations, and Emcure Pharma’s US antitrust cases. Allied Blenders reports statutory dues delays with interest payments, and missing corporate filings suggest documentation gaps. Investors should carefully review these aspects.   Read the full story here https://bit.ly/4d2w5A3

Risk factors that are often overlooked in IPO papers Governance risks in red herring prospectuses include promoters in similar businesses, high related party transactions such as Cello World’s 53% FY23 revenue, regulatory investigations, and Emcure Pharma’s US antitrust cases. Allied Blenders reports statutory dues delays with interest payments, and missing corporate filings suggest documentation gaps. Investors should carefully review these aspects.   Read the full story here https://bit.ly/4d2w5A3

New Post: After a storm of criticism, Lina Khan’s FTC has a $7 billion victory related to a cancer-test acquisition - Illumina Inc. said it will sell Grail Inc. after a US appeals court found that its $7 billion acquisition of the cancer detection startup violated antitrust laws. The Fifth Circuit Court of Appeals issued the ruling last week, sending the case back to the U.S. Federal Trade Commission for a fresh review. While the sale is likely to “substantially lessen competition,” the court said, the trade regulator misapplied antitrust standards when conducting an internal assessment of the deal and its decision should be vacated.   Still, Illumina said Sunday that it won’t pursue further appeals of the Fifth Circuit’s opinion, pointing out that it had previously stated it would divest Grail if it wasn’t successful with either its European Court of Justice jurisdictional appeal or in a final decision of the Fifth Circuit. The European Commission ordered the company to unwind the transaction in October. The divestiture will be carried out via a third-party sale or capital markets transaction, and the company aims to finalize terms by the second quarter of 2024. Shares of Illumina rose 3.7% Monday at the New York market open. They had fallen 37% this year as of Friday’s close. Analysts at Evercore ISI wrote in a note Monday that they were pleased to see Illumina commit to a deadline and have “clarity on message,” adding that investors can now focus on the standalone company. Illumina, a DNA-sequencing company based in San Diego, founded Grail, which has a blood test to detect about 50 types of early stages of cancer. Illumina spun Grail off in 2016, then sought to buy it back in a deal that closed in 2021. That led to a long, contentious battle with regulators who had not yet approved the transaction. Grail has been held separately since the reacquisition. Illumina’s pursuit of Grail came at a significant cost. In July, the company was hit with a $476 million fine for acquiring Grail before the purchase was vetted by the European Union. Activist investor Carl Icahn argued in a two-month proxy fight that Illumina had wasted money by sticking with its aggressive pursuit of the acquisition, even over opposition from US and EU antitrust enforcers. During the battle with Icahn, the company’s chief executive officer resigned. The FTC ruled unanimously in April that Illumina’s acquisition of Grail violated antitrust law, overturning an earlier decision by an in-house judge clearing the sale. The FTC had challenged the deal in 2021, arguing that it would stifle advances in the market for multi-cancer early detection tests and block competitors’ access to vital technology.Subscribe to Well Adjusted, our newsletter full of simple strategies to work smarter and live better, from the Fortune Well team. Sign up for free today. #storm #criticism #Lina #Khans #FTC #billion #victory #related #cancertest #acqu

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