Making sense of it all

It’s been almost two full weeks since the ADA conference ended and we’re still trying to make sense of it all. What’s pretty obvious is that Dexcom up 10.6% and Insulet up 5.3% were the big winners in terms of stock price appreciation. Everyone else has basically tread water.

Everyone seems to think its big news that Dexcom intimated but did not come right out and state that their sensor will send readings directly to the Apple Watch. Everyone but us that is for what have we been saying consistently Apple and Dexcom are getting pretty cozy, Apple wants to enhance their platform and Dexcom is a perfect fit when it comes to glucose monitoring. At one point we thought maybe Miles would try to cozy up with our friends in the spaceship hoping they would acquire Libre, but it seems he’s content to go it alone.

This Dexcom Apple relationship also presents some intriguing prospects with their other partner, Google. It wasn’t that long ago that Dexcom changed the nature of their Google relationship in effect buying their freedom. The question now becomes how serious is Google about staying in diabetes. The Verily/Sanofi partnership hasn’t produced much of anything, the two “partners” are having “issues” and each would like nothing better than to get rid of the other but remain together as the cost of a divorce is very expensive.

One side of our head wonders what would happen to the Verily Sanofi partnership if the new guy at Sanofi decides enough is enough it’s time to get out of diabetes and sells the franchise to his friend at AstraZeneca. Would the Sanofi share of the partnership go with the franchise, would this provide an out for Google or perhaps the new guy will want out so badly that he’ll take $500 million rather than a billion for Google to buy their freedom.

Frankly we aren’t sure what Google wants to do and quite honestly, we don’t think they know either. This has always been our concern with the newbies in diabetes, yes, they have tons of money and talent, but it takes more than money and talent to be successful in our wacky world. It takes a clear strategic objective that is then executed. Google, Apple and Amazon the big three of tech land have all been swimming in the diabetes pool but so far none of them have quite figured out whether they are swimming laps or just splashing around.

We also have some news from a company that hasn’t executed very well, Medtronic. Now that the dog and pony show is over the real world is once again intruding on the fantasyland the company showed to investors at ADA. The much ballyhooed new and improved sensor is having the same issues as the old crappy sensor, reliability. Our field research indicates the more things change the more they stay the same; when the damn thing works patients love it when it doesn’t, they want to strangle someone.

At some point Medtronic needs to get with the program and realize that even one fingerstick calibration is one too many. The calibration train left the station long ago and we don’t care how much lipstick you put on a pig it’s still a pig. In terms of their pipeline two points, first Medtronic can and does say lots of things. Second, they aren’t very good at actually executing on what they say. Yes, the results for Tandem’s Control IQ didn’t meet the lofty expectations everyone had but the fact is patients prefer Tandem/Dexcom. Tandem’s problem wasn’t the results released their problem is knocking out the last leg of the Medtronic chair, formulary position.

We remain firm in our belief that the dog and pony show by Bevis and Butthead was more about positioning the unit for a future sale than anything else. The insulin pump market is changing, Medtronic is falling further behind in CGM and the Board is getting inpatient with promises made but not kept. Listen we aren’t big fans of Bevis and Butthead, but these guys aren’t stupid and know that if they don’t sell now, they risk becoming another Animas.

In another part of our head we’re wondering when people will realize that drug companies should not be in the device business. We say this as Lilly and Novo Nordisk seem to be doing everything in their power to screw up their versions of Tyler. Novo has already suffered through a recall in Sweden while Lilly has submitted their cap cover to the FDA the much-anticipated disposable connected pen seems stalled.

Why these guys don’t just go out and buy Companion and Common Sensing we’ll never know. This would give them a suite of options for Tyler and would allow them to get a jump on each other. Tyler for Lilly and Novo isn’t about making money on the toy, it’s all about protecting their insulin franchise. With their scale either company could lower COGS to the point where the toy is given away for free for, they both know payors aren’t going to pay for the toy.

This is the fool’s paradise for every Tyler that isn’t connected with one of the big three insulin companies. They all talk about their Tyler, how it will improve outcomes and that payors will pay for that. Well we hate to break the news to these guys that ain’t going to happen anytime soon and the big three won’t let it happen either. The fact is Lilly, Novo and Sanofi can afford to give away their toy for free and everyone else can’t. And yes, it is that simple.

So what have we learned now that we’ve had nearly two weeks to reflect, well the more things change the more they stay the same. Dexcom still has the best CGM while Abbott has the cheapest CGM. Medtronic is a crumbling empire, Tandem needs to slay the formulary dragon while Insulet is just going about their business staying above the fray and doing quite nicely we should add. Novo and Lilly are great drug companies that shouldn’t be in the device business. Sanofi is well Sanofi.

Have great weekend everyone.