Latest / Vanguards of Healthcare by Bloomberg Intelligence / Tandem Diabetes’ Pump Portfolio Has Rubber Hitting the Floor

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Tandem Diabetes’ Pump Portfolio Has Rubber Hitting the Floor · Vanguards of Healthcare by Bloomberg Intelligence

• 0:18
  Speaker 1: Welcome to another episode of the Vanguards of Healthcare series.
• 0:21
  Speaker 1: My name is Matt Henriksen, the Medical Technology Analyst at
• 0:24
  Speaker 1: Bloomberg Intelligence, which is the in-house equity research platform of
• 0:27
  Speaker 1: Bloomberg LP. We are pleased to have with us today
• 0:30
  Speaker 1: John Sheridan, CEO of Tandem Diabetes, a medical device company
• 0:34
  Speaker 1: that is a key leader in the expansion of Automated
• 0:37
  Speaker 1: Insulin Delivery System, or AIDs for short. These are the
• 0:41
  Speaker 1: next generation of insulin pumps to help diabetic patients keep
• 0:44
  Speaker 1: track of their glucose levels. You can dive deeper into
• 0:47
  Speaker 1: the company and its financials by typing in TNDMEquityGo on
• 0:52
  Speaker 1: your Bloomberg terminal. John, thank you for joining us.
• 0:55
  Speaker 2: It's nice to be here, Matt. Thanks for having me.
• 0:57
  Speaker 1: Absolutely. And, you know, I feel like when we had
• 0:59
  Speaker 1: you last year to today, a lot has just changed
• 1:03
  Speaker 1: in the insulin pump market. But why don't we just
• 1:07
  Speaker 1: start with a quick overview of Tandem? I talked about
• 1:10
  Speaker 1: automated insulin delivery systems, but what is Tandem offering today?
• 1:15
  Speaker 1: within the automated insulin delivery system market?
• 1:20
  Speaker 2: Okay. Well, we have two products on the market today.
• 1:24
  Speaker 2: And I guess I should start by saying that the
• 1:26
  Speaker 2: diabetes market is very segmented. People have differences of they
• 1:31
  Speaker 2: want to control, interact with where and just differently. And so,
• 1:36
  Speaker 2: you know, one product is not going to fit the
• 1:40
  Speaker 2: needs of the entire marketplace. And so what we've done
• 1:43
  Speaker 2: is we have two products on the market today. We
• 1:45
  Speaker 2: have a T-Slim, which has been on the market now
• 1:48
  Speaker 2: for about 12 years. It has a touchscreen on it.
• 1:51
  Speaker 2: It holds 300 units of insulin. When it first came
• 1:53
  Speaker 2: to market, people used to describe it as the iPhone
• 1:57
  Speaker 2: of insulin pumps. And we really did focus on trying
• 1:59
  Speaker 2: to make the interface very simple, intuitive, and easy to use.
• 2:03
  Speaker 2: And by doing that, we felt like ease of use
• 2:05
  Speaker 2: drives adoption. And from the beginning, we've really been trying
• 2:08
  Speaker 2: to convert people from pens and needles to to pumps
• 2:11
  Speaker 2: because pump therapy has been proven beyond a shadow of
• 2:14
  Speaker 2: a doubt even and including the aid systems to provide
• 2:17
  Speaker 2: much better much better therapeutic outcomes the other product we
• 2:20
  Speaker 2: have in the market right now is called mobi and
• 2:23
  Speaker 2: we introduced that about a year and a half ago
• 2:25
  Speaker 2: mobi is about half the size of the t slim
• 2:28
  Speaker 2: it does not have a user interface it is controlled
• 2:32
  Speaker 2: entirely by a mobile app that you can use on
• 2:34
  Speaker 2: your own on your own phone And so the two
• 2:37
  Speaker 2: of those have a lot of areas of choice. We
• 2:40
  Speaker 2: have choice in CGM systems. You can choose how you
• 2:46
  Speaker 2: wear the devices. There's a lot of elements of choice
• 2:48
  Speaker 2: which deal with this segmented nature of the market. And
• 2:53
  Speaker 2: we think that's a strategy that's important going forward. Yeah.
• 2:57
  Speaker 1: And, you know, one of the things that's interesting about
• 2:59
  Speaker 1: Tandem is just, you know, you talked about the T-SLAM being,
• 3:02
  Speaker 1: you know, introduced 12 years ago. But it's, and you
• 3:06
  Speaker 1: talked about it like the iPhone of insulin pumps. And
• 3:10
  Speaker 1: it's interesting because it's not sometimes the hardware, but it's
• 3:13
  Speaker 1: the software. So, I mean, I remember back in 2018,
• 3:16
  Speaker 1: Basal IQ was the algorithm that came out. Then you
• 3:20
  Speaker 1: had Control IQ a couple of years later. And then
• 3:22
  Speaker 1: most recently you've had Control IQ Plus. So how has
• 3:27
  Speaker 1: that progression of the algorithm improved over those six, seven years?
• 3:33
  Speaker 1: And how do you differentiate kind of from the rest
• 3:37
  Speaker 1: of the market with that algorithm?
• 3:38
  Speaker 2: Yeah, that's a great question. First of all, I'll say
• 3:41
  Speaker 2: that when we first started back in 2012 or 13,
• 3:44
  Speaker 2: it was just a pump. A couple of years later,
• 3:46
  Speaker 2: we integrated a sensor. It was the Dexcom G5 sensor.
• 3:50
  Speaker 2: And then later, we integrated an algorithm. And so today,
• 3:54
  Speaker 2: we're on our second or third generation algorithm. And both
• 3:57
  Speaker 2: the T-SLIM and Mobi use the exact same algorithm. And
• 4:01
  Speaker 2: the way these work is that the algorithm is it
• 4:03
  Speaker 2: takes the signal from the sensor. The sensor is measuring
• 4:06
  Speaker 2: the blood sugar of the patient every five minutes. We
• 4:09
  Speaker 2: take that data. It processes it in the algorithm. And
• 4:13
  Speaker 2: then the algorithm just predicts where your blood sugar is
• 4:16
  Speaker 2: going to be in 30 minutes and decides whether you
• 4:18
  Speaker 2: need additional insulin or whether you need to suspend or
• 4:21
  Speaker 2: attenuate insulin. And so at that point, it basically manages
• 4:25
  Speaker 2: your diabetes much more effectively because it's making decisions for
• 4:28
  Speaker 2: you when you have to be made. as opposed to
• 4:32
  Speaker 2: doing it when it's convenient for the patient. And so
• 4:34
  Speaker 2: I think that as these algorithms have advanced, the big
• 4:39
  Speaker 2: measurement that shows the improvement in these algorithms is time
• 4:43
  Speaker 2: and range. The range is between 70 and 180 milligrams
• 4:49
  Speaker 2: per deciliter. That's the measurement. And you want to be
• 4:51
  Speaker 2: between that. And if you are between that, you're essentially,
• 4:54
  Speaker 2: you have normal blood sugars and you don't have the
• 4:57
  Speaker 2: side effects of diabetes, you know, having, you know, highs
• 5:03
  Speaker 2: or lows. And so... The control IQ algorithm is the
• 5:07
  Speaker 2: only one in the market that has an automated correction bolus.
• 5:12
  Speaker 2: And the impact of that is that as soon as
• 5:15
  Speaker 2: you wear control IQ, you get immediate and sustained improvement.
