Yesterday Companion Medical announced a deal with Senseonics to integrate Senseonics sensor data into the InPen system. Companion already has a deal with Dexcom, and we suspect at some point will also strike a deal with Abbott even though Abbott continues to invest in Bigfoot. In these days of interoperability with all the toys talking with all the other toys deals such as these are becoming commonplace.
The goal here is to get Tyler from the development stage to the market. The fact is all the technology needed for Tyler is already available. Besides Companion all the insulin companies have their own versions of Tyler under development. Therefore one has to wonder why this process is taking so long. Initially we thought this glacial development speed was due to the insulin company’s ineptitude when it comes to medical devices.
Yes Lilly, Novo Nordisk and Sanofi are adapt at making insulin but when it comes to insulin delivery systems, they have a less than impressive track record. Of the three Novo has demonstrated they highest degree of competence, yet Novo has had some issues with their connected pen. Lilly says their connected pen will eventually get here and Sanofi has signed more than a few deals in the connected pen area.
So why then is it taking so long to get Tyler into the hands of patients? A situation which is more ironic since everyone and we do mean everyone believes Tyler will produce better patient outcomes. It’s not as if cost is an issue as CGM systems are becoming more affordable while Novo and Lilly have noted that more than likely they will give away for free their connected pens or cap covers.
We have long believed that the Tyler market would be controlled by the insulin companies. That since insulin has become a commodity the insulin companies would use Tyler to protect their insulin franchises, that the insulin market would transform from who has the cheapest insulin to who has the cheapest insulin with the best insulin delivery system. Lilly, Novo and Sanofi know that biosimilar short acting insulins are coming and just as the long acting market was devasted by the introduction of biosimilars so too would be the short acting market.
However with the exception of Sanofi, Lilly and Novo are no longer insulin companies or put more accurately insulin is no longer the gas that powers their diabetes franchises. As we noted after their earnings calls Lilly and Novo have become GLP-1 companies with insulin relegated to the back burner. None of these companies will exit the insulin business, although Sanofi should, but it’s their GLP-1 franchises that are growing and generating strong revenue growth.
To put it simply for Lilly, Novo and Sanofi there is no sense of urgency to get Tyler to market. Insulin prices continue to contract and as we noted more biosimilars are coming so why rush Tyler as even with his presence he won’t change the dynamics of the insulin market. Sure all the insulin companies want to protect their insulin franchises but given that Tyler will cut into their already shrinking margins why rush it.
This scenario has opened the door for a company like Companion to walk thorough and be the first to launch a real Tyler. Although the InPen system right now consists of a durable connected pen and durable pens only make up about 5% of the insulin pen market, there is nothing preventing Companion from adding a connected cap cover to their portfolio. Remember when it comes to Tyler it’s not the hardware that matters, the hardware is just a commodity. What matters is the system, the ability to collect glucose data, insulin dosing data send this data to the insulin dosing algorithm and then communicate with the patient.
Given that Lilly, Novo and Sanofi continue to fumble about with their Tyler’s we have yet to see their patient interface/app which we believe is critical. Listen patients pretty much get how to use a CGM and it doesn’t take an advanced degree from MIT to use a connected pen. The real trick as we see it is having an easy to use patient friendly app and quite frankly, we aren’t overly confident any of the insulin companies understand how important that is.
Companion on the other hand has a pretty nice app but they have something even better, actual users they can learn from. Anyone who has used Uber or Lyft and let’s be honest who hasn’t used them understands what we’re talking about. These apps aren’t just popular because they make our lives easier, they are popular as unless you’re a complete idiot they are very easy to use.
As per usual everyone is fascinated with the toy, the hardware which as we keep noting is nothing more than a commodity. What everyone forgets is these toys are useless if the patient doesn’t play with them. Just by way of example consider the user interfaces of the Tandem insulin pumps compared to the interface of a Medtronic insulin pump. While the Medtronic pump is akin to an old-fashioned pager, Tandem pumps are akin to an iPhone. Simply put Tandem pumps have much more friendly user interface.
There is nothing that would prevent Companion from striking a deal with a biosimilar insulin manufacturer and being the first to bring Tyler to market. Throw in a connected cap cover and Companion could well own the Tyler market. If nothing else, they would force all the insulin companies from playing offense to defense.
What everyone needs to understand when it comes to insulin delivery systems it’s not about the toys. It’s all about the system, a system which is user friendly and affordable. The connected pen, the insulin components of the system are commodities. The real work isn’t done by these toys, the real work is getting accurate data from the CGM and having a solid insulin dosing algorithm. Dexcom and Abbott have taken care of the first part and there are multiple insulin dosing algorithm’s which work just fine.
The key for Tyler to do what he is capable of doing is to combine all these components into a user-friendly app. An app that is as easy to use as Uber or Lyft. As it stands today Companion with a few enhancements is the closet to making this happen. As Momma Kliff said, There is nothing wrong with making something stupid as the dumber something is the less thinking a person has to do the more likely they will use it.