While folks in New England contemplate what to do now that the Patriots have been eliminated from the playoffs and begin to wonder whether their all world 42-year-old quarterback will retire, return for another season or heaven forbid dawn another teams jersey another New England based company has decided to call it quits. Word is spreading that Valeritas is about to call it quits.
The last public information we have from the company on December 20, 2019 when they stated;
“Valeritas Holdings, Inc. (VLRX), a medical technology company and maker of the V-Go® Wearable Insulin Delivery device, which uses its proprietary h-Patch™ technology, today announced revised revenue guidance and preliminary financial results for the fourth quarter and year ended December 31, 2019 as a result of a manufacturing yield issue that has caused a temporary disruption in supply.
The issue has caused a delay in available product and the Company will be unable to ship product until the issue is resolved and the supply chain is replenished. The Company is working toward resuming shipment as soon as possible and will provide additional information as it becomes available. Patients or prescribers who have any questions should contact the Company’s customer service line at 1-866-881-1209.
Due to this situation, the Company has updated its revenue guidance for the fourth quarter of 2019 to be $8.0 to $8.2 million and full year 2019 revenue to be $30.2 to $30.4 million. The Company also expects to incur a temporary reduction in yields and an incremental one-time write-off of inventory of up to $8 million, which would result in a revised negative gross margin expectation for the fourth quarter of 2019. Aside from the one-time inventory write-off expense and increased cost of goods sold due to the lower manufacturing yields, the Company does not expect any other material changes in recurring operating expenses from the third quarter of 2019. The Company expects to end the year with approximately $11 million in cash and cash equivalents on hand at December 31, 2019, which it believes would fund operations into February 2020, excluding any additional expenses incurred related to lower yields in January and in pursuing strategic alternatives, as described below.
Looking towards the first quarter of 2020, the Company expects continued impact to revenue and gross margin as a result of the temporary supply disruption until shipments and production yields return to normal. Given this financial outlook and current cash on hand, the Company has engaged Lincoln International to continue to explore all strategic alternatives including, but not limited to, a sale of the Company, incremental funding by identifying other sources of financing capital, or a sale of the Company’s business through a Chapter 11 process.
Unrelated to the manufacturing process issue, the Company’s partner MedTrust has exercised its right to terminate the V-Go distribution agreement covering four countries due to significant pricing pressures resulting in lower than expected reimbursement rates in Germany and Austria. In addition, the Company has exercised its rights to terminate the V-Go distribution agreement with Julphar due to competitive market conditions in the Middle East.”
So it seems that this “temporary” setback has transformed into a death sentence. Now we can’t say we are shocked or surprised by this news as we have never had much appreciation for any of these dumb patch pumps. A product which really isn’t needed.
With Valeritas gone that leaves CeQur as the sole remaining dumb patch pump company. CeQur has already acquired the assets of Calibra from Johnson and Johnson back in 2018 and who knows could also acquire what remains of Valeritas. Either way we don’t see much of a chance CeQur will be able to do what Valeritas and Calibra couldn’t do, that is be a commercially viable dumb patch pump company.
Tyler is around the corner; the Control IQ is now here so there is little need for any dumb patch pump. Frankly even without Tyler or hybrid closed loop insulin delivery systems there was no need for any of these dumb patch pumps. Dumb patch pumps were a solution looking for a problem to solve only problem being there was no problem in the first place.
This same scenario could soon repeat itself in another crowded device area, “connected insulin pens or cap covers”. With the notable exception of Companion which seems to be the only company with a real product, there are hundreds (ok not hundreds) of others who are destined to fail. The highest profile failure likely to be Bigfoot who like so many in this space has over promised under delivered and is quickly running out of money.
So as we get set to head to CES in Sin City and JPM in that beautiful city by the bay (who has a pretty good football team as well) 2020 begins just like every other year in our wacky world.