More foolishness

More foolishness

From time to time Diabetic Investor likes to catch up with companies who for a time seemed destine to become something only to fade away and then remerge once again. This is a reoccurring theme in the non-invasive glucose monitoring quest, as these glorified con-men continually reinvent themselves taking old ideas that don’t work, repackaging them as new ideas and bilking investors out of even more money. Yet, non-invasive companies are not the only culprits as insulin pump companies are also guilty of these same shenanigans.

We mention this as Diabetic Investor this morning spoke with Sophie Baratte CEO for CellNovo. Now we have not written about CellNovo since they went public on the French stock exchange. A post which didn’t sit well with Ms. Baratte who seems to be believe that Diabetic Investor was less than complimentary to the company. As Ms. Baratte stated; “the next time you write about us you should say something nice.”  Apparently the truth written by Diabetic Investor does not translate well into French, something our wine drinking friends at Sanofi (NYSE: SNY) also have a problem with.

Now to be fair as Ms. Baratte seems like a very nice person in spite of the fact she’s French, we decided to see what the company has been up to lately. Just to back up a little CellNovo is yet another wireless insulin pump company – think Insulet (NASDAQ: PODD) with a French accent and French arrogance.

According to their 2015 full year results released back on January 20th,

“Over the fourth quarter, Cellnovo shipped 102 new systems, for a total of 224 since launch. With demand continuing to outstrip supply, the manufacturing outsourcing programme with Flex (Flextronics), initiated at the end of September 2015, is progressing well and will enable Cellnovo to significantly increase system shipments in the second half of 2016.”

Now we don’t know about anyone else but these aren’t exactly impressive numbers by any stretch of the imagination. That is unless of course you are management at CellNovo which has a very vivid imagination. But let’s look further.

As recently as March 15th the company announced a deal with … wait for it .. that distinguish insulin pump juggernaut Roche who according to a company issued press release;

“Cellnovo Group (“Cellnovo” CLNV:EN Paris), a medical technology company marketing the first mobile, connected all-in-one diabetes management system, today announces the signing of a commercial agreement to integrate Roche Diabetes Care’s market leading Accu-Chek® Aviva and Accu-Chek ® Performa blood glucose monitoring (BGM) platforms into the Cellnovo diabetes management system.”

Keep in mind that Roche long ago acquired Disetronic who at the time was the number two insulin pump company behind what was then MiniMed and today is Medtronic (NYSE: MDT). An acquisition that didn’t go all that well as Roche has basically ran this company into the ground. Just to prove that this wasn’t a mistake Roche doubled down and also bought Medingo, who just happened to have .. wait for it ..a wireless insulin pump. A product which never made it to market which basically means that when it comes to insulin pump acquisitions Roche is batting a 1000 or O for 2 depending on whether you have a vivid imagination or live in the real world.

Although most people wouldn’t know it Roche is still in the insulin pump business, yet given their miniscule market share it’s easy to understand why most people aren’t aware of this fact. Typically, when someone thinks of Roche and diabetes devices they think of glucose monitoring. An area where Roche should take great pride as they are perhaps the only company in BGM to turn a billion-dollar unit into a million-dollar unit. Now that takes real talent.

Listen even our good friends at Abbott (NYSE: ABT) who have run not one but two glucose monitoring acquisitions into the ground can make that claim. Although Abbott still holds the distinction of also running a continuous monitoring system into the ground, something Roche has yet to do so we do have something to look forward too.

Yet we digress and need to get back to our new friends at CellNovo. Ok so they have a whiz bang way cool wireless pump – been there done that as Insulet has basically the same thing. And judging by how Insulet’s been doing we wouldn’t exactly hold them out as a model for CellNovo. Insulet has been at this for far longer than CellNovo and still hasn’t figured out how to make money. And from what we have seen and now heard there is nothing to make Diabetic Investor believe that CellNovo will be any different than Insulet.

The main difference is being based in Boston Insulet has better chowder and sea food, while being based in France CellNovo has better wine and a much snootier attitude. Insulet also has somewhat of an attitude but it doesn’t come within a glass of a big and blood red wine compared to the arrogance shown by CellNovo. Or as they like to say in France “Qu’ils mangent de la brioche”. Which can be loosely translated as “ Go F yourself.”

Still perhaps we are being too hard on our new friends from France. Perhaps CellNovo is not infected with the same disease which has infected our wine drinking friends at Sanofi. Maybe they can hit water if they fell out of an ocean liner.  Maybe they can do what no one else has been able to do in the insulin pump market, namely beat Medtronic. Maybe they can do what Insulet has never done, make real money. Maybe they have a secret potion, magic elixir or pixie dust who knows.

What they don’t have is anything really that different than what Insulet has. What they don’t have is any presence here in the US and won’t have this presence until next year at the earliest. They have built a different mouse trap but to quote the ex-CEO of Insulet at the end of the day that’s all they have.

What they do have and have in abundance is a healthy dose of old fashioned French arrogance. As Momma Kliff used to say and she did speak Yiddish but no French; “Better to play a good game then talk a good game. Any idiot can talk the talk but few can walk the walk.” Viva Momma Kliff!!!!