Illumina expands IP offer to help save PacBio deal as Oxford Nanopore cries foul

Illumina has expanded its offer to open sequencing-related intellectual property held by itself and Pacific Biosciences to competitors in order to persuade the UK’s Competition and Markets Authority to allow its planned $1.2 billion acquisition of PacBio to go forward.

Illumina’s submission of the revised remedies proposal to the CMA on Nov. 19 (posted on the CMA website) came on the same day as a CMA submission by Oxford Nanopore Technologies responding to Illumina’s original proposal, which the UK-based nanopore firm called “wholly inadequate” to remedy the anticompetitive effects of a merger.

The original proposal, which Illumina submitted on Nov. 7, had offered a “perpetual, royalty-free, irrevocable, sole license” of certain PacBio patents to either Oxford Nanopore Technologies or to any interested third party for use in the nanopore sequencing field.

Under the amended proposal, Illumina now offers “a perpetual, royalty-free, irrevocable license to any of Illumina and PacBio’s pre-closing patents and patent applications to any interested third party undertaking for use in the field of single-molecule, native long-read sequencing systems and associated sequencing chemistries.” The offer would also extend to relevant IP filed within 12 months of the closing date of the merger, and it would include any in-licensed patents held by Illumina or PacBio as of the closing date.

According to Illumina, this proposal “would be a fully effective, reasonable, and proportionate undertaking to remedy the [substantial lessening of competition] provisionally identified by the CMA.

In October, the CMA had proposed to block the acquisition in order to preserve competition in the sequencing market in the UK and abroad, though it had asked Illumina, PacBio, and others to propose alternative remedies.

In its latest proposal, Illumina maintained that making its patents available to others removes “one of the most significant barriers to entry identified by the CMA,” namely IP.

It also said that among the potential licensees are several large companies — including Roche, Agilent Technologies, and NanoString Technologies — that have “significant commercial capabilities,” allowing them to compete with a merged Illumina-PacBio entity, which was one of the concerns of the CMA.

Another issue the CMA voiced was that potential licensees would not have the competitive benefits of existing short-read sequencing technology. However, Illumina said, those potential licensees include companies that are either offering or developing short-read technologies — such as BGI, Thermo Fisher Scientific, Agilent Technologies, or Omniome — which they could leverage in conjunction with long-read technologies.

Illumina also reiterated potential benefits of a merger with PacBio for customers, including wider distribution, enhanced quality, and improvements of PacBio’s products, and the availability of coordinated solutions, including bioinformatics, for Illumina and PacBio products.

Oxford Nanopore, in its response to Illumina’s original remedy proposal, argued that even if the companies made certain IP available, a merger would still result in their market dominance. ONT’s response, dated Nov. 19, has not been released on the CMA’s website but is available on the company’s website.

Notwithstanding the proposal, the merger would still result in a situation where Illumina/PacBio combined would have a market share in the UK of 90 percent + and worldwide 80 percent +,” ONT wrote. “The merger would not only eliminate the competition Illumina is facing from PacBio but would enhance the ability to foreclose ONT and other parties from the market, including through aggressive commercial bundling and pricing practices.”


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