Not like we need more reasons to call this the wacky world of diabetes but take a look at these items;
1. As trading begins today Dexcom, Insulet and Tandem – the Three Amigos of diabetes tech – are all well off their lows. Dexcom and Insulet have recovered so well both are within spitting distance of their 52 week HIGH. Tandem still has a ways to go to reach that level but the trend is upward.
2. Livongo is not just well off their lows but is having one hell of a week approaching levels not seen since their IPO. This rise is directly tied to the coronavirus and the mistaken belief that somehow the Livongo platform helps patients with diabetes deal with the crisis. All this attention being paid to remote monitoring of patients is understandable but a bit misguided. Remote monitoring is easy assuming of course the patient actually uses the Livongo old fashioned conventional finger stick glucose monitor.
The real issue continues to be turning data into action. Yes, the company is getting lots of attention and to their credit they are taking full advantage of all this favorable publicity. But the real test will come not with first quarter results but second quarter when the real impact of the coronavirus will be felt. We have seen nothing that changes our belief that the stock is setting up as a great short.
3. Talk about things going from bad to worse but right now Omar Ishrak has to be doing the happy dance now that he’s enjoying retirement. Earlier in the week the company noted that the coronavirus is majorly negatively impacting results. As we anticipated given that patients cannot visit their doctor sales of pumps have been negatively impacted. Pump supply revenue has been steady, but this low margin business cannot offset the loss of new pump revenue.
But believe it or not when it comes to their diabetes franchise it will get even worse when patients can once again see their physician. With the Control IQ continuing to get rave reviews from patients and physicians Medtronic has to be worried that once shelter in place is lifted existing patients will begin switching to what is now the coolest toy in the toy chest.
From the day he took over the franchise Mr. Salmon has been swimming against the tide. Yet there is a silver lining among the dark clouds as with Omar gone the possibility of selling this franchise has increased exponentially.
4. OMG here we are well into today’s post and we have yet to mention that Sanofi released first quarter results which of course for diabetes sucked. Onto number 5
5. We may not be big fans of AstraZeneca but damn they are pushing the edge of the envelope as they are now looking at Farxiga as treatment for COVID. Like Livongo they aren’t short on chutzpah.
6. Yesterday we wrote about the continued troubles at Senseonics but failed to mention one critical point. CGM is the hottest thing going and still they cannot find a buyer. Yes, the greater fool theory is alive and well, but the blithering idiot theory isn’t and quite frankly that’s what it will take for Senseonics to find a buyer.
7. Looking ahead to next week two of the three amigos will report results with Dexcom and Tandem reporting. Our guess is that Dexcom will reported solid results while Tandem will spend time explaining how the coronavirus is slowing the adoption of the Control IQ. This of course is temporary as there is no doubt in our mind that once shelter in place ends sales will accelerate.
Well that’s it for this week hope everyone is staying safe and doing well.