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NanoString Technologies Files for Chapter 11 Bankruptcy

NEW YORK – NanoString Technologies and three of its subsidiaries have filed for Chapter 11 bankruptcy protection, signaling the potential for a sale of the company or its product lines.

The Seattle-based spatial biology firm, along with its subsidiaries in Germany and the Netherlands and NanoString Technologies International, filed its Chapter 11 petition on Sunday in the US Bankruptcy Court for the District of Delaware. According to the petition, the company had $274.7 million in total assets and $325.3 million in total debts as of Sept. 30, 2023.

NanoString said in a statement that it has also secured a debtor-in-possession (DIP) loan of at least $40 million from certain existing noteholders. Upon approval of the bankruptcy court, this funding is expected to provide "sufficient liquidity to operate the company’s business during the pendency of the cases," according to the firm.

"The unexpected outcome of the November GeoMx patent litigation trial in Delaware and the unusually large magnitude of the damages awarded by the jury have forced us to take proactive steps to protect our stakeholders, customers, and employees," NanoString President and CEO Brad Gray said in a statement. "We believe Chapter 11 protection will provide us with the necessary breathing room to continue to serve our customers while we address our litigation and the related financial challenges."

In November 2023, a Delaware jury found that NanoString's GeoMx Digital Spatial Profiler infringed seven patents held by its competitor 10x Genomics, awarding the latter $31 million in damages. The result sent shares of NanoString tumbling more than 50 percent the next trading day, prompting the company to withdraw its full-year 2023 and fourth-quarter financial guidance.

As it goes through Chapter 11 restructuring, NanoString said its current management team, board of directors, and employees will continue to operate the business and serve customers. The company will also pay its employees in the usual manner and continue their primary benefits without disruption.

NanoString said the process will also allow it to stay all ongoing patent litigation against it worldwide.

Additionally, NanoString said it plans to "explore strategic alternatives," including a potential sale of all or parts of the firm's business. "The company has received and is currently evaluating multiple preliminary indications of interest as part of this process," it said.

NanoString is represented by Willkie Farr & Gallagher as counsel, AlixPartners as restructuring adviser, and Perella Weinberg Partners as restructuring investment banker.

Embattled in a multifront patent war with competitor 10x Genomics, NanoString had a tumultuous 2023, losing a string of cases in the US and abroad.

On Dec. 31, the company laid off approximately 50 employees or about 9 percent of its workforce. Additionally, it received a delisting notice from the Nasdaq on Jan. 4 because the bid price for its common stock had closed below the $1.00 per share minimum bid price requirement for the previous 30 consecutive business days.

During a company presentation at the JP Morgan Healthcare Conference in January, Gray said the company hasn't decided if it will issue financial guidance for 2024. However, he noted that the investment community is "misjudging the long-term impact of litigation on NanoString's ability to flourish and lead in spatial biology."

In mid-morning trading on the Nasdaq, NanoString's stock was down 72 percent at $.13 per share.