Good news, not so good news

On this Monday before Super Tuesday the insulin pump world received two pieces of news, one good, one not so good. On the positive side Tandem announced the FDA Designation of Basal-IQ Technology as an Interoperable Automated Glycemic Controller. Per a company issued press release;

“Tandem Diabetes Care, Inc. (NASDAQ: TNDM), a leading insulin delivery and diabetes technology company, today announced U.S. Food and Drug Administration (FDA) clearance of its Basal-IQ™ technology as an interoperable automated glycemic controller (iAGC). This is the second system to receive iAGC designation by the FDA, following the Company’s clearance of the t:slim X2™ insulin pump with Control-IQ™ technology in December 2019.”

Insulet on the other hand issued some not so good news;

“Insulet Corporation (NASDAQ: PODD) (Insulet or the Company), the global leader in tubeless insulin pump technology with its Omnipod® Insulin Management System, today announced that it plans to pause the pivotal study of the Omnipod Horizon™ Automated Glucose Control System to correct a software anomaly. The identified anomaly could result in the system using an incorrect glucose value which has the potential to impact insulin delivery. The issue is rare, but because of the potential to affect insulin delivery, the Company will pause the study until the anomaly is corrected. No adverse events have been reported due to this issue.”

Not surprisingly shares of Insulet are down almost 5% on the news while shares of Tandem are basically flat on the news. Taken together we don’t see either piece of news as all that shocking, nor do we believe either will have an immediate or material impact on sales. Tandem continues to benefit from the launch of the Control IQ while Insulet continues to add users to the OmniPod system.

Of the two pieces of news the Insulet news is obviously more disappointing as this pause will push the approval of the Horizon from later this year into early 2021. Now before we go any further let’s be very clear here Insulet is taking the appropriate action. The company is once again demonstrating good judgement taking no chances when it comes to patient safety. The company knew the news would not be well received by investors but chose to suffer some short-term pain rather than risk their long-term future by recklessly proceeding.

Based on what we know about the Horizon and the team working on this project we expect this anomaly to be corrected and the study resumed. As we keep noting when it comes to these sensor augmented systems issues can and do arise from time to time and better to get it right before the system launches then to risk having an issue arising after the system is on the market.

We will further reiterate what we said last week that for long term investors who can stomach some of this short-term pain these selloffs provide an opportunity. This one issue in no way changes our long-term positive outlook for Insulet. As Momma Kliff used to say even the best kids can have issues from time to time this doesn’t mean they are bad kids. And believe me she would know after raising four rambunctious boys.