Illumina CEO Francis deSouza has resigned after a heated proxy dispute with activist investor Carl Icahn over the future of the world’s largest gene sequencing company.
Illumina said Sunday that the company’s board has accepted deSouza’s immediate resignation and has begun searching for a replacement. DeSouza will remain with Illumina in an advisory capacity through 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 2016, follows the resignation last month of Illumina chairman John Thompson, who was ousted from Icahn in a shareholder vote following a proxy campaign.
The 87-year-old activist investor led a shareholder campaign focused on Illumina’s “reckless decision” to complete its $8 billion acquisition of cancer test developer Grail in 2021 against the wishes of antitrust authorities in the EU and US.
Icahn, who holds a 1.4 percent stake in Illumina, said it was “inexplicable and unforgivable” that the Thompson-led board went ahead with the deal without checking whether it would receive EU regulators’ approval.
Icahn had urged the Illumina board to fire deSouza, saying he planned a “Hail Maria” power grab by acquiring Grail and allowing the 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 May 25 leadership vote and received 71 percent support from shareholders. But the proxy dispute weakened his position and he began negotiations with the company last week to exit, sources with knowledge of the talks say.
Illumina said there was no severance payment associated with the resignation.
The Grail acquisition has plunged Illumina into years of legal battles with antitrust authorities in Brussels and Washington at a time when its core business is being pressured by new gene-sequencing entrants.
In December, Brussels ordered Illumina to divest itself of Grail and plans to fine up to $453 million for “weapons jump”.
The US Federal Trade Commission has also ordered Illumina to divest Grail. Illumina is appealing orders from EU and US regulators. Icahn also claimed that the board lacked independence and that most directors were handpicked by deSouza.
Illumina’s market cap has fallen to less than $32 billion on Friday from $75 billion in August 2021 when the company bought Grail.
In a letter to Illumina employees posted on LinkedIn, deSouza said his decision to leave the company was “extremely difficult” but that he felt “a sense of fulfillment and pride in where we have 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 with Illumina remains unshakable,” 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 regulators 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 gene sequencing machines called the NovaSeq X.
The company faces increasing competition from several new entrants and Chinese gene-sequencing company MGI.
In a tweet, Icahn described the leadership changes as “important steps for Illumina specifically and activism in general.”