This isn’t right by any measure

This isn’t right by any measure

Tandem (NASDAQ: TNDM) continues to be the posterchild for everything that is wrong in diabetes today. This company which has blown through millions of dollars and is now on the verge of collapsing, yet seems oblivious that they are about to turn people lives upside down. No in an act of major chutzpah the entire board of directors every single member on the same damn day exercised their stock options.

Options which based on where shares closed on Friday are already in the money. Now we know this happens all the time and we know the board is trying to show support for the company, but this just doesn’t pass the smell test. It doesn’t even come close given how this board has done nothing and we mean nothing to prevent the coming collapse.

What’s even worse and more like sickening is these are the people who stood by doing nothing while management ran this company into the ground and they could make even more money if as a rumored a private equity group comes in and buys the company. Think about that just for a moment, these people who are already wealthy will get even wealthier for sitting by while management destroyed value. But of course, these are the same people who said it was ok to pay bonuses to executives while the company was bleeding cash.

Think of it this way the actions of the Tandem board would be like the owners of the Chicago Bears rewarding head coach John Fox who has a 12-29 record (that’s a .293 percentage) with a raise and contract extension when he clearly should be fired. The business of football is about winning and the responsibility for winning sits with the head coach, this as they say is why they make the big bucks. In most normal organizations losing is not rewarded.

The Tandem board of directors has stood by twiddling their thumbs when it’s clear to everyone that this management team should be gone. And quite frankly should have been gone a long time ago. Think about this just for a moment Tandem loses money on every system they sell, and no this is not a misprint. Why do you think every company that has come in and kicked the tires has no thanks? Why do you think it will cost somewhere near $200 million to transform Tandem into a viable insulin pump company?

Before we go any further it’s important to separate the product which Tandem makes from the management team and board of directors. There is no question the t: slim pump is a good one and that patients love it, that isn’t at issue here. The issue here is not the product the issue here is that management and the board of directors have placed their interest ahead of patients. They could care lees that these people could see their lives turned upside down. All they care about is making more money.

As we have stated consistently we have no problem with companies making billions and executives making millions provided that patients benefit as well. When Medtronic (NYSE: MDT) bought MiniMed the team that built MiniMed deserved every dollar they received. MiniMed was a rare example of how a company could put patients first and still make gobs of money.

But there is no measure that shows Tandem management, or the board should be rewarded. On a year to date basis shares have fallen over 86%, over the past two years shares have fallen over 97%, over 5 years down over 98%. This isn’t creating shareholder value this is destroying shareholder value. So please explain why management and the board is being rewarded.

This is a company which is spending nearly $20 million on facilities and most of them aren’t even being used, yep they are vacant. This is a company which is burning through cash, has diluted shares on multiple occasions but has yet to take any substantive measures to conserve cash. As one company observer noted; “Even the people who should clearly be let go aren’t being let go.”

So again, please explain to me why management still has a job and the board of directors should not be lynched. This is so wrong on so many levels and flat out stinks. When it’s all over and the company ceases operations management will walk away with fat severance packages, the board will walk away with no liability while Tandem patients will be left to scramble.

This is one time we hope we are flat out wrong and that someone does come along and saves the company. Frankly after seeing and listening to what Animas patients are going through today we cannot bear the thought of Tandem patients going through the same thing. And as much as it pains us to write this we could care less if management or the board makes money. As sickening and disgusting as this would-be the welfare of patients is more important.