Astonishing

Today shares of Tandem closed at $65.57 which means that

1. The company now has a market cap of almost $4 BILLION

2. Over the past 12 months shares of Tandem are up almost 2000% – no that is not a misprint

3. Therefore, it stands to reason that this company which could have been acquired for a few hundred million will now likely get acquired for a few billion.

Folks think about this just for a moment – as we noted yesterday a year ago Tandem was on life support. Today they are financially strong, adding patients by the boatload and soon will have the coolest toy in the toy chest when the Control IQ gets here late this year.

Let’s not stop with Tandem, stay in San Diego and look at Dexcom, whose shares are up over 148% the last twelve months and has a market cap approaching $13 BILLION. And Medtronic did not buy them why?

Although not based in San Diego Insulet does have a major presence here and must feel like the ugly sister as their shares are only up 25% over the past year. With a market cap of about $5.6 Billion that means these three pure diabetes plays now command a combined market cap of almost $23 BILLION – so much for anyone having the stones to roll up the three and take control of the insulin delivery market.

What’s truly hysterical is all three of these companies could have been bought for a fraction of what they are now valued at. Tandem in particular could have been bought and fixed for less than $500 million. And Lilly who is now entering the insulin pump market didn’t buy them why?

Not to dump on our many friends at JNJ but seriously how stupid must they feel today. They couldn’t get their act together and ended up paying Medtronic to take Animas off their hands. Then they sold LifeScan for a fraction of its true value was as they were that desperate to get out of the diabetes device world. For a company that used to have an uncanny ability to add and divest units at just the right time they blew it big time when it came to diabetes devices.

Frankly we aren’t surprised at any of this as companies with no valid business model are getting unholy valuations. Not to pick on our friends in Palo Alto but Livongo is a prime example of what we are talking about. As are our good friends at OneDrop or any of these way cool whiz bang companies who have no IP protection, can and will be easily replaced by newer way cool whiz bang technology.

The sad reality is that most companies cannot see the forest through the trees. Lilly not buying Tandem, Medtronic not buying Dexcom and JNJ inability to sell Animas are all examples of this. Instead of buying an immediate presence in the insulin pump market and then fixing Tandem Lilly instead bought a pump that has been bought and sold three times before. Even crazier they are starting from ground zero, no patients, no payor contracts, no nothing. Medtronic thanks to arrogance and hubris could not admit their sensor flat out sucks in comparison to the Dexcom sensor. Even worse this hubris and arrogance prevented them from owning the insulin delivery market. Frankly Tandem and Insulet should send Medtronic a thank you letter and a dozen long stem red roses for being so damn stupid.

JNJ well what can be said that already hasn’t been said expect that they either became stupid overnight or seriously took their eye off the ball or both. Yet as with most dark clouds there is a silver lining here as Tandem in particular should pay attention to why JNJ failed with Animas. The harsh reality is JNJ only bought Animas because they were afraid it was about to implode. Like most shotgun weddings, done with high emotions, fears of being embarrassed and little in the way of reason the Animas JNJ marriage was doomed from day one.

Listen after more than 20 years of watching all this we are no longer shocked. Sadly, this is par for the course. Or as Momma Kliff said so often never ever underestimate what happens when you combine ignorance, with arrogance and then throw in some hubris. This is how is stupid happens.