About half a year after announcing its intent to acquire a South Korean maker of tubeless insulin pump technology, Medtronic is scrapping the deal.
In an 8-K filing (PDF) with the U.S. Securities and Exchange Commission on Wednesday, Medtronic said it had notified EOFlow of its decision to terminate their acquisition agreement. The medtech giant attributed the canceled deal to “multiple breaches” under the acquisition’s set terms, and the decision comes after EOFlow ran into legal trouble in a patent dispute with the diabetes hardware maker Insulet.
Presumably due to the alleged breaches of contract, Medtronic wrote in the filing that it “does not believe any termination fee is payable under the Agreements.” The company added that it doesn’t expect the terminated agreement to have any impact on the earnings per share it forecasted for its 2024 fiscal year.
But even as it sealed off one potential avenue into the realm of insulin patch pumps, Medtronic is keeping its eyes open. In a statement sent to Fierce Medtech, the company said: “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.”
The statement continued, “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 did not respond to a request for comment.
Medtronic originally announced the planned acquisition in late May. Under the terms of the deal, the devicemaker said it would pay out 30,000 South Korean won for all shares of EOFlow currently held by its president and all outstanding shares, while also putting forth a share subscription agreement that would see it pay 24,359 won each for additional shares to help fund EOFlow’s continued operations.
All told, Medtronic was offering up to 971 billion won, or about $738 million U.S., to buy out the company. The acquisition was expected to close in the second half of 2023, depending on the share acquisition and whether EOFlow’s technology would be able to secure certain regulatory clearances.
At the time, Medtronic hailed the proposed buyout as an expansion of its diabetes management offerings. According to the company, integrating EOFlow’s wearable, wireless pump—which can connect to a user’s smartphone and holds up to 3.5 days’ worth of insulin—with Medtronic’s own continuous glucose monitors and meal-detection algorithm would allow its technology to reach even more people with diabetes by offering additional insulin delivery options.
As of the deal’s cancelation this week, EOFlow’s patch pump had yet to secure FDA clearance, after the company submitted its application to the agency in late 2022. Elsewhere, however, it has racked up regulatory nods in Europe, Indonesia and the United Arab Emirates.
Stateside, EOFlow hit a legal roadblock this fall, as fellow insulin patch pump maker Insulet won a preliminary injunction in a lawsuit against EOFlow. Insulet alleged that the South Korean tech maker created its pump based on trade secrets stolen from Insulet; the October preliminary injunction stops EOFlow from manufacturing or selling any products that were based on Insulet’s Omnipod tech.
In its August complaint, Insulet argued that the EOPatch device is “strikingly similar” to the Omnipod pumps both in external appearance and internal mechanisms, adding of the latter that “many of the components are entirely interchangeable between the two products.”
That injunction will stay standing until a full trial of the case is complete.