Insulet Reports – On Track

Insulet Reports – On Track

This morning’s conference call for Insulet (NASDAQ:PODD) confirmed what Diabetic Investor suspected based on what we’ve been hearing from the field, demand is increasing. The company raised full year revenue guidance, they are taking steps to increase manufacturing capacity and are working on lowering manufacturing costs.

The only thing missing from today’s call was any significant news on integrating the OmniPod with a continuous glucose monitoring system. As many know the company disclosed prior to going public they had an agreement with Abbott (NYSE:ABT) to integrate the Navigator with the OmniPod. This agreement is now in limbo as the Navigator has not yet received approval from the FDA and it isn’t quite clear what Abbott plans to do with Navigator should it receive approval.

There is speculation that Abbott has received an approvable letter from the FDA for Navigator and is merely waiting for a few final items before approval is granted. Given Abbott’s troubled history with Navigator Diabetic Investor prefers to go with what we know and not speculation. This really is non-issue for Insulet as they do have an alternative and could easily do a deal with Dexcom (NASDAQ:DXCM) that would allow Dexcom’s CGM to work with the OmniPod.

Adding a CGM to the OmniPod would put Insulet on par with Medtronic (NYSE:MDT) in terms of having advanced pump technology. Even without a CGM the OmniPod is quickly becoming Medtronic’s primary competitor. As Diabetic Investor predicted the insulin pump market is becoming a two horse race between Insulet and Medtronic. Although Medtronic has a huge lead in terms of installed users, Insulet has fresh legs and innovative technology.

Insulet’s strategy of a phased rollout has proved beneficial as it has allowed the company to work out any kink’s in the system. The company is in the enviable position of having a product consumers want even though it may not yet be available in their area. This pent up demand will not go away as the company still has no competition. There are several OmniPod wannabes but as of now the OmniPod is the only approved tubeless pump on the market. The company is taking full advantage of their position in the market making matters difficult for any future competitors.

The OmniPod is also doing something Diabetic Investor thought could not be done, expanding the market for pumps. Based on patient interviews, patients who would have never considered a pump because of the tubing are adopting the OmniPod. These patients are aware of the benefits of pump therapy but didn’t like the prospect of being wired to a medical device. As Diabetic Investor has pointed out in the past the vanity factor cannot be underestimated.

All in all the future looks very bright for Insulet.

David Kliff
Diabetic Investor
847-634-4646 fax
224-715-3761 mobile