Medtronic (NYSE:MDT) filed a Form 8K with the SEC today stating that it terminated its agreement to buy EOFlow.
The medtech giant struck a $738 million deal to acquire the Seongnam, South Korea-based insulin patch pump maker in May. EOFlow develops the EOPatch — a tubeless, wearable and fully disposable insulin delivery device.
Medtronic’s SEC filing stated that, based upon “multiple breaches,” the company notified EOFlow of its decision to terminate the deal. The company said it believes no termination fee is payable under the agreement and the termination doesn’t impact its fiscal 2024 guidance.
A spokesperson for Medtronic issued the following statement to Drug Delivery Business News:
Medtronic has exercised its rights to terminate its agreement to acquire EOFlow as a result of multiple breaches on their part. We remain steadfast in our commitment to bringing a differentiated patch pump to market that integrates our most advanced CGM platform and clinically proven Meal Detection Technology algorithm. We understand how important choice is for the diabetes community and we continue to advance innovations that help make living with diabetes easier in the ways our customers need and want.
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.
Medtronic’s plans to buy EOFlow looked set to pit the company against leading patch pump maker Insulet. Tandem Diabetes Care also has a new patch pump that won FDA clearance earlier this year. Analysts were quick to dispel any fears over the market share for the likes of Insulet after Medtronic announced the agreement in May. However, it appears the deal won’t go through after all.
In the SEC filing, the company highlighted its existing pipeline of insulin delivery technology. It includes the MiniMed 780G automated insulin delivery system, which won FDA approval in April. The company also offers the InPen smart insulin pen with the Simplera CGM.
In pointing to its existing product pipeline, Medtronic also said it has a differentiated patch pump under development.
Analysts’ reaction to the Medtronic news
BTIG analysts Marie Thibault and Sam Eiber wrote in a report that they remain unsure if the termination came as a result of legal battles at EOFlow. However, they note several legal wins for Insulet against EOFlow, including a temporary restraining order issued in August. The U.S. District Court for the District of Massachusetts issued a preliminary injunction in October, too.
They wrote that Insulet filed a patent suit against EOFlow’s German distribution partner. That led to the suspension of sales in March 2023. The analysts maintain a “Buy” rating for Insulet in the wake of the news as the company remains atop the patch pump market.
“We think this update solidifies Insulet’s monopolistic position in the insulin patch pump space and highlights the strength of its patent portfolio,” they wrote. “We believed [Insulet’s] large headstart in patch pumps, its integration with CGMs, and compelling business model create a significant competitive advantage versus potential new entrants.”