• 5:20
  Speaker 2: And that's one of the benefits that we've got is
• 5:21
  Speaker 2: immediate and sustained. You see a substantial improvement in your
• 5:24
  Speaker 2: blood sugar control. The difference between our system and other
• 5:28
  Speaker 2: systems on the market is the other systems have to
• 5:31
  Speaker 2: learn you. And that can take, they have to learn
• 5:34
  Speaker 2: how your blood sugar interacts with the system. And that
• 5:37
  Speaker 2: can take four or five weeks for that to happen.
• 5:41
  Speaker 2: And while it's happening, your blood sugar, your needs may
• 5:44
  Speaker 2: change and it has to start learning you over again.
• 5:46
  Speaker 2: And so unfortunately, when you're in that learning phase, the
• 5:50
  Speaker 2: system doesn't control your diabetes as well. You have highs
• 5:53
  Speaker 2: and lows. And so that's the real benefit of Tandem
• 5:56
  Speaker 2: is it really provides immediate sustained improvement. And as you said,
• 6:00
  Speaker 2: we have the system is now, it's Control IQ Plus.
• 6:04
  Speaker 2: It's an enhancement we made to the system about a year,
• 6:07
  Speaker 2: maybe a year and a half ago. And the advantage
• 6:09
  Speaker 2: of that enhancement is it substantially simplifies the interaction with
• 6:15
  Speaker 2: the patient. All you have to do at that point
• 6:17
  Speaker 2: is load your total daily insulin and your weight, and
• 6:23
  Speaker 2: it'll fill in all the settings of the system. It
• 6:26
  Speaker 2: also has the technology that was approved for type 2 diabetes.
• 6:32
  Speaker 2: And more recently, it also was approved for use with pregnancy.
• 6:36
  Speaker 2: So today, we're the only pump on the market that
• 6:39
  Speaker 2: has the approval for the pregnancy indication. And so today,
• 6:43
  Speaker 2: our pumps, it's type 1, type 2, and people with pregnancy,
• 6:47
  Speaker 2: type 1 with pregnancy. So we've got a wide range
• 6:51
  Speaker 2: of people living with diabetes that we can support. Interesting.
• 6:55
  Speaker 1: I know we'll jump into that type one, type two opportunity,
• 6:59
  Speaker 1: but the additional product that also came out in addition
• 7:02
  Speaker 1: to the T-Slim is the Mobi. You talked about it
• 7:05
  Speaker 1: being half the size. What customers are utilizing that smaller
• 7:12
  Speaker 1: form factor right now? And, you know, this might be
• 7:15
  Speaker 1: a little bit of a spoiler alert, but, you know,
• 7:17
  Speaker 1: as we're starting to talk about patch forms or, you know,
• 7:21
  Speaker 1: the patch form factors for net insulin pumps of the future,
• 7:24
  Speaker 1: How much of it could be these patients are looking
• 7:27
  Speaker 1: forward to having a fully patch pump and they want
• 7:33
  Speaker 1: to just start with the Mobi now and be able
• 7:35
  Speaker 1: to transition easier into a patch pump when it becomes available?
• 7:38
  Speaker 2: Well, first of all, I can say there's a strong
• 7:41
  Speaker 2: demand still for T-Slim, the original pump we brought to market.
• 7:45
  Speaker 2: And people just like to have the touchscreen on the pump.
• 7:48
  Speaker 2: They feel a lot more comfortable interacting with the touchscreen
• 7:51
  Speaker 2: as opposed to their phone. I would say that what
• 7:54
  Speaker 2: we've seen is that people who do use Mobi, they're
• 7:57
  Speaker 2: a little bit more tech savvy. They're comfortable with technology.
• 8:00
  Speaker 2: They're active. And as opposed to people who use T-SLIM
• 8:04
  Speaker 2: might be older. But there's still a great deal of demand.
• 8:09
  Speaker 2: And we have been evolving technology. and adding functionality to
• 8:13
  Speaker 2: Mobi over the last year or so. And the final
• 8:17
  Speaker 2: or the next generation of features that we're going to
• 8:20
  Speaker 2: add to Mobi will be the ability for Mobi to
• 8:22
  Speaker 2: be a tubeless system. And tubed and tubeless, you know,
• 8:27
  Speaker 2: T-Slim is tubed. You have an infusion set that actually moves,
• 8:30
  Speaker 2: is attached to the pump and attached to the body.
• 8:33
  Speaker 2: And that allows you flexibility in terms of how you
• 8:36
  Speaker 2: move it around your body. There's no tubes on the
• 8:39
  Speaker 2: Mobi tubeless system. You can put it where you want.
• 8:41
  Speaker 2: And I think that form factor, it's a very important
• 8:46
  Speaker 2: design feature that we're adding for the company. If you
• 8:49
  Speaker 2: look at the tube market in diabetes today, the tube
• 8:52
  Speaker 2: market is growing at roughly mid single digits annually. If
• 8:56
  Speaker 2: you look at the tubeless market, we're seeing growth rates
• 8:59
  Speaker 2: in excess of 25% annually. So there's only one player
• 9:02
  Speaker 2: operating in that tubeless market today. We intend to get
• 9:06
  Speaker 2: in there quite quickly and take advantage of it ourselves.
• 9:09
  Speaker 1: Well, yeah, let's jump into that with the Mobi tubeless.
• 9:13
  Speaker 1: You've submitted to the FDA. What is the timeline usually
• 9:18
  Speaker 1: for that? Is it a 510k approval? Is it a
• 9:21
  Speaker 1: different type of approval? And then once you do get approval,
• 9:24
  Speaker 1: and this kind of maybe goes into that, the shoe
• 9:27
  Speaker 1: in the door metaphor is, Are you in a position
• 9:32
  Speaker 1: to be better, to get your launch started quicker because
• 9:37
  Speaker 1: you've already started with the original MobiPump?
• 9:41
  Speaker 2: First of all, we have submitted. We submitted in the
• 9:43
  Speaker 2: second quarter. It is a 510K. We anticipate getting approval
• 9:47
  Speaker 2: in the second half. And I think that we have
• 9:50
  Speaker 2: a great relationship with the FDA. We're interacting with them now.
• 9:53
  Speaker 2: And as I said, we intend to bring it to
• 9:55
  Speaker 2: market in the second half. Typically, when you get approval,
• 9:59
  Speaker 2: there's a few things that you need to do. They
• 10:02
  Speaker 2: typically make adjustments to your labeling and your manuals, and
• 10:05
  Speaker 2: you have to correct that. That takes a few weeks
• 10:07
  Speaker 2: to do that. But we've tested the product thoroughly, and
• 10:11
  Speaker 2: we're very comfortable with the way it works with people.
• 10:15
  Speaker 2: But before we bring it to market, we want to
• 10:17
  Speaker 2: test it even again. And so we have a couple
• 10:19
  Speaker 2: of phases of, I would say, of clinical work. In
• 10:22
  Speaker 2: the first phase, we'll call it first access. We bring
• 10:25
  Speaker 2: about 100 people in and have them start using it.
• 10:28
  Speaker 2: And in that period of time, we want to be
• 10:30
  Speaker 2: sure that the pump itself is working the way we
• 10:32
  Speaker 2: expect it to and that the systems to support the patient,
• 10:36
  Speaker 2: such as our customer service, our training, the physician's understanding
• 10:40
  Speaker 2: of how the product works, all of that stuff has
• 10:42
  Speaker 2: to be tuned as well. So it takes about a
• 10:45
  Speaker 2: month to get through that. And, you know, we would
• 10:48
  Speaker 2: expect that to be a positive experience. We have KPIs
• 10:50
  Speaker 2: that are measured, you know, even on a daily basis.
