- In back-to-back earnings reports, insulin pump makers Tandem Diabetes and Insulet each topped Wall Street's revenue expectations, adding to a year of healthy performances in the diabetes tech sector.
- Despite Tandem posting 105% year-over-year sales growth in the third quarter — the fifth period in a row exceeding 90% — the market "was likely expecting more," analysts at Stifel said following the smaller pump maker's results Monday. Tandem execs attributed a bit of a pause in U.S. pump purchases to patients waiting for FDA approval of the company's Control-IQ algorithm for automated insulin dosing, expected during the fourth quarter.
- Insulet then impressed investors Tuesday, growing 27% in its fourth consecutive quarter of accelerating sales. William Blair analysts pegged tailwinds like Insulet's unique wearable design and improving market access via the pharmacy channel as "still in their early stages," leaving the company "uniquely positioned to benefit from growing demand for insulin pump technology in both Type 1 and Type 2 patients," according to a note.
Tandem and Insulet largely focused their third-quarter earnings discussion on critical next product launches.
Tandem placed significant stock in the imminent Control-IQ approval and launch, which Cowen analysts called "a huge catalyst" through 2020 and a key factor in Tandem having "what should be the best automated insulin delivery system on the market."
Anticipation for that algorithm's approval likely led many U.S. healthcare providers and their patients to hold off on transitioning to a Tandem system during the quarter, executives said.
Kim Blickenstaff, Tandem's former CEO currently serving as executive chairman, told investors the company expects the October New England Journal of Medicine publication of positive glycemic control outcomes when pairing its investigational Control-IQ dosing algorithm with Dexcom's glucose sensing technology to be "invaluable in our conversations with clinicians as well as payers following FDA approval."
"I've seen the New England Journal publication serve as an inflection point for companies and transform their business by establishing their products as a new standard-of-care," he said. "This is our vision for automated insulin delivery systems and the goal for our Control-IQ technology."
Tandem is aiming to quickly expand Control-IQ's reach to the pediatric market; the company said it plans to file a supporting regulatory submission for people aged 6 and older in the first quarter of 2020.
Tandem offered few further details on its future tech integration partnership with Abbott, announced last month. But CEO John Sheridan said there are several steps to finalizing the agreement.
The company plans to turn focus to its next pump model, called t:sport, which executives said is about half the size of its existing offering. Tandem is targeting a summer 2020 510(k) submission and will seek alternate controller enabled (ACE) pump status, which its t:slim X2 model was the first to receive.
For Insulet, CEO Shacey Petrovic said the third quarter represented another period of record patient starts on it pump therapy.
"Medicare beneficiaries continue to represent a growing percentage of our Omnipod users, not only because of the increased coverage but also because our product design and functionality are incredibly well suited for the Type 2 insulin-requiring population, many of whom are Medicare beneficiaries," Petrovic told investors.
Type 2 adoption is also increasing thanks to rising use of the pharmacy channel, Insulet executives said. The company reported that more than 20% of U.S. sales volume is happening through the pharmacy, up from 15% to 20% last quarter and 10% to 15% at the start of the year.
"The move to PBM lessens the burden of starting with Omnipod as it eliminates the upfront cost of the [personal diabetes manager]," Jefferies analysts wrote in a note Tuesday, adding that Insulet is realizing a higher average selling price on pharmacy sales.
Petrovic said the company's automated, tubeless, smartphone-controlled insulin delivery system, called Horizon, is in its final stages of development as the company targets a product launch in the second half of 2020. Insulet plans to begin recruitment for a pivotal trial next month.
Insulet raised its guidance for the third time this year, now projecting full-year revenue between $722 million and $730 million, for growth of up to 29%.