A Preview of coming attractions

A Preview of coming attractions

Yes, its earnings time once again, that time when everyone will go nuts over lots of numbers that in the grand scheme of things really don’t mean all that much. This is particularly true in the growing CGM market and will play out in full force when Abbott reports this Wednesday and Dexcom later in the month. No matter how many times we say it, no matter how obvious it’s becoming there are still people who think that someone is going to come along and steal the CGM thunder from Abbott and Dexcom. Well it ain’t going to happen no way no how. Abbott and Dexcom own CGMland and everyone else is merely fighting for the scraps that fall off the table.

If history repeats itself and it usually does no matter what Abbott says will negatively impact shares of Dexcom which to us is great reason to buy in or add more. Not that we’re technicians but once shares of Dexcom break through the $153 barrier it could be open field running. Listen when a company like Livongo is about to be valued at over $2 Billion and does nothing but lose money we’d prefer a company with the best product in a growing category, let Abbott have the value segment, we on the flip prefer to make something called a profit.

One thing we’ll be paying attention to but likely won’t get much attention is just what the hell is going on with Lilly, Sanofi and Novo Nordisk in terms of Tyler. Novo will likely get lots of questions about the oral version of Semaglutide now that it’s at the FDA but being Novo don’t expect much in the way of answers. Our opinion still hasn’t changed – yes, we expect the FDA to approve the drug – we expect it to get off to a fast start, but refills will be key for this drug and we don’t think the refill numbers will be all that great.

But getting back to Tyler this toy should belong to the insulin companies. We say should because they are doing everything in their power right now to screw this up and let someone else come in and steal their thunder. We aren’t far away from a biosimilar short-acting insulin that will do to the short-acting market what Basaglar did to the long-acting market. Sanofi could be the real winner with Tyler as they already have a biosimilar short-acting, but this is Sanofi we’re talking about the only company that would find a way to screw up a winning Powerball ticket.

The way we see it Dexcom could easily work out a deal with Companion and Common Sensing, find a biosimilar short-acting insulin and have it at. We’d say that Abbott could do the same thing as they are partnered with Bigfoot who claims to have the best thing since sliced bread and soft soap, when in reality all they have is an excellent social media presence. The simple fact is, and this is why the insulin companies better get their act together or risk getting their butts kicked, it really doesn’t matter which insulin is part of Tyler.

When it comes to the insulin pump world expect Tandem to get lots of question about the Control IQ. As we noted at ADA too much attention is being paid to which hybrid closed loop system does what. The fact is we trust Tandem’s numbers more than anything Medtronic says for as the old saying goes liars’ figure and figures lie. The fact is the Tandem will win this race thanks to the Control IQ working with the Dexcom G6 a CGM which not only delivers accurate readings but doesn’t fail very much which is in sharp contrast to the Medtronic sensor which is basically a piece of garbage.

Insulet for their part seems to walking merrily along without a care in the world, that is until you consider they are falling further and further behind having a sensor augmented system let alone a hybrid closed loop system. The company should really refocus their efforts getting the DASH to work with Dexcom and Libre, then focus on closed loop. Given how the FDA is cracking down on the possibility of hacking better to grab the low hanging fruit get the systems communicating first and worry about smartphone control later. Yes, every OmniPod user wants smartphone control and it will come eventually we just think the FDA will make this process harder than everyone thought it will be. The FDA might be a little overzealous here, but we can’t argue too much as their job ultimately is to protect the patient.

This is another reason we see Tyler having an easier path through the FDA as the system is not run on a smartphone. CGM data is collected on the phone as is insulin dosed but it’s the patient who ultimately controls when and how much insulin is dosed. This is in sharp contrast to a pump which follows the instructions its given, yes, the patient can intervene but that defeats the whole purpose of having a closed loop system. The FDA rightfully understands that insulin is not just a life sustaining drug but also a lethal drug when dosed improperly. Even if the chance of hacking is one in a million there are lots of crazy’s in this world who seem to get off on this stuff. Or as Momma Kliff used to say why take a chance when there is workable solution.

Nothing really has changed our belief that for all the attention these whiz bang way cool hybrid closed loop systems get they are nothing more than a niche market at best. Tyler on the other hand has mass appeal, patients are already used to injecting, most understand CGM and how to use it, all Tyler adds is advice which the patient can or cannot follow. The fact is Tyler should be positioned similar to the way Amazon positions snarky Alexa, as a tool which can enhance the user experience but not control the user experience.

The closed loop community is vocal, but the fact are from a business perspective it’s not a very large market. Tyler on the other hand properly positioned will reach 5 million or more patients. Given the respective market sizes combined with the fact that Tyler carries a minimal amount of patient risk, little in the way of training and cost a fraction of what a closed loop system does we also see payors jumping on the Tyler bandwagon. There will always be a place for closed loop and these systems will get better but from a business perspective Tyler is where the money is at.

So off to earnings we go.