Illumina CEO Francis D’Souza has resigned after a painful proxy battle with activist investor Carl Icahn over the future of the world’s largest gene-sequencing company.
Illumina said on Sunday that the company’s board of directors had immediately accepted de Souza’s resignation and had begun searching for a replacement. The company said DeSouza will remain in an advisory position at Illumina through July 31.
Illumina said Charles Dadswell, senior vice president and general counsel at the company, has been named interim CEO.
The resignation of De Souza, who was named CEO in 2016, follows the departure last month of Illumina chairman John Thompson, who was ousted in a shareholder vote following a retainer campaign by Icahn.
The 87-year-old activist investor led a shareholder campaign focused on Illumina’s “reckless decision” to close its $8 billion acquisition of cancer test development company Grail in 2021 against the wishes of EU and US antitrust regulators.
Icahn, who owns a 1.4 percent stake in Illumina, said it was “inexplicable and inexcusable” that the Thompson-led board went ahead with the deal without being certain whether it would get clearance from EU regulators.
Icahn had called on the Illumina board of directors to fire DeSouza, saying he had masterminded the “Hail Mary” powergrab by acquiring Grail and allowing the core business to deteriorate. He also alleged that most of Illumina’s directors were handpicked by deSouza—a claim the company denied.
DeSouza survived the May 25 leadership vote, garnering the support of 71 percent of shareholders. But the agency battle has weakened his position, and he began negotiations with the company last week upon his exit, according to sources familiar with the talks.
Illumina said there are no severance payments associated with the resignation.
The Grail acquisition has plunged Illumina into years-long legal battles with antitrust regulators in Brussels and Washington at a time when its core business is under pressure from newcomers to genetic sequencing.
In December, Brussels ordered Illumina to get rid of Grail and plans to issue a fine of up to $453 million for “jumping the gun.”
The US Federal Trade Commission has also ordered Illumina to recall Grail. Illumina is appealing against orders from EU and US regulators. Icahn also alleged that the board lacked independence and that most of the directors were hand-picked by de Souza.
Illumina’s market capitalization has fallen from $75 billion in August 2021, when it bought Grail, to less than $32 billion as of Friday.
In a letter to Illumina employees sent to LinkedIn, deSouza said his decision to leave was “very difficult” but that he felt “fulfillment and pride in where we’ve taken the company,” including the Grail acquisition.
“My belief in the potential life-saving potential of Grail technology and the benefits of integrating it with Illumina remains unwavering,” he wrote.
But many shareholders question 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 Disney director, comes at a critical time for Illumina, which recently launched a new generation of genetic sequencing machine, called NovaSeq X.
The company faces increasing competition from several newcomers and Chinese genetic sequencing company MGI.