“Flash” in the pan or the real deal

“Flash” in the pan or the real deal

This morning Abbott (NYSE:ABT) announced they have received CE approval in Europe for their FreeStyle® Libre Flash Glucose Monitoring System.  According to a company issued press release;  “Abbott (NYSE: ABT) today announced that it has received CE Mark (Conformite Europeenne) for its FreeStyle® Libre Flash Glucose Monitoring System, a revolutionary new glucose sensing technology for people with diabetes. The system eliminates the need for routine finger pricks1, reading glucose levels through a sensor that can be worn on the back of the upper arm for up to 14 days. In addition, no finger prick calibration is needed–a key differentiator from current continuous glucose monitoring systems. The system will be available in seven countries across Europe in the coming weeks. “

Perhaps the best way to think of the system is CGM Lite. Unlike current CGM systems which transmit readings to a receiver the Libre consists of a sensor and receiver which is waved over the sensor to capture readings. According to today’s press release “Glucose readings can be taken as many times per day as needed or desired, with a painless one second scan Each scan provides a current glucose reading, 8-hour history and the direction glucose is heading”

Honestly Diabetic Investor is clueless as to how the Libre may do in the marketplace as we just can’t decide who will be using the device. From our viewpoint the main benefit of CGM is not just glucose trend analysis, understanding glycemic variability or even hypoglycemia detection (although this is an extremely valuable function provided by CGMs) – no to us we see the value in providing an educated patient with data that they can translate into better diabetes management. The key question is will patients prefer a device that is worn for two weeks does not require calibration but does require greater interaction or will they prefer a sensor that is approved for 7 days usage, does require calibration but also provides real-time data.

Or guess is like all things diabetes reimbursement and formulary placement will factor heavily into the outcome, as will how Abbott prices the system. For the moment we’d give the edge to Dexcom (NASDAQ:DXCM) and Medtronic (NYSE:MDT) if for no other reason that their systems are well known and have years of patient experience. As everyone who reads Diabetic Investor knows of the two established CGM systems we see Dexcom as superior, and it’s only a matter of time before the system gets even better with readings soon to be delivered to a patient’s smartphone.

This makes us wonder if Abbott once again is a day late and a dollar short. Well back in the very early days of CGM Abbott had what was considered the best CGM – the Navigator. Yet for reasons only the company understood they went to the FDA seeking approval as a replacement for conventional finger sticks rather than an adjunct to conventional finger sticks. This proved to a disastrous decision as the FDA wasn’t quite ready to make that leap and basically forced the company into resubmitting the application seeking an adjunct not replacement indication. This delay allowed Dexcom and Medtronic to grab the low hanging fruit and doomed Navigator when it was finally launched and then eventually pulled from the market.

One has to wonder whether this same scenario will play out for the Libre. Dexcom and Medtronic have been at it for years, the CGM market is expanding as more patients and their physicians understand how to use all this data. However as well as this market is performing today Diabetic Investor does see parallels to how the insulin pump market evolved over the years. Like CGM insulin pump therapy experienced strong growth, especially after the landmark DCCT trial proved that intensive glycemic management lead to better patient outcomes. Back then insulin pump therapy offered the ultimate tool for intensive management.Yet as more competitors entered the market combined with better insulin’s and improved needle technology growth in the insulin pump market slowed.

This seems to be what’s happening in the CGM market. Yes the market is expanding but not nearly as rapidly as it was.  Dexcom has basically collaborated with every insulin pump company expect for Medtronic, while Medtronic is mining its huge installed user base to sell more sensors. Dexcom, who is well aware that combined market share of their insulin pumps partners is a fraction of the Medtronic installed base, has expanded their share by aggressively targeting patients following multiple daily injection (MDI) therapy.

This make Diabetic Investor wonder given all that’s going on is there room for a third player. To Diabetic Investor it’s not a question of if Dexcom and Medtronic will have systems that don’t require calibration it’s a question of when, this will negate one of Libre’s advantages. As we noted earlier Dexcom will have a system that delivers readings to a patients smartphone which we see as a major benefit given the move towards interconnected diabetes management (IDM). Finally while the Dexcom system may carry an approval for 7 day usage it’s well known that patients are using sensors for well beyond that time frame which negates the 14 day usage for the Libre.

The more we look at the Libre the more it reminds us of the many non-programmable patch pumps.  Systems which seem to be a cross between an insulin pen and true insulin pump.  As Diabetic Investor accurately predicted long ago not one of these systems has achieved success in the marketplace. The fact is no one is quite sure who should be using this product.  The product is being positioned as better than insulin pen therapy – fewer injections and less complicated than a true insulin pump therapy.  Yet as we have noted on a regular basis this hybrid approach really isn’t needed as patients, physicians and payors are very comfortable with insulin pens and true insulin pumps. Or put even more simply there really isn’t that much of a need for this product.

The Libre is an interesting product that has some nice features; however we’re just not sure there’s a place for the Libre in the marketplace.  We’re also unsure whether given all the changes going on in the diabetes device market, CGM in particular that there is room for a third player.  Given that the FDA has yet to approve the system this is even more damning as it gives Dexcom and Medtronic more time to build market share making Abbott’s job even tougher.

We hate to say it but the Libre looks like a lot like Navigator part two and given how badly Navigator part one did this is not a good sign.