• 10:53
  Speaker 2: We would add another 400 or 500 people to that
• 10:58
  Speaker 2: group and do it again for approximately another month. And
• 11:01
  Speaker 2: then I think that, you know, we have to, again,
• 11:03
  Speaker 2: we do not want to step on the gas and
• 11:05
  Speaker 2: go aggressively into the market with this product unless we're
• 11:08
  Speaker 2: absolutely sure it's performing exactly the way we want it to.
• 11:12
  Speaker 2: And the systems required to support it are also performing
• 11:15
  Speaker 2: that way. And so I would say that this is
• 11:17
  Speaker 2: likely to be something that, you know, we'll get through
• 11:19
  Speaker 2: the second half and probably in the early 2027 period,
• 11:24
  Speaker 2: we'll be really putting our foot on the gas and
• 11:27
  Speaker 2: making this happen. The one point I do want to
• 11:29
  Speaker 2: make about Mobi, though, is that Moby, you know, we've
• 11:32
  Speaker 2: been selling Moby now for, you know, roughly two years.
• 11:36
  Speaker 2: And so there's quite a few of these systems already
• 11:39
  Speaker 2: in the marketplace. The change that we're making to make
• 11:41
  Speaker 2: Moby tubeless is not a change to the pump. All
• 11:44
  Speaker 2: the pumps that are in the market today can be
• 11:46
  Speaker 2: made tubeless. It's the supplies that we use. And so
• 11:50
  Speaker 2: today on a tubeless system, you have a cartridge that
• 11:53
  Speaker 2: contains the insulin and an infusion set. And these are disposable.
• 11:58
  Speaker 2: They currently last about three days. With Mobi tubeless, instead
• 12:02
  Speaker 2: of an infusion set, we have an infusion plate. And
• 12:05
  Speaker 2: this actually is a plate that you attach to your
• 12:06
  Speaker 2: body with adhesive. And it has a cannula in it
• 12:09
  Speaker 2: that you insert. you change the cartridge on the Movi
• 12:12
  Speaker 2: system to a tubeless cartridge, and then that basically just
• 12:17
  Speaker 2: connects up to the plate, and you can wear it
• 12:19
  Speaker 2: as a tubeless system. And so the beauty of this is,
• 12:21
  Speaker 2: first of all, if you prefer to wear a tube
• 12:24
  Speaker 2: pump for some reasons and a tubeless pump for other reasons,
• 12:28
  Speaker 2: you can switch back and forth, and it's just simply
• 12:30
  Speaker 2: a supplies change. The other thing about Movi tubeless is
• 12:33
  Speaker 2: it'll be the first extended wear system tubeless system on
• 12:38
  Speaker 2: the market. And the benefit of that is that currently
• 12:41
  Speaker 2: most systems on market today are changed every three days.
• 12:45
  Speaker 2: You have to take out, you take the cartridge out,
• 12:46
  Speaker 2: you take the infusion set off. And with what would
• 12:50
  Speaker 2: be tubeless, that's every seven days now. So we reduce
• 12:53
  Speaker 2: the frequency of the infusion site change. We basically double
• 12:59
  Speaker 2: how much time you can wear the system. And the
• 13:01
  Speaker 2: benefit of that is, again, it's just there's so many
• 13:03
  Speaker 2: things that affect the thought processes that people have. There's
• 13:08
  Speaker 2: a real cognitive demand on people with diabetes just to understand.
• 13:13
  Speaker 2: And every decision they make, they have to think about it.
• 13:15
  Speaker 2: And just these little things like that really make a
• 13:17
  Speaker 2: difference in terms of simplifying their life. And that's really
• 13:20
  Speaker 2: what the intent is here. Okay.
• 13:22
  Speaker 1: And just for a layman like myself, I'm envisioning that
• 13:27
  Speaker 1: you have that infusion plate and it's attached to the
• 13:30
  Speaker 1: back of your arm. And then you have the pump
• 13:33
  Speaker 1: that connects to that infusion plate. And so every two
• 13:37
  Speaker 1: or three days when you need to refill that pump
• 13:40
  Speaker 1: with more insulin, you just disconnect the pump from that
• 13:44
  Speaker 1: infusion plate, take it out, fill it up like you're
• 13:47
  Speaker 1: filling up a gas tank, connect it back to that
• 13:49
  Speaker 1: same infusion plate, and you're.
• 13:51
  Speaker 2: Good to go. That's exactly right. The only thing you
• 13:53
  Speaker 2: would do is you would change the cartridge. You would
• 13:55
  Speaker 2: change the cartridge, which is a very simple thing to do.
• 13:58
  Speaker 2: The old cartridge that you're taking off is disposed of
• 14:02
  Speaker 2: and the new one's put on with the old one
• 14:04
  Speaker 2: in it. And it's still, it's a very short, it
• 14:07
  Speaker 2: takes just a few minutes to do that. It's very simple.
• 14:09
  Speaker 2: And so people who use a large amount of insulin,
• 14:13
  Speaker 2: I know we're going to talk about type 2, you know,
• 14:15
  Speaker 2: it's not a matter of changing the device out every,
• 14:18
  Speaker 2: you know, one or two or three days. It's really
• 14:21
  Speaker 2: just changing the cartridge, which is a simple task for
• 14:25
  Speaker 2: the person with diabetes.
• 14:26
  Speaker 3: Yeah, it seems exciting for that to come out. And so,
• 14:29
  Speaker 3: you know, the other thing, too.
• 14:31
  Speaker 1: About the commercial rollout of Mobi and for type 2
• 14:34
  Speaker 1: is also, you know, You've initiated the pharmacy channel access.
• 14:40
  Speaker 3: You call it PAYGO.
• 14:42
  Speaker 1: How has that also helped with the rollout for Mobi,
• 14:47
  Speaker 1: but also for future type 2 patients out there?
• 14:52
  Speaker 2: Well, I'll say that we've been looking at the pharmacy
• 14:55
  Speaker 2: channel and trying to get into the pharmacy channel now
• 14:58
  Speaker 2: for a couple of years. And it really wasn't until
• 15:00
  Speaker 2: we had a new product that was different than the
• 15:03
  Speaker 2: T-SLIM that we had the opportunity to actually get into
• 15:06
  Speaker 2: the pharmacy channel. You know, T-Slim's been on the market
• 15:09
  Speaker 2: for quite a while. It's been going through the DME channel.
• 15:12
  Speaker 2: And so we just used Mobi, and we were successful
• 15:14
  Speaker 2: in doing that. And I think that, you know, we
• 15:17
  Speaker 2: actually started in earnest using and selling products through the
• 15:21
  Speaker 2: pharmacy channel in early 2025. And we learned quite a
• 15:25
  Speaker 2: bit during that period of time. And what we have
• 15:28
  Speaker 2: gravitated to now is we have gravitated to, as you said,
• 15:32
  Speaker 2: a pay-as-you-go model. And with the pay-as-you-go model, we basically
• 15:36
  Speaker 2: give the pump away for $ 0. We give it away
• 15:39
  Speaker 2: for free. And the pharmacy is basically used to provide
• 15:44
  Speaker 2: access to the supplies, which is either the infusion set
• 15:49
  Speaker 2: in the cartridge or the infusion plate in the cartridge.
