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  1. Deals Analysis
June 18, 2020

Medtronic secures $337m for diabetes portfolio

Despite a dipping diabetes tech market stemming from the Covid-19 crisis, Medtronic has netted a guarantee of up to $337m in R&D funding for its diabetes portfolio.

By Chloe Kent

Medtronic has announced that Blackstone Life Sciences has agreed to provide up to $337m in funding for research and development (R&D) in its diabetes portfolio. This is Blackstone’s first investment in the medical device sector.

The money will be used to advance new, innovative products to reduce the burden of diabetes management. Medtronic’s diabetes device portfolio is designed to improve patient outcomes and provide greater lifestyle flexibility to type 1 diabetes patients.

Medtronic will receive up to $337m from Blackstone over the next several years to fund four different diabetes R&D programmes, the specifics of which Medtronic is not disclosing for competitive reasons. The funding received for each project will be equal to the R&D costs incurred.

If the projects are successfully commercialised, Medtronic will pay royalties in the low- to mid-single digit range as a percentage of sales to Blackstone.

Medtronic executive vice president Sean Salmon said: “This investment is important for people living with diabetes, as we expect it will expand our offering of future insulin delivery and sensor innovations that have the potential to improve patients’ management of their diabetes.

“Over the past 12 months, Medtronic has significantly increased its investment in Diabetes R&D, including investments in a series of near-term programs such as the MiniMed™ 780G insulin pump system, our Personalized Closed Loop (PCL) system, our extended wear infusion set, and our Zeus and Synergy sensors. The added investment from Blackstone empowers us to pull forward specific programs in our pump and CGM [continuous glucose monitor] pipeline that aim to address unmet patient needs, beyond PCL and Synergy.”

Medtronic reveals several successful studies

Alongside its deal with Blackstone, Medtronic announced the results from a US pivotal study into its MiniMed 780G Advanced Hybrid Close Look (AHCL) system at the virtual 80th Scientific Sessions of the American Diabetes Association (ADA).

The system met all study endpoints and demonstrated high user satisfaction across the studies presented at the conference. The MiniMed 780G system features a default target of 100mg/dL (with the option of 120mg/dL), programmable insulin action time from two to eight hours, and automatic corrections every five minutes. The device has now received a CE mark and is expected to begin shipping in Europe later this year. Medtronic expects to submit the device to the US Food and Drug Administration (FDA) for approval this summer.

The company has also shared study results of a first-of-its-kind extended wear infusion set. Infusion sets allow people on insulin pump therapy to deliver insulin under the skin to maintain healthy blood glucose levels. Current-generation infusion sets must be changed every two to three days, but Medtronic’s new system can be safe and effective for up to seven days. The set has also received a CE mark and is being studied in a pivotal US trial.

Covid-19 and the diabetes market: sales slump amid global crisis

Medtronic’s diabetes division saw a 9% revenue slump in April 2020, most likely due to Covid-19 keeping patients away from doctor’s offices, impacting sales of insulin pumps and other diabetes devices.

However, an agreed sum total payment of $337m from a massive private equity firm like Blackstone shows that the slump hasn’t put off potential investors. While a 9% drop in revenues could be pretty damning under different circumstances, the ongoing global pandemic means occurrences like this are actually relatively unsurprising.

Blackstone Life Sciences global head Nicholas Galakatos said: “This collaboration, our first investment in the medical devices space, demonstrates how Blackstone Life Sciences is using its capital and expertise to help bring vital technologies, with the potential to save lives, to patients who need them.

“We look forward to partnering with Medtronic, the leader in this space, to advance their next generation of innovative medical devices for diabetes patients.”

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Verdict deals analysis methodology

This analysis considers only announced and completed deals from the GlobalData financial deals database and excludes all terminated and rumoured deals. Country and industry are defined according to the headquarters and dominant industry of the target firm. The term ‘acquisition’ refers to both completed deals and those in the bidding stage.

GlobalData tracks real-time data concerning all merger and acquisition, private equity/venture capital and asset transaction activity around the world from thousands of company websites and other reliable sources.

More in-depth reports and analysis on all reported deals are available for subscribers to GlobalData’s deals database.

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