The drugmaker Regeneron Pharmaceuticals will buy the genetic testing firm 23andMe Holding for $256m through a bankruptcy auction, the companies said on Monday.

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 companies expect to close the deal in the third quarter.

The bankruptcy proceedings, filed in March, had drawn scrutiny from lawmakers who warned that millions of customers’ genetic data could be sold to unscrupulous buyers.

23andMe last month agreed to allow a court-appointed overseer for the company’s handling of customers’ genetic information and its security policies during the bankruptcy.

As part of the agreement, Regeneron will acquire all units of 23andMe, except the telehealth service 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 company has collected genetic data from 15 million customers who ordered its DNA testing kits online and provided saliva samples. It had been struggling with weak demand for its ancestry testing kits and the fallout from a data breach in 2023 that exposed millions of customers’ genetic data.