November 14, 2024 • 52 mins
Insulet’s Omnipod 5 automated insulin delivery (AID) system has avenues to expand as it’s revolutionized the way patients treat their diabetes, including the new indication for Type 2 diabetes, CEO Jim Hollingshead explains to Bloomberg Intelligence. In this Vanguards of Health Care podcast episode, Hollingshead sits down with BI analyst Matt Henriksson for an in-depth interview on Insulet’s Omnipod patch pump technology, how on-the-body wear compares to traditional insulin pumps and opens access to patients still using syringes, and expansion opportunities with Omnipod 5 in international markets and with the Type 2 diabetic cohort in the US.Find this and other Bloomberg Intelligence podcasts at BI PODCASTS <GO>.
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Episode Transcript
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Speaker 1 (00:22):
Welcome to another exciting episode of the Vanguards of Healthcare series.
My name is Matt Hendrickson, the medical technology analyst at
Bloomberg Intelligence, which is the in house equity research platform
of Bloomberg LP. Returning with us today Jim hollingshead CEO
of Insulin, a medical device company that is the key
leader an expansion of automated insulin delivery systems or aids
(00:44):
for short. They launched its omnipod five pump, which automatically
adjusts insulin dosing to help diabetic patients to maintain healthy
glucose levels. You can dive deeper into the financials by
typing in po d D equity go on your Bloomberg terminal.
Welcome back and thank you for joining us today.
Speaker 2 (01:02):
Thanks Matt, it's really great to be back with you
and Jim.
Speaker 1 (01:05):
We were sitting here about a year ago. A lot
has changed in that year, But why don't we start
with kind of, you know, a little bit more about
what Insulate does and maybe we can start a little
bit of a quick overview of how the last twelve
months have been.
Speaker 2 (01:21):
Sure so insul It is revolutionizing diabetes care with our
omnipod five product platform, which, as you just alluded to
in the intro, it's wearable, disposable, waterproof, tubeless insulin pump
that has automated dosing. It's small, it's very discreet. You
wear it on your arm, you wear it on your stomach,
and it just determines how much insulin you need over
(01:43):
the course of three days, and then you replace it
when it runs out of insulin at the end of
three days. Takes away all the complexity of decision making
for people living with diabetes. There's a huge burden of
living with diabetes. Tracking your blood sugar, deciding how much
insulin you need over the course of any given day,
over the course of the diabetes doesn't take any time off.
There's no vacations from diabetes. So with the really simple
(02:07):
ease of use of the product, plus the automated insulin delivery,
it just really removes the burden of diabetes, replaces all
kinds of injections and just the whole burden of it.
We've had a great year. We launched Omnipod five in
August of twenty twenty two into the Type one market,
and because of all of the value propositions of omnipod five.
It's easy use, its access discretion. We've just had a
(02:30):
huge run. We've had tremendous growth in new customer starts.
We've were now clearly in first place from a manufacturer's
point of view. Number one prescribed plump my number one
prescribed aid system in the US, number one patient choice
in the US. We're now number one in Europe. We've
taken omnipod five to only four countries in Europe and
we're number one in those markets. And we're really excited
(02:52):
because we just got clearance to help all the people
living with type two diabetes as well.
Speaker 1 (02:56):
Yeah, and why don't we just dive first into the
type one Because if I did my math RNE, I
looked at the calendar correctly, this is we're entering the
third year of the launch of omnipod five for this
type one patient. But based off of your third quarter results,
momentum is still strong in that adoption. So what has
(03:17):
been driving that adoption into year three and how do
you kind of see that runway playing out over time
as we go into twenty twenty five.
Speaker 2 (03:26):
Yeah, we've continued to have great, great momentum in the
Type one business, and we launched back in August of
twenty two, huge new customer starts for US, and we
keep leading that and our target market is really people
that went diabetes who are using what's called multiple daily
injections or you'll hear us shorthanded MDI multiple daily injections,
(03:47):
and those are the people who are still giving themselves
injections with you know, with a syringe or with an
insulin pen needle. Omnipod five is so much simpler to use,
and it actually produces much better health outcomes, and it's
so discreet, and so we've been growing that part of
the market. If you go look at the penetration, I
just go back to the type one market in the US,
there's about one point seven million people living with type
(04:08):
one diabetes, and type people living with type one diabetes
need insulin every day all the time, so one point
seven million people. That market for technology for pumps is
only about forty percent penetrated. Still, so omnipot five is
so easy to use, it's available in pharmacy channel where
you get your insulin. You know, its outcomes are great.
(04:28):
It's so discreet that we've driven so much growth and
so we've overtaken all the other pumps in the market.
Really actually did that really quickly from a new customer
start point of view, right after launch, and that momentum
in Type one continues. We have a really clear strategy
to continue and extend our lead in Type one in
the US market, and that's gone on this whole time,
(04:50):
just this quarter, and on late August we got FDA
clearance for Type two. And I know you want to
get more into type two, but we've had significant new
customer starts with Type two patients. Actually for quite a
while we had our Omnipon Dash product there. We were
getting off label prescriptions in September right after we got clearance.
