Slide 1: Support Illumina's Strategy for Creating Long-Term Value for All Shareholders
© 2023 Illumina, Inc. All rights reserved. April 2023 Support Illumina’s Strategy for Creating Long-Term Value for All Shareholders
Slide 2: Forward Looking Statements
Forward Looking Statements 2 This communication contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding mandates, the future, business plans and other statements that are not historical in nature. These statemen
Slide 3: Table of Contents
Table of Contents 2 Executive Summary 4 Illumina Delivers Value through Genomics 5 - 8 Illumina’s Results Continue to Be Best-in-Class Against a Challenging Backdrop 9 - 19 GRAIL is a Growth Engine with Unprecedented Potential 20 - 26 Illumina’s Board is Highly Qualified with Deep Industry Experienc
Slide 4: Executive Summary
Executive Summary Illumina’s leadership is delivering results Illumina leads the Next-Generation Sequencing (NGS) industry and is an important player and driver of innovation, as demonstrated by products like NovaSeq X, a revolutionary sequencer yielding 2x faster speeds at only $200 per genome The
Slide 5: Illumina Delivers Value through Genomics
Illumina Delivers Value through Genomics 2
Slide 6: Global Leader in Genetic Sequencing
6 2022 Core Revenue $4.6B Global Leader in Genetic Sequencing 1 Core Gross Margin vs. 43% peer median 68% Operating Margin vs. unprofitable peers 15% Customers >9,500 Patents Worldwide >8,800 Covered Lives Globally IVD / EUA Product Registrations >1,200 Countries with Regulatory Approvals 62 Install
Slide 7: Illumina's Technology Innovations Expand the Genomics Diagnostic Tools Market
7 Illumina’s Technology Innovations Expand the Genomics Diagnostic Tools Market and Our Leadership Position Source: NHS, NSF, NIH, UN, WHO, and additional publicly available sources, primary market research, secondary reports, Illumina internal estimates. I l lumina’s Consistent Innovation Enables N
Slide 8: Illumina's Strategic Playbook Works
8 Illumina’s Strategic Playbook Works Large Clinical Markets Catalyzing New Markets 1 Sequencing Technology Leader 2 End to End Services in 4 Accelerating Clinical Adoption 3 Note: NGS is Next-Generation Sequencing. Deliver Breakthrough Technology to Win Sequencing Business Broadest portfolio of seq
Slide 9: Illumina's Results Continue to Be Best-in-Class Against a Challenging Backdrop
9 Illumina’s Results Continue to Be Best-in-Class Against a Challenging Backdrop
Slide 10: Over Two Decades, Illumina's Innovation Engine Has Delivered Value to Shareholders
10 $0.0 $0.0 $0.0 $0.1 $0.1 $0.2 $0.4 $0.6 $0.7 $0.9 $1.1 $1.1 $1.4 $1.9 $2.2 $2.4 $2.8 $3.3 $3.5 $3.2 $4.5 $4.6 – $1 $2 $3 $4 $5 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 $0 $20 $40 $60 $80 Over Two Decades and Multiple Market Infl
Slide 11: Illumina's Stock Has Outperformed All Pure-Play Genomics Peers
Illumina’s Stock Has Outperformed All Pure-Play Genomics Peers in a Market Challenging to All Key Players Source: Market data through 10-Mar-2023, one day before Icahn publicly announced its intention to nominate candidates to Illumina’s board. Note: Charts reflect total shareholder return. Pure-Pla
Slide 12: The Macro Environment Has Severely Impacted Healthcare Category Leaders
The Macro Environment Has Severely Impacted Healthcare Category Leaders Peak to Current Performance (Over Last 2 Years) Peak Mkt Cap ($bn) ’20A-’23E Rev. CAGR Curr. Mkt Cap ($bn) Category-defining, high growth, pure-play healthcare companies also experienced market capitalization decline over the la
Slide 13: Illumina is the Only Profitable Pure-Play Genomics Player
13 Illumina is the Only Profitable Pure-Play Genomics Player… F Y 2 0 22 G R O S S M AR G I N Source: Capital IQ, company filings as of 10-Mar-2023. Note: NM denotes margins less than (500)%. Oxford Nanopore figures are FY 2021 as FY 2022 not available as of pricing date. 1 Reconciliation of Non-GAA
Slide 14: …and Trades at a Premium to Key Life Science Players