• 15:52
  Speaker 2: And that can be done for $ 0. So the pharmacy channel,
• 15:57
  Speaker 2: the reason we went to this thing originally was because
• 16:00
  Speaker 2: there's a substantial benefit to the patient, a substantial reduction
• 16:03
  Speaker 2: in the out-of-pocket. And out-of-pocket or the expenses that are
• 16:06
  Speaker 2: necessary to purchase a new pump has been a barrier.
• 16:10
  Speaker 2: And so by eliminating that, we substantially improve the uptake
• 16:16
  Speaker 2: of the community now that are looking at pumps. So
• 16:20
  Speaker 2: that's a big benefit. Pharmacy Channel is also easier for
• 16:25
  Speaker 2: physician to prescribe. It's not, I mean, DME, there's requirements
• 16:29
  Speaker 2: to have certain tests and data in order to get
• 16:34
  Speaker 2: prior authorization before you can get approved for a pump.
• 16:37
  Speaker 2: It's much easier in the pharmacy channel. So it reduces
• 16:40
  Speaker 2: the burden on the physician and his staff. So those
• 16:44
  Speaker 2: are the primary reasons we've done this. But now what
• 16:46
  Speaker 2: we've also learned is that the economics for Tandem are
• 16:50
  Speaker 2: substantially better than they were in the DME market. And
• 16:54
  Speaker 2: as I said, beginning in March of this year, both
• 16:57
  Speaker 2: Mobi and T-SLIM are now pay-as-you-go. We'll give them away
• 17:02
  Speaker 2: and we will basically charge you for your supplies. And
• 17:04
  Speaker 2: typically people would purchase a quarter's worth of supplies. And
• 17:08
  Speaker 2: as I said, by copay management and other things like that,
• 17:14
  Speaker 2: we can basically, they can basically purchase supplies for, you know,
• 17:18
  Speaker 2: very little out of pocket, which is a real positive
• 17:20
  Speaker 2: for them. Yeah.
• 17:21
  Speaker 3: No, especially for a disease as serious as diabetes.
• 17:25
  Speaker 1: And with that then, I mean, so, you know, you
• 17:27
  Speaker 1: have this, the new commercial platform, Let's just circle back
• 17:31
  Speaker 1: on the diabetic patient base because, you know, it's so
• 17:36
  Speaker 1: different between type 1 and type 2. How are those
• 17:39
  Speaker 1: opportunities different here in 2026? And what are some of the,
• 17:43
  Speaker 1: you know, particularly for type 2, what are some of
• 17:46
  Speaker 1: the hurdles to really get that penetration up to where
• 17:50
  Speaker 1: it is in the U.S. for the type 1 patient base?
• 17:53
  Speaker 2: Yeah. Let me just explain both first. I think that
• 17:55
  Speaker 2: might be a helpful start. Today, there's about 1.9 million
• 18:00
  Speaker 2: people in the U.S., maybe two, who have type 1.
• 18:04
  Speaker 2: And of that group, about 40% use a pump today.
• 18:10
  Speaker 2: The rest of them use pens and needles, which is
• 18:12
  Speaker 2: the original way people have been dealing with diabetes since
• 18:15
  Speaker 2: the early 1900s when insulin was first discovered. We are
• 18:20
  Speaker 2: trying to improve the simplicity, improve the cost, and improve
• 18:26
  Speaker 2: the performance of our system so more and more people
• 18:29
  Speaker 2: who are using pens and needles come to pump therapy because, again,
• 18:32
  Speaker 2: the therapeutic value is substantial. People who have type 1
• 18:36
  Speaker 2: typically contact it at a young age. It's an autoimmune situation,
• 18:43
  Speaker 2: and basically the virus attacks the pancreas, stops working gradually,
• 18:48
  Speaker 2: but ultimately stops working completely. And then you have no
• 18:52
  Speaker 2: ability to produce insulin, and you either need to inject
• 18:54
  Speaker 2: it or use a pump. And as I said, the
• 18:56
  Speaker 2: pump is the best way to do it because of
• 18:59
  Speaker 2: the outcomes that people achieve. When you look at type 2,
• 19:02
  Speaker 2: it's very different. It's also a genetic situation where there's
• 19:06
  Speaker 2: genes you need to have. But if you have those genes,
• 19:09
  Speaker 2: it's also connected to lifestyle. And I think that, you know,
• 19:14
  Speaker 2: as people get older, they build up insulin resistance. They
• 19:18
  Speaker 2: may not be active. They may not be eating healthy.
• 19:22
  Speaker 2: And that insulin resistance gets to the point where they
• 19:24
  Speaker 2: have insulin intensive type 2, which is basically the same
• 19:30
  Speaker 2: as type 1. where you need basal insulin every five minutes,
• 19:34
  Speaker 2: and then you also need bolusing. You need to bolus
• 19:37
  Speaker 2: insulin when you're taking a meal to affect the spike
• 19:39
  Speaker 2: that you see in your blood sugar after you've eaten.
• 19:42
  Speaker 2: So people with insulin-intensive type 2 essentially have the same
• 19:48
  Speaker 2: symptoms as somebody in the state They need the same
• 19:51
  Speaker 2: type of system to perform for them as type 1.
• 19:55
  Speaker 2: And the type 2 market is about, in the U.S.,
• 19:58
  Speaker 2: it's about 2.3 million, and only about 5%, or maybe
• 20:02
  Speaker 2: over 100,000 people use pumps today. So all of the,
• 20:07
  Speaker 2: you know, the players in the diabetes space have recently
• 20:10
  Speaker 2: achieved a, and they've got the indication for type two.
• 20:14
  Speaker 2: And so we're all working aggressively to take advantage of
• 20:16
  Speaker 2: this market, most importantly to help people with diabetes. But,
• 20:19
  Speaker 2: you know, we think it's a big opportunity. And so
• 20:22
  Speaker 2: both of these situations exist also outside the U.S. The
• 20:26
  Speaker 2: outside U.S. market for type 1 and type 2 is
• 20:28
  Speaker 2: much larger than it is in the U.S., and it's
• 20:31
  Speaker 2: also less penetrated. So I think that, you know, again,
• 20:35
  Speaker 2: it's a large market. It's growing. And I think that
• 20:38
  Speaker 2: the technology that we're working on right now is going
• 20:40
  Speaker 2: to do a great deal to help people.
• 20:42
  Speaker 1: Yeah, and it's the interesting thing is that with the
• 20:44
  Speaker 1: type 2 insulin-intensive same symptoms, but far less penetration, even
• 20:51
  Speaker 1: though when you kind of think about it, having an
• 20:54
  Speaker 1: insulin pump help control the amount of insulin is delivered,
• 20:59
  Speaker 1: prevents those type two from over delivering and using too
• 21:02
  Speaker 1: much insulin because of the amount of insulin that they
• 21:05
  Speaker 1: require over type one. So what are some of the steps?
• 21:10
  Speaker 1: Is it just market awareness? Is it going to maybe
• 21:13
  Speaker 1: the primary care physician instead of the endocrinologist, or I
• 21:17
  Speaker 1: feel like these type 2 patients would still be going
• 21:19
  Speaker 1: to an endocrinologist. So what is it that you're seeing
• 21:22
  Speaker 1: that could be potentially like the next inflection point to
• 21:25
  Speaker 1: really get that adoption rate up within the type 2 patients?
