Despite winning an FDA green light nearly three months ago for its first wearable insulin delivery system, Embecta is now discontinuing its patch pump program as part of a broader restructuring and layoffs within the diabetes care company.
Disclosed alongside full-year earnings results for its 2024 fiscal calendar, the former BD spinout said it planned to instead focus on its core injection hardware businesses in what it referred to as a brand transition in addition to paying off its more than $1.6 billion in debt.
“Following the recent U.S. FDA clearance that we received on the open-loop version of the pump that could be used by people with Type 1 or Type 2 diabetes, the decision to cease the pump program may come as a surprise,” Embecta President and CEO Devdatt Kurdikar said on the company’s investor call.
“However, it is important to understand that we did not intend to do a full-market launch of this product, as the open-loop product currently cleared requires additional enhancements to be commercially competitive—including extensions of the product’s shelf-life, as well as enhancements in the form of making the device compatible from a ‘bring-your-own-device’ perspective,” Kurdikar said.
“Most importantly, our goal since spin was to come to market with a closed-loop version of a patch pump that had a specific label designation for people with Type 2 diabetes,” he said, adding that would require several more years of work and investments in clinical studies to support a new FDA submission.
Embecta had previously worked with diabetes software developer Tidepool to incorporate automated insulin delivery algorithms for the planned closed-loop artificial pancreas system.
“Additionally, we recognize that the pump market has continued to evolve. We anticipate that competition in closed-loop, Type 2-indicated products may continue to intensify and our offering would require incremental investments to be market-competitive,” Kurdikar said.
At the same time, Embecta had sought out potential partners and other commercial opportunities to promote its open-loop patch pump following the agency clearance—but Kurdikar said no viable options were found, and that it was taking “firm steps today” to shutter the program. The patch pump’s intellectual property, however, could still be up for grabs if an interested buyer comes along, he said.
The company said it had spent about $63 million to develop the patch pump over its 2024 fiscal year—and that it expected to save between $60 million and $65 million in fiscal 2025 through the discontinuation in addition to workforce reductions. The layoffs will affect about 125 employees, a spokesperson told Fierce Medtech; they will stay with Embecta through early February 2025, and will receive severance, healthcare benefits and outplacement assistance. The restructuring itself, plus asset impairment charges and write-offs, is set to cost between $35 million and $45 million, and is set to mostly wrap up in the first half of next year.
For the 2024 fiscal year, Embecta reported revenues of $1.123 billion, for a gain of 0.2%, including fourth-quarter sales of $286.1 million. Annual net income reached $78.3 million, compared to $70.4 million the year before.
By the end of fiscal 2025, the company said it expects revenues to decline by 1.2% to 2.7%, and land in a range between $1.093 billion and $1.110 billion.
As of the end of September, Embecta said it had $274.2 million in cash and equivalents and that it had not yet begun to draw from its $500 million revolving credit facility.
Editor's note: This story has been updated with additional details on the layoffs from Embecta.