FUDiabetes

News from the Tandem Q2 2019 conference call

The Tandem Q2 2019 conference call was held on August 1st, and a transcript is available at https://seekingalpha.com/article/4280541-tandem-diabetes-care-inc-tndm-ceo-john-sheridan-q2-2019-results-earnings-call-transcript

The big news is that the software upgrade to the Control-IQ closed loop algorithm will be free in the USA for all in-warranty t:slim X2 pumps. Actually, the broader statement is that all software upgrades will be free through the end of 2020 for in-warranty US customers who have the t:slim X2. One big reason they gave for this is that they didn’t want customers to defer a t:slim purchase to wait for Control-IQ version. (“Osborne Effect”) [snark]Nobody asked whether they were unable to convince any insurance companies to pay for a software upgrade.[/snark] They indicated that they wanted Control-IQ to be widely installed and used because they care about their pumpers, and anyway, the results will be so good that the word-of-mouth recommendations will help sell many additional pumps.

The Control-IQ study met all primary and secondary endpoints. And they suggest that it was good even for for people with A1C in the high 5’s. “The most important element of that study was the fact that, when you look at the stratification of time in range versus A1C. There was a very wide range of A1Cs from 5.5 to 10.5 and every group improved.” So time in range improved for all groups. The conference call did not state what happened to the A1C of people who started in the 5’s.

Control-IQ is expected to have a commercial launch in the 4th quarter of 2019 for age 14 and above, pending FDA approval. The study for patients age 6-13 is underway and half-enrolled. They are aiming to submit those results to the FDA early in 2020 to get approval before “kids summer camp season” in 2020.

They hope to launch the t:sport pump in late 2020, but didn’t say much about it.

They expect to launch Basal-IQ and the Device Updater software broadly outside the USA later this year, pending various regulatory approvals and insurance reimbursement arrangements.

The business is growing fast, and they expect 2019 as a whole to be cash-flow positive despite heavy spending to grow the manufacturing, sales, and support organizations. Pumpers and prescribers are happy. They hinted that they may be starting to make some progress with UnitedHealthcare: they definitely are not claiming any breakthroughs there, just that the Basal-IQ and Control-IQ results are helping those long-term discussions.

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I’ve always considered tandem to be the “good guys” in the insulin pump wars, but I think it’s interesting that they seem to be backtracking from the notion that pump updates would be free/low cost during the pump’s warranty period to now only providing essentially two years of software updates for pump software.

The way I’m reading the press release, you can update your software anytime during the pump’s warranty period, but you’ll only be able to update to the Control IQ V1.0 (since that appears to be the only one that will clear the FDA before the end of 2020), so anything that comes subsequent to that while your pump is still under warranty would require a pump upgrade. I guess eventually shareholders always win. Maybe I’m looking at this wrong-I dunno. Still gonna buy one.

This is a stretch. What I read into what they said, is that until 2020 all upgrades that come out will be free, but we are keeping our options open in case our business requires us to charge after 2020.

My educated guess is they need the growth right now and are willing to lose the money they would earn from the upgrade charge to ensure they continue to get people buying or upgrading their pumps. Eventually, that calculus won’t work anymore and they will start charging. Seems fair to me. Honestly, I would have paid $500 (and expected to) for the Control-IQ upgrade.

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That seems logical. Even a few hundred bucks to basically get the newest algorithm isn’t a bad deal, when basically just a couple years ago, you were basically SOL till your pump warranty expired or you signed away your diabetes life for another 5 years to the pump overlords and paid several hundred bucks to get the next cool thing. Even an incremental change there is very positive.

I did think it was interesting that they also mentioned their internal metrics noted many new buyers were coming from MDIs. I would have thought they’d be getting more Minimed converts at this point, but maybe it’s just a function of folks thinking all CGM tech is the same/being locked in to a pump for 5 years? It seems to be tough to find too many hardcore T1s raving about how awesome medtronic cgm tech is.

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They’ve been saying this pretty consistently for the past few years, that about half of the pump purchases are new pumpers who had been on MDI. This was the first time that I noticed them suggesting that they were picking up a significant number of Medtronic pumpers who were looking for a change, although clearly it has been happening for a while.

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I agree with you, however the United deal and just sheer volume of physicians that only offer Medtronic pumps is certainly helping them keep patients in their ecosystem. They may not be raving about their sensors the way Dexcom patients seem to, but they have improved it enough that the bitching stopped.

Minimed’s old pumps were bullet proof, their CGM was something out of a nightmare, I still remember trying to grind a pencil deal into my stomach at work in the bathroom and blood running everywhere… I had a Tandem v1 for 4-5 years, total complete junk other than the color screen and clear IOB info. I had whole boxes of reservoirs go bad, needle tips that were dull, a crazy long refill process, having to hit 15 buttons to give yourself insulin, no one here can tell me otherwise Tandem is complete and total junk, once a Chrysler always a Chrysler, or in this case today a Chrysler with Dexcom. I’m so glad a couple year ago I bought the cheaper insurance at work and found Tresiba, best stuff in the known universe.