Drugmaker Regeneron Pharmaceuticals will buy genetic testing firm 23andMe Holding for $256 million through a bankruptcy auction, the companies said Monday.

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Regeneron said it will comply with 23andMe's privacy policies and applicable laws with respect to the use of customer data and that it is ready to detail its intended use of the data to a court-appointed overseer.

The bankruptcy proceedings, filed in March, have raised privacy concerns as the genomics company had a data breach in 2023 that exposed millions of customers' genetic data.

As part of the agreement, Regeneron will acquire all units of 23andMe, except Lemonaid Health, which the genetic testing firm plans to wind down.

After the transaction completes, 23andMe will continue to operate as a wholly-owned direct or indirect unit of Regeneron, the companies said.

The companies expect to close the deal in the third quarter.