So last month we saw a clear lift for people
living with insulin needing insulin requiring type two as well.
(05:13):
And that's a big market for US. That's about three
times the size, so it expands our TAM in the
US by another three x.
Speaker 1 (05:20):
Yeah, and we'll definitely dive into that a little bit
more just with the Type one though. Going back to that,
though you talked about the forty percent penetration, Intuitively, I
would think that as you mentioned, like having a patch
on your arm, you can almost forget about it, or
as forget about it as much as you can when
you're treating diabetes versus having the syringes with you in
(05:41):
your pocket and having to do the manual calculations. What
is it what does it take to get that forty
percent penetration rate to a fifty or sixty percent penetration rate?
And I know, and you know the continuous glucose monitors
side of the business, they always talk about kind of
for that type one patient a penetration rate that could
reach eighty percent in the future. Is that something that
(06:03):
is a goal for you or what is kind of
your near term or medium term goal for kind of
getting penetration rate for that type one patient.
Speaker 2 (06:10):
Yeah, it's a great question, Matt. You know, if I
come back to our CGM partners, you know, we work
very closely with the two leaders in that space who
are dex Com and Abbot as you know, and I
always say, the CGM providers are actually paving road for us.
And because you need a CGM for automated insulin delivery,
and we can come back to you know, the sensors
(06:31):
and our roadmap for sensors and things like that. But
the penetration of CGM in the US in both the
Type one and the Type two space have been really
good for us because it gives people an experience of
wearing a product on body, which is great for Omnipod five,
and it provides that CGM background. There's like a market
there with people using CGM, and so we need the
CGM sensor to be able to dose with omnipod five.
(06:54):
We think penetration can go very high in the Type
one space in the US. So we've said publicly that
we think that penetration is sitting there about forty. We
think it can go into the seventies with you know,
with CGM paving the road in front of us, and
we believe we'll be the player to drive it there
because penetration got into the thirties. With the competing pumps
(07:15):
on the market, which is who we compete with. Those
pumps are tubed pumps. They tend to be larger. You
wear them externally on a belt or you know something
like that. They have tubes. Hence tube pumps. They have
a canula that then leads to a needle set tube
get stuck on a door knob. Kid can't sleep with
it in bed overnight when you prime it. When you
set it up, you have to prime the tube and
bleed an air bubble as a very inconvenient use case.
(07:36):
So omnipot five so much more convenient, available in pharmacy,
connects to leading sensors, and we think penetration can go
very high on the type ones. Yeah.
Speaker 1 (07:45):
I didn't even think about the sleeping just because I mean,
I know I roll around a lot when I sleep.
I mean I haven't rolling around with a tube and
everything that I never connected that together, especially now too,
especially in the summer months, when people are wearing T shirts,
I'm noticing the pod much more then I'm noticing a
pump in the tube in someone's pocket.
Speaker 2 (08:03):
Yeah, which is interesting, right anymore? Right, so you see
you see, you know that you see a lot of
people with some sort of CGM on their arm, and
now you're seeing more and more people with pods on
their arm. And that's because we're driving so much growth.
Speaker 1 (08:14):
Yeah, and so let's let's jump into that the new
market opportunity then with omnipod five for the Type two patients.
I know last year we were talking about how you
were prepping the data for the Secure T two D
pivotal trial. That data came out in June. Why don't
we just start with kind of what were the key
(08:35):
takeaways of that data to support the use of omnipod five.
Speaker 2 (08:39):
Sure, you know, I'll tell you honestly that we could
do a whole podcast on secure T two D. The
trial was just so the outcome of that trial was
so amazing. So the first the main thing just to
say is so Secure T two D was our pivotal
trial with the FDA to get clearance for the space
for insulin using people who live with type two diabetes.
(09:01):
The headline is, you know, we met all the endpoints,
we had great outcomes, and we got clearance. And I'll
just say the data were so good that we actually
got clearance in sixty seven days. It's almost unheard of,
you know, so a five to ten K filing, this
is supposed to be ninety days. They usually run one
hundred and ten or something. Sixty seven days we got
the clearance. So fantastic data. Just the headlines fantastic A
(09:21):
and C improvement at all levels. So the patients in
the study were people living in type two who were
on insulin therapy. Of some sort basil or intensive multiple
daily injection therapy, and they were uncontrolled. They had uncontrolled
A and C. So it went from seven, which is
above guidelines, to up to nine plus everybody got benefit.
So the overall benefit was a point eight A and C,
(09:43):
which is a big material number, but the benefit increased
with the baseline A and C, so people who had
an A and C above nine got a benefit more
than two points of A and C, so really incredible results.
The results were similar for people on basil only insulin
and MDI, which is you know, we had deliberately put
basil only in because we wanted to test that that
(10:04):
part of the market. Everybody uncontrolled benefited from omnipod five therapy,
and then really strikingly, whether or not the patient were
on GLP one therapy, they benefited almost identical benefit, no
statistically different benefits between the GLP one arm or the
GP one participants and the people who were not on
(10:25):
a GLP one, which had been a big controversy at
this time last year.
