A small deal with a big message

A small deal with a big message

Yesterday Novo Nordisk agreed to purchase Corvidia Therapeutics for $750 million in cash in a deal that could be worth $2.1 billion depending on regulatory and sales milestones achieved. This may not a blockbuster transaction, but it does send a loud message that Novo is beginning to expand beyond diabetes. As we have noted many times we cannot see Novo leaving diabetes as Sanofi seems to be doing. However Novo does see the handwriting on the wall as their core insulin franchises are commoditizing leaving their GLP-1 franchise as the main sales and profit driver.

Unlike their rival Lilly, Novo never committed to building a comprehensive portfolio of diabetes therapies. Novo excuse the expression stuck with what they knew best namely injectable therapies insulin and GLP-1’s. Only recently has Novo entered the oral space with their oral GLP-1 Rybelsus. We don’t fault Novo for this strategy as it has served them well over the long term and they should also be credited for now shifting beyond diabetes. The company may have been slower to move then we would have liked but as the old saying goes better late than never.

Shifting to the insulin delivery business yesterday Medtronic received a CE Mark for their 780G system. This is the follow-on product to the 670G with some new features and a more sophisticated insulin dosing algorithm. The system should be available in select European markets this fall but has yet to be submitted to the FDA for US approval.

While the 780G is an upgrade to the 670G we doubt even when approved here in the US it will change much in terms of sales. First with no FDA submission this allows Tandem the luxury of time to build upon their strong Control IQ sales. It also buys time for Insulet to get their Horizon system to the FDA, Insulet just recently restarted work on the Horizon after discovering a software glitch.

It should also be noted that by the time the 780G does get here it is highly likely Tandem will have an updated version of the Control IQ making it even more difficult for Medtronic. And last but certainly not least both the Control IQ and Horizon work with the Dexcom CGM giving both systems a huge advantage over any Medtronic system.

Bottom line the 780G will not save the day for Medtronic nor will it change the dynamics of the insulin pump market. Medtronic is still a player, but they no longer own the market nor can be considered the technology leader. They have come back to the pack and will have to fight to stay relevant.

Before we begin our weekend we’ll conclude with an observation as our friends at Livongo are getting lots of positive publicity. We have always understood the fascination with the company as they seem to hit every buzzword popular these days. Next to Apple, Livongo is perhaps the leader when it comes to way cool whiz bang. As Lou Mannheim said to Bud Fox in the great movie Wall Street; “You’re on a roll kid enjoy it while it lasts.”

However as Momma Kliff said no roll lasts forever and better to walk away when the going is good then to walk away empty handed.

Have a great weekend everyone, stay safe.