…and Trades at a Premium to Key Life Science Players E V / F Y 2 0 23 E E B I T D A Source: IBES, Capital IQ, company filings as of 10-Mar-2023. Note: EV/EBITDA unavailable for pure play genomics peers. Illumina ex. GRAIL assumes GRAIL’s FY 2022 EBIT of $(592) is the same for FY 2023 and is added ba
Slide 15: Illumina's Strategy is Delivering Compelling Financial Results
Illumina’s Strategy is Delivering Compelling Financial Results Increased installed base of instruments Recurring revenue from consumables and services was 80%+ of revenue for past six years Growth resulted from demand elasticity, in both research and clinical markets around the globe $2.8 $3.3 $3.5
Slide 16: Illumina's Innovation Engine Continues to Generate Breakthrough Products
Illumina’s Innovation Engine Continues to Generate Breakthrough Products First FDA-registered and CE-marked IVD high- throughput sequencer NovaSeq 6000 Dx 2023 2021 2020 NovaSeq X & NovaSeq X Plus Breakthrough high throughput sequencer with 2x speed and 2.5x throughput improvement 75 breakthrough in
Slide 17: Illumina Managed Headwinds in 2022 and Has Momentum with NovaSeq X Launch
Illumina Actively Managed Headwinds in 2022 and is Experiencing Strong Momentum with 2023 NovaSeq X Launch FY23 growth expected to be moderate due to challenging macroeconomic environment Launch Year for NovaSeq X, for which demand will outstrip supply Illumina Took Action to Reduce Cost in Response
Slide 18: Illumina Delivers Attractive and Sustainable Financial Performance Over Time
Increased Workflow Penetration Sample Library Sequencing Secondary Advanced Prep Prep Analysis Analysis # Samples Gb / Analysis 3.0X – 4.0X 1.5X – 2.0X # Analyses / Sample 1.5X – 3.0X Growth in Instruments, Services and Arrays High Single-Digit CAGR Mid-Teens % Revenue Growth to Low 70s% Gross Margi
Slide 19: Illumina is Taking Further Action to Reduce Costs
19 Illumina is Taking Further Action to Reduce Costs on Top of the Steps Announced in November 2022 Reducing Annualized Run-Rate Expenses by More Than $100M in CY 2023 Product Commercialization Process / Organization Global Footprint Modularization of innovation and development Utilize new technolog
Slide 20: GRAIL is a Growth Engine with Unprecedented Potential
GRAIL is a Growth Engine with Unprecedented Potential 22
Slide 21: GRAIL's Path Forward Holds Enormous Value and Illumina is Leading the Way
GRAIL’s Path Forward Holds Enormous Value and Illumina is Leading the Way 1◼ GRAIL Continues a Strategy of Platform-Enhancing Acquisitions 2◼ GRAIL Has Incredible Long-Term Value with the Only Commercial Multi-Cancer Early Detection Test in a $44B Addressable Market 3◼ Illumina’s Integration of GRAI
Slide 22: GRAIL Continues a Strategy of Platform-Enhancing Acquisitions
GRAIL Continues a Strategy of Platform- Enhancing Acquisitions Source: IBES, Capital IQ, company filings as of 10-Mar-2023. 1 Represents share price decline from 10-Nov-2006 close, one business day prior to Solexa acquisition announcement on 13-Nov-2006, to 13-Mar-2007 and subsequent increase from 1
Slide 23: GRAIL Has Long-Term Value with the Only Commercial Multi-Cancer Early Detection Test
GRAIL Has Incredible Long-Term Value with the Only Commercial Multi-Cancer Early Detection Test in a $44B Addressable Market 1 45 of 50 cancers with no other recommended screens in the U.S. 2 Hubbell E, Clarke CA, Aravanis AM, Berg CD, Modeled Reductions in Late-stage Cancer with a Multi-Cancer Earl
Slide 24: Illumina's Integration of GRAIL Would Accelerate Commercialization and Drive Efficiencies
Illumina’s Integration of GRAIL Would Accelerate Commercialization and Drive Efficiencies 3 Expand Market by Accelerating FDA Approval and Reimbursement Illumina can leverage its capabilities and relationships to accelerate reimbursement from private insurers; Illumina’s expertise in market access h
Slide 25: Illumina's Decision to Close the GRAIL Transaction Was Well-Reasoned
25 Illumina’s Decision to Close the GRAIL Transaction was Well-Reasoned and Supported by Robust External Legal and Regulatory Advice At the time: The European Commission had never solicited referrals to take jurisdiction over an acquisition of an American company that had no revenue in Europe Rather
