More than two months after filing for Chapter 11, NanoString Technologies has found a buyer in Bruker, which will acquire substantially all the bankrupt company’s assets for approximately $392.6 million cash, plus assumption of liabilities, after winning a competitive auction.

Bruker won the auction, held Tuesday, by increasing its earlier qualifying bid with a revised offer that was 78% above the $220 million offered by healthcare investment firm Patient Square Capital.

“As a global leader in the life science analytical instrument industry, Bruker is uniquely positioned to ensure ongoing customer access to NanoString’s innovations,” Brad Gray, NanoString’s president and CEO, said in a statement.

Bruker tops GEN’s most recent A-List of five public companies among the Top 10 Spatial Biology Companies. In snapping up NanoString, Bruker signaled its intent to expand within spatial biology, a field the Billerica, MA-based buyer entered in 2020 when it bought Canopy Biosciences for an undisclosed sum. A year later, it made an undisclosed majority investment in Acuity Spatial Genomics that enabled the company to launch.

In 2022, Canopy—now a Bruker subsidiary—launched the CellScape™ system designed to deliver single-cell targeted spatial proteomics for complex whole-tissue analysis of the tumor microenvironment, as well as deep immune profiling for applications in immunology, neuroscience, and infectious disease.

At its Investor Day in June 2023, Bruker disclosed that its spatial biology and cellular analysis business was on track to generate more than $70 million in revenue that year. Bruker also detailed plans to transform Canopy into a performance leader in spatial biology.

“Stalking horse”

Patient Square last month agreed to serve as the “stalking horse” bidder in a sale process supervised by the U.S. Bankruptcy Court. As a stalking horse, Patient Square planned to purchase substantially all of NanoString’s global business operations as a going concern.

The sales process—which took place under Section 363 of the U.S. Bankruptcy Code—allowed for the submission of higher or otherwise better offers than that of Patient Square, which reported approximately $8 billion of assets under management as of December 31, 2023.

Seattle-based NanoString initiated the sales process by joining with three of its subsidiaries in filing for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code on February 4. NanoString blamed a $31 million jury award assessed against it last November in a patent infringement case filed by rival 10x Genomics.

A jury held that NanoString’s GeoMx® Digital Spatial Profiler (DSP) infringed seven patents that 10x held after exclusively licensing them from Prognosys Biosciences. 10x was awarded $31 million in damages ($25 million in lost profits, $6 million royalty) in a lawsuit it filed against NanoString Technologies in the U.S. District Court for the District of Delaware.

NanoString—which is appealing the decision—responded to the jury award by withdrawing its full-year 2023 guidance to investors of $175 million to $185 million, then eliminating 9% of its workforce (about 50 employees) during the first quarter.

The publicly traded company suspended trading in its shares on February 14 after Nasdaq said it would delist the stock for closing below the $1/share minimum price for 30 consecutive business days. NanoString’s shares were delisted on April 8.

Defense and response

NanoString also mounted an unusually public defense of its actions and decision to file for Chapter 11, and voiced equally unusual public criticism of a competitor, accusing 10x of seeking to stifle innovation through litigation.

Joining NanoString in that criticism has been a dozen leading scientists from 10 academic institutions. In a pointed commentary published in February in GEN, the scientists expressed alarm over what they called the negative impact that patent litigation is having on the field of spatial biology, and advocated unspecified antitrust action “to safeguard the spirit of exploration and innovation in spatial biology.”

10x responded to that commentary in March through a letter it issued to customers and partners and posted on its website. In that letter, 10x CEO Serge Saxonov, PhD, and CSO Ben Hindson—both co-founders of the company—committed the company to continuing its pursuit of innovation, while insisting that the company has “been diligent in following both the spirit and the letter of the law” in challenging its rivals through lawsuits over what 10x argues is their unlawful incorporation of its patented technologies in their product offerings.

“The narrative portraying 10x as impeding scientific progress could not be further from the truth,” Saxonov and Hindson wrote.

That sentence in the letter links to a page on 10x’s website defending its patent protection approach—and singling out NanoString for criticisms that it infringed on 10x patents, that NanoString executives discussed plans to crush 10x in internal documents, and that poor decisions by NanoString management led to its bankruptcy.

“NanoString’s management failed to build a sustainable company after more than 20 years in business, taking on massive debt while burning large amounts of cash well before 10x even filed the first patent infringement case,” 10x asserted.

10x continued a defense of its litigation strategy that Saxonov articulated last fall on GEN’s “Close to the Edge” video interview series, when he made his case for 10x’s series of patent lawsuits against competitors.

NanoString’s product offerings include:

  • GeoMx® Digital Spatial Profiler, which combines whole tissue imaging with gene expression and protein data for spatial whole transcriptomics and proteomics.
  • CosMx™ Spatial Molecular Imager, a single-cell imaging platform applying spatial multiomics, and designed to enable researchers to map single cells in their native environments to extract deep biological insights and novel discoveries from one experiment.
  • AtoMx™ Spatial Informatics Platform, a cloud-based informatics solution with advanced analytics and global collaboration capabilities, designed to enable powerful spatial biology insights.
  • nCounter® Analysis System, designed to securely profile the expression of hundreds of genes, proteins, miRNAs, or copy number variations, simultaneously with high sensitivity and precision.

“Not going away”

In an interview with GEN days after the Chapter 11 filing, from the sidelines of the Advances in Genome Biology and Technology (AGBT) meeting, Joe Beechem, PhD, NanoString’s CSO and senior vice president of research and development, said NanoString set out to specialize in high plex, multiomic, FFPE applications, leaving other specialized technologies to other companies attending the NanoString-hosted first spatial genomics summit at AGBT’s 2019 meeting.

“NanoString wasn’t structured to have the money laying around to be able to pay the legal bills that come when a monster company litigates you from A to Z,” Beechem said. “We made a decision: we want to keep our customers’ access to our products and new technologies, to keep building CosMX and GeoMX instruments, to continue to develop our entire product development roadmap, to provide customer service, and to do everything that we are currently doing. And Chapter 11 allows us to do that.”

Beechem declared: “We are in a situation where one big player is trying really hard, and has the potential, to stifle the whole thing. I don’t think they are going to succeed. We are not going away. But we need everybody’s help. We are going to get out of this.

Upon closing of the sale to Bruker, which is expected in early May, NanoString will be owned by Bruker on a go-forward basis, and NanoString’s business operations will emerge from Chapter 11.

NanoString said its acquisition by Bruker validated its technology and ensured continuity of its business operations and product development efforts for customers and “substantially” all of its employees.

The law firm of Willkie Farr & Gallagher represents NanoString as counsel. AlixPartners is acting as NanoString’s restructuring advisor, while Perella Weinberg Partners is its restructuring investment banker. Bruker is represented by Morgan Lewis & Bockius as counsel and Goldman Sachs & Co. as financial advisor.

“Our loyal customers, suppliers, and employees have stood with us through this dynamic period,” Gray stated, “and we are grateful for their dedication to the future of our technology and our mission to map the universe of biology.”

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