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Lucira Health, Inc. – With Combined COVID-19/Flu Testing Kit Now FDA Approved, Debtors Name Pfizer (Looking to Counter Declining Paxlovid Sales) as Successful Bidder at Auction


April 6, 2023 – Further to a March 27th bidding procedures order [Docket No. 182] and an auction concluded on April 6th, the Debtor notified the Court that it had selected Pfizer Inc. as the successful bidder for substantially all of the Debtor’s assets [Docket No. 221]. Pearsanta, Inc. was designated as the back-up bidder. 

Pfizer's APA has yet to be filed (there are no details as to terms) and a sale hearing is scheduled for April 13th.

Facing a predicted 58% drop in annual sales of its COVID-19 antiviral Paxlovid, Pfizer has looked for ways to counter that drop, including through arrangements with diagnostic developers (they have a deal with, inter alia, the Debtors, whereby purchasers of testing kits get access to Pfizer supplied information). The Debtors' combined Covid/flu test would seemingly fit into a strategy of protecting Paxlovid sales.

Case Status

On February 22, 2023, Lucira Health, Inc. (Nasdaq: LHDX; “Lucira” or the “Debtor”) filed for Chapter 11 protection noting estimated assets between $100.0mn and $500.0mn (no funded debt); and estimated liabilities between $50.0mn and $100.0mn (the Debtor further notes assets of $145.9mn and liabilities of $84.8mn as at December 31, 2022). At filing, the Debtor, a developer of infectious disease testing kits, cited a decline in COVID test kit sales and the failure of the FDA to approve its 2022-2023 flu testing kit as precipitating its need to seek bankruptcy shelter. In a case of unpropitious timing and/or a disastrous lack of communication, the FDA announced approval of the testing kit on February 24, 2023.

The unsurprisingly aggrieved Debtors and the FDA have have since engaged in a spirited blame game.

The Bidding Procedure Motion

The Debtor's bidding procedures/sale motion [Docket No. 16] states “Following an extensive prepetition marketing process, the Debtor determined, in consultation with Armanino LLP (‘Armanino’) and the Debtor’s other advisors, that an expedited sale process under chapter 11 of the Bankruptcy Code is the best path forward to consummate a value-maximizing Sale of its Assets. For the reasons set forth herein, a marketing and Sale process under section 363 of the Bankruptcy Code provides the Debtor with certain advantages that were not available to the Debtor during the prepetition marketing process.”

Marketing Efforts

In a declaration in support of the bidding procedures motion [Docket No. 18], Alexander Brandtneris of Armanino states, “Beginning in the Fall 2022, following an unanticipated delay in the FDA’s approval of the Debtor’s combination test kit for COVID-19 and influenza A and B and a decline in COVID19 testing, the Debtor determined that it was necessary to explore strategic alternatives aimed at maximizing optionality while containing costs wherever possible to best preserve available liquidity and maximize the value of the Assets for all its stakeholders.

On November 13, 2022, the Debtor retained Armanino to assist in these efforts. Commencing shortly thereafter, the Debtor, with the assistance of its professional advisors, pursued multiple work streams to evaluate a range of strategic alternatives with the goal of maximizing the value of the Debtor and its Assets. The Debtor, in consultation with Armanino, launched a marketing process for the Assets on December 13, 2022. Armanino contacted or received inbound interest from approximately 177 strategic and financial parties regarding a potential transaction for the Debtor or the Assets. These parties were provided non-confidential presentation materials prepared by the Debtor, including a sale memorandum with the detailed background of the Debtor and the Assets. Certain confidential information (including access to a virtual data room) was provided to approximately 35 parties who executed a non-disclosure agreement. All interested parties who executed a non-disclosure agreement were also invited to attend a post-NDA webinar ('Webinar') with the Debtor’s management on January 5, 2023. 

Despite the best efforts of the Debtor and its advisors, the strategic alternative exploration and evaluation process—including the marketing process—did not produce a satisfactory stalking horse offer to purchase the company as a going concern or to purchase the Assets outside of the protections afforded by a chapter 11 process. Without a clear out-of-court solution to maximize value, the Debtor pivoted to preparing for a chapter 11 filing and Sale process under section 363 of the Bankruptcy Code."

About the Debtors

According to the Debtor: “Lucira is a medical technology company focused on the development and commercialization of innovative infectious disease tests to make lab-quality diagnostics more accessible. Lucira designed its test platform to provide accurate, reliable, PCR-quality test results anywhere and at any time. Beyond its already commercialized COVID-19 and Point of Care COVID-19 & Flu Tests, Lucira is working on new diagnostic tests for respiratory infections and other categories including women’s health and sexually transmitted infections (STIs).”

The Nadiro Declaration adds: "The Debtor is a corporation organized under the laws of the State of Delaware, with its principal office located in Emeryville, California.
7. Founded in 2013, Lucira is a medical technology company focused on the development and commercialization of transformative and innovative infectious disease test kits.

Lucira has developed a proprietary testing platform that produces molecular testing for infectious diseases in a single-use and consumer-friendly test kit. That platform enables Lucira to develop a pipeline of infectious disease test kits, which, to date, has focused on respiratory diseases, including COVID-19 and influenza A and B virus indications. Lucira’s test kits are powered by two AA batteries and fit in the palm of a hand. The kits are designed to securely deliver a clinically relevant test result to users at home, to healthcare providers, and to required public health authorities, anywhere and at any time. In addition, the kits are coupled with a digital platform, Lucira Connect, which is able to connect users with virtual care providers that can prescribe treatment plans, including antiviral medications if necessary.

Lucira’s business model has been to pursue the commercialization of a broad menu of test kits for use within point-of-care ('POC') and prescription or over-the-counter ('OTC') athome settings through partnerships with customers, such as hospital networks, payors, corporate senior living facilities and large employers. All of Lucira’s net sales have been derived from sales of its test kits through its healthcare, business-to-business, international and direct-to-consumer channels."  

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The post Lucira Health, Inc. – With Combined COVID-19/Flu Testing Kit Now FDA Approved, Debtors Name Pfizer (Looking to Counter Declining Paxlovid Sales) as Successful Bidder at Auction appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.

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