Speaker 1 (10:28):
That's another thing that we could talk about, yeah for hours,
and yeah, actually let's just go with that GLP one
because that's interesting. So what was the theory or because
you know, there was always the the pro GLP camp
was saying that you don't need to have insulin if
you're taking these glp ones. So what was the thesis
for that for the GLP one cohort? Was it that
(10:50):
there wasn't going to be as much of an improvement
because they had already seen improvement with glps.
Speaker 2 (10:54):
Well we had, so we've said all along, So the
GLP ones you and I were talking prew about this, right,
So GLP one therapy in the most modern class or
GLP one is you know, the class that's been introduced
over the last couple of the last few years, have
been prescribed in type two diabetes since twenty seventeen, and
so we've had a lot of experience in that space.
(11:15):
And so last year when it was when the wave
of GLP one's kind of hit Wall Street, what we
said all along was glp ones are great drugs, and
we think that we think golp ones are great drugs.
They help people, they control they improve glyceman control, but
they don't cure type two diabetes, and people continue to
progress type two diabetes as a decaytal you know, sort
of fifteen twenty year progression of disease for people, and
(11:38):
GLP one's slow that progression, but they don't cure type
two diabetes. They don't fix the pancreas, and that's the
real root issue. So people tend to still progress to
needing insulin therapy and so so last year at this time,
we were out telling people this doesn't impact our business
opportunity because it doesn't cure the disease. And since then
we've done a lot of work. We've looked at healthy
(11:59):
con you know data, we looked at claims data, and
then of course the big thing is the secure T
two D data. We had seen in our own you know,
sort of a pre trial that we did about a
year and a half two years before secure T TWOD
that the people using golp ones and the people not
using glp ones both benefited from omnipod five. So we
also knew it then from a feasibility trial, but now
(12:22):
we've been able to document that, so I think it's
really clear. We still think golp ones are great drugs.
They benefit people in type two and in other ways.
Obviously they've taken off broadly, but we know that if
you're on a GOLP one, you'll benefit from omnipod five
if your A one C is uncontrolled. And we also know,
interestingly from the claims data, really large data set shows
(12:44):
that people who initiate GLP ones are actually more likely
to initiate insulin therapy in the next twelve months, and
if they drop off of GLP ones, they're even more
likely to initiate insulin therapy. So last year this time,
everybody thought it would be a headwind for us. It's
actually probably a tailwind. But pushing aside the business side
of it, yeah, we know that they help patients, but
(13:06):
the only delay progression, and then once people are on
GLP ones and their disease progresses and their anecson control,
they will benefit from homnipot five therapy. We've just demonstrated
that really clearly.
Speaker 1 (13:17):
Yeah, And I think what you're just showing that clearly
too is that if they just were on insulin, it's
the same benefit, that's right. Yeah, And so for our listeners,
when we were chatting before this recording, I mentioned to
Jim that I did a search of the number of
times GLPS was mentioned in this most recent third quarter
twenty twenty four Ernie's call versus the third quarter last year,
(13:39):
and it was mentioned thirteen times in third quarter twenty
twenty three and only two times in this recent quarter.
And the only reason it was mentioned two times was because.
Speaker 2 (13:50):
You because I mentioned it twice, right. I think I
mentioned in the context of secure TTD because the study
results are just so striking.
Speaker 1 (13:57):
But it just shows you what a difference a year
can make, as you know, people, you know, the dust
settles and people can see how the business model actually
is really impacted or not impacted at all.
Speaker 2 (14:06):
Exactly here we are, yeah, and you know it's worth
it's also worth pointing out that we continue to have
growth in type two. So we were we our previous
generation of product, which is omnipoon Dash, had the label
for type two, and it had when we've had a
lot of growth for you know, we call our users potters.
We'd had a lot of growth with Potters with omnipon Dash.
When Omnipod five came to market, a lot of our
(14:27):
prescribing physicians started to use it off label. We weren't
promoting it, but they were using it off label in
the type two space. And so you know, about a
quarter over that span since Omnipod five about it, twenty
to twenty five percent of our starts have been in
type two diabetes with those two combined products. We just
got clearance in August, and in September we had a
noticeable lift just the last month of the quarter because
(14:48):
we could now, you know, sort of take that one
arm that had been tied behind our reps backs and
go off and promote. Right, So we untied that arm,
and and so you could you could already see it.
There's a huge need. There's so many people with type
two struggling with their control and Omnipod five is going
to be great for them.
Speaker 1 (15:05):
Yeah, and actually, let me before we go into the
commercial strategy around launching omnipod five for the type two patients.
I'm curious you mentioned sixty seven days from day of
submission for FDA approval, which you're right, it's much faster
than ninety days. And it was also much faster than
kind of the last four and a half years for
diabetic products, because COVID related testing products was approved by
(15:31):
the same division right that was doing diabetic products. One,
the data was very compelling, that's one of the factors.
