Seattle-based research device company NanoString Technologies Inc. (Nasdaq: NSTG) has filed for Chapter 11 bankruptcy protection in federal court in Delaware.
The move, announced Sunday, comes as legal battles with competitor 10x Genomics Inc. (Nasdaq: TXG) over patent claims continue to hammer NanoString. NanoString said in a news release it is looking at "strategic alternatives," including selling the company or certain product lines.
“Our decision to file for Chapter 11 restructuring is a direct result of the extraordinary campaign of litigation instigated by 10x Genomics," NanoString CEO Brad Gray said in a statement to the Business Journal. "We believe prioritizing unfair litigation over innovation is detrimental to science. This voluntary restructuring will fortify us to continue serving our customers with the same commitment to advancing science and operating with integrity.”
NanoString's leadership, board and employees will continue to operate the company. The Chapter 11 proceedings also stop all ongoing patent litigation against the company. NanoString is receiving $40 million in debtor-in-possession financing, a special type of financing for companies that file for bankruptcy.
NanoString, founded in 2003, makes high-powered, high-tech imaging and research tools. Pleasanton, California-based 10x, which was founded in 2012, also makes imaging tools, as well as software and analysis tools. 10x has sued NanoString in the U.S., Germany and the European Union’s Unified Patent Court (UPC).
On Nov. 17, 10x announced a jury in the U.S. District Court for the District of Delaware found in favor of 10x in a patent lawsuit, awarding 10x more than $31 million in damages. NanoString released a statement saying it plans to appeal the decision, a process that usually takes 12 to 18 months.
The UPC in September issued a preliminary injunction blocking sales of some NanoString products in the 17 UPC countries while the case awaits a full hearing, expected this summer.
Gray previously told the Business Journal the NanoString revenue flow blocked in Europe represents about 10% of the company’s overall revenue, and NanoString’s legal bills are “many millions of dollars,” and that money would otherwise go into product innovation.
In January, NanoString announced layoffs to about 50 employees, which followed an announcement of roughly 110 layoffs in October. The company expects to complete the most recent round of layoffs by the end of March, after which it will have a little more than 500 employees.
NanoString in January received notice from the Nasdaq that its stock had closed below $1 per share for the past 30 consecutive business days. NanoString has until July 2 to regain compliance by having its stock close at $1 or more for at least 10 consecutive business days.
NanoString can appeal if it doesn't regain compliance by then, or the company could qualify for an additional 180 days if it transfers its stock to the Nasdaq Capital Market. The company's stock was trading at around 11 cents per share Monday morning. NanoString generated $48.1 million in revenue during the third quarter, up from $29.5 million during the third quarter of 2022.
10x also has filed lawsuits against Cambridge, Massachusetts-based biotech Vizgen and Seattle-based biotech startup Parse Biosciences.
