JP Morgan Day One Morning Session

JP Morgan Day One Morning Session

As expected Alkermes (NASDAQ:ALKS) did not have much to say on the status of Bydueron.  Although the company did note they are working on a once-monthly version of the drug which is currently in Phase 2, again not major news.

Perhaps the most surprising aspect of the Bydueron conversation is not what’s known about the drug rather what companies like Alkermes should be saying but don’t say. Yes everyone knows that diabetes is growing at epidemic rates and that nearly two-thirds of patients are not properly controlling their diabetes. We also know that once-weekly dosing is better than once-daily and that is a very easy drug to administer (no glucose monitoring, set dosing). However, for reasons that elude Diabetic Investor we have yet to hear Alkermes, Amylin (NASDAQ:AMLN) or Lilly (NYSE:LLY) mention the positive economic impact Bydueron could have.

Studies have shown that companies save on average $1,000 per year in healthcare related costs for every 1% reduction in HbA1c.  These savings are actually greater the more out of control the patient. Why is this important? Although there has been a great deal of speculation as to how much Bydueron will cost, it is widely expected it will be priced at a premium. Given this scenario gaining formulary coverage will be critical if Bydueron is to reach it’s anticipated blockbuster status.

While it’s great that patients using Bydueron experience a low incidence of hypoglycemia, it’s even better they achieve better outcomes and these days better outcomes translates into lower costs which is something  people at  this event understand all too well. Given that there isn’t likely to be much in the way of concrete news for Bydueron it may be wise for the Bydueron trio to begin telling a slightly different story before investors lose interest.

Listening to Roche two things were obvious, first they do realize they have problem in their diabetes unit but they just aren’t sure what to do about it. The company has known about the maltose issue for over 4 years but just now is acknowledging they should get with the program and do what every other BGM company has done and use a different enzyme.  

In another sign they still just don’t get it, the company continues to believe new technology is the best strategy to reignite growth.  Keep in mind these comments come from a company that invested almost $200 million for a patch pump, that still is not on the market, may never actually make it to the market and even if it does make it to market will be so difficult to use it will actually help sell the competitions product.

Speaking of patch pump Medtronic (NYSE:MDT) continues to change the timeline for their much hyped and much delayed patch pump.  The latest timeline is the first half of their fiscal year 2013. Based on the how this question was answered in today’s breakout session, Diabetic Investor believes this latest timeline will be subject to further review.

What’s truly fascinating here is that patch pumps are still seen as the next great innovation, when in reality Insulet (NASDAQ:PODD) with their OmniPod system has already on the market and doing just fine.  While Medtronic and Roche fumble about with their systems, Insulet continues to add patients and make it even more difficult for these OmniPod wannabes, if they ever get here.

Given these set of circumstances one has to wonder why no one has come along and bought Insulet, something that may come sooner than later now with Charlie Liamos taking control. The reality is Insulet is learning the hard way that having an innovative product is half the battle. Having an innovative product that you can sell at a profit is the real battle. This is where both Roche and Medtronic are struggling, they have seen there is a demand for this technology but they have also seen that business model isn’t as attractive as a conventional pump. As Diabetic Investor has been stating for some time when it comes to patch pumps COGS are critical.

Roche and Medtronic also appear to be banking on the fact that Insulet cannot continue to function as it is structured today and they will eventually run out of money. This may have been a scenario before Mr. Liamos was called upon but is unlikely now. The company has enough cash on hand, plus demand for the OmniPod will likely increase when the company introduces their new smaller pod. This will buy Mr. Liamos enough time to work his magic and move the company into where they wanted to be all along, in the hands of a bigger player.

Well that’s all for now, more later.