Francis deSouza steps down as Illumina CEO after proxy fight with Carl Icahn

Illumina CEO Francis deSouza has resigned after a fierce 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 had accepted deSouza’s immediate resignation and began a search for a replacement. DeSouza will continue in an advisory capacity at Illumina until July 31, the company said.

Illumina said Charles Dadswell, the company’s senior vice president and general counsel, has been named interim CEO.

The resignation of deSouza, who was named CEO in 201[ads1]6, follows the departure last month of Illumina chief John Thompson, who was ousted in a shareholder vote following a proxy campaign by Icahn.

The 87-year-old activist investor led a shareholder campaign that focused on Illumina’s “reckless decision” to close its $8 billion acquisition of cancer test developer Grail in 2021 against the wishes of EU and US antitrust regulators.

Icahn, who has a 1.4 percent stake in Illumina, said it was “inexplicable and inexcusable” that the board led by Thompson went ahead with the deal without finding out whether it would get approval from EU regulators.

Icahn had asked Illumina’s board to fire deSouza, saying he had made a “Hail Mary” power purchase by buying Grail and allowing its 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, receiving 71 percent support from shareholders. But the proxy fight weakened his position, and he began negotiations with the company last week about his exit, according to sources with knowledge of the talks.

Illumina said there is no severance associated with the termination.

The Grail acquisition 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 new entrants to gene sequencing.

In December, Brussels ordered Illumina to sell Grail and plans to issue a fine worth up to $453 million for “gun jumping.”

The US Trade Commission has also ordered Illumina to sell Grail. Illumina is appealing orders from EU and US regulators. Icahn also alleged that the board lacked independence and that most board members were handpicked by deSouza.

Illumina’s market value 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 posted on LinkedIn, deSouza said his decision to leave was “extremely difficult” but he felt a sense of “fulfillment 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 hold on to Grail and want the board to negotiate an agreement with EU authorities to spin off the cancer diagnostics company.

The departure of deSouza, who is also a Disney executive, comes at a critical time for Illumina, which recently launched a new generation of gene sequencing machines, called NovaSeq X.

The company faces increasing competition from several new players and the Chinese gene sequencing company MGI.

In a tweet, Icahn described the leadership changes as “important steps for Illumina in particular and activism in general.”