Slide 26: Illumina's Path Maximizes Shareholder Value – Legal Process Concludes by Early 2024
Illumina’s Path is the Only One that Maximizes Shareholder Value – Will Conclude Legal Process by Early 2024 5 32 The process is finite Only path to maximize value Illumina is maximizing optionality Illumina appealed the EU jurisdiction decision as well as the FTC decision and received expedited rev
Slide 27: Illumina's Board is Highly Qualified with Deep Industry Experience and Expertise
Illumina’s Board is Highly Qualified with Deep Industry Experience and Expertise 32
Slide 28: Illumina's Board Reflects Purpose-Built Mix of Skills and Diversity
Illumina’s Board Reflects Purpose-Built Mix of Skills and Diversity Governance Highlights Risk Oversight / Management Number of Director Appointment by Year Public Company Executive Life Sciences Technology & Innovation Regulatory Expertise Financial Experience International Experience MD / PhD 2012
Slide 29: Board Member Experience
29 Philip Schiller Adds expertise from an extensive career in bringing world class products to market with Apple, where he led product marketing, developer relations, business marketing, education marketing, international marketing, and App Store programs in the period when Apple created and launche
Slide 30: Illumina's Thorough Nomination Process Yields a Board of Exemplary Skills
Illumina’s Thorough Nomination Process Yields a Board of Exemplary Skills and Experience Risk Management Public Company Executive Life Sciences Technology & Innovation Regulatory Experience Financial Expertise International Experience MD / PhD Frances Arnold Francis deSouza Carol
Slide 31: Key Leadership and Expertise are Unnecessarily at Risk
Key Leadership and Expertise are Unnecessarily at Risk At Symantec, where he was CEO for 10 years, grew revenue from $600 million to $6 billion and delivered a TSR of 819%, outperforming the S&P 500 by 856 p.p. During his tenure as chair and lead independent director from February 2012 to present, M
Slide 32: Illumina's Compensation Program Promotes Executive Alignment with Shareholder Interests
Illumina’s Compensation Program Promotes Executive Alignment with Shareholder Interests Compensation Program Design CEO Compensation Base Salary (4%) Performance Based Cash Incentive Long-Term Equity1 At-Risk (96%) 50% 50% Pre-set corporate revenue goals Pre-set corporate operating income goals 75%
Slide 33: Carl Icahn's Nominees are Not Right for Illumina's Board
Carl Icahn’s Nominees are Not Right for Illumina’s Board 32
Slide 34: Icahn is Unwilling to Consider Any Other Resolution
34 Icahn is Unwilling to Consider Any Other Resolution; “My Guys Answer to Me” 1 Per Icahn’s nomination notice. 2 Per 02-Mar-2023 conversation between Illumina and Carl Icahn. 3 Per 23-Feb-2023, 02-Mar-2023, 08-Mar-2023, 09-Mar-2023 conversations between Illumina and Carl Icahn and 14-Mar-2023 CNBC
Slide 35: Icahn is Correct; He Does Not Understand Illumina
Icahn is Correct; He Does Not Understand Illumina NO actionable plan to accelerate the resolution of GRAIL NO qualified director candidates NO plan to enhance Illumina’s core operations 1 Per 02-Mar-2023 conversation between Illumina and Icahn. 2 Per CNBC interview on 14-Mar-2023. GRAIL is “th
Slide 36: Icahn Has No Actionable Plan for GRAIL
Icahn Has No Actionable Plan for GRAIL There is nothing Icahn or his current / former employees that he has nominated can do to accelerate the divestiture of GRAIL Abandoning Illumina’s legal challenge in the EU would not necessarily speed up divestiture either and certainly not optimize shareholder
Slide 37: Ad Hominem Attacks are Not a Plan
Ad Hominem Attacks are Not a Plan Private Demands Supportive of the company, management and the plan “Just want my three guys to fix this GRAIL thing”1 Threatens proxy contest and personal attacks Public Pressure TV “interviews” focused on GRAIL Weekly letters attacking the company Goes Public with
Slide 38: Icahn's Core Thesis on GRAIL is…What, Exactly?
