A deal in the works?

A deal in the works?

Well the diabetes rumor mill is hot and heavy today that Medtronic (NYSE:MDT) is very close to buying Tandem Diabetes (NASDAQ:TNDM). For the moment neither company will acknowledge this possibility although it’s well know than Tandem was shopping themselves at the recent ADA conference back in June.

With a market cap of under $350 million and shares trading near their 52 week low Medtronic can easily afford to do a deal and from a practical perspective buying Tandem does make sense. While Tandem won’t bring with it a huge patient base this is not what Medtronic needs, what they need is a ready-made replacement for their aging pump platform. As we have noted all along Tandem’s major advantage was their Apple like design and very patient friendly user interface.

One loser here may be Dexcom (NASDAQ:DXCM) who does have an agreement with Tandem to integrate their system with the Tandem pump. This also could be another reason for Medtronic to do the deal as they have seen the impact the Dexcom sensor has had with the Animas Vibe. While Johnson and Johnson (NYSE:JNJ) might believe the success of the Vibe is related to their pump it’s not, the reason the Vibe is doing so well is directly attributed to the fact it works with the Dexcom sensor.

Another loser would be Insulet (NASDAQ:PODD) who has yet to launch their sensor augmented pump. The longer it takes to bring this system to market the worse it will be for Insulet, a company who has more than enough trouble already. There is no question that patients are gravitating towards sensor augmented pumps and not having one is a major disadvantage.

Whether or not the deal actually happens remains to be seen but from nearly every angle it does make sense. After all this is the wacky world of diabetes where anything can and usually does happen.