Alive and kicking

Alive and kicking

While we aren’t sure we would call it a fair fight there is no question that Tandem is alive and kicking. Looking at the earnings announcement and listening to the corresponding call a few points come to mind;

1. Tandem is now financially secure and this security is helping sales.

2. The company has a robust pipeline which should drive further growth.

3. The company should send a bouquet of flowers and some good champagne to Dexcom and TypeZero.

4. The company is also benefiting from mistakes being made by our friends in Northridge.

5. The critical question remains can they convince payors that this is not a one horse race.

This being the second quarter which is traditionally a slow quarter for pump sales our thoughts turn to teh future and not what Tandem will do rather how will Insulet and Medtronic respond. Insulet is in a rather precarious situation as they are now well behind both Medtronic and Tandem when it comes to having a sensor augmented system. Even with the new DASH system coming to market Insulet needs to get their sensor augmented system to the market as quickly as possible or risk seeing slower OmniPod uptake.

Medtronic while still in command when it comes to formulary position cannot ignore that Tandem isn’t going anywhere. The fact is patients prefer the Tandem system which works with the Dexcom G6 and soon will come with the TypeZero insulin dosing algorithm. As we noted previously the guarantee offered by Medtronic will become ubiquitous in the future leaving Medtronic no choice but to fight back using traditional tactics, i.e. buying up formulary position.

The real question for Tandem is can they build upon their now financially secure position and strong pipeline where it counts. Can they convince payors that this is not a one horse race. As we have stated often payors care about money and even with their newfound financial security Tandem cannot match the vast resources Medtronic has at their disposal. And there is no doubt in our minds that when pressured Medtronic will do everything in their power to protect the goose that lay those golden eggs.

With Lilly, Bigfoot, Onduo, CellNovo and Roche all chiming in Medtronic can ill-afford any missteps. Taking away formulary position when it gets here the Tandem system with the TypeZero insulin dosing algorithm and Dexcom G6 will be the best hybrid closed loop system in terms of technology and patient ease of use. Or put simply it will be the best damn you in the toy chest. However, as we have stated before the company with the best toy does not always win.

Still we are delighted that Tandem avoided the insulin pump graveyard. This is one time we are thrilled that we were wrong. Tandem stakeholders paid a heavy price but are now being amply rewarded for their past pain and suffering. Going forward we suspect more rewards are on the way as the insulin pump market is taking on a new competitive dynamic. As we noted before even with their commanding share and strength with payors Medtronic is for ripe for the taking.

But before everyone does the hippy hippy and starts believing that the rebels have destroyed the Death Star for good, keep in mind we have seen this movie before. We have seen the Death Star rebuilt after near destruction and used again to destroy the rebelinsurgency. However this time that air of invincibility does not surround the Evil Empire, small cracks are now becoming visible as the rebel forces regroup. Time will tell if the force is with them but for the first time in a very long time there is reason for hope.

Or as Momma Kliff used to say; “This fight which once looked over ain’t over just yet.”