• 21:29
  Speaker 2: I would say that many people who have insulin-intensive type
• 21:32
  Speaker 2: 2 transition from a PCP to an endocrinologist. And so
• 21:36
  Speaker 2: the people we're actually supporting today that have type 2
• 21:40
  Speaker 2: are being managed mostly by endocrinologists. by endos, we also
• 21:44
  Speaker 2: keep track of insulin use for PCPs and we work
• 21:48
  Speaker 2: directly with them as well. The PCPs are not as
• 21:52
  Speaker 2: well educated in terms of managing the condition as endos are,
• 21:56
  Speaker 2: of course. And so I think that there's a training
• 22:00
  Speaker 2: and awareness process that we have to go through to
• 22:04
  Speaker 2: make them comfortable prescribing these pumps, something that's very important
• 22:07
  Speaker 2: for us. And that's something that's training and education is
• 22:11
  Speaker 2: something that's really an important part of the market development
• 22:15
  Speaker 2: that's needed for type 2. The other thing too is that,
• 22:17
  Speaker 2: I mean, historically, if people have gotten to the point
• 22:20
  Speaker 2: where they're insulin intensive, they feel like they failed because
• 22:23
  Speaker 2: they haven't been able to control it. And so there's this,
• 22:26
  Speaker 2: they have a negative stigma associated with it. And there's
• 22:28
  Speaker 2: also a general negative social stigma because people believe that
• 22:35
  Speaker 2: if you just ate and you, you know, exercised, you
• 22:38
  Speaker 2: wouldn't have got to this point. It's not that simple.
• 22:41
  Speaker 2: But I would say that as we have made these,
• 22:45
  Speaker 2: I mean, so discretion, of course, is very important for
• 22:47
  Speaker 2: people with type two. So as we've been evolving the technology,
• 22:52
  Speaker 2: we have been doing, we've been shrinking the devices, we've
• 22:55
  Speaker 2: been providing choice, and we've been reducing the cost And
• 23:00
  Speaker 2: we've been providing excellent outcomes. And so in the type
• 23:03
  Speaker 2: 2 community, there's definitely a group of people who we
• 23:05
  Speaker 2: would call near-term pumpers. These are people who are college educated.
• 23:10
  Speaker 2: They've got a job that has good insurance. They have
• 23:13
  Speaker 2: a social network of people who really care about their health.
• 23:17
  Speaker 2: And they want to continue to improve. And so I
• 23:20
  Speaker 2: think that's a community that we really are targeting for
• 23:24
  Speaker 2: pumps because, again, we're moving pumps in the direction where
• 23:27
  Speaker 2: it's easy for them to work for 24 hours. It's
• 23:30
  Speaker 2: easy to interact with. And I think that simplicity and
• 23:32
  Speaker 2: discretion is very important as we do work to build
• 23:36
  Speaker 2: this market out. Yeah.
• 23:38
  Speaker 1: And I feel like at the end, especially with the
• 23:41
  Speaker 1: new patch pumps that are coming out from you and
• 23:44
  Speaker 1: others in the market, hopefully it expands so that they
• 23:46
  Speaker 1: would be able to get that similar type of treatment. Um,
• 23:51
  Speaker 1: you know, we're looking at the Mobi tubeless and that's,
• 23:55
  Speaker 1: you know, second half approval, but I'm also just going
• 23:58
  Speaker 1: to look at the next steps as well, because you've
• 24:00
  Speaker 1: highlighted in the past so much more in the pipeline.
• 24:04
  Speaker 1: And that's mainly the Mobi with the SIGGY technology that
• 24:08
  Speaker 1: you acquired a few years ago and the fully closed
• 24:11
  Speaker 1: loop algorithm that you're developing. Let's start with the, the,
• 24:15
  Speaker 1: that next generation Mobi. Cause it's interesting, you know, in
• 24:18
  Speaker 1: med tech, you're always, you know, developing what's next, even
• 24:22
  Speaker 1: as the current version.
• 24:24
  Speaker 3: Is going on the market.
• 24:24
  Speaker 1: So when I look at that Mobi with the Sigi technology,
• 24:28
  Speaker 1: what technology came from that acquisition that is now going
• 24:34
  Speaker 1: to be additive to the Mobi tubeless or just the
• 24:38
  Speaker 1: Mobi platform itself?
• 24:40
  Speaker 2: I'll just say first, it's a very, very competitive market.
• 24:44
  Speaker 2: And I think in order to stay ahead, you really
• 24:47
  Speaker 2: have to have technology that leapfrogs our competitors in the marketplace.
• 24:53
  Speaker 2: And that's certainly what we've been trying to do. And
• 24:56
  Speaker 2: I believe that Tandem has the most exciting pipeline in diabetes.
• 25:00
  Speaker 2: And we've also, I think, demonstrated the ability to bring
• 25:04
  Speaker 2: new technology to market faster than any of our competitors.
• 25:07
  Speaker 2: But so what you're talking about is a company called
• 25:11
  Speaker 2: AMF Medical that had a technology called CIGI, which was
• 25:14
  Speaker 2: a patch pump that we acquired. I think it's been
• 25:17
  Speaker 2: about two and a half years since we acquired them.
• 25:19
  Speaker 2: And as we began to work with them, and we
• 25:22
  Speaker 2: were also working with Mobi Tubeless. And we feel like
• 25:27
  Speaker 2: it makes sense to bring Mobi Tubeless to market now,
• 25:29
  Speaker 2: which we are. And we think that's going to be
• 25:31
  Speaker 2: a great product on the market. It's going to be
• 25:33
  Speaker 2: very competitive for a couple of years. But as you said,
• 25:37
  Speaker 2: in the meantime, we're working on implementing the SIGI technology
• 25:41
  Speaker 2: into a next generation Mobi pump. So the current Mobi
• 25:45
  Speaker 2: system with the tubeless supplies is a durable pump. It's
• 25:51
  Speaker 2: a pump that you recharge and you use. It lasts
• 25:53
  Speaker 2: for four years. As we move into a full patch,
• 25:58
  Speaker 2: it'll also be a durable patch. We do not believe
• 26:00
  Speaker 2: in throwing away batteries, integrated circuits, and PCBs every three days.
• 26:06
  Speaker 2: So we believe it's, from an environmental point of view,
• 26:10
  Speaker 2: it's the right thing is to have a durable system.
• 26:12
  Speaker 2: So it'll be durable. It's going to be smaller. It'll
• 26:15
  Speaker 2: be a full patch. It'll use some of the technologies
• 26:18
  Speaker 2: that we acquired from from amf medical that have to
• 26:23
  Speaker 2: do with how it's pumping and cannulas a variety of
• 26:27
  Speaker 2: issues how it's actually attached so there's a lot of
• 26:30
  Speaker 2: benefits that that will come with the technology unless as
• 26:33
  Speaker 2: you said we're currently working on that the the other
• 26:36
  Speaker 2: thing is there's also now that there's there's going to
• 26:39
  Speaker 2: be more than more than one tubeless product in the
• 26:42
  Speaker 2: market we have the ability to see what other features
• 26:45
  Speaker 2: are out there and how we can differentiate it when
• 26:47
  Speaker 2: we do bring it to market in a couple of
• 26:49
  Speaker 2: years And so it's definitely the next generation. It's the
• 26:52
  Speaker 2: next generation product that we'll bring to market. It's probably
• 26:55
  Speaker 2: two years or so out there in time. And like
• 26:57
  Speaker 2: I said, we believe Moby's going to have a very
• 26:59
  Speaker 2: good runway as it comes to market later this year
• 27:02
  Speaker 2: and drive growth in our revenue and profitability as well.