Icahn’s Core Thesis on GRAIL is…What, Exactly? The Facts Carl Icahn’s “Ideas” 39 I’ll call the EC right now… …my guys will speed it up Icahn doesn't understand the regulatory process and has not offered any new ideas for a more rapid resolution for GRAIL As for the EU regulatory process, Icahn admit
Slide 39: Icahn's Campaign Reads like Good Fiction, but the Facts are Better
Icahn’s Campaign Reads like Good Fiction, but the Facts are Better 1 Peers include Singular Genomics, Oxford Nanopore, PacBio, 10X Genomics, Berkeley Lights and NanoString 2 Per CNBC interview on 14-Mar-2023. 3 Based on close price as of 17-Apr-2023 (excluding stock options). Illumina has lost $50 b
Slide 40: Icahn's Campaign Reads like Good Fiction (Continued)
Icahn’s Campaign Reads like Good Fiction, but the Facts are Better (Continued) Illumina’s Board acted inappropriately and expanded its D&O insurance prior to completing the GRAIL acquisition The GRAIL acquisition process was full of conflicts Francis deSouza handpicked the entire board except one di
Slide 41: Icahn is Not a Healthcare Investor
41 Icahn is Not a Healthcare Investor Pre-2011 Lead life sciences portfolio manager left Icahn in 2011 to found Sarissa Source: FactSet, public filings. 1 Adjusted stock price return to date subtracts S&P 500 returns from company stock price performance. Enzon adjusted stock price return reflects re
Slide 42: Icahn and His Nominees Want to Set Strategy – Do They Have Relevant Experience?
42 Icahn and His Nominees Want to Set Strategy at Illumina – Do They Have Any Relevant Experience? Icahn has no experience in genomics or sequencing, and very little in healthcare generally Among Icahn’s 50 shareholder activism campaigns since 1996, ~70% have been at natural resources, industrials a
Slide 43: Icahn's Nominees Provide No Additive Skills or Independence
After Illumina Interviewed Icahn’s Nominees, it is Clear They Provide NO Additive Skills, NO Industry Experience, and NO Independence from Icahn Jesse Lynn Andrew Teno Vincent Intrieri No biotech experience as an executive or a director Already overboarded with 4 public board directorships No
Slide 44: Icahn Offers No Actionable Ideas to Improve Shareholder Value
Icahn Offers No Actionable Ideas to Improve Shareholder Value at Illumina, and His Nominees Will Distract from Our Progress Icahn has… NO actionable plan to accelerate the divestment of GRAIL NO director candidates of value to add to Illumina’s Board NO plan to improve Illumina’s operations Ad
Slide 45: Key Takeaways
Key Takeaways 43
Slide 46: Key Takeaways
Key Takeaways 43 Illumina is the industry leader in pure-play genomics and executing well in an environment where its peers and other key life science players have struggled Acquisition of GRAIL continues a history of strategic acquisitions by Illumina to maximize live-saving technology for patients
Slide 47: Vote FOR ALL of Illumina's Director Nominees on the WHITE Proxy Card Today
Vote “FOR ALL” of Illumina’s Director Nominees on the WHITE Proxy Card Today
Slide 48: Appendix
Appendix 48
Slide 49: Building a World-Class Management Team Under Francis' Tenure as CEO
Building a World-Class Management Team Under Francis’ Tenure as CEO Joydeep Goswami Chief Financial Officer, Chief Strategy and Corporate Development Officer Alex Aravanis CTO, Head of Research and Product Development Holds more than 30 pending and issued patents 20+ years of experience leading R&D
Slide 50: Building a World-Class Management Team Under Francis' Tenure as CEO
Building a World-Class Management Team Under Francis’ Tenure as CEO ~75% Multi Industry Experience ~60% Ethnic and Gender Diversity >80% Executives with Large Public Company Scaling Expertise Kevin Pegels Chief of Global Operations Aimee Hoyt Chief People Officer Kathryne Reeves Chief Marketing Offi
Slide 51: Statement regarding use of non-GAAP financial measures
Statement regarding use of non-GAAP financial measures 48 The company reports non-GAAP results for diluted earnings per share, net income, gross margin, operating expenses, including research and development expense, selling general and administrative expense, legal contingencies and settlement, and
Slide 52: Core Illumina Non-GAAP Reconciliations
Core Illumina Non-GAAP Reconciliations 48 FY '22A Gross Profit $ (mm) % Margin GAAP gross profit (b) $3,107 68 % Amortization of acquired intangible assets 38 1 % Restructuring (c) 1 - Non-GAAP gross profit (a) $3,146 69 % FY '22A Operating Margin $ (mm) % Margin GAAP operating profit $ 481 11 % Cos