ATTD Day Three – Lots of wackiness

ATTD Day Three – Lots of wackiness

Ok a word of advice as we would recommend sitting down while reading this post as we are going to say something positive about Tandem (NASDAQ: TNDM). However before we get to Tandem lets cover a few other items first.

1. As we noted you can’t swing a dead cat around here without hitting yet another “smart” insulin pen company. Now some of these companies have nothing more than a prototype which is a nice way of saying they have nothing but vaporware.

But some have a “real” product ready to go one of which is Insulcloud, S.L (www.insulclock.com) called the Insulclock. During a demo we asked a rather simple question; What does it cost? And the answer – 250 Euros which at current exchange rates is over three hundred bucks US. When we followed up with who they expect to pay 300 bucks for this way cool whiz bang cloud enabled toy the answer – the patient.

Listen we don’t want to cast any aspersions on this company but if they think patients will pay 300 bucks for this way cool whiz bang cloud enabled toy we want what they are smoking. Even if this was the coolest toy in the toy box there is no way patients are going to shell out 300 bucks of their own money.

2. After the dead cat hits yet another “smart” insulin pen company it turns the corner and hits yet another CGM company. Like “smart” insulin pen companies some are real and some aren’t. One of the real ones Senseonics has an implantable CGM. From what we have seen the data is good and the company is partnered in Europe with Roche. This is the good news.

Unfortunately here comes the bad news. Although implanted in the patients body the patient must wear a transmitter on their body. The transmitter collects the data and sends it to a smartphone. Our concern here isn’t about data accuracy which looks good. Our concern here is not necessarily having to wear a patch on the outside of the body. No our concern is the business model. Can the company make money when you factor in the cost of the insertion, extraction and then reinsertion of the sensor.

A process which according to the company may or may not be a reimbursable event. Plus add in the fact the company must train physicians to insert and extract also adds to the cost. Even if this training takes a short period of time it still must be done and physicians don’t like doing any procedure they are not paid to do.

This isn’t like the Intarcia micro-pump where the physician gets paid to insert, extract and reinsert.

Given that a price war is coming rule one is COST matters, rule two is reread rule one.

3. Some additional thoughts on the future of CGM – the patient experience matters. The more we learn about the Libre from Abbott (NYSE: ABT) the more we see this. Simply put the less interaction the patient has with their toy the better. Right now Libre has the advantage of factory calibration but that advantage will disappear when the Gen6 system from Dexcom (NASDAQ: DXCM) gets here.

Libre is also cheaper than Dexcom another short term advantage. And while we don’t see it many believe Libre has another advantage as patients can pick up sensors at their local pharmacy. Given the world we live where everything is delivered to the patients doorstep we would think shipping sensors directly to the patient would be an advantage. Yet we heard over and over again that being able to pick up sensors at the pharmacy gives Libre an edge. Guess all those stories about brick and mortar retail pharmacies being put out of business by Amazon are fake news.

Anyway Libre does have an Achilles Heal. Accuracy in the low range isn’t great and that is being very kind. To compensate for this the physicians as we noted recommend that the patient scan the Libre multiple times per day since the readings aren’t sent to a smartphone and there are no alarms or alerts.

Here is the problem as Abbott has a choice to make, do they turn Libre into a real CGM adding smartphone connectivity plus alarms and alerts? Even though these changes won’t add significant cost to the product it does put them head to head against Dexcom and lets face it the Dexcom sensor is still more accurate.

Abbott also knows more competition is coming, competition that won’t require calibration, has a 14 day sensor life and has all the bells and whistles. They also see the Evil Empire lurking and while their LightSaber may not be as good their Death Star will be what else; price. The Empire has invested heavily in CGM and beyond their insulin pump base they have nothing to show for it in the stand alone sensor market, a market which is growing.

To sum up here hopefully people can now see why a price war is coming. A war that no one will win and ultimately hurt patients the most.

4. OK here is where we would recommend sitting down as we are about to say something nice about Tandem. This morning we attended a session which covered the progress towards having a REAL artificial pancreas.

First to present was Dr. Boris Kovatchev a Professor at the University of Virginia School of Medicine and founder of TypeZero. During his presentation Dr. Kovatchev shared data which showed Tandem newest pump combined with Dexcom G6 sensor with the TypeZero insulin dosing algorithm embedded on the pump produced some amazing results.

Now lets be clear here about a few things- first rarely are we impressed by data and we were very impressed with this data – second for the first time we now believe that we just might see a REAL artificial pancreas – third and we can’t believe we are saying this as it stands today Tandem has the best chance of making this happen.

This is the good news now comes the bad news as impressed as we were with this data we maintain our belief that a REAL artificial pancreas isn’t a commercially viable product. As we noted yesterday this will be a major technological achievement and yes a small set of patients will benefit from this technology. However from a business perspective this is NOT a major money maker and it will NOT change the dynamics of the insulin pump market.

5. Don’t get up just yet as we are about to say something positive about the JDRF. Although it was not their intention all this effort and money put toward an artificial pancreas will make Tyler a reality. And just in case anyone has forgotten Tyler is our name for a “smart” insulin pen/CGM/App system.

As we have stated before the technology already exists to make Tyler a reality – we already have three thousand “smart” insulin pens – we have six hundred CGM systems and three million apps – the only thing missing was someone putting them all together in a nice neat package.

Thanks to the work being done on the artificial pancreas insulin dosing algorithms have gotten way better. While all the work on the artificial pancreas involves pumps no one disputes that a Tyler will produce great results at a much lower price point than any system which requires an insulin pump.

The only question now is which insulin company will have the vision to make this happen. And we can tell you none of them have it which means transforming Tyler from an idea into a real diabetes management system will come from ……?

Well that’s all for now as frankly we’re exhausted. We’ve been going since early this morning and it’s been non-stop. Yes we have more to say but that can wait until tomorrow or Monday. Enjoy the weekend everyone. Dilly Dilly