RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2024

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

Illumina Purchases and Sales

The Company was a subsidiary of Illumina, Inc. between August 19, 2021 to June 23, 2024. Subsequent to the Spin-Off, Illumina retained a 14.5% stake in the Company. Illumina is both a customer of the Company and a major supplier of the Company’s reagents and capital equipment. Goods and services transactions with Illumina are invoiced and paid when due.

Goods and services transactions with Illumina have been reflected in the condensed consolidated financial statements as follows:

(in thousands)	As of June 30, 2024		As of December 31, 2023
Accounts receivable, net — related parties	$	32	$	80
Supplies — related parties	6,259		5,855
Prepaid expenses and other current assets — related parties	59		41
Property and equipment, net — related parties	3,021		3,640
Accounts payable — related parties	—		168
Accrued liabilities — related parties	—		95

	Three Months Ended				Six Months Ended
(in thousands)	June 30, 2024		July 2, 2023		June 30, 2024		July 2, 2023
Screening revenue — related parties	$	108	$	164	$	237	$	416
Cost of screening revenue — related parties	3,457		2,213		6,126		3,792
Cost of development services revenue — related parties	71		36		116		60
Operating expenses — Research and development — related parties	5,310		6,386		10,112		11,166
Operating expenses — General and administrative — related parties	52		52		103		103

The Company has entered into an amendment to its Supply and Commercialization Agreement with Illumina. Under the terms of the amended agreement, regardless of whether its products incorporate any Illumina technology, the Company has agreed to pay to Illumina a high single-digit royalty, subject to certain reductions, in perpetuity on net sales generated by its products or revenues otherwise generated or received by the Company, subject to certain exceptions, in the field of oncology. Per the terms of the Separation and Distribution Agreement with Illumina, the royalty arrangement is suspended until the earlier of December 24, 2026 or any earlier change of control of the Company, at which time a high-single digit royalty payments will be payable.

Contributions from Member, Net

The following related party transactions between the Company and Illumina have been included in these condensed consolidated financial statements. As there was no intercompany loan agreement between Illumina and GRAIL and because these transactions had no history of being settled and were not settled per the terms of the Separation and Distribution Agreement, the total net effect of these transactions are reflected in the condensed consolidated statements of cash flows as cash provided by financing activities and in the condensed consolidated balance sheets as contribution from member, net, in member’s equity. The following table presents the components of the net transfers to and from Illumina:

	Six Months Ended
(in thousands)	June 30, 2024		July 2, 2023
Cash funding received from Illumina	$	1,244,300	$	304,000
Taxes paid related to net share settlement of equity awards	—		(225)
Total contribution from member, net	$	1,244,300	$	303,775

Twist Bioscience Relationship

Mr. Robert Ragusa was appointed as the Company’s chief executive officer in October 2021. Mr. Ragusa also serves on the board of directors of Twist Bioscience (“Twist”), a supplier to the Company. Transactions with Twist beginning when Mr. Ragusa became the Company’s chief executive officer are reflected in the condensed consolidated financial statements as related party transactions.

Related party transactions with Twist have been reflected in the condensed consolidated financial statements as follows:

(in thousands)	As of June 30, 2024		As of December 31, 2023
Supplies — related parties	$	1,051	$	1,052
Accounts payable — related parties	—		660

	Three Months Ended				Six Months Ended
(in thousands)	June 30, 2024		July 2, 2023		June 30, 2024		July 2, 2023
Cost of screening revenue — related parties	$	322	$	—	$	385	$	—
Cost of development services revenue — related parties	7		—		7		—
Operating expenses — Research and development — related parties	159		13		592		585