Just when it looks wacky it gets ….
Things certainly are wacky these days. The Fighting Illini football team has won four Big Ten games in a row becoming bowl eligible. Our beloved Chicago Bears finally won a football game. Livongo seems to have found some life, Dexcom is blazing hot, Insulet is on fire while Tandem and Abbott continue to wait for the FDA to do its thing.
One of the things we wonder about given the competitive landscape is whether or not Medtronic will reconsider spinning off their struggling diabetes franchise or will they attempt to fix the many issues this unit faces. Now under new leadership, again, the unit again is seeking answers as to how to proceed. If history repeats itself and with Medtronic it usually does, Mr. Salmon will attempt to save the golden goose.
However this time around the goose may not be worth saving. Perhaps it’s time to reexamine an option the Mothership has considered before, maybe it’s time to sell the goose while it’s still laying golden eggs. The problem of course is this isn’t as easy as it seems and worse the expected multiple makes this deal unattractive for private equity the most likely buyer. So like it or not the Mothership is stuck with the unit and will just have to make the best of a bad situation.
While we continue to doubt the long-term viability of the Livongo platform it’s time to acknowledge they are becoming the standard by which other digital diabetes players will be judged. The company may not be making money and likely will not make any for the foreseeable future, but the fact is they are giving themselves every opportunity. The way we see it they just have to be around long enough to entice one of the larger tech platforms into buying them. This is the ultimate goal anyway.
It also reminds us of the early days at Insulet when the goal was simple, get to market, disrupt the apple cart and get bought. As we all know things didn’t exactly work out that way and while the company today is kicking some serious ass, this transformation did take some time and did not come about without lots of hard work and a little luck.
Yet we wonder when or if Dexcom another serious ass kicker will move beyond having a killer sensor and become an insulin delivery company. They really have no need, nor do we think they have much desire to be in the insulin pump market, but we can see them having a Tyler of their very own. Do they need to have one? Not really as everyone else has got one and they’ll all work with the Dexcom sensor, but the question isn’t do they need one rather when will everyone else get off their fat asses and bring the damn thing to market.
The fact is Tyler should have been here by now but like so many things there is huge chasm between what should have been and what is.
Tandem must feel like Cinderella waiting for that Prince with the glass slipper as the clock slowly clicks down to midnight. As each day passes by without approval of the Control IQ the fourth quarter gets closer to ending. Now the company must shift gears as like it or not the Control IQ won’t be fully impactful until next year. Yes this truly sucks but as Momma Kliff used to say, we cannot lament about what might have been we have to prepare and be ready for what is. Which thankfully Tandem is doing.
Abbott on the other hand has to be wondering if they bet on the wrong horse when they went after an iCGM designation for the Libre2. iCGM is kind of a nice to have thing but not a must have kind of thing. This is especially true for Abbott as iCGM or not they will not stray from their value strategy. The fact is only a minority of users even know what iCGM is and even fewer select Libre because if it. Libre has been successful because it works well enough and is cheaper than Dexcom, and yes, it is that simple.
The problem for Abbott is they cannot go backwards; they cannot go to the FDA and say hey we really don’t care if we get iCGM just approve the damn thing so we can sell the damn thing. Well they could and perhaps should do that, but they won’t as it would be majorly embarrassing. Abbott has been very public about iCGM even though they have been back tracking recently. Abandoning the quest for iCGM is like our Bears abandoning their quarterback, we all know it should be done but we also know it won’t be done so we just have to pray that he somehow finds his inner Tom Brady.
We have already begun preparing for 2020 as that’s when we’ll find out if Novo Nordisk was right to bet the farm on Rybelsus. This really is setting up as one the most interesting diabetes drug launches as its success or failure isn’t directly tied to formulary position. This isn’t like Basaglar which had a price advantage or Trulicity which had a usability advantage, Rybelsus will sink or swim based on patient/physician acceptance, payors excuse the expression will not be able to force Rybelsus with its complex dosing regimen down the throats of patients and physicians.
For all the excitement over this being the first orally delivered GLP-1 a strong case can be made that Trulicity and Ozempic offer a less complex equally efficacious option for patients. Perhaps this is why Novo priced the drug on par with Ozempic.
No matter what the reality is the wacky world is as wacky as ever. So let’s see if the Illini can make it five in a row in two weeks against the corn feed Iowa Hawkeyes plus whether the Bears can win two in a row against the now struggling LA Rams (seems like Medtronic isn’t the only thing in LA having issues, but let’s not digress). Yep it is a wacky world my friends.