Random Wackiness

Random Wackiness

It goes without saying that the continuous glucose monitoring space is the hottest area in diabetes devices. For the moment the market is dominated by two players, Dexcom (NASDAQ: DXCM) and Medtronic (NYSE: MDT). Abbott (NYSE: ABT) who at one time could have been a major player had they not screwed up the Navigator is trying to reinvigorate their CGM efforts with the FreeStyle Libre. Yet in true Abbott fashion the Libre is a day late and dollar short. As it stands today Dexcom and Medtronic are light years ahead of everyone else locking up not just valuable market share but formulary placements.

Even with this set of circumstances many others want to enter this space. Roche is supposedly working on a CGM system, which according to various sources looks pretty interesting. Yet in true Roche fashion they are over thinking the system and by our estimates even if they get the damn thing to the market it will be well behind the competition.

In attempt stand out from the crowd some CGM newcomers are claiming they have built a better mouse trap. That rather than wearing the sensor, the sensor would be implanted in a patient’s body and remain implanted for 6 months to a year. The theory with these implantable systems is that since the sensor is implanted there are no worries over missing data points since patients won’t have to replace their external sensor every 7 or days.

At the moment two companies are aggressively pursuing implantable systems, one being Senseonics Holdings, Inc. (NASDAQ: SENS).  According to a company issued press release the company announced they have entered into “ a term loan agreement with Oxford Finance LLC (Oxford), Silicon Valley Bank (SVB), and its wholly-owned subsidiary, Senseonics, Incorporated. The agreement provides Senseonics with up to $30 million of potential borrowing capacity.”

The release also states;

“Together with the capital we have raised through our recent public offering, the agreement with Oxford and SVB provides capital on attractive terms that can support our continued efforts to pursue our business plan aggressively,” stated Tim Goodnow, Chief Executive Officer of Senseonics. “The optional borrowing amounts, which are available upon achievement of certain milestones, provide added flexibility to fund other growth initiatives as opportunities arise.”

Now we don’t want to rain on anyone’s parade here but all the money in the world won’t change market dynamics. While we can see a niche for implantable systems, the real money in CGM is in disposable systems. The real money in CGM is not getting insulin using patients on a system, the real money in CGM is getting non-insulin patients on a system. To make conventional point to point glucose monitors obsolete.

Switching gears to the diabetes drug market it seems that everyone is beginning to wake up to something Diabetic Investor has been stating for some time. That this has become a commodity market where price trumps performance. That with so many me-too drugs in each category that all do basically the same thing the same way the only way for a company to gain share is too … wait for it … offer lower prices and/or higher rebates.

According to a report from research and consulting firm GlobalData, “The highly mature type 2 diabetes (T2D) market, which is forecast to be valued at $58.7 billion by 2025, will see pharmaceutical companies prioritizing competitive pricing in order to offset the impact of patent expiries ahead of improving existing products.” Ya think!

The report goes onto state;

“Sanofi, historically a major player in the T2D space, is a good example of a company which has turned its attention to price rather than therapeutic value as the late-stage pipeline becomes saturated with me-too drugs. The company’s recently marketed drug Lyxumia (lixisenatide) was launched at a heavy discount to rival glucagon-like peptide-1 receptor agonists (GLP-1RAs), AstraZeneca’s Byetta (exenatide) and Novo Nordisk’s Victoza (liraglutide).

As Lyxumia is the fourth-to-market GLP-1RA product, with a low level of differentiation in the GLP-1RA space, Sanofi had to offer a competitive price in order to win market share. With health systems in many markets facing cost pressures today, this is likely a strategy that other companies will adopt with their me-too drugs that are in late-stage development.”

First it’s nice to see someone else besides Diabetic Investor noting that when it comes to diabetes our wine dinking friends in France couldn’t boil water without screwing it up.

The only thing this report does not mention is what happens when all the drugs in a category aren’t the same, a situation which seems to be developing in the growing SGLT2 class.

However, when it comes to insulin’s short or long acting, GLP-1’s and DPP4’s this report is spot on.

Having just come back from Silicon Valley Diabetic Investor is even more convinced that when it comes to the future of diabetes management it’s all about data and systems. Now that devices and drugs have become interchangeable commodities the real power comes from turning data into .. wait for it … patient relevant patient actionable information. That the real power in diabetes does not rest in the hands of device or drug companies but in companies who understand the power of data.