That sucking sound

That sucking sound

Not unexpectedly shares of both Dexcom (NASDASQ: DXCM) and Tandem (NASDAQ: TNDM) are getting hammered after both reported less than stellular results yesterday. Perhaps out of sympathy shares of Insulet (NASDAQ: PODD) are taking a beating as well. Insulet reports their third quarter results tomorrow after the market closes.

Besides being diabetes device companies all three of these companies plus one or two more are having the wind sucked out of their sails by a product that hasn’t hit the market yet, the 670G from Medtronic (NYSE: MDT). As we noted just the other day while the 670G is a move towards an artificial pancreas, it is not an artificial pancreas. As we also noted this doesn’t matter all that as the main stream and even some diabetes media (people who should know better) have positioned the product as an artificial pancreas.

Just how big of an impact has the had, how about HUGE. Look at some of the comments made during yesterday’s call;

The first set is from Dexcom CEO Kevin Sayer;

“Approximately a month ago Medtronic announced it had received FDA approval of the 670G hybrid closed loop system. Since that time, there has been significant press surrounding this product, which has created a considerable – which has created considerable confusion in the marketplace. For example, we’ve recently attended a diabetes charity event where it was declared from the podium that Type 1 diabetes is now being cured because of the FDA approved artificial pancreas.

Clearly, this is not the case, patients and caregivers are showing signs of skepticism and frustration due to the over-hype of the promise of this technology. Our review of the currently available data suggests that although this product may be an incremental step in automated insulin delivery, it appears to be an extremely complex system and its real world performance remains to be seen.”

“Finally, as I mentioned in my opening remarks, there’s a lot of confusion in the U.S. marketplace today. The media blip surrounding what is being called the new artificial pancreas has been deafening. Based on what they’ve been told, many patients currently perceive that they will no longer need to manage their diabetes if they purchase this product. Therefore, many patients are willing to delay purchase decision until this system becomes commercially available, or they’re being directed to purchase the current Medtronic offering, with the promise of being first in line for the 670G.”

Kim Blickenstaff Tandem‘s President and CEO also made several references and faced numerous questions on the 670G. (As of this writing the Tandem transcript was not available.)

We suspect that Pat Sullivan Insulet’s CEO will also face similar questions.

The reality here for all of Medtronic’s competitors is there isn’t much they can do about it. Until the 670G officially hits the market and reviews start hitting the various diabetes blogs, the 670G will be perceived as an artificial pancreas. The fact is Medtronic has the latest in whiz bang way cool diabetes technology and the added luster of lots of free and very positive media exposure. Until the next big way cool whiz bang piece of technology comes along the 670G will continue to suck the air out of the room.

Think of it this way this isn’t unlike the current flap over Hillary’s emails which is dominating the news cycle until of course Trump does what he always does opens his mouth fails to think and says something outrageous. Thank goodness the election is Tuesday and all this nonsense will end and we’ll have a new President. But we digress.

The harsh reality here is that Medtronic should and will press the petal to the metal while they can. Situations like this don’t come along every day. They are riding a very nice wave here but eventually the wave will hit the shore. The furor will die down and reality will set in. Until then enjoy the ride.