Illumina CEO Francis deSouza has resigned after a blood-curdling proxy battle with activist investor Carl Icahn over the future of the world’s largest gene sequencing company.
Illumina said Sunday that the company’s board of directors had accepted deSouza’s immediate resignation and had started looking for a replacement. DeSouza will remain in an advisory role with Illumina until July 31, the company said.
Illumina said Charles Dadswell, a senior vice president and general counsel at the company, has been named interim chief executive.
The resignation of deSouza, who was named CEO in 2016, follows the departure last month of Illumina chairman John Thompson, who was impeached by Icahn following a shareholder vote following a proxy campaign.
The 87-year-old activist investor led a shareholder campaign targeting Illumina’s “reckless decision” to complete its $8 billion acquisition of cancer test developer Grail in 2021, against the wishes of EU and US antitrust regulators.
Icahn, who holds a 1.4 percent stake in Illumina, said it was “inexplicable and inexcusable” that the Thompson-led board went through with the deal without checking to see if it would get approval from EU regulators.
Icahn had called on Illumina’s board of directors to fire deSouza, saying he engineered a “Hail Mary” power grab by taking over Grail and allowing its core business to deteriorate. He also claimed that most of Illumina’s directors were handpicked by deSouza – a claim the company denied.
DeSouza survived the leadership vote on May 25, receiving 71 percent shareholder support. But the proxy battle weakened his position and he began negotiations with the company over his departure last week, according to sources with knowledge of the talks.
Illumina said there is no severance pay associated with the layoff.
The acquisition of Grail has plunged Illumina into years of legal battles with antitrust regulators in Brussels and Washington at a time when its core business is under pressure from gene sequencing entrants.
In December, Brussels ordered Illumina to divest Grail and plans to fine it up to $453 million for “gun jumping.”
The US Federal Trade Commission has also ordered Illumina to divest Grail. Illumina is appealing the EU and US orders. Icahn also claimed that the board was not independent and that most of the directors were chosen by deSouza.
Illumina’s market cap is down from $75 billion in August 2021 when it bought Grail, to less than $32 billion on Friday.
In a letter to Illumina employees on LinkedIn, deSouza said his decision to leave was “extremely difficult,” but he felt a sense of “achievement and pride in where we’ve taken the company,” including the acquisition of Grail.
“My belief in the potential of Grail’s potentially life-saving technology and the benefits of merging it with Illumina remains unwavering,” he wrote.
But many shareholders are skeptical of Illumina’s determination to stick with Grail and want the board to negotiate a deal with EU authorities to spin off the cancer diagnostics company.
The departure of deSouza, who is also a director of Disney, comes at a critical time for Illumina, which recently launched a new generation of gene-sequencing machines called NovaSeq X.
The company faces growing competition from several new entrants and Chinese gene sequencing company MGI.
