MINNEAPOLIS (Legal Newsline) - Medtronic has defeated a shareholder class action lawsuit that alleged the company hid problems with an insulin pump's FDA approval.
Minnesota federal judge Katherine Menendez on March 28 dismissed the complaint brought by The Trustees of the Welfare and Pension Funds of Local 464A and other shareholders of the company who said they were hurt when information became public that caused Medtronic's stock price to drop.
She found the complaint, which named individual officers at the company as defendants too, lacked allegations of actionable, material misrepresentations and omissions.
"(T)he allegations do not establish that any of the individual defendants actually knew that the 780G approval would be delayed or recklessly disregarded a very serious risk that the issues with the 600 Series pumps would render timely approval of the 780G all but impossible," Menendez wrote.
A better product from competitor Tandem Diabetes Care, which had developed a hybrid closed-loop system insulin pump, slowed sales of Medtronic's 670G pump, the decision says, by fiscal years 2019 and 2020.
Medtronic was developing its own hybrid closed-loop system, the 780G. Medtronic said in an August 2019 SEC filing that its Diabetes Group's sales were up, attributing it primarily to growth in international markets and demand there for the 670G.
Analysts predicted the 780G pump would be ready for the market in late FY20. The complaint alleges the company hid quality problems with the 670G and other 600 series pumps - a manufacturing defect in a clear retainer ring that could cause potentially life-threatening problems by unexpectedly delivering more or less insulin than a user asked for.
That issue led to product liability lawsuits. In February 2020, the company said FDA review was "going well" for the 780G, which was released in 12 other countries in October of that year.
Concerns raised by the FDA after a 2021 inspection of Medtronic's Northridge, Calif., facility led to the agency to issue a warning letter. Medtronic said it didn't expect the letter to impact 780G approval.
But by May 2022, the company told investors that it no longer expected timely approval of the pump. The complaint alleged Medtronic had known all along timely approval would not be granted.