• 27:08
  Speaker 2: So we're excited about that. So that's the next, I mean,
• 27:12
  Speaker 2: in terms of formal pump work that we've got going on.
• 27:15
  Speaker 2: But you also mentioned fully closed loop. And the fully
• 27:19
  Speaker 2: closed loop system is the next generation algorithm. So today,
• 27:23
  Speaker 2: all of the algorithms that are on the market, including Tandems,
• 27:27
  Speaker 2: Control IQ, are hybrid closed loop systems. And what that
• 27:31
  Speaker 2: means is it means these pumps do a good job
• 27:33
  Speaker 2: of providing the basal insulin every five minutes. But you
• 27:38
  Speaker 2: have to actually interact with the pump. to provide the
• 27:42
  Speaker 2: bolus insulin that's needed to counteract the effect of blood
• 27:46
  Speaker 2: sugar rising when you eat. So when you eat, you've
• 27:49
  Speaker 2: got a bolus. Now, what we have seen with control
• 27:53
  Speaker 2: IQ today is that if people are careful doing that,
• 27:55
  Speaker 2: they can see time and range in the 80s and 90%.
• 27:59
  Speaker 2: And therefore, they live a life very much like you
• 28:02
  Speaker 2: and I do. But the thing is that you have
• 28:05
  Speaker 2: to work with the system. You have to interact with it.
• 28:07
  Speaker 2: The next generation technology Oh, yeah.
• 28:10
  Speaker 1: Is that just like when we're thinking about like working
• 28:12
  Speaker 1: with it? Is that like when I hear terms like
• 28:15
  Speaker 1: carb counting or meal announcement? Is that kind of those?
• 28:19
  Speaker 2: Those are the things that come along with the hybrid.
• 28:21
  Speaker 3: Yeah, that the patients have to do.
• 28:22
  Speaker 2: OK, you have to count your carbs. You have to
• 28:23
  Speaker 2: figure out how much insulin you need. And then you
• 28:26
  Speaker 2: have to program the system to do that. And if
• 28:28
  Speaker 2: you do that, like I said, you get. you get very,
• 28:32
  Speaker 2: very good control. A lot of people don't do that.
• 28:34
  Speaker 2: They just let the pump operate. And even if the
• 28:37
  Speaker 2: pump operates by itself and gives you boluses automatically, you
• 28:42
  Speaker 2: still see a substantial improvement over what you would experience
• 28:45
  Speaker 2: if you just used pens and needles. But the problem
• 28:48
  Speaker 2: is it's not as good as we think it can get.
• 28:50
  Speaker 2: And the fully closed loop systems really represent the next generation.
• 28:54
  Speaker 2: And the idea here is that these systems work and
• 28:56
  Speaker 2: they don't require a bolus for meals. Basically, it's set
• 29:00
  Speaker 2: it and forget it, and it'll manage your diabetes all
• 29:03
  Speaker 2: the time. And you'll experience results similar to what you
• 29:06
  Speaker 2: get with the hybrid closed-loop systems today when you do
• 29:10
  Speaker 2: have to bolus. So it's the next big step, we think.
• 29:14
  Speaker 2: It's that thing that reduces the burden of thought. And
• 29:19
  Speaker 2: for people who are just managing their diabetes, they have
• 29:21
  Speaker 2: to think about so many things. We're just taking another
• 29:24
  Speaker 2: big step off, another big requirement off the list so
• 29:29
  Speaker 2: they can just live lives that are substantially simplified in
• 29:34
  Speaker 2: terms of just thinking about diabetes.
• 29:35
  Speaker 3: All right.
• 29:36
  Speaker 1: And then what are the next, what are the kind
• 29:38
  Speaker 1: of the timelines for the next cow? for that fully
• 29:41
  Speaker 1: closed system this year?
• 29:44
  Speaker 2: Yeah, this year we're initiating a pivotal study. We've been
• 29:47
  Speaker 2: running feasibility tests over the last two years. These feasibility
• 29:51
  Speaker 2: tests confirm to us how the algorithm performs on real patients.
• 29:57
  Speaker 2: And now what we need to do is collect data
• 29:59
  Speaker 2: to provide information to the FDA for approval. And so
• 30:03
  Speaker 2: that's the pivotal study, which we will begin in the
• 30:05
  Speaker 2: second half of this year. And that will take approximately
• 30:08
  Speaker 2: a year to complete. It'll be a large study. It'll
• 30:11
  Speaker 2: have people with type one, type two. It'll have pediatrics.
• 30:15
  Speaker 2: It's a large group of people. And then when it's completed,
• 30:20
  Speaker 2: we'd summarize the data and then get that into the FDA.
• 30:22
  Speaker 2: So we would anticipate seeing this product in the market
• 30:25
  Speaker 2: in 2028. 2028, okay.
• 30:26
  Speaker 1: It sounds too optimistic to potentially see data at ADA
• 30:31
  Speaker 1: next year because I'm just thinking of all the other
• 30:34
  Speaker 1: algorithm-type studies. They're usually 13 weeks long. that would mean
• 30:39
  Speaker 1: you would have to close the books by.
• 30:43
  Speaker 3: End of February. That seems a little too optimistic.
• 30:46
  Speaker 1: I'll just ask, is that too optimistic to think of
• 30:51
  Speaker 1: that as a timeline?
• 30:52
  Speaker 2: Well, I would say the way to think about it
• 30:54
  Speaker 2: is that in order to start a pivotal study with
• 30:57
  Speaker 2: the FDA, the FDA has to have confidence it's going
• 31:00
  Speaker 2: to work. And so in order to do that, you
• 31:02
  Speaker 2: have to run many studies before that. They're smaller studies.
• 31:06
  Speaker 2: They're only maybe 20 or 30 people, and they run
• 31:09
  Speaker 2: for a week or two. But in those studies, you
• 31:11
  Speaker 2: accumulate information that you share with the FDA, and they
• 31:15
  Speaker 2: grow to get confidence in how the system performs so
• 31:17
  Speaker 2: that they're willing to put the work in and get
• 31:22
  Speaker 2: these pivotal studies started. Because they're very large, complex. They're
• 31:25
  Speaker 2: going to be managed at multiple sites. Many, many sites
• 31:27
  Speaker 2: are going to be running these studies. And as I said,
• 31:29
  Speaker 2: they take a long time to complete. So Control-A-Q, the
• 31:33
  Speaker 2: original algorithm, was developed with Tandem back in the 2015 timeframe,
• 31:39
  Speaker 2: and we finally got it on the product in 2020.
• 31:41
  Speaker 2: That system, when we partnered with UVA, it had the
• 31:46
  Speaker 2: most clinical data, and the clinical data was excellent. And
• 31:49
  Speaker 2: it has proved itself to be the best algorithm on
• 31:52
  Speaker 2: the market. Over the last couple of years, we continue
• 31:55
  Speaker 2: to work with UVA, the Diabetes Technology Center there, and
• 31:58
  Speaker 2: they have developed an algorithm called AIDANET. AIDANET, all of
• 32:05
  Speaker 2: these feasibility studies have been published or they've been shown
• 32:08
  Speaker 2: in conferences and things like that. The data is out
• 32:11
  Speaker 2: there on the system. And again, we believe this system
• 32:13
  Speaker 2: has the best data in the market. And it's, again,
• 32:16
  Speaker 2: why we are excited about bringing this fully closed-loop technology
• 32:21
  Speaker 2: to the diabetes community here in a relatively short period
• 32:24
  Speaker 2: of time. Gotcha.