But is there were there other factors involved too. Was
there a larger division still that was trying to do
COVID and diabetics that now can focus on diabetics, or
and also was there kind of conversations that you were
(15:53):
having with the FDA ahead of time to help streamline
the process. It was a kind of a combination of
all three.
Speaker 2 (15:58):
It was a couple of things. I should say. I
want to get credit to the FDA because the division
of the FDA that deals with both diabetes technology and
with you know, the COVID tests, right, is called o
HT seven. And you can imagine they were so we
talked about this last year. They were so backlog during
COVID because they were they were working on all these
submitted home tests for COVID, right, so they created a backlog.
They've really done a great job of getting back to
(16:20):
where they're caught up. So that's the first thing I'll say,
just kudos to the FDA moving so fast through COVID
and now you know, as they're moving. But there's a
couple of things that that were a little different about
maybe maybe a little different about this submission for OMNIPOD five.
The first was we had been able to go into
the FDA with real world evidence and this is this
could I could end up being long winded on this,
I'll do it short. Every Omnipod five user is cloud connected, okay,
(16:43):
and so that means we get actual usage data. And
so we've been able to do a pre sub with
the FDA that demonstrated and basically said this is what
we think we're going to see in the study. So
we had a feasibility trial that was like an external
trial that we'd set up. We were able to share
some of our reilroad evidence with them and say this
is this is you know, and get approval on the
protocol and say this is what we expect. And so
so there was a way in which the nature of
(17:06):
the technical nature of Omnipod five helped us with the
pre sub and I think it probably ended up giving
I'm not going to speak for them and they're not
going to they're probably not going to say right, but
I think it probably gave them some more confidence in
the submission. And it just shows why omnipod fives data
connection and cloud capability is so important and it will
speed up other parts of our business as well. And
so so the pre sub with that, but then the
(17:27):
data we're so clean. I mean, this is you know,
I've been in and around biotech and medtech for I
don't know twenty some years. When our team presented the
results of secure T twod to me, right, I'm on
like a zoom call to the slides, and you know,
we got like I don't know, twenty seven slides into
the study, and every slide was a good news page
like everything. We saw this and then we saw this,
(17:49):
and so I actually stopped the team and said, wait, okay,
what's the bad news because I've never seen I've never
seen a clinical trial go through where there wasn't some
shoe that dropped where you were like, oh no, that
we didn't get this there or but yeah, right, honestly,
there's nothing like that in this trial. I mean, it's
just it's I've never seen a trial like it, and
I think that, you know, I mean, I can't speak
(18:10):
for the FDA, but I think the investigator saw that
and it was the same thing there, you know, no
adverse events, you know, really key findings for type two
like one of the things that's a huge barrier to
writing insulin in the type two space is docs are
worried about hypoglycemia, right, and that's been a strength for
the omnipod five algorithm the whole time. We have very
low hypoglycemia with our automatic dosing, and hypoglycemia is what
(18:33):
tends to send you into the R right, So so
we've written the algorithm to be very protective in that
way a while still driving great time and range and
great overall results. We saw the benefit and Omnipod five
so no increased hypoglycemia. So it removes that worry. And
the other thing that stops docks from a clinical point
of view writing is they're just not sure how to dose,
you know, So if you're going to initiate a write
(18:55):
a script and initiate a type two patient on insulin therapy,
it's hard to gauge that initial dose for patients. Our
algorithm moves with the patient, right, and so it removes
all the complexity of trying to choose a starting dose
for docs. So we saw those things in the study.
We saw minimal weight gain in the study, you know,
(19:15):
which is another big worry about you know, if I
put them on insulin, they'll end up very minimal weight
gain in the studies. So it was just such a
clean result and so obviously beneficial to people who were
struggling to control their glycemia.
Speaker 1 (19:30):
Yeah, and I mean all those things just yeah, the
data just keeps piling up and piling up. Well. Caught
my attention though, when you were discussing the real world
data is the on cloud connectivity with the omnipod to
the central cloud database, because I remember you were talking
about this last year, and I remember you were talking
(19:50):
about how your career path was from res MED and
we just had Mike from RESMD on for a r
episode and he was talking about the on cloud connectivity
for their sleep apnea treatment and it's you know, you
made the comment that it carried you know, this is
just a skill set or you know, a knowledge base
(20:11):
that you carried over from there to insul it. And
now it's just it sounds like it's materializing into something
that is actually you know that can benefit or speed
up product approvals and things like that. And I'm assuming
also improves the algorithm to you know, you know, tweak
it here or there for things that you see. Have
(20:32):
you seen it come to full fruition yet or do
you see more coming from it.
Speaker 2 (20:35):
Oh, there's much more coming. I mean, it's coming to
fruition now. And we're doing a lot of things that
I can talk about. We're doing some things I don't
want to talk about for competitive reasons, Matt. But but
let me just tell you a couple of things. Well,
let's start with the concept. So basically, we have all
this data, right so, and what's powerful about it is
every user that uses omnipot five is connected, as I said,
(20:56):
and so we take that data and we can see
into all the corners of usage. So if you think
about it, a patient who might you know, have an
app from another pomp might upload the data into the cloud.
