And the hits just keep on coming

This morning per a Tandem press release;

“Tandem Diabetes Care, Inc. (NASDAQ: TNDM), a leading insulin delivery and diabetes technology company, today announced that it intends to use its remote software update tool, the Tandem Device Updater, to resolve a Control-IQ technology software anomaly identified during the ongoing DCLP3 phase of the International Diabetes Closed Loop (IDCL) clinical trial. The Company anticipates that the software update will be available to study sites before the end of March.

“A primary reason for a larger pivotal clinical trial is to identify and resolve infrequent anomalies like this that may not appear in smaller studies. Being able to address this now helps us to offer a more robust product for our customers at launch,” said John Sheridan, president and chief executive officer. “Our ability to quickly develop and provide trial participants a remote software update is another example of the revolutionary power of our Tandem Device Updater, and our Company’s nimble research and development capabilities. We continue to prepare for the launch of our Control-IQ technology in the second half of this year, subject to successful completion of the study and FDA review.”

This news is significant on many levels, but the biggest level is it shows just how far behind Medtronic is. As we have noted on several occasions Medtronic has a huge and costly problem on their hands as the way cool 670G does not offer connectivity. A problem the company intends to address should they ever get their 670G replacement through the FDA, by no means a slam dunk.

The ability to make adjustments to a pump via software downloads isn’t big it’s HUGE. Unlike Medtronic who must introduce new and expensive hardware Tandem can make adjustments on the fly without replacing the hardware. To put this in terms everyone can relate to think of all the apps on your smartphone which are automatically updated. Apple, Samsung and the rest of the smartphone companies aren’t asking you to buy a new phone they are simply allowing all your apps to be updated.

This connectivity will become more critical in the future given that insulin dosing algorithms have the ability to learn. Rather than ask the patient and/or payor to replace a pump Tandem can simply update the algorithm. In the future the insulin pump market will become more like the smartphone market in that when new hardware comes out the consumer will be given the choice to upgrade or stick with the system they have.

At some point everyone is going to have to wake up and realize that the hardware is just a commodity and it’s the software (i.e. insulin dosing algorithm) and CGM sensor that drives the insulin delivery system. This transformation which is now underway has the potential to turn the insulin delivery market upside down dramatically lowering costs. By increasing the life of the hardware via updates a company like Tandem can structure longer term deals with payors lowering the upfront cost of a pump and making more money from long term supply and outcomes agreements.

One of the biggest obstacles to insulin pump therapy is the high upfront cost. This is one reason Insulet’s move into the pharmacy is brilliant as it eliminates this high upfront cost. This is also the reason Bigfoot is pursuing the Shave Club for Men pricing model. It’s another reason why Tyler’s arrival will impact growth in the insulin pump market. Although durable insulin pens make up less than 5% of the insulin pen market a strong case can made that since the software can be cheaply updated a durable pen will have a lower lifetime cost than the much more popular disposable pen.

As we say consistently this is all about money who saves it who spends it and who makes it. The fact is insulin pumps with connectivity save money. Tyler saves money. Even better this is one time when this quest to drive cost out of the system will also benefit the patient, whether they inject or pump their insulin thanks to connectivity they will always have the latest greatest software. They will not have to dig into their pockets when a new piece of hardware comes out, they will be given the choice to stick with what they have or upgrade.

Now two more items before we close. Many have reached out and asked if we would issue a mea cupla regarding Tandem. This stems from our accurate reporting back in 2017 that the company was on deaths doorstep and on the verge of declaring bankruptcy. A situation we felt patients and physicians needed to know. We did not want Tandem to go under however we felt that patients and their physicians should know the truth.

Thankfully we were wrong, and the company did not declare bankruptcy. We never doubted their products or pipeline, but the fact was back then their financial situation was precarious.

Now if we just get the West Coast Mafia and the JDRF to issue a mea cupla for their hypocrisy. These two groups first condemned Medtronic for their exclusive deal with UnitedHealthcare stating it would limit patient choice and stifle innovation two things that never happened. Next, they fawned all over Medtronic when the 670G was approved stating this was a watershed moment for insulin pump patients something that also hasn’t turned out to be true.

Listen after more than 20 years in this business we have no problem stating that we sometimes get it wrong. Unlike the West Coast Mafia or the JDRF, we have no delusions of grandeur nor are we hypocrites. Unlike these groups we don’t particularly care if people like what we write our job isn’t to be liked it’s to get the facts right. Momma Kliff taught us long ago that if you want a friend get a dog but you damn well better be right on the facts. And when it comes to Tandem, we did have the facts right but are very happy the results were not what we anticipated.

The last thing we wanted was another Animas as ultimately this hurts patients and it’s more important that patients win then it is we are 100% right about every possible outcome.