Insulet Reports – Is the FDA being used as a scapegoat?
Listening to the Insulet (NASDAQ:PODD) earnings call Diabetic Investor began to wonder whether the company is using the FDA as a scapegoat. A few weeks ago, shortly after the company’s meeting with their field sales team, reports began to surface that the FDA had declined to approve the new, and much delayed, Eros pod. Next rumors surfaced the company was having some major issues with the manufacturing process and that even if the FDA approved the new pod it would not be in the hands of patients for another six to nine months.
Yesterday we learned that the FDA has asked the company to make some changes to the new personal diabetes manager (PDM), the device that controls the OmniPod, these changes were software related, rather minor but would once again delay the full blown approval from the FDA. Perhaps sensing that the investment community is growing a little tried with all these delays and the various explanations offered by the company, they would not venture a guess as to just when the FDA will actually get around to issuing an approval.
Now Diabetic Investor does not believe the company is intentionally misleading the investment community, but we do find it odd that other diabetes device companies are telling these same analysts that things at the FDA, while not great, are getting better. Although no one bothered to ask the question, one has to wonder whether the Insulet FDA team is up to the task. Looking over comments made in previous calls and all the issues the company is having with the FDA it’s not illogical to wonder whether the company is using the FDA as a scapegoat rather than acknowledge other more pressing problems with the new pod.
The fact is the company’s future is at stake here and they will not get a second chance. As they have correctly acknowledged in the past, the last thing they need is to launch the new pod, replace all the old PDM’s and then not be able to supply their customers should there be any issues with the new pod. Strangely absent from yesterday’s call and lending credence to our belief that there are still manufacturing issues was the absence of any detailed information on how many new pods are being made. Again looking back to previous calls, the company had disclosed how many new pods were coming off the line and provided greater detail on how things were progressing.
Since it’s unlikely that new pod will be approved in the third quarter it looks like we’ll have to wait until next year to see if the issues , previously acknowledged with the manufacturing process, have been solved. It will be equally interesting to see how the investment community reacts, if the FDA has more questions and there is yet another delay.
For now Diabetic Investor, like everyone else is in a wait and see mode, wondering whether this is really an FDA issue or whether there’s more to this story. Given this is the wacky world of diabetes, where anything can and usually does happen Diabetic Investor suspects there is much here than meets the eye. As the old saying goes, if it walks like a duck and talks like a duck, it’s a duck.