And but a patient that takes that step is we know,
just in practice but also kind of by definition, they're
very engaged, right, so they're really managing, so they're willing
to upload the data whatever or their physician is demanding.
(21:18):
They download the data in the office. That for us,
every patient sends their data into the cloud. That means
we get to see the very engaged patients. It means
we get to see the very non engaged patients. And
it means we get to see all the data and
we unlike seatpeps SEAPEP. It was a revolution when when
we launched that at RESMET. I mean it changed the
market completely and it changed the patient experience a lot
in the healthcare provider experience. And we can see the
(21:40):
same thing here. But the difference is we've got data
twenty four to seven from on diabetes where SEAPEP you
might have six or seven or eight hours a night. Right,
So we can see into the corners of usaid. Now
what are we going to do with that? Right? So
it's a fantastic it's a data asset for us. We're
very careful with the data. You know, it's we deidentify it,
we keep it very safe and secure. We're obsessed with
at to privacy and security right people opt in right,
(22:02):
and so we're very diligent on that front. We've got
all this data from all our users. It's a huge
data asset and it's unique. Nobody else in the industry
has that kind of all into the edges view of
their users. So what are we to do that Already
we're using it to improve the patient experience. We have
algorithm programs running, their advanced algorithm programs that are based
(22:25):
on what we call in silica simulation, so we can
with data sciences, we can take all that data and
we could say what if we tweak the algorithm to
do this instead of that, and then you run it
through a huge computer model, say what would have been
the outcome for time and range and for hypoglycemia and
things like that. Both of our advanced algorithms have leveraged
that big data. The other thing we can do is
(22:46):
we can what they would call instrument the patient journey
in the cloud, so we can see where patients stay
on where patients drop off, and we can develop both
in our customer platform cloud based customer platform a much
more seamless patient experience, and we can start to launch
data products where we're using machine learning to do personalized coaching.
And the goal here is to personalize care. The goal
(23:08):
is to remove as many difficult steps for the patient
and for the physician and practice as we can so
streamline the whole flow, but also use tools to keep
people on therapy. And so you know, we have very
high retention on therapy, but if we can drive it
even higher, people have better outcomes. It's better for them,
better for the doc, and better for our business as well,
(23:29):
so we put the patient experience in the center, we
make it more seamless, we personalize it, we'll be able
to use machine learning for patient coaching. We'll constantly be
able to improve the algorithm and the product. It also
meets the needs of other stakeholders. So if you have
a patient who's on therapy and easy to manage in
the cloud, its streamlines a workflows for a practice. And
if you have a patient that's getting on therapy and
(23:50):
getting great outcomes and it is very satisfied, payers love
that too. So it's a big self reinforcing cycle with
all the data and we're taking steps already. We've got
other stuff up. Our sleep is coming.
Speaker 1 (24:00):
Yeah, And I think that's going to be important because
you know, you talk about patient streamlining for doctors, and
I think that's going to be important for your commercial
strategy for the type two patients. So let's dive into
that a little bit more. Because the type two patient
or the you know, the person with type two diabetes
is not going to an endocrinologist first, right, They may
(24:22):
be going just to the primary care physicians. So how
does that dynamic shift the commercial strategy for those patients
with type two diabetes versus the type one diabetes.
Speaker 2 (24:35):
Great question. So so data products will be material and
our material for both people living with type one and
type two. But you can picture a world where you
have different patient journeys and different solutions for those patients.
When you think about our current call point, you're right.
So it's the you know, our core business has been
type one. We're getting into type two. We call on
(24:57):
it largely on endocrinology practices all over the country. And
you know, most Type one patients, but not all, but
most Type one patients are in the ENDO channel, and
then a minority of Type two patients who are intensive
insulin users or in the ENDO channel tends to tilt
more towards the intensive therapy as opposed to the basel therapy.
(25:17):
And as we expand in type two, what we're doing
is we're expanding our sales force to reach down into
the next layer of practices that aren't necessarily under chronology practices.
But they look a bit like ENDO practice, isn't. We
call them high prescribing PCPs, And so what does it
mean to be high prescribing? It means they're writing a
lot of rapid acting insulin and or they're writing a
(25:38):
lot of cgms, so we know from the data that
they're treating people with diabetes. And as you go down there,
you get a different mix, you get a little bit
less type one, but there's still a lot of type
one patients down there. You still have a lot of
intensive insulin therapy using type twos, and you have a
lot of basil only type twos, and so we're expanding
our reach down into that. We've actually been expanding in
(26:00):
our salesforce all year in twenty twenty four during the year,
and we announced that we'll be expanding it, you know
four into twenty twenty five, will fill those rolls and
get down to that larger part of the practice. So
right now, in our current call point, we think we
reach about just take the type two intensive insulin therapy,
we think we reach about thirty percent of those patients
and our current call point, and with our expansion, we're
(26:21):
going to add at least ten so we'll get probably
north of forty percent of those patients we'll reach and
as we get down there, they'll have all the same
benefits of OMNIPOT five. It's you know, it's great, it's
a you know, wearable, discreete disposable available in pharmacy, pay
as you go economics really important for all those patients.
