CEO of biotech firm Illumina quits after proxy battle with activist investor Carl Icahn

NEW YORK - Illumina’s chief executive Francis deSouza stepped down on Sunday, marking a victory for activist investor Carl Icahn and heightening expectations that it could unwind its controversial US$7.1 billion (S$9.5 billion) acquisition of Grail.

The gene sequencing machine maker had repurchased cancer diagnostic test maker Grail in 2021 – after it was spun off in 2016 as a new company – despite opposition from US and European antitrust regulators.

The decision prompted Mr Icahn to pursue a proxy fight at Illumina, arguing that it should be divested as it had cost investors billions of dollars.

Illumina said on Sunday that its board had accepted Mr deSouza’s resignation.

It has begun a search for a new CEO and named Mr Charles Dadswell, senior vice-president and general counsel, as interim chief executive.

Mr deSouza will stay on in an advisory capacity until July 31, it said.

Analysts said they expected the company’s shares to trade higher on Monday morning after Mr deSouza’s resignation.

The Grail deal “has kept a lot of investors out of the stock”, said TD Cowen analyst Dan Brennan.

“With Francis now stepping aside, I think the certainty of a Grail exit definitely goes up.”

The company’s shares have lost about 60 per cent of their value since the Grail deal was completed in 2021.

Illumina shares closed at US$200.53 on the Nasdaq on Friday.

Mr Icahn said in a Twitter post that he is happy with the recent changes at Illumina and considers them a “very positive occurrence”.

“The new additions to the board, the CEO transition, as well as the change of the chairman, are significant positives that should drive value for all stakeholders and human health,” he said.

The proxy battle began in March and ended with a May vote where Mr Icahn won enough shareholder support to oust board chairman John Thompson and install his nominee Andrew Teno.

Mr Icahn has said he wants former Illumina CEO Jay Flatley to return.

Mr deSouza, in a letter to employees on LinkedIn, said: “My belief in the potential of Grail’s potentially life-saving technology and the benefits of merging it with Illumina remains unshakeable.”

Mr deSouza’s departure was not a foregone conclusion.

He had secured more than twice the number of shareholder votes than his challenger in the proxy vote, which could have given him enough legitimacy to hang on.

Ms Vicki Hollub, for instance, remains Occidental Petroleum’s CEO after the company cut a deal with Mr Icahn over board seats in 2020 and after Mr Icahn cashed out two years later.

Still, there is a history of CEOs leaving.

Unilever CEO Alan Jope announced plans to leave three months after hedge fund Trian Fund Management’s co-founder Nelson Peltz joined the consumer giant’s board in 2022.

Illumina earlier in June filed an appeal against an order from the United States Federal Trade Commission demanding that it divest Grail on competition concerns. REUTERS