• 32:25
  Speaker 3: Yeah, I know.
• 32:25
  Speaker 1: It's always, like I said, I feel like the theme
• 32:27
  Speaker 1: throughout this call so far has just been you know,
• 32:31
  Speaker 1: each additive step from the previous generation. And it seems like,
• 32:35
  Speaker 1: you know, you're doing the same blocking and tackling to
• 32:38
  Speaker 1: get to that next generation of algorithm and the, you know,
• 32:44
  Speaker 1: form factor itself.
• 32:45
  Speaker 2: It's a very competitive market right now. And, you know,
• 32:49
  Speaker 2: we have our partners, you know, our partners who develop sensors.
• 32:54
  Speaker 2: They're evolving the technology. They're making things easier. smaller and
• 32:57
  Speaker 2: more accurate. Our competitors are also developing pumps that have
• 33:02
  Speaker 2: better algorithms. And it's stressful for an organization when it's
• 33:09
  Speaker 2: so dynamic today. But the good news is that the
• 33:12
  Speaker 2: outcome is absolutely fantastic for people with diabetes, because we
• 33:16
  Speaker 2: are all out there trying to develop better products to
• 33:18
  Speaker 2: manage diabetes. And that's what we're all here for, honestly.
• 33:22
  Speaker 2: And so I think it's a great time for someone
• 33:25
  Speaker 2: with diabetes, I think, because we're going to see substantial
• 33:28
  Speaker 2: improvements in how they manage the disease and how they
• 33:30
  Speaker 2: interact with these systems over time. And again, it's going
• 33:33
  Speaker 2: to really improve the quality of their lives, which is,
• 33:35
  Speaker 2: I think, really what we're here for.
• 33:37
  Speaker 1: I mean, that's kind of 101 for what the benefits
• 33:40
  Speaker 1: of capitalism does is this competition ends up aiding the
• 33:43
  Speaker 1: consumer at the end of the day, which is a better.
• 33:45
  Speaker 3: Time and range for these patients.
• 33:46
  Speaker 2: Exactly.
• 33:47
  Speaker 1: The other thing that caught my attention with the Mobi
• 33:49
  Speaker 1: with the SIGI technology, and maybe this is too subtle,
• 33:54
  Speaker 1: but when the acquisition was first announced a couple years ago,
• 33:59
  Speaker 1: it sounded like it was going to be a standalone pump.
• 34:03
  Speaker 1: And now it feels like the messaging is that you're
• 34:05
  Speaker 1: taking some of the best technologies from the SIGI system
• 34:10
  Speaker 1: and taking some of the best technologies from the Mobi
• 34:13
  Speaker 1: system and combining them together.
• 34:15
  Speaker 2: That's exactly right.
• 34:16
  Speaker 1: This is kind of the putting on your CEO hat moment.
• 34:20
  Speaker 3: When did you come to that realization?
• 34:22
  Speaker 1: Because some people could be a little stubborn about, no,
• 34:27
  Speaker 1: this is the path that we initially set.
• 34:28
  Speaker 3: This is what we're going to do.
• 34:30
  Speaker 1: But you saw something that realized that jiving them together
• 34:35
  Speaker 1: was going to be the best approach. Or did you
• 34:37
  Speaker 1: just think, was that part of the initial strategy from
• 34:40
  Speaker 1: day one?
• 34:41
  Speaker 2: I think the thing that changed in the timeframe that
• 34:43
  Speaker 2: we acquired CIGI to today is we have received tremendous
• 34:48
  Speaker 2: positive feedback on Mobi Tubeless. We think Mobi Tubeless is
• 34:52
  Speaker 2: going to be a game changer in the marketplace. We've
• 34:55
  Speaker 2: eliminated the form factor benefits some of our competitors have.
• 34:59
  Speaker 2: We've eliminated the market access and cost issues, and we
• 35:03
  Speaker 2: have the best algorithm. So we think that today, we're
• 35:07
  Speaker 2: going to be competing again, basically on therapeutic outcomes. And
• 35:11
  Speaker 2: we think we win when that's the case. So once
• 35:13
  Speaker 2: that's on the market, it's going to do quite well.
• 35:16
  Speaker 2: So the idea of having two tubeless or patch devices
• 35:20
  Speaker 2: on the market simultaneously is going to be problematic. And
• 35:23
  Speaker 2: I think that so the confidence grew in Mobi tubeless.
• 35:28
  Speaker 2: And as a result of that, we felt like we
• 35:30
  Speaker 2: could take more time to optimize the next generation Mobi product.
• 35:35
  Speaker 2: And you're exactly right. It's got the benefits of the
• 35:37
  Speaker 2: technology that we acquired from CIGI and also many of
• 35:40
  Speaker 2: the benefits that we've learned as we've developed Mobi. And
• 35:42
  Speaker 2: we're putting them together in a better product. And so
• 35:47
  Speaker 2: I think that if we would have had those two
• 35:49
  Speaker 2: on the market, it would have been confusing for a
• 35:50
  Speaker 2: sales force, confusing for people to understand what's the differences.
• 35:54
  Speaker 2: And I think this way makes a lot more sense
• 35:56
  Speaker 2: for the business. And that's really the reason that we've
• 35:58
  Speaker 2: chosen to make them sequential.
• 36:02
  Speaker 3: Yeah, interesting.
• 36:03
  Speaker 1: It keeps you on your toes and be able to
• 36:06
  Speaker 1: pivot when you think it's necessary to. And the other thing, though,
• 36:10
  Speaker 1: moving on to kind of, you know, we talked about
• 36:12
  Speaker 1: the new commercial business model and giving away the pump
• 36:17
  Speaker 1: for free is interesting. But it's kind of also very
• 36:21
  Speaker 1: interesting because you're on track for positive adjusted EBITDA in 2026.
• 36:26
  Speaker 2: Yeah.
• 36:28
  Speaker 1: So there's something in your business model that's allowing you to...
• 36:32
  Speaker 1: maintain or get to that level of profitability, even with
• 36:37
  Speaker 1: essentially giving away the pump for free initially and deferring
• 36:40
  Speaker 1: that revenue down the road. So how have you been
• 36:43
  Speaker 1: able to, as a small cap company, you need to
• 36:46
  Speaker 1: invest in that growth as you just talk about the
• 36:49
  Speaker 1: intense competition in the insulin pump space. You need to
• 36:52
  Speaker 1: maintain a level of investment, both in R & D
• 36:54
  Speaker 1: and SG & A to keep.
• 36:55
  Speaker 3: The product rolling.
• 36:57
  Speaker 1: How have you been able to do all of that
• 36:59
  Speaker 1: and be able to maintain you'll get to that level of.