But we think especially in type two and they'll have
all the ability to run their insulin therapy off of
(26:43):
their off of their smartphone. Right, so we provide a smartphone.
We've just launched we haven't talked about this yet, mat
but we've just launched our our iPhone app, the Coos app,
and that's a fantastic app, and so you know, so
it just simplifies this. That's a data product in and
of itself. It is the iPhone app. And then we'll
launch more more data products into those practices. Already, with
(27:04):
omnipot five, you can you can log in and see
your patient in the cloud, see what they're doing. You
don't have to have them come into the office. That'll
be way more important in PCP land than it is.
I mean, it's important for endos. Endos are great time constrained,
but the further you go down into PCP, the more
the more time constrained they are, and so the ability
to remote monitor your patients see the results in cloud
to be very important.
Speaker 1 (27:25):
And so I actually I'm curious because you know, you
talked about the the PCPs who prescribe a lot of
fast action insulin. How do they keep track of the
patients throughout? Is it just simply every six months, every
three months, the patient comes in and they get their
bread and then they that's how they measure their A
(27:46):
one C with them, and that's how they track it.
Speaker 2 (27:47):
That's right, That's exactly it. So it's you know, and
if the patient comes in, right, so they want to
see them every ninety days, every two months, every every
half you know of the year, every six months, and
they'll come in and do a blood a blood drawer
or some you know, or a fingerprick to see what
their A one C is. And you know, and by
the way, it's a market that's almost completely unpenetrated by technology.
(28:08):
So we talked about the type one space where it's
forty percent penetrated right now in the type two if
you take the two sides of it, so you've got
the intensive insulin usings people that look like type ones
in their practice because they're doing multiple injections, that part
of the type two patient space is probably less than
five call it five five percent penetrated. Almost all those
patients are on an omnipod product now, right, So and
(28:31):
then the that's five percent of that part of the market,
which is about two and a half million people in
the US. So that market already is significantly larger than
the US Type one market. It's one point seven two
point five. Type two is five percent penetrate. The people
on basil only therapy who are secure data shows, secure
TTV shows benefit from omnipod five effectively zero percent penetrated.
(28:55):
And that's because PCPs don't think about pomps. That's one
of the things we found over the last year is
when we walk into one of those practices and we
say we're here to talk about automated insulin delivery through
our pump, right, they say, wow, we don't do pumps
here because they're picturing the big thing. You're wearing your
belt with the tubes and the ten hours to start
up training and all this stuff, and they know they
can't manage that in their practice. And then when they
see omnipod, the light bulb goes on and they say, wait,
(29:19):
that's that's an insulin pump. And so then they get
very interested. And so that's you know, we know that
we can develop that market and we aim to really
grow it.
Speaker 1 (29:27):
Yeah and so, yeah, and it's interesting that you're talking
about the physicians who are new to the form factor
of omnipod five and just versus kind of traditional insulin pumps.
But I know there's other companies out there that are
kind of developing their own version of on the body where.
So I'm curious what your thoughts are about the market
(29:50):
overall and the specifically for on the body where. And
then I know that you know everything for all medtech companies,
pat and protection is very important. Your thoughts on your
potential note around your development.
Speaker 2 (30:03):
Sure, well, let's let's take the you know, the competitive
landscape first and we'll come back to ip On the
competitive landscape, there's you can imagine, we watched this very closely.
There is nothing on the market and there's nothing in
anybody's pipeline that looks anything like omnipod five. You know,
we've we've proven the case for wearable disposable patch pump.
(30:25):
I think there were people that thought we wouldn't be
able to do it with a I D. Now we've
proven the case. We've you know, we're clearly number one
in the US. We're clearly number one actually in Europe
now in our markets, not you know, in the fore markets.
We've we've launched Omnipod five. But so everybody's chasing there's
nothing that looks like it. First second, there's a lot
(30:46):
of work to be done to get there. And so
you know, we've we've been manufacturing wearable disposable patch pump
form factor for you know, a couple of decades, very
difficult to get. The volumes are out. We make tens
of millions of pods a year in our three factories.
You know, they're high quality, you know, safety critical pods.
(31:08):
And to get to that point, we've invested, I mean,
you put around number on it. We've probably invested a
billion dollars to get probably more actually, but we've invested,
call it a billion dollars. So, you know, it's the
there's so many moats around it. There's the design mode,
the design for manufacturer, there's there's the manufacturing scale safety,
(31:28):
there's the supply chain that goes with that. You know,
so there's there's more than seventy parts in an omnipod.
