GRAIL, Inc.

Current report

We are and may continue to be subject to lawsuits, investigations or regulatory proceedings initiated by regulators, law firms, shareholders or other parties, and derivative or other similar litigation, any or all of which, individually or in the aggregate, could have a material adverse effect on our business, financial condition and results of operations.

Current report

We are and may continue to be subject to lawsuits, claims, disputes, investigations or regulatory proceedings initiated by regulators, law firms, shareholders or other parties, and derivative or other similar litigation that can be expensive, divert management attention and human and financial capital to less productive uses and result in potential financial and reputational damage. These lawsuits, claims, investigations and proceedings may be related to regulatory, securities, corporate governance, privacy, intellectual property, employment matters, or any other aspects of our business.

Current report

For example, since the acquisition of our business by Illumina in 2021 (the “Acquisition”), the Acquisition has been subject to various legal challenges, including those brought by the Federal Trade Commission (the “FTC”) and the European Commission. As a result, we have been a party, together with Illumina and as a separate party, to a number of regulatory and administrative proceedings regarding the Acquisition, including ongoing proceedings and proceedings in which we have filed separate appeals. In addition, we have intervened in certain procedures in support of Illumina. Following our Spin-Off in June 2024, we and Illumina sought dismissal of the FTC’s complaint on July 30, 2024, and on August 15, 2024, the FTC dismissed without prejudice the complaint on the basis that the Spin-Off effectively abandoned the transaction giving rise to the complaint. On September 3, 2024, the European Court of Justice annulled the European Commission’s decision to review Illumina’s acquisition of the Company on the basis that the European Commission did not have the jurisdiction to do so. With the completion of the Spin-Off, the dismissal by the FTC and the annulment by the European Court of Justice, the Company believes these matters are substantially concluded. However, we may continue to be involved in litigation proceedings related to the FTC’s or the European Commission’s actions related to the Acquisition. We may also be a party or otherwise involved in new litigation proceedings regarding the Acquisition. For example, in July 2023, Illumina was informed that the staff of the SEC was conducting an investigation relating to Illumina and was requesting documents and communications primarily related to Illumina’s acquisition of GRAIL and certain statements and disclosures concerning GRAIL, our products and the Acquisition, and related to the conduct and compensation of certain members of Illumina and GRAIL management, among other things. On May 9, 2025, the Company confirmed with the SEC that the SEC has closed its investigation into this matter.

Current report

In addition, our acquisition by Illumina and subsequent litigation resulted in the filing of three securities class actions in the United States District Court for the Southern District of California: Kangas v. Illumina, Inc. et al., Roy v. Illumina, Inc. et al., and Louisiana Sheriffs’ Pension & Relief Fund v. Illumina, Inc. et al. See Note 8 — Legal Proceedings, Commitments, and Contingenciesto our condensed consolidated financial statements included in this Form 10-Q for more information. In the event that any of the matters described above results in one or more adverse judgments or settlements, we may experience an adverse impact on our financial condition, results of operations or stock price.

Current report

Furthermore, from time to time, we may face claims of infringement or other intellectual property claims by third parties. For example, on September 11, 2026, a patent infringement lawsuit captioned Clinical Genomics Pty Ltd, Clinical Genomics Technologies Pty Ltd, and Clinical Genomics, Inc. v. GRAIL, Inc. was filed against us, alleging that the Galleri test infringes two U.S. patents owned by the plaintiffs related to methods and associated diagnostic kits for the detection of DNA methylation that allegedly underlie the plaintiffs’ methylation-based colorectal cancer detection test, Colvera. The action is at an early stage and is pending before the U.S. District Court for the District of Delaware. At this time, we cannot predict the outcome of this matter or estimate our potential exposure.

Current report

Lawsuits and other proceedings have in the past and may in the future result in us incurring significant expenses in settlement and litigation costs. Any negative outcome from any such lawsuits or claims could result in payments of substantial monetary damages or fines, or undesirable changes to our products or business practices and, accordingly, our business, results of operations, financial condition, or prospects could be adversely affected. There can be no assurances that a favorable final outcome will be obtained in any or all instances, and defending any lawsuit, even unmerited claims, is costly and can impose a significant burden on management and employees. Any litigation or proceeding to which we are a party may result in an onerous or unfavorable judgment that may not be reversed upon appeal or in payments of substantial monetary damages or fines, or we may decide to settle lawsuits or proceedings on similarly unfavorable terms, which could adversely affect our business, results of operations, financial condition, and prospects.

