A Diabetes Skunkworks

A Diabetes Skunkworks

According to Wikipedia;

“A skunkworks project is a project developed by a small and loosely structured group of people who research and develop a project primarily for the sake of radical innovation.”

Typically, such projects are shrouded in secrecy with only the people involved with the project knowing what’s going on. These super-secret projects are so secret that the people involved cannot even talk about them with their spouses, let alone the media. This is exactly what’s supposed to be happening in the Apple orchard.

As we have been reporting Apple is making the deep dive into the diabetes pool, not just considering way cool whiz bang new toys but also drugs to treat diabetes. Apple sees their rivals at Google jumping in the pool and figures the waters aren’t too scary. Like Google they do not need to be in diabetes they want to be in diabetes. Like Google they have gobs of cash on hand to fund these super-secret projects. Like Google they believe they can do a better job than the current collection of drug and device companies, something that is very hard to argue with.

The biggest difference so far is that Google has become more public about their diabetes skunkworks. Besides their way cool contact lenses that measure glucose which they pawned off on Novartis. They have a partnership with Dexcom (NASDAQ: DXCM) and a joint venture with Sanofi (NYSE: SNY). It was also just announced they have begun a venture fund along with Novartis and others which will invest in early stage drug development.

Apple so far has been much more closed mouthed about their diabetes skunkworks only recently revealing that CEO Tim Cook was wearing a continuous glucose monitor, which Diabetic Investor has confirmed was the Dexcom CGM.  During his remarks at the Apple Developers Conference Mr. Cook specially mentioned Dexcom noting that readings from system will now go directly to the Apple Watch. However, beyond Mr. Cook’s comments no one at Apple has been talking nor do they want to talk. As one Apple employee told Diabetic Investor; “I have a really good job and not going to risk that by talking out of school.”

Now we’re not sure what the company has done that has put the fear of God into these people but whatever they have done it seems to be working, so far. While we can understand some of this secrecy the folks in Silicon Valley are carrying things just a bit far and it’s fair to say that these people are just a little paranoid. But the thing is Apple like Google is a large company with lots of employees and lots of potential partners. Which is a nice way of saying it’s not easy keeping any project secret especially one as large and complex as diabetes. The reality is there are too many people involved and leaks happen, just look at what’s happening at the White House these days.

Having been around the block more than once Diabetic Investor finds this quest for being super-secret slightly amusing and to be honest a great challenge. But it is also true that while Apple and their rival Google may be looking for the diabetes secret sauce, figuring this out isn’t that difficult. No disrespect to my friends in the Valley there are only so many ways to skin a cat. That the problems in diabetes aren’t overly complex and while everyone thinks the solutions are also complex; they aren’t. In fact, we consider the biggest obstacle facing Apple and Google is over-thinking things.

Let’s take the area of medication adherence which as we keep stating is the biggest obstacle standing between patients and better outcomes. A problem which has been solved by Intarcia and their exenatide micro-pump. A device we consider the most elegant dumb solution which is why it will work. Once in the patient that’s it, no pills, no shots, no measuring glucose, no counting carbs and no worries about hypoglycemia. Oh, and we should mention the patient just might lose a few pounds too.

Still not every patient will use this pump as the fact is pills will still be cheaper and favored by physicians, patients and most importantly payers. Again, as we keep stating the goal of payers is not better patient outcomes, their goal is to manage these patients as cheaply as possible. So, the question for Apple and Google, both of whom who want to solve the medication adherence problem, how do they balance the needs of the payers and the needs of the patient? How do they convince payers that their diabetes management system saves them money? Even more pressing does Apple and Google understand the huge difference between intensively and non-intensively managed patients?

The answer to the first two questions are simple, given that Apple and Google have billions in cash they can easily afford to give their system away for FREE. They also could if they wanted to be very aggressive give away all the toys to the patients. See Apple and Google both understand given the size of the patient population they will make money in other ways, that there are multiple revenue streams. Just by way of example we pay $0.99 per month for more storage in the Apple cloud, now multiple that by say 10 million patients with diabetes. This is not to say they will not make money from diabetes management rather they have a huge advantage over legacy franchises in that these franchises MUST make money from diabetes.