Think about the number of components. We've were making tens
of millions of pods, how many tens and tens of
millions of components that have to all be in a
supply chain, have to all be precise, you know. So
one of the things that people I think underestimate or
you know, underappreciate is how hard it will be. So
(31:50):
it's it's way more than having a design and a
prototype get to that volume, right, it's years of development,
and so we have very good motes that way. We've
obviously got the mote of all bays, we've got the
moat of our commercial excellence, you know, and then we'll
have data as a next mode. So there's a lot
of reasons to believe we're going to continue our lead,
and a lot of reasons to think that there's more
(32:12):
work to be done for anybody trying to chase than
they appreciate. That's the first thing if I go to
intellectual property side of that, because that's another moat. We
have a really strong body of intellectual property. We're almost
unencumbered as all our IP right and so you know,
we don't pay royalties to anybody's all our IP and
we also have really deep trade secrets associated with those
(32:33):
moats around you know, manufacturer designed for manufacturer precision and
manufacturing and so on. And you know, so we feel
very strongly that we've got a great body of IP
that we can protect. And you know, we've shown that
we will appropriately and aggressively defend both our patents and
our trade secrets, and so we feel pretty confident. I mean, look,
(32:54):
there are plenty of clever people and engineers and so
on out there, and we're productively paranoid, I think is
an hill saying, right, But we feel very confident in
our competitive position.
Speaker 1 (33:05):
Yeah. And you know, one of the other things too
you just talked about is your place in just the
four international markets, because I know that international or outside
the US sales is very important growth driverphy as well.
In fact, I think your twenty twenty four guidance has
higher growth in the international market than the US market.
Speaker 2 (33:26):
That's right.
Speaker 1 (33:28):
First of all, what four markets are you in currently?
And then kind of how how do you see the
expansion both within those four countries and then moving into
new European countries and then beyond Europe. How does that
how do you see that strategy playing out over the
next two three years.
Speaker 2 (33:45):
Sure, we're in We're actually in We've got Omnipod five
and four markets, right, so we're actually we're in we're
in twenty five total markets of twenty four markets outside
the US, and we've been competing with omnipot Dash and
those and with our classic model in those mores and
have done very well. Dash continues to actually perform really
well in those markets, but Omnipod five changes the game
(34:06):
everywhere we take. It's Omnipod five wins everywhere goes. And
so we launched Omnipod five in the UK last June
and twenty three June of twenty three, we launched it
in August at twenty three in Germany. Both of those
markets have performed incredibly well. You know, Omnipod five took
off in both of those markets. We've just launched in
the Netherlands and in France this year. They're both ramping.
(34:28):
So we launched and then we continue to negotiate, you know,
sort of a market access play, you negotiate with your
with distributors, and so the Netherlands and France are both
ramping nicely and we're really confident in the second half
of this year. The growth that we see in the
fourth quarter this year, the growth will see there, and
then because of our crean revenue model, we'll see that
revenue in twenty five, you know, kind of a you know,
(34:50):
get to full run rate, but it'll keep growing too.
We're driving tremendous new customer starts with omnipod five, so
it's a great play for us to continue ramping growth
in all four of those markets. But then we've and
auns we'll take it to ten more markets in twenty
five and so, and I'm going to try to do
these by memory to see if I get it right.
We're going to do throughout twenty five, and we'll do
(35:11):
five of them in early twenty five. So we'll do
the four Nordics in Italy in early twenty five. So
that's five. So we had Switzerland and Belgium. We've got
Australia and Canada in Israel coming in twenty five, and
so we'll take omnipod five to those markets where we're
already competing with Dash and we anticipate great ramp and
great reception for omnipod five and all of those markets,
(35:32):
and then we'll continue rolling it to We'll take Omnipod
five to every market we're in, and we'll also start
to enter new markets over the course of you know,
you'll see us do that on a pretty thoughtful basis
over the next couple of years as well.
Speaker 1 (35:45):
Okay, and then, actually it's an interesting segue because you know,
one of the things you're talking about, you know, your
round number, you said about billion dollars has been invested
in these manufacturing plants. Your newest plant is in Malaysia,
which kind of I feel like I'm picturing it as
coinciding with this international expansion. Correct me if I'm wrong,
(36:06):
But how has that launch? How's the opening of that
plant change maybe the expansion, the capacity expansion for international
markets as well as for your profitability as well.
Speaker 2 (36:19):
Yeah, Malaysia's fantastic because a great site. We opened it
in the summer and I had the opportunity to go
up for the official ribbon. It was running, you know,
we had kicked it off and it was it was
producing positive before I was able to get out there.
But we had this just amazing opening ceremony for a
Malaysia plant. And I'll tell you what, the local the
local team there's amazing. We had dignitaries, we had the
(36:40):
US ambassador, you know, to Malaysia at our opening was wonderful.
Four hundred thousand square feet be a really efficient plant.
So we have three factories we have. We manufactured in China,
we manufacturing and right here, very proud to manufacturing in
the United States, right here in Massachusetts at our headquarters
in Acton. And then we've just opened Malaysia. Ma Lasia
opens up a lot of capacity for us, and it
(37:02):
gives us a lot of flexibility. So, you know, we've
opened the site. We have we have some lines running,
but we have room for more manufacturing lines, and so
that'll be a flexible capacity site for us. And we're
actually we're growing so fast we're actually already thinking about
plant for right So so we have a tremendous capacity
now and tremendous flexibility and the ability to build more
(37:23):
capacity over time to serve those tens of millions of
pods and you know, the hundreds of thousands of potters
we have on a cost on the cost basis, every
time we've opened a factory, we've learned more and so
and each factory benefits from the other factories. It's been
very interesting. So when we open Acting you know, very
highly automated, really fast, and it's almost like you know,
if you like, as a kid, if you had a trainset,
(37:44):
you would love to come and see the act in
factory because it's just so it's just remarkable with a
lot a lot of robotics, you know, a lot of precision.
