Back to the wackiness

Before we got caught up from all the wackiness that happened around the 4th of July holiday how about a huge shout out to the U S Women’s Soccer team for not just winning the World Cup but doing so with class, dignity, a little good old fashioned swagger and making a pitch for equal pay for equal work. These ladies not only represented our country well on the field of play but equally as well off the field. Congrats ladies you did America proud.

Now onto the business at hand and there’s lots to discuss so let’s get right to it.

1. The Wacky World is awash in money.

We knew that Livongo going public was just the first of many digital diabetes players to hit the capital markets and we certainly wasn’t wrong. Besides Livongo raising $100 million with their upcoming IPO Omada Health also raised $73 million last month bringing their total raise to date to around $200 million. Omada like Livongo offers a diabetes coaching platform and claims to have 250,000 patients using their platform. We see it only as matter of time before others in the digital diabetes space, i.e. OneDrop, also hit the capital markets adding to their coffers. As we say often in this wacky world it’s easier to steal more money with a good PowerPoint presentation than it is with a gun.

2. Mo Money

Digital diabetes players aren’t the only ones taking full advantage of this easy money CGM wannabes are also jumping in the money pool. Right before the holiday;

“AgaMatrix, Inc. (“AgaMatrix”) and WaveForm Technologies, Inc. (“WaveForm”), wholly owned subsidiaries of AgaMatrix Holdings LLC, today announced that it closed on a total capital raise of $56 million. The raise includes over $6 million in financing from existing and new investors and $50 million in senior financing from Perceptive Advisors. The proceeds from the capital raise will be used for repayment of debt and to support increased production capacity, product development, and additional clinical trial initiatives for the commercialization of WaveForm’s Continuous Glucose Monitor (CGM) in Europe and FDA clearance in the USA.”

On the same day Senseonics noted;

“On July 1, 2019, Senseonics Compensation Committee granted twenty new non-executive employees non-qualified stock options to purchase an aggregate of 775,000 shares of the Company’s common stock as an inducement for such employees to join the Company.”

While the Senseonics announcement is not a traditional capital raise per se it does tells us two things;

A. The company is having a tough time finding new employees yet understands that next to digital diabetes CGM is the hottest thing going so why not entice potential employees with dreams of hitting the lottery.

B. These potential employees are doing their homework and are a little worried about the company’s long-term viability. Stock options are nice, just ask all the folk at Tandem, but only when the company survives, again ask the folk at Tandem.

With so many Dexcom and Libre wannabes we share the concerns of potential Senseonics employees about the company’s long-term viability. This has nothing at all to do with whether their system works, it does. This has everything to do with their business model which depends on reinsertion rates and reimbursement rates. As we have noted before there is a market for implantable sensors just a narrow not mass market. Hence the problem for Senseonics.

3. Wasted Money

It should surprise no one that Sanofi is at it again;

“ALCOR / Eligible PEA PME) (Paris:ALCOR), a French company specializing in the development and manufacturing of medical devices and smart drug delivery systems, announces that they have entered into an exclusive negotiation with SANOFI, a worldwide leader within the pharmaceutical industry, aimed at introducing their Mallya connected device into SANOFI’s integrated diabetes care platform.”

We hate to continually dump on our wine drinking friends especially after our ladies kicked their ladies’ butts in the World Cup but seriously only our chardonnay guzzling friends could be this stupid. Is this not the same company who also invested in Common Sensing another company that has connected pen cap. Sanofi is giving this other company an upfront payment of $4 million Euros why?

4. Funny Money

We have never been big fans of all these “dumb” patch pumps that are promoted as alternatives to multiple daily injection (MDI) therapy. The theory being that these “dumb” pumps are better than a patient injecting multiple times per day but easier than a real insulin pump. Yet even though we don’t see an unmet medical need for these “dumb” pumps nor much a market either they continue to survive. Even better they continually try and prove they are worthy. Check this out;

“Valeritas Holdings, Inc. (VLRX), a medical technology company and maker of the V-Go®Wearable Insulin Delivery device, announced today positive data from a retrospective study using the HealthCore Integrated Research Database (HIRD) comparing patients using V-Go to patients using multiple daily injection (MDI) therapy. The study demonstrates V-Go users experienced lower insulin dose requirements and lower diabetes-related medication cost while lowering average blood sugar levels, as measured by A1c.”

It dawned on us that after reading the press release that it never mentioned that this retrospective analysis was not published anywhere. That it was the company that did this retrospective analysis not an independent entity which did not have a vested interest in the conclusions drawn by this retrospective analysis.

Now we are not saying that the good people at Valeritas are playing fast and loose with the numbers or that this is fuzzy math, but we didn’t fall off the turnip truck yesterday either. Our wacky world is full of interesting calculations and it’s shocking just how many of these analysis’s just happen to draw conclusions which favor the company that did the analysis.

As Inspector Renault said in that great movie Casablanca, he was shocked to find gambling in a casino.