Day One Wrap, Day Two Preview

Day One Wrap, Day Two Preview

The final two sessions of day one were pretty much what we expected with a few surprises. What surprised Diabetic Investor about the Johnson and Johnson (NYSE: JNJ) presentation and follow up Q&A was their silence when it came to diabetes. Keep in mind this is the company that keeps hyping their diabetes eco-system and does have the current leader in the growing SGLT2 category. Yet except for a few brief comments someone just might wonder if JNJ was in the diabetes market at all. Also, keep in mind that is a company that when asked swears they are committed to remaining in the diabetes space.

Now we realize that when it comes to JNJ and diabetes things aren’t going all that well these days but my goodness this silence speaks volumes in our eyes. Has the company finally come to their senses, have they made a choice? The answer is who knows. Perhaps the more important question is no matter what they have decided is it too late, has too much damaged been inflicted? The real surprise here is these guys aren’t stupid JNJ typically is very disciplined and most times makes very sound decisions. This wishy washy back and forth with diabetes is frankly dumbfounding.

Another surprise came in the Insulet (NASDAQ: PODD) presentations as the company noted that they have 4% of the domestic Type 1 market which they peg at 1.7 million patients, which translates into 68,000 OmniPod users. They also claimed to have between 1 and 2% of the international Type 1 market but did not connect a number to just how many Type 1’s there are outside the US. Given that they continue to insist there are 100,000 OmniPod users and doing some simple math that means they have 32,000 patients outside the US.

What we find somewhat funny is the words they use as they don’t claim they have 100,000 ACTIVE users the company just states they have 100,000 USERS. Given the higher than normal attrition rate with OmniPod this choice of words is very important, as there is a huge difference between ACTIVE users and someone who used the OmniPod but is not actively using it. Just in case anyone is having trouble grasping this allow us to dumb it down little, active users generate revenue and non-active don’t, and yes, it is that simple.

The real problem for Insulet, other than their interesting choice of words, is they are up against the 800-pound gorilla, won’t have any new products for two years, the OmniPod still is not covered by Medicare and the insulin pump market is not large enough nor is it growing fast enough to get them to their stated goal of a $1 billion of revenue.

Now in the interest of full disclosure we did not attend the break out session as we had other commitments, cocktails are an essential element of JPM, but frankly no matter what they said it wouldn’t change the dynamics of the insulin pump market. The fact is since we began writing Diabetic Investor everyone has gone up against MiniMed now Medtronic (NYSE: MDT) and lost. No one and we mean no one has come even close, many have tried but so far, they have all failed.

Turning our attention to today Roche, Sanofi (NYSE: SNY) Dexcom (NASDAQ: DXCM) and Lilly (NYSE: LLY) are all on tap. Looking at our schedule it looks like we will have a window to write sometime after lunch. Yes, we know everyone will be anxious to hear what’s going on with my new best friend Olivier so we have some advice for a new-found friend; don’t try and put lipstick on a pig. Admit the company screwed up and reassure everyone that the company has learned from past mistakes.  This won’t matter much as actions are what matters but it sure would be refreshing if any company would publicly admit they made a mistake. As Momma Kliff used say; “Mistakes happen all the time, the real issue is learning from them and not making the same mistake over and over.”