Tyler, Tyler everyone has a Tyler

This year’s EASD got off to a strong start with two deals announced this morning in the connected pen space, the first involving Medtronic and Novo Nordisk, the second between Abbott and Sanofi. Per the press releases;

‘Abbott (ABT) and Sanofi are partnering to integrate glucose sensing and insulin delivery technologies that would help to further simplify how people with diabetes manage their condition. The two companies will take an innovative approach to connected care by developing tools that combine the revolutionary FreeStyle Libre technology with Sanofi′s insulin dosing information for future smart pens, insulin titration apps and cloud software.”

“Medtronic plc (MDT), and Novo Nordisk A/S today announced a collaboration that will develop solutions to integrate insulin dosing data from future Novo Nordisk smart insulin pens into Continuous Glucose Monitoring (CGM) devices from Medtronic, such as the Guardian™ Connect system.”

Quite frankly neither deal comes as much of a surprise as the insulin companies continue to look for ways to stop the commodization of insulin, while both Abbott and Medtronic are looking to offset Dexcom’s multiple partnerships and sell more of their sensors. It should be noted that Dexcom also works with Sanofi and Novo as both insulin companies are moving towards integrating their connected pens with multiple sensors.

A few quick points as these deals just confirm what we have been saying all along, that in the not so distant future everyone will have a Tyler (remember Tyler is our name for a connected pen/cgm/app system).

1. Don’t be surprised if both Tandem and Insulet jump into the Tyler market.

2. Expect payors to embrace Tyler as he offers a cheaper effective alternative to increasingly expensive hybrid closed loop insulin delivery systems.

3. Cross platform integration will be common in the Tyler market. The fact is the insulin companies could care less which sensor the patient uses as their goal is to sell more insulin.

4. The battle in the Tyler market will come down to what it always comes down to, who wins formulary position. As we have noted Lilly is developing a disposable connected pen which we expect they either will give away for free or at cost, a move that would help secure formulary.

5. These deals will likely spell the end for several of connected pen players who are already experiencing resistance in raising more money. The fact Abbott is partnering with Sanofi could well mark the end of Bigfoot who as we noted not that long ago underwent a major restructuring as the company is running out of money.

We’ve said it before and will say it again the Tyler market will be controlled and dominated by the insulin companies. Yes there will some others who will play in this sandbox but given what’s at stake, their existing infrastructures, strong brand name recognition and existing payor relationships combined with their massive scale the Tyler market will be owned by Lilly, Novo and Sanofi. They will use whatever means they can to fend off the coming of a biosimilar short-acting insulin.

Some additional thoughts before we close;

A. The insulin companies are NOT endorsing one sensor over another they are merely allowing their systems to work with all FDA approved sensors. Therefore nothing really has changed for the sensor companies. The reality is Dexcom and Abbott will continue to capture the lion’s share of patients.

B. We view it as highly unlikely that either Dexcom or Abbott will market a Tyler of their own, just as the insulin companies want to sell insulin, the sensor companies want to sell sensors. This is one time where neither the insulin companies want to play in the sensor sandbox and the sensor companies don’t want to play in the insulin sandbox for the moment anyway, they will play nicely together.

C. We shall reiterate our belief that as Tyler becomes more popular, he will be the biggest threat to the insulin pump market impacting growth for the simple reason Tyler will be much cheaper than an insulin pump while producing solid clinical outcomes. This is why Insulet and Tandem need to protect their franchises and have a Tyler too.

In the end for all the white noise generated by these deals nothing much has really changed other than Tyler is about to hit the market in a big way. We’ve always known he was coming and are somewhat surprised he’s taken this long to get here. But know that he is here Tyler will definitely make his presence felt and that my friends you can take to the bank.