Tic Toc

Tic Toc

The key takeaways from Tandem’s (NASDAQ: TNDM) earnings announcement:

1. $38 million in cash

2. Approximate burn rate $15 million a quarter

3. As we predicted the company is proceeding with a reverse stock split which according to SEC documents “To approve an amendment to our certificate of incorporation to effect a reverse stock split of our issued and outstanding common stock at a ratio not less than 1-for-8 and not greater than 1-for-12, with the exact ratio to be set within that range at the discretion of our board of directors before June 20, 2018 without further approval or authorization of our stockholders.”

4. Also, as we predicted the company is again attempting to raise more money with a $15 million ATM.

Amazingly the company is not taking any major steps to converse cash as CEO Kim Blickenstaff noted during the Q&A; “Well, I’d say, we are not trying to reduce our operating expenses, more control them.”

At this point it’s difficult to believe the company can do all the things they say they are going to do and not run out of money. Even if they can raise another $15 million that as Momma Kliff used to say is a fly on an elephants tush. Just how long they can sell investors on the promise of tomorrow over the harsh realities of today is an open question.

Let’s be honest if someone wanted to buy the company they would have done so already. Tandem has been shopped to everyone and everyone has said no thank you. All this financial maneuvering might buy them a little time but it does not change the dynamics of the situation. What’s astonishing here is with the ship sinking the Board of Directors isn’t making any changes to the management team that has run this company into the ground.

As Tandem has been taking on water we have attempted to come up with a scenario where the company does not run out of money. About the only way we see this happening would be a buyout and that isn’t happening. Even if by some miracle the company was bought out the struggles will not just go away. The many issues facing the company would just be in someone else’s hands.

Tandem is facing what we used call as kids a double whammy; not only do they have a host of internal issues they are facing an equal amount of external issues. Now money and a new team could perhaps clean up the internal issues but the external issues they face will not be solved by money and a new team and that my friends is a big reason no one has ridden to the rescue. Add in the fact that anyone who wants to be in the insulin pump business would be better off buying Animas from Johnson and Johnson (NYSE: JNJ).

Our sense is the company will hang on for six perhaps nine more months. Even if the ATM brings in less than hoped for the company has enough cash to make it that far. Really nothing much has changed the doomsday clock continues to tic away.