Current report

Our results of operations and demand for Galleri are impacted by our pricing strategy and use of discounts, rebates and other pricing initiatives and developments.

Current report

Our success, ability to execute our growth strategy, and the continued adoption and use of Galleri depend on several factors discussed in these risk factors and in the risk factors included in our 2025 Form 10-K, and are significantly impacted by the prices we charge for our tests. Galleri test pricing is generally based on our list price, with discounts in certain channels, or negotiated contractual rates for certain customers, such as larger, higher-volume customers or international distributors. We continuously assess our pricing strategy and list price. As part of our pricing strategy, we have and may continue to implement broad promotional or other price reductions across all channels, such as the promotional pricing we launched in September 2026 ahead of the FDA advisory committee, as well as rebates, and we may reduce our list price from time to time. In assessing these and other pricing initiatives and developments, we consider a variety of factors, including demand for our products, market dynamics and price competition, reimbursement landscape and legislation, and other inputs. While such pricing initiatives and developments are designed to increase demand for our tests, support market penetration, and position our pricing for potential broader access, adoption and commercialization if we receive FDA approval, including in light of potential future reimbursement prices, no assurance can be given that such initiatives or developments will have the desired impact or achieve the intended objectives. In addition, revenue generated from customers with negotiated contractual rates, or with rebates or discounts, is generally lower margin as compared to revenue generated based on list price; any increase in demand resulting from pricing initiatives or developments may not be sufficient to offset the impact to margin and profitability resulting from the lower margin revenue. To the extent we reduce our list price or otherwise utilize pricing initiatives and developments that reduce our ASP, our revenue, growth and margins may decrease, which could adversely affect our ability to invest in and grow our business and could have a material adverse effect on our business, financial condition, results of operations, and growth prospects.

Current report

Our multi-cancer detection tests are a new approach to cancer screening, which present a number of novel and complex issues for FDA review. Because the FDA has never cleared or approved a multi-cancer detection test, we cannot provide assurances regarding our ability to obtain PMA approval on a timely basis, or at all, or regarding the adequacy or scope of any approved indication or label.

Current report

Our multi-cancer detection tests represent a new approach to cancer screening, and obtaining FDA approval for Galleri presents a number of novel issues. Given the novel nature and complexity of multi-cancer detection tests, and the fact that the FDA has never granted marketing authorization for a multi-cancer detection test, we cannot be certain whether we will receive FDA approval for Galleri, and we cannot provide assurances that our PMA will be sufficient to support FDA approval for our proposed intended use. In connection with the review of our PMA for Galleri, the FDA convened a meeting of the Molecular and Clinical Genetics Panel of the Medical Devices Advisory Committee. In September 2026, this advisory committee voted in favor of Galleri’s safety, effectiveness and overall benefit-risk profile for screening for the early detection of multiple types of cancer in adults aged 50 years and older. While the FDA will take the advisory committee’s recommendations into consideration when making its final decision on our PMA, the FDA is not bound by the views or recommendations of its advisory committees. Accordingly, notwithstanding the discussion and vote of the advisory committee, the FDA may delay the approval of, or ultimately determine not to approve, our PMA for a variety of reasons, including due to its perception, evaluation, inspection or analysis of Galleri’s quality, clinical data, utility or other considerations that are or may be important to the FDA’s review of our PMA. In addition, while the advisory committee was presented with various questions and considerations, including statements proposed to be included in Galleri’s indications for use and labeling, the FDA has not yet completed its review of such matters. As a result, there can be no assurance as to the timing or outcome of the FDA’s ultimate decision on our PMA. The FDA could deny approval of our PMA altogether, could require additional studies, expansion of completed or ongoing studies or performance of new analyses of our clinical data for further consideration, could approve our PMA but limit Galleri’s indications for use or labeling, resulting in a narrower or more restrictive label than we expect, or could require costly post-approval commitments or other requirements. These risks are heightened because Galleri is currently the first multi-cancer detection test to progress to this stage of the PMA process. Any such action by the FDA could severely and adversely affect our reputation, business, financial condition and results of operations.

Previous report

We could be subject to additional securities class action litigation.

Previous report — wording carried elsewhere

In addition, any perceived or actual decline in our business prospects or stock price following the NHS-Galleri Trial results or other adverse developments could invite shareholder activism. Responding to shareholder activism can be costly and time-consuming, disrupt our operations, and divert the attention of our management and board of directors. Furthermore, activist shareholders may attempt to influence or change our strategic direction, capital allocation, or governance practices, which could adversely affect our business and stock price.