ILMN Illumina Inc

SAN FRANCISCO—Illumina Inc., seeking to build on its strength in DNA sequencing, is launching a new company that will develop and market a test to detect genetic evidence of cancer in the blood.

The San Diego maker of gene-sequencing machines said Sunday it is forming the company, called Grail, with a group of other investors, marking the latest bet that so-called liquid biopsies will become a major tool for detecting, diagnosing and managing treatment of cancer.

The test will be designed to screen people who have no cancer symptoms and detect disease at its earliest stages when the chance to cure it is highest, said Jay Flatley, Illumina's chief executive, who is also chairman of Grail.

Illumina is the majority owner of the company, which is backed by more than $100 million in its initial financing. Arch Venture Partners is also a lead investor, with additional participation from Bezos Expeditions, Bill Gates and Sutter Hill Ventures, Mr. Flatley said. The company announced the launch on the eve of the annual J.P. Morgan Healthcare Conference here.

Researchers have long known that evidence of tumors lurks in the blood, either in the form of circulating tumor cells or in fragments of DNA that are shed from tumor cells. That has raised hopes for a blood test that could reliably enable doctors and patients to detect and monitor the disease without painful and sometimes misleading tissue biopsies that are commonly used to diagnose cancer. But advances in technology, including the ability to cheaply sequence tumor DNA, are just beginning to make such tests feasible.

Grail's test will focus on detecting cancer-associated mutations in DNA fragments to screen people for evidence of disease. The company will have a "preferential economic relationship with Illumina" and its DNA sequencing expertise, Mr. Flatley said.

That will make it possible to perform the especially detailed analyses of DNA fragments needed to develop and validate the test and to market it at an affordable price. He estimated the company will have to sequence between 100,000 to 300,000 human genomes at exceptionally deep levels to develop a reliable test.

There are big hurdles. Broad screening programs for prostate and breast cancer, for instance, often raise suspicions when no cancer is present—a false-positive result—or find cancer that will never cause problems yet lead patients to undergo further tests and procedures that come with harmful side effects.

Mr. Flatley said a blood test avoids some such problems because unlike, for example, suspicious findings from mammography, which can have a variety of causes, "we are actually measuring mutations from cancer cells." It is "a direct measure of the cancer itself," he said.

But he acknowledged that it is crucial to show the test "doesn't have a high false-positive rate," and that it can distinguish between potentially aggressive cancers and those likely to have no health consequences. The company plans to work closely with regulators and insurers in developing the test, said Mr. Flatley, adding that the price will have to come in under $1,000 initially and come down further after that.

He said Grail will spend the next year refining the test before testing it in clinical trials beginning in 2017. If all goes well, a test to detect evidence of any cancer–what he termed a "pan-cancer screening test" —could be on the market by 2019.

(END) Dow Jones Newswires

January 10, 2016 21:05 ET (02:05 GMT)

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