Biora Therapeutics Undertakes Chapter 11 Sale Process to Position Business for Future Growth

Rhea-AI Summary

Biora Therapeutics has initiated a Chapter 11 bankruptcy process and secured up to $10.25 million in debtor-in-possession financing from its prepetition creditors. The company aims to strengthen its balance sheet through a court-supervised sale process, with the Lenders serving as stalking horse bidders.

The bankruptcy filing in Delaware includes provisions for continuing normal business operations, maintaining employee wages and benefits, and paying vendors and suppliers under normal terms during the Chapter 11 case. The company plans to focus on developing its BioJet and NaviCap platforms through an expedited sale timeline designed to minimize disruption to operations.

Positive

• Secured $10.25 million in new financing to support operations
• Ability to continue normal business operations during restructuring
• Lenders committed as stalking horse bidders
• Maintaining vendor and employee payments during process

Negative

• Filed for Chapter 11 bankruptcy protection
• Company assets to be sold through court-supervised process
• Financial distress requiring restructuring
• Uncertain future ownership structure

Insights

Financial Restructuring Expert

The Chapter 11 filing by Biora Therapeutics represents a critical restructuring phase with significant implications. The secured $10.25 million DIP financing provides essential operational runway, but the accelerated Section 363 sale process signals serious financial distress. The presence of pre-arranged stalking horse bidders from existing lenders suggests a coordinated restructuring strategy, though this could limit competitive bidding and potentially impact asset value realization. The company's small market cap of $2 million and the focus on maintaining vendor relationships during bankruptcy indicates a delicate attempt to preserve operational continuity while restructuring the balance sheet. This type of pre-packaged bankruptcy typically results in significant equity dilution or complete wipeout for existing shareholders.

Biotech Industry Analyst

The bankruptcy filing raises serious concerns about the commercial viability of Biora's smart pill platforms - BioJet and NaviCap. While management frames this as a strategic move to enable future development, Chapter 11 proceedings often indicate fundamental challenges in the biotech development pathway. The commitment from existing lenders to provide DIP financing suggests there's perceived value in the intellectual property, but the expedited sale process could compromise the company's ability to maximize the value of its drug delivery technology platforms. The restructuring introduces significant uncertainty around the timeline for clinical development programs and potential regulatory approvals, which are critical value drivers for biotech companies.

Market Research Analyst

This bankruptcy filing represents a severe market position deterioration for Biora. The company's tiny market cap of $2 million pre-filing suggests the market had already priced in significant distress. The stalking horse bid arrangement with existing lenders could deter potential strategic buyers, potentially limiting the company's ability to secure optimal value for its assets. While the DIP financing provides short-term operational stability, the expedited 363 sale process typically results in substantial shareholder value erosion. The focus on maintaining vendor and employee relationships indicates an attempt to preserve going concern value, but historical patterns in biotech bankruptcies suggest challenging recovery prospects for existing equity holders.

Sale process will help enable next stage of product development

Secures up to $10.25 million in new financing to support ongoing business operations

SAN DIEGO, Dec. 30, 2024 (GLOBE NEWSWIRE) -- Biora Therapeutics, Inc. (“Biora” or the “Company”), a biotech company developing smart pill-based therapeutic platforms, today announced it has reached an agreement with certain of its prepetition creditors (the “Lenders”) to provide financing to support a chapter 11 sale process, which will ultimately lead to a strengthened balance sheet and help enable it to launch its next stage of product development. To effectuate the transaction, the Company has filed a voluntary petition under chapter 11 of the U.S. Bankruptcy Code in the District of Delaware.

Throughout this process, Biora expects to operate its business as usual and in the ordinary course as the Lenders have agreed to provide the Company with a debtor in possession financing facility of up to $10.25 million, subject to Court approval. This funding is expected to allow Biora to meet its obligations arising during the chapter 11 case to vendors, suppliers, employees and other stakeholders as it pursues a court-supervised sale process.

