Medtronic drops $738m takeover of wearable insulin pump firm
Medtech giant Medtronic has decided not to go ahead with a planned acquisition of EOFlow, a developer of patch-based insulin pumps, saying that there have been “multiple breaches” of their takeover agreement.
The deal was first announced in May and had been due to be completed by the end of the year, with Medtronic offering $738 million for the business, saying it would combine EOFlow’s tubeless, wearable, and fully disposable EOPatch with its continuous glucose monitor (CGM) devices and artificial intelligence algorithms to create a “seamless” system to help patients manage their illness.
Now, it has said in a regulatory filing that it has “exercised its right to terminate the agreements” with the South Korean company and does not believe any termination fee will be payable.
The deal has been axed a few weeks after a federal judge in the US blocked EOFlow from selling its insulin patch pump in a lawsuit brought by Insulet, which sells a rival product.
The lawsuit, filed in August, claims that EOFlow’s product is very similar to Insulet’s Omnipod pump and infringes three US patents on the device. It also alleges that EOFlow was originally developing an alternative device, but changed direction after stealing Omnipod trade secrets.
Wearable patch pumps are smaller and more discreet than conventional insulin pumps, which tend to be bulky and worn on a belt or carried. Insulet’s Omnipod was seen as a revolutionary new product when it reached the market a few years ago and has grown rapidly into a blockbuster, with sales topping $1.1 billion in the first nine months of this year.
That has left Medtronic and others in the insulin pump market scrambling to catch up, and the deal with EOFlow was the company’s solution to bridging the gap, with analysts suggesting that Medtronic’s marketing muscle could spell trouble for Insulet.
At the time the deal was first announced, Medtronic said it was “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.” Now, the company will have to look elsewhere for a technology that can rival Insulet’s product.
EOPatch is already authorised for sale in Europe and other markets, including South Korea, Indonesia, and the United Arab Emirates (UAE), but earlier this year Insulet also claimed a court victory against EOFlow – which included an injunction on sales – in Germany. The company has not commented on the outcome of the lawsuits or Medtronic’s decision to abandon its takeover.