What’s happening in the orchard

What’s happening in the orchard

While everyone is focused on the all the new toys, and my goodness the exhibit hall might as well be a toy store. In years past it used to be you couldn’t swing a dead cat and not hit yet another conventional glucose meter, today that cat is hitting the many way cool whiz bang continuous glucose toys. Seriously we’re beginning to believe that some companies think that if the put an I in front of their toy name people will think they are part of the Apple orchard.

Now to a certain extent we can understand this fascination with a company that isn’t even officially here. While we may not be one of the many who awake each morning, and pray at the altar of Apple, this company located just few hours north of here is making the deep dive into our wacky world. And based on what we’ve learned they aren’t using the intermediate diving board, nope they are climbing to the top platform getting ready to do a full twisting double somersault.

As everyone knows Apple has a quasi-relationship with Dexcom (NASDAQ: DXCM) a relationship highlighted last week when Apple CEO Tim Cook, who has been wearing the Dexcom sensor, spoke at the Apple Developers conference. It is also known that independently Apple has been trying to develop a non-invasive continuous glucose monitor. An effort that is not going very well as it based on technology that just doesn’t work.

Now we can’t say for certain that Apple won’t throw more money at their own project but we believe we know what Apple is shooting for and why they want to play in the diabetes sandbox. THIS IS ALL ABOUT MEDICATION ADHERENCE. Why do we believe this, well as it turns out APPLE HAS ASKED TO MEET WITH THE PEOPLE AT LILLY (NYSE: LLY), NOVO NORDISK (NYSE: NVO) AND WE BELIEVE SANOFI (NYSE: SNY). Which is just more than a little wacky as our chardonnay guzzling friends have already invested $250 million with Apple’s neighbor and rival Google.

It should surprise no one that Lilly, Novo and Sanofi jumped at the chance to meet with Apple. This is akin to asking Diabetic Investor if it would be ok to provide us with years supply of Miller Lite for free. Of course, they are going to jump at the chance. Now just what Apple wants to know we can’t say but we can say this, they wouldn’t ask for a meeting if they didn’t have something up their sleeve. Apple does not ASK to meet with anyone unless they something in mind.

As we have stated consistently the biggest obstacle standing between better outcomes and patients is medication adherence. Also, as we have stated the largest market is not intensively managed patients rather non-intensively managed. Simply put getting these 25 plus million patients to take their medications. This does not mean Apple will ignore intensively managed patients but Apple thinks big and there is no bigger market than non-intensively managed patients.

This just so happens to be the same market that Google wants. This is the reason the Google/Dexcom slap it on turn it on low cost disposable sensor is being developed. Again, as we have stated the data provided by this device will tell physicians two things; First if patients are taking their meds and second if they are whether these meds are working or not.

Let’s be honest here every diabetes drug company has a huge vested interest in improving medication adherence. The better medication adherence the more drugs they sell. Yes, we know this should be obvious but one thing we have learned over these past 20 plus years is that in our wacky world it helps to state the obvious. Think for a moment what it would mean to any of the insulin companies should through this data the physician discovers the patients current oral meds aren’t working, well the next step is either a GLP-1 or insulin and gee they make these products. Lilly could be the biggest winner here as they have not just insulin’s and GLP-1’s but a plethora of pills too.

Given that Apple internal project isn’t going all that well and that Dexcom has the best sensor on the planet the possibility exists that they could steal Dexcom from Google. Now before we go any further here allow us to explain why Dexcom is more valuable than say the Abbott’s (NYSE: ABT) Freestyle Libre or Medtronic’s (NYSE: MDT) new Enlite sensor. And no this is not just about accuracy. What Dexcom has demonstrated and Abbott and Medtronic have not is they can manufacture highly accurate sensor on a massive scale.

We have long contended that eventually every CGM and my goodness there are so many now, will achieve Dexcom like accuracy, this as Momma Kliff likes to say is not the issue. No, the issue is to be able to make highly accurate sensors on a massive scale. Why do you suppose Abbott is still waiting for the FDA to approve the Libre or that Medtronic is having issues supplying patients with the new Enlite sensor, this has nothing to do with accuracy. This has everything to do with the ability to make the damn thing.

Listen we have meet with many of the Dexcom wannabes all of whom talk accuracy. But as we say about the insulin pump market the hard part is not developing an insulin pump, the hard part is running a successful insulin pump company. The same applies to CGM and part of running a successful CGM company is the ability to manufacture sensors consistently and do so on a massive scale. This is something Dexcom does very well.

Here are where things getting very interesting. Based on our understanding of the agreement between Dexcom and Google there is nothing that would prevent Dexcom from being bought by another company. Well just as Google has gobs of money so does Apple. With their internal project floundering and their interest in playing in the diabetes sandbox Apple just might make a run at Dexcom. This would solve a ton of problems for Apple.

They wouldn’t have to worry about whether to deal with FDA. They would instantly have a solution that already works with their many way cool whiz bang toys. And of course, they would one up their cash rich neighbors at Google, who likely wouldn’t sit ideally by and let Apple just take Dexcom away from them. As Momma Kliff liked to say nothing better than a bidding war between two cash rich bidders both of whom could easily afford the bidding war.

So, while everyone here is beautiful San Diego plays in the toy store, the biggest story is about a company that isn’t even officially here.