Biora intends to file a motion requesting approval of a marketing and sale process (the “Bid Procedures Motion”). The sales process is expected to occur on an expedited timeline which will help minimize any potential adverse impact on the Company’s operations, vendors, and employees and allow it to quickly emerge from the sale in a position to continue the clinical development of its products. The Bid Procedures Motion will facilitate a competitive bidding process under section 363 of the Bankruptcy Code, designed to achieve the highest or otherwise best value for Biora and its stakeholders. The Lenders have agreed to serve as a stalking horse bidder for the Company’s assets.

“This path will help allow us to focus on the BioJet and NaviCap platforms which we believe continue to make tremendous progress. We are happy that the Lenders recognize this progress and have showed their confidence by financing the process as we continue the development of our programs,” said Adi Mohanty, Chief Executive Officer of Biora Therapeutics.

The Company has filed customary motions with the court to authorize ongoing operations, including the timely, uninterrupted payment of employee wages, salaries, and benefits. Biora intends to pay vendors and suppliers in full under normal terms for goods and services provided during the chapter 11 case. The Company expects these motions to be approved in the coming days.

Court filings and other information regarding Biora’s court-supervised process is available at cases.ra.kroll.com/biora. The Company has set up an information line to answer questions about this announcement, which can be reached by calling 1-877-329-1873 (toll-free U.S. calls) or 1-646-817-8535 (international).

McDermott Will & Emery is Biora’s legal counsel, MTS Health Partners is its investment banker, and Evora Partners, LLC is its restructuring advisor.

About Biora Therapeutics
Biora Therapeutics is a clinical-stage biotech company developing two smart pill-based therapeutics platforms: the NaviCap™ platform for colon-targeted treatment of IBD, designed to improve patient outcomes through treatment at the site of disease in the gastrointestinal tract, and the BioJet™ platform for oral delivery of large molecules, designed to replace injection with needle-free delivery. For more information, visit bioratherapeutics.com.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including statements regarding the Company’s business and balance sheet strength, profitability, continued product development, advancement of its strategy, ability to continue operating its business, make timely payments and meet its obligations to vendors, suppliers, employees and other stakeholders, ability to maintain its workforce, and ability to implement the restructuring pursuant to the Chapter 11 cases and plan of reorganization, including the timetable of completing such transactions, if at all. These forward-looking statements are based on management’s current expectations. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to: the Company’s ability to obtain Court approval with respect to motions in the Chapter 11 cases; the effects of the Chapter 11 cases on the Company and on the interests of its constituents; the length of time the Company will operate under the Chapter 11 cases; the potential adverse effects of the Chapter 11 cases on the Company’s liquidity and results of operations and increased legal and other professional costs necessary to effect the Chapter 11 sale process; the potential risks associated with trading on the OTC Market, including liquidity constraints and limited regulatory oversight; risks related to the Company’s indebtedness that may restrict its current and future operations; and the Company’s ability to continue as a going concern. These factors could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s estimates as of the date of this press release. All forward-looking statements speak only as of the date made, and the Company disclaims any obligation to update any of these statements, even if subsequent events cause our views to change. The Company therefore cautions readers against relying on these forward-looking statements and they should not be relied upon as representing our views as of any date subsequent to the date of this press release.

Media Contact
media@bioratherapeutics.com

FAQ

What is the purpose of Biora Therapeutics' Chapter 11 filing?

Biora Therapeutics filed for Chapter 11 to facilitate a sale process, strengthen its balance sheet, and enable the next stage of product development while maintaining normal business operations.

How much financing did BIOR secure for its bankruptcy process?

Biora secured up to $10.25 million in debtor-in-possession financing from its prepetition creditors, subject to Court approval.

Will BIOR continue operating during bankruptcy proceedings?

Yes, Biora intends to continue normal business operations, including paying employees, vendors, and suppliers during the Chapter 11 process.

What happens to BIOR's development platforms during bankruptcy?

Biora plans to continue focusing on the development of its BioJet and NaviCap platforms through the restructuring process.

Who is the stalking horse bidder for BIOR's assets?

The company's Lenders have agreed to serve as the stalking horse bidder for Biora's assets in the court-supervised sale process.