A building on the Illumina World Headquarters campus is shown on September 1, 2021 in San Diego, California.
Mike Blake | Reuters
Enlightenment on Tuesday unveiled cost-cutting plans to improve the DNA sequencing company’s shrinking margins.
The plans aim to cut Illumina’s annualized spend by more than $100 million starting later this year, according to the company’s first-quarter release.
The company reported a gross margin of 60.3% for the period, up from 66.6% in the year-ago period.
“These cost savings will accelerate progress toward higher margins and free up capital to increase investment in high-growth areas,” Illumina said in the press release.
Among other things, Illumina plans to use its NovaSeq X sequencing system to accelerate genomic discoveries. Launched in September 2022, the system sequences DNA twice as fast and three times more accurately than previous Illumina products.
The San Diego-based company said it also plans to make savings by “enabling operations” in lower-cost areas around the world. Illumina did not disclose details of these activities.
The company is struggling with criticism and a falling market cap following its controversial $7.1 billion acquisition of cancer test developer Grail.
Illumina’s market value has fallen to about $34.5 billion from about $75 billion in August 2021, the month it completed its acquisition of Grail.
Antitrust authorities have repeatedly pushed back on this deal.
The Federal Trade Commission earlier this month ordered Illumina to divest the acquisition, saying it would stifle competition and innovation.
Last year, the European Commission, the executive body of the European Union, blocked the deal over similar concerns.
Illumina is appealing both orders and expects final decisions in late 2023 or early 2024.
The Grail deal is also at the center of a proxy fight between activist investor Carl Icahn and Illumina. They have been trading jabs for more than a month.
Icahn, who owns a 1.4% stake in the company, is seeking a seat on Illumina’s board and is urging him to break the Grail deal. He’s also urging Illumina to oust its CEO Francis deSouza “immediately.”
The company is asking shareholders to vote down Icahn’s three board nominees at its May 25 annual meeting.
Illumina has repeatedly claimed that Grail has “tremendous long-term value creation potential.”
Grail claims to offer the only commercially available early detection test that can detect more than 50 types of cancer from a single blood draw.
The cancer test generated about $55 million in sales in 2022 and is expected to bring in up to $110 million this year, Illumina said.