• 37:02
  Speaker 2: Profitability well i'll say a couple things first of all
• 37:06
  Speaker 2: as we've introduced new technology to market it's less expensive
• 37:09
  Speaker 2: than the former technology i mean the cost of the
• 37:12
  Speaker 2: of the mobi pump is less expensive than t slim
• 37:15
  Speaker 2: the cost of them of the mobi cartridge is less
• 37:17
  Speaker 2: expensive than the t slim part so that's and that
• 37:20
  Speaker 2: that's an important um important move for us i mentioned
• 37:23
  Speaker 2: that the economics of pharmacy are substantially better than they
• 37:27
  Speaker 2: are in the um And so, you know, we have,
• 37:34
  Speaker 2: you know, I think those two changes by themselves really
• 37:37
  Speaker 2: do give us gross margin improvement, which is going to
• 37:41
  Speaker 2: fall to the bottom line. I would also say a
• 37:43
  Speaker 2: lot of the changes that we've made to our business model,
• 37:47
  Speaker 2: to the Salesforce expansion, to the Salesforce modernization have been self-funded.
• 37:52
  Speaker 2: We have looked for, you know, expenses that we could
• 37:55
  Speaker 2: reduce in the organization. And we have used those funds
• 37:59
  Speaker 2: to drive these key projects for us to build, you know,
• 38:02
  Speaker 2: the capability and team that we need to compete effectively
• 38:06
  Speaker 2: in the marketplace. So I think that, and then we're also,
• 38:10
  Speaker 2: we're very, very carefully managing our spending. We think we're
• 38:15
  Speaker 2: going to see a significant step up in growth as
• 38:18
  Speaker 2: Moby Tubeless comes to market, and we can leverage that.
• 38:21
  Speaker 2: We don't have to spend a lot more on R &
• 38:24
  Speaker 2: D or an SMG & A because we're going to
• 38:27
  Speaker 2: see growth in the top line. So we feel that
• 38:31
  Speaker 2: the objectives that we've set like a 65% gross margin
• 38:36
  Speaker 2: and a 20 to 25% operating margin are achievable in
• 38:40
  Speaker 2: the next couple of years. I think that if you
• 38:42
  Speaker 2: just look at this year alone, typically because of seasonality,
• 38:46
  Speaker 2: gross margin is, we see a drop from the fourth
• 38:49
  Speaker 2: quarter to the first quarter. This year, gross margin actually
• 38:52
  Speaker 2: went up as the volume came down. And then in fact,
• 38:55
  Speaker 2: if you look at The first quarter to the second quarter,
• 39:00
  Speaker 2: I think we showed a 5% year-over-year improvement in gross margin,
• 39:04
  Speaker 2: which is a substantial change. We expect to end this
• 39:07
  Speaker 2: year in the fourth quarter with a 60% growth margin.
• 39:10
  Speaker 2: And again, I think if you look to the future,
• 39:12
  Speaker 2: we expect to see continued growth in margin. That's coming
• 39:15
  Speaker 2: from the product improvements I've mentioned, but also from the
• 39:18
  Speaker 2: economics associated with the pharmacy channel. So I think that
• 39:22
  Speaker 2: we feel confident in the growth of the business and
• 39:28
  Speaker 2: the profits And that's just based on these strategic changes
• 39:32
  Speaker 2: that we've been working to implement over the last probably
• 39:36
  Speaker 2: 18 months. And this is the year where the rubber
• 39:38
  Speaker 2: hits the road. This is the year where these things
• 39:40
  Speaker 2: are coming to life. And we're actually seeing them, you know,
• 39:43
  Speaker 2: affect the performance. I mean, we've seen, you know, we're
• 39:47
  Speaker 2: still not fully into pharmacy, right? We're just, we just
• 39:50
  Speaker 2: started over the last four or five months, but the
• 39:53
  Speaker 2: improvements and the changes that we've seen from them have
• 39:55
  Speaker 2: been dramatic in that short timeframe. Yeah.
• 39:57
  Speaker 1: And I like that, the rubber to the floor. especially
• 39:59
  Speaker 1: because you need to in this competitive landscape right now.
• 40:05
  Speaker 1: So I'm just going to close out. We've talked about
• 40:09
  Speaker 1: the changing competitive landscape. We've talked about the change in
• 40:14
  Speaker 1: the innovation that's been going on. And you've been the
• 40:18
  Speaker 1: CEO for seven years. And so that's a huge change
• 40:21
  Speaker 1: from where it was seven years ago. It was a
• 40:22
  Speaker 1: huge change to where it was two years ago even.
• 40:25
  Speaker 1: Every time it changes.
• 40:28
  Speaker 3: you need to adapt how you run the company.
• 40:31
  Speaker 1: So how much of that is skill sets that are
• 40:36
  Speaker 1: always there, but that are able to create those changes
• 40:41
  Speaker 1: or be able to adapt? Or how much of that
• 40:43
  Speaker 1: have you seen yourself change through those seven years as
• 40:47
  Speaker 1: you've evolved to continue being competitive in the insulin pump market?
• 40:54
  Speaker 2: I would say that certainly, You know, you've got to
• 40:57
  Speaker 2: develop a strategy. You've got to see the strategy through.
• 41:02
  Speaker 2: And I think that, as I said, over the last
• 41:03
  Speaker 2: 18 months, we've been working on this three-pronged strategy that
• 41:06
  Speaker 2: absolutely has worked and is going to continue to work.
• 41:09
  Speaker 2: And we believe it's going to get us to where
• 41:12
  Speaker 2: we need to go. I would also say that over
• 41:14
  Speaker 2: the last three to five years. We have brought in
• 41:18
  Speaker 2: new leadership to the organization that has done just what
• 41:21
  Speaker 2: we're doing now. They have experience doing this. We have
• 41:25
  Speaker 2: had a great team of people over the last 12 years.
• 41:29
  Speaker 2: And some people have experience and skills at a certain
• 41:33
  Speaker 2: size of the business. They know how to run a
• 41:36
  Speaker 2: business that's half a billion dollars and they do it effectively.
• 41:39
  Speaker 2: Now we're headed to two, three, four billion dollars in revenue.
• 41:43
  Speaker 2: And we need people that have done that and successfully before.
• 41:47
  Speaker 2: And so I think that, you know, for each of
• 41:49
  Speaker 2: the key functions in the organization, we have brought in
• 41:51
  Speaker 2: expertise to basically address the changes that we've made in
• 41:56
  Speaker 2: this strategy. People that have been there and done that.
• 41:59
  Speaker 2: And I think that's a very important part of the
• 42:02
  Speaker 2: company as well. The execution of the business is dependent
• 42:05
  Speaker 2: on having the skills to do this. And we brought
• 42:07
  Speaker 2: those skills into the business. So I think you have
• 42:10
  Speaker 2: to have a good strategy and you have to have
• 42:11
  Speaker 2: a good team. And I really believe that we've got
• 42:14
  Speaker 2: both right now.
• 42:15
  Speaker 3: Yeah, and that's a great way to close out on that.
• 42:18
  Speaker 1: It's going to be exciting to watch you execute on
• 42:21
  Speaker 1: this pipeline over the next 12 to 18 months.
• 42:24
  Speaker 3: But John, thank you for joining us today.
• 42:26
  Speaker 2: Yeah, Matt, it was great talking to you. Thanks so much.
• 42:28
  Speaker 1: And thank you to our producers, Aditya Samani and Mariam Thawele,
• 42:31
  Speaker 1: for all the behind-the-scene work. And thank you to our
• 42:34
  Speaker 1: listeners for tuning in today. We hope you join us
• 42:36
  Speaker 1: for future episodes. And if you'd like to stay up
• 42:38
  Speaker 1: to date, you can click the subscribe button on Spotify
• 42:41
  Speaker 1: or your favorite streaming platform.
• 42:42
  Speaker 2: Take care. Thank you.