And from that factory, from the acting plant, as we
improved it, we learned a lot for our China plant.
So then we improved the China plant even further and
the China plant became very very efficient. And then in
launching in Malaysia, we've learned more still and so the
(38:07):
Malaysia factory will be a creative to gross margin within
its first twelve months of use and and then and
then a creative still over that time. So we've done
a great job, or tell you what, our operations team
does a great job of continue to improve the operations
of all of our factories and it's been a big
gross margin benefit for us. And we'll continue to drive
(38:27):
our our cogs down as we go.
Speaker 1 (38:29):
Yeah, and that's always because that that allows you to
invest in the you know, you're talking about expanding your
sales for so investments rest and a and also investing
in R and D. Maybe we'll round out the episode
with just kind of R and D and development in
the future. I mean, one of the things you kind
of just quickly talked about was the iOS app. So
let's jump into that first because it's funny because I
(38:51):
feel like ninety percent of the people have iPhones. Yeah
and so, but you started with an Android app? What
was what was the ration now for starting with the
Android app? And then for the people who have iPhones,
what was what did they have when they they couldn't
have an app? Obviously?
Speaker 2 (39:08):
Yeah, yeah, So so the Android, the Android platform, this
is a pre dates almost the entire probably the whole
management team. That may not be quite right, but you
know so, but Android was deemed an easier platform to
develop on as we were early in our history, and
I think that's w It's more of a kind of
a it's a little bit easier to develop on than
you know. So you yeah, So we developed the original
(39:29):
whole platform on Android. And when I say the whole platform,
I mean all of the all of the controller technology,
and so we've been through different versions of controllers. The
original Dash product was the first time we did all
of the control on what's effectively a smartphone, but it
was it was not a download from the app store app.
It was a lockdown cell phone that had an Android.
Speaker 1 (39:51):
Based Okay, so you already had that, was po right.
Speaker 2 (39:54):
So we had the we had the Android code base,
and then because we had done that, it it was
it was just an easy next step to start launching
the Android phone app. So you can get we cover
I shouldn't know the number off the top of my head,
you know, twenty plus handsets, twenty plus Android handsets, and
from the Android app stores you can download our you know,
sort of an app for your Android phone. But to
(40:16):
your point, the iPhone has been you know, just give
me an iPhone app. It's the most requested feature that
we've had. But it was totally new code for us.
So you can imagine the big development for us to
write an entirely new code base. And there's a bunch
of technical stuff that we wanted to do with the
codebase as we did it, so we'll make it more modular,
more modern, you know that kind of thing. So it
(40:37):
took us took us some time to get the iPhone
app written. We did the LMR in the middle of
the year, so limited market release serve of the acronym
in the middle of the year. The limited market release
went great, and just on October twenty ninth, we announced
that we've launched the iOS app with G six. I'll
come back to that, launched it with G six. Within
hours of being in the app store, we jumped to
(40:58):
the number one app in the in the Apple App Store, right,
so tens of thousands of downloads. It's a fantastic app.
It's actually there's some features in it that go beyond
what's in the controller. Right. So, so you ask the question,
what do people get if they have an iPhone. In
our starter kits, we provide that lockdown cell phone controller app,
(41:19):
so you have you know, you've been provided a kind
of a lockdown phone and only is the controller. We
call it the Personal Diabetes Manager of the pdium. So
you get that starter kit. One of the reasons people
want the phone app is so they don't have to
carry around the controller. They want to get down to
one phone. They want to live in their phone, right,
and and that's especially generational, but it's true for everybody.
So now with the iPhone app, you have full control.
You actually have a couple of cool features that are
(41:41):
not in our controller. So you can see your you
can see your your glucose number on the on the
front screen. And it's got a custom foods feature so
you can sort of say, you know, this morning, I'm
every morning, I tend to have a bagel and a coffee,
and you can just load that in rather than worry
about counting the carbs every time if you're going to
give yourself a ball. Is incredibly well received app, and
(42:02):
it's just the first drop, so it's compatible G six.
We'll bring G seven onto it in the first half
of twenty five, working hard on that. Want to do
it as fast as we can, and then we'll the
iPhone app will be compatible with sensors as we go,
you know, as we expand the Omnipid platform.
Speaker 1 (42:18):
Yeah, that's interesting. We'll go into the sensors in a bit.
But it's very interesting to talk about a bagel as
the custom food that you would put in on a
morning basis because the number of Vender chronologists I've talked
to in the past and they talk about, you know,
the difference between a candy bar and a bagel, and
it was the bagel the bagelkyrock.
Speaker 2 (42:