Again, as we keep stating neither Apple or Google need to be in diabetes they WANT to be in diabetes.

The more pressing issue for Google and Apple is whether they can develop systems which match the needs of non-intensively managed patients. Do they understand the very real differences between intensively managed and non-intensively managed? Differences which go well beyond the toys these patients play with. Differences in lifestyle and how these patients view their diabetes.

There is no question that they understand that all patients with diabetes are consumers of healthcare. It is also clear they understand that design matters. Here they have a major advantage over legacy franchises. The one area, perhaps the only area where legacy franchises have an advantage is they understand the differences between intensively and non-intensively managed patients. Sadly, some do not but for the most part these legacy franchises do understand that an insulin pump patient has different needs then a patient who just takes orals. That these patients may have the same disease but they live vastly different lives and view their diabetes from much different perspectives.

Our concern with Apple and Google is they will fall into the same trap as many of the legacy franchise in that they will over-think and over complicate their system. That they will fail to understand that for non-intensively managed patients they have a disease they do not want, do not understand and requires a great deal of work to manage properly. Work they would rather not do.

It would be an overstatement to say non-intensively managed patients do not care about outcomes. A better way of looking at this is that unlike intensively managed patients they do not FEEL the impact of their diabetes every day. Intensively managed patients by the nature of how they manage their diabetes feel their diabetes each day. To non-intensively managed patients there is no immediate personal impact from their diabetes to these patient’s diabetes management is one big pain in the rear. A pain which yields little in the way of any tangible benefits. A pain which yields little in the way of positive reinforcement when they do well. To these patient’s diabetes management does not make their lives easier, it does not save them time and most importantly does not save them money.

Perhaps the biggest difference between intensively and non-intensively managed patients is intensively managed patients understand why they are doing what they are doing. For example, these patients understand the more effectively they dose their insulin the less likely it is they will experience a serious hypoglycemic event. Therefore, these patients monitor their glucose regularly and why they use CGM.

We’ve said it before and we’ll say it again the reason non-intensively managed patients do not monitor their glucose has nothing to do with pain or the cost of testing supplies. They don’t understand what these numbers mean, they don’t see any direct impact there is no value to this number so why do it. Testing supplies and it doesn’t matter whether its BGM or CGM could be given away for free and they still wouldn’t be used as patients are being given the why.

Now some will say that’s what coaching is for, it gives the patient the why. Well it doesn’t. This is the biggest fallacy of interconnected diabetes management (IDM) as without data the whole system collapses. IDM only works when there is data to analyze. If the patient doesn’t use the device IDM is just another fad that looks good on paper but doesn’t work in the real world.

Perhaps the best to look at this is think of the new 670G from Medtronic (NYSE: MDT) take away the glucose sensor and what do you have? Nothing but a conventional insulin pump not the hybrid closed loop insulin delivery system it’s supposed to be. Without sensor data, there is no low glucose suspend. There is no auto-mode. Well the same goes for IDM targeted at non-intensively managed patients. No data, no nothing.

Quite frankly Apple can be a secretive as they wish. And quite frankly it’s orchestrated to create buzz so when they finally do go public Apple pickers will eat it all up. Listen Apple is many things and stupid is not among them. They know how to play the game, they understand social media and realize they will get more free publicity. As Momma Kliff used to say; “Better to let people believe you actually have something than to show them what you have as they just might be disappointed. The fantasy of what could be is better than the harsh reality of what is.”

The harsh reality for Apple and Google is they aren’t the first and likely won’t the last newcomers to this wacky world who thinks they are smarter than the average bear.  Diabetes management is not about the toys in the toy box. Diabetes management is not about the drugs used. Effective diabetes management is about understanding the needs of the patient. Understanding that while they all have diabetes there are huge differences between intensively and non-intensively managed patients. These differences extend well beyond the toys they play with or the drugs they take.

Happy Father’s Day everyone.