Insulet gains amid winning TRO in dispute with EOFlow, CEO insider buy
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Insulet (NASDAQ:PODD) rose 8.1% at least partly after the insulin pump maker was granted a temporary restraining order in a trade secrets case against rival EOFlow, which is being acquired by Medtronic (MDT).
A judge issued a TRO on Tuesday to stop EOFlow from sharing disputed information related to the EOPatch or Ominpod products with any third parties. The restraining order remains in effect until Sept. 12, though it can be extended.
The case is important because some believe that Insulet (PODD) filed the lawsuit against competitor EOFlow to potentially hurt Medtronic's chances of acquiring EOFlow in a $738 million deal announced in May. Insulet (PODD) shares fell 5.7% on May 25 when the Medtronic deal was announced and peer Tandem Diabetes (TNDM) dropped 6.7% the same day.
The implications of the TRO issued on Tuesday are small, Wells Fargo analyst Lawrence Biegelsen wrote, citing a patent expert that was consulted on the matter. Medtronic (MDT) likely has already reviewed the information it needs for due diligence since the deal was announced in May.
"Second, the ruling here is mainly designed to buy the court some time ...," Biegelsen, who has an overweight rating and $330 price target on PODD, wrote in the note. "That’s why the ruling is a `temporary' restraining order rather than a preliminary injunction. The court needs time to learn more about the allegations and evidence."
Biegelsen added that the patent consultant also believes that the TRO doesn't telegraph much about the merits of the case, though the analyst said Insulent's (PODD) allegations are "plausible.
"The circumstantial evidence—EOFlow's hiring of so many former Insulet executives, its use of the same manufacturing partner, and the overall similarity between the two devices—raises red flags in his view," Biegelsen said.
Insulet (PODD) shares were also likely up on Wednesday after the CEO of the insulin pump maker, James Hollingshead, disclosed the purchase of more than $1 million worth of company shares.
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