Medtronic (NYSE:MDT) announced today that it entered into a set of agreements to acquire insulin delivery technology developer EOFlow.
Seongnam, South Korea-based EOFlow develops the EOPatch — a tubeless, wearable and fully disposable insulin delivery device.
EOFlow already launched its EOPatch insulin delivery system in Korea and Europe. The company submitted the insulin delivery device for U.S. FDA clearance in January. EOFlow already has FDA breakthrough device designation on a wearable, integrated artificial pancreas. The disposable device features a glucose monitoring sensor, insulin pump and automated insulin delivery algorithm.
The stocks of insulin delivery tech competitors Insulet and Tandem Diabetes Care were down today on the news.
Medtronic plans to add EOFlow’s offerings to its existing diabetes portfolio. That includes its Meal Detection Technology algorithm and next-generation continuous glucose monitor (CGM). The medtech giant just one month ago received FDA approval for its own insulin delivery technology, the MiniMed 780G. MiniMed 780G features the next-generation sensor and Meal Detection Technology, creating a closed-loop artificial pancreas.
“We have not blinked when it comes to diabetes, and we’re shifting to offense as we continue to invest heavily in assembling our ecosystem of durable pumps, smart pens, patch pumps, sensors, algorithms, and customer service with multiple programs under development. Having this ecosystem is really important because we believe the market will move from CGM first to automated insulin delivery, and we are well-positioned for that trend,” Medtronic CEO Geoff Martha said during the company’s earnings call today.
According to a news release, the EOFlow acquisition expands Medtronic’s ability to address the needs of more individuals with diabetes, regardless of where they are in their treatment journey or their preference for insulin delivery methods.
“Our goal is to simplify diabetes management and deliver the well-established benefits of automated insulin delivery to our customers in the ways they want and need,” said Que Dallara, EVP & President, Medtronic Diabetes. “We’re excited to introduce a differentiated wearable patch option to provide more patient choice and drive further innovation for those who want to use technology to make living with diabetes easier. We look forward to expanding our offerings to participate in the patch pump market and enabling those customers access to our seamless ecosystem of support.”
Dallara spoke with Drug Delivery Business News recently about the progress in Medtronic’s Diabetes business.
About EOFlow and the EOPatch
EOFlow’s EOPatch features a proprietary microfluidic technology. The company designed it to deliver insulin with high accuracy and reliability while minimizing the risk of insulin occlusion. It has marketing authorization in Europe, South Korea, Indonesia and the United Arab Emirates. The system features a compatible smartphone application allowing users to monitor and control the patch directly from their phone.
Medtronic said that, upon the closing of the transaction, it plans to quickly integrate EOPatch with its next-generation sensor and Meal Detection Technology algorithm.
The company said that, with the development and regulatory authorization of the next-generation EOPatch, it can offer access to a broad range of solutions. These offerings span multiple daily injections (MDI), tethered insulin pumps and wearable insulin patch technologies. Medtronic said they all leverage clinically advanced and proven algorithms while seamlessly integrating to a single CGM platform.
“We’re thrilled to accelerate our next phase of growth with a partner like Medtronic who shares our goal of simplifying diabetes management to make life easier for the customers we serve,” said Jesse J. Kim, CEO and founder of EOFlow. “Together, we’ll work to advance innovation in wearable insulin patch technology to expand our reach to more individuals around the world living with diabetes. With a global footprint in over 100 countries, ability to scale up manufacturing quickly, and advanced software and sensor capabilities, Medtronic is the ideal strategic partner for EOFlow.”
Overview of the acquisition
Medtronic plans to acquire all shares belonging to Kim and EOFlow President Luis Malave at KRW 30,000 ($22.55) per share. The company acquires new shares at a price of KRW 24,359 ($18.31) apiece to fund EOFlow’s operational and R&D requirements.
According to Medtronic, it also plans to undertake a public tender offer to acquire up to all outstanding public shares. Those also come with a price of KRW 30,000. Medtronic will hold at least a majority of the shares outstanding on a fully diluted basis. The company intends to acquire all outstanding shares in EOFlow and delist the company.
Total consideration for the acquisition comes to KRW 971 billion, or $738 million. Medtronic expects to close the acquisition in the second half of this calendar year, subject to certain conditions. That includes receipt of required regulatory clearances.
The company expects the transaction to be less than 1% dilutive to its adjusted earnings per share in each of the first three years. It should remain neutral to accretive thereafter. Medtronic released its fourth-quarter financial results today, forecasting 4.5% revenue growth in the coming fiscal year.
Medtronic Diabetes continues to progress
On top of the FDA approval for MiniMed 780G and this EOFlow acquisition, Medtronic’s Diabetes unit has had an eventful couple of months.
Shortly after receiving the MiniMed approval, the company confirmed a full resolution for its FDA warning letter. In December 2021, the FDA had issued a warning letter to Medtronic’s Northridge, California, Diabetes headquarters. The company took proactive actions to continue to strengthen its quality systems.
Not long after resolving the letter, Medtronic received another regulatory boost in Canada. The country’s regulatory body licensed the use of the next-generation Guardian 4 CGM sensor with MiniMed 780G. Canadian officials previously approved the MiniMed 780G pump in November 2022. Medtronic plans to launch the system there by the end of 2023.
However, in the company’s earnings announcement, it reported a 3.3% decrease in reported revenues for the Diabetes unit for the full year. Sales totaling $2.262 billion did increase by 2.4% on an organic basis, however.
Medtronic reported low-double-digit growth in Western Europe amid strong adoption of MiniMed 780G, though. U.S. preorders of the system started May 15 , with shipments starting June 1. Medtronic officials are encouraged to see orders already exceeding expectations.