Illumina, Inc. (NASDAQ:ILMN) is changing the world, and investors are reaping the rewards…
The devastating COVID-19 pandemic has garnered most of the healthcare headlines in 2020.
But perhaps what has been lost in the news is the fact that breakthroughs in genetic sequencing allowed a team of scientists in China to sequence the SARS-CoV-2 genome within 40 hours of receiving virus samples.
The research team, led by Yong-Zhen Zhang of the Shanghai Public Health Clinical Center & School of Public Health, used the latest high-throughput sequencing technology for RNA (the viral genetic building blocks which function similar to how DNA works in humans) in order to achieve this monumental feat.
News about the sequence came from Edward Holmes, a virologist and evolutionary biologist at the University of Sydney who also worked on the project.
On January 10, he tweeted the first notice about the availability of the initial sequence of the newly discovered coronavirus – well before it exploded into a global health crisis. The sequence was posted on an open-access site, virological.org, and on the sequence database Genbank as well.
As we’ve now learned, just 2 days after it was initially published, Moderna was able to take that data and complete the design of a vaccine candidate, which today is about to be one of the first vaccines to be widely distributed around the world.
Simply put, the potential health benefits of genome sequencing are abundantly clear.
And companies that are advancing the technology will become increasingly important as we attempt to gain a better understanding of human biology and as we try to find new solutions that will improve human health.
One such company is Illumina.
It is at the forefront of genetic sequencing technology, and as a business, it’s gaining incredible momentum.
Illumina, Inc. (NASDAQ:ILMN)
Illumina is a global leader in DNA sequencing and array‐based technologies, serving customers in the research, clinical, and applied markets.
Their products are used for applications in the life sciences, oncology, reproductive health, agriculture, and other emerging segments.
But there is one key aspect about their business that investors should be very excited about… it’s their newly announced acquisition of GRAIL.
You see, one of the most exciting subjects in cancer treatment today is liquid biopsy testing.
These tests are designed to pick up genetic material shed by cancer tumors into the blood.
They are considered the holy grail of cancer detection because a blood test will avoid the invasive procedures needed to extract samples directly from tumors, especially when tumors are deeply embedded in internal organs and are hard to reach with traditional biopsies.
More importantly, a blood test can improve early detection, which can have a significant impact on outcomes and mortality rates.
Today, there are several companies that are racing to develop these new tests…
But what if one was developed that could screen for all types of cancers?
What would a breakthrough like that be worth?
The GRAIL Acquisition Will Pay Off In Spades
On September 21, Illumina announced that they would acquire GRAIL for $8 billion in cash and stock. In addition, GRAIL stockholders will receive future payments representing a tiered single digit percentage of certain GRAIL-related revenues.
GRAIL is a healthcare company whose mission is focused on multi-cancer early detection.
GRAIL was founded by Illumina in 2016 and was spun out as a standalone company, powered by Illumina’s next-generation sequencing (NGS) technology, to develop state-of-the-art data science and machine learning and create the atlas of cancer signals in the blood, enabling multi-cancer early detection tests.
This deal is all centered around GRAIL’s Galleri product.
Galleri is a blood test that’s expected to launch commercially in 2021.
It is a multi-cancer, laboratory developed test for early cancer detection from blood, but unlike other tools that can only detect 5 cancers, Galleri can detect 50 different types.
And this is a rapidly growing market with huge upside. According to Illumina’s internal analysis, the next-generation sequencing (NGS) oncology market is expected to grow at a CAGR of 27% and reach $75 billion by 2035.
GRAIL plans to follow Galleri with future blood-based tests for cancer diagnosis, detection, and post-treatment monitoring of cancer patients.
Yet even before this acquisition was announced Illumina was growing at an incredible pace.
Over the last 5 years, revenues grew at 14% per year, EPS grew at 23.7%, and free cash flow grew at 16%.
What’s more the company has been returning capital to shareholders in the form of stock buybacks with $518 million worth of shares repurchased over the TTM. In 2019, Illumina also paid off $550 million of debt and currently only has $666 million of long term debt outstanding versus $3.3 billion in cash and cash equivalents.
To sum it up, ILMN has a strong balance sheet, it’s generating a ton of profit, and it’s a growth stock that has a very bright future ahead. If you’re going to own one healthcare stock, put this company on your watchlist today.
-Investing Insider Magazine