Matthew Herper , FORBES STAFF I cover science and medicine, and believe this is biology's century.
Grail, a San Francisco startup that aims to invent a blood test that can detect cancer early, announced this afternoon that it plans to raise $1 billion in venture capital in its second financing round, a sum that puts the biotech startup in a class with tech names like Uber, Facebook and AirBnb.
As part of the announcement, Grail is also spinning out of its parent company, San Diego’s Illumina, the $2.4 billion (sales) firm that makes most of the DNA sequencing machines that scientists and doctors use to study human biology, diagnose rare genetic diseases and pick treatments for cancer patients. Illumina is keeping a 20% stake in Grail.
“We founded Grail a year ago to enable early cancer detection via a blood-based screening test powered by Illumina sequencing technology,” said Jay Flatley, Executive Chairman of Illumina and current Chairman of Grail. “This raise, when completed, will provide Grail the resources to develop its first products and embark on the large-scale trials required to demonstrate the stringent performance requirements of a cancer screening test.”
The spinout is likely to be popular with many of Illumina’s investors. Grail executives have discussed conducting clinical trials involving hundreds of thousands of patients. These would be expensive, and could be a drag on Illumina’s profitablity. Illumina shares fell 23% last year.
In a press release, Grail said it has received “indications of interest” from investors who would commit $1 billion. That means the money has not been received, and that the size of the funding round could grow. Grail said in an interview that the announcement was made now so Illumina could give clearer guidance to its investors, and because there may be others interested in investing.
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