Case Study - Insulet
In March of 2009 the market was swooning and Insulet needed to fund the strong market uptake of its OmniPod insulin management system, a novel tubing-free insulin pump. However, Insulet had yet to make a profit and traditional lenders were not interested in providing sufficient capital. Additionally, the company’s share price made equity capital undesirable. Working closely with the company, Deerfield developed a hybrid approach and provided $60 million in capital, $27.5 million of which was available immediately and balance drawable at Insulets’ discretion over the following 20 months.
In late 2009, driven by the success of the OmniPod launch, Insulet’s stock had approximately tripled. Deerfield agreed to accept Insulet shares for the repayment of the $27.5 million outstanding and to provide the additional $32.5 million on more favorable terms than originally agreed upon given the tremendous progress the company had made. By December of 2010, the company’s stock had risen another 50%. The company returned to the equity markets and repaid the balance of the Deerfield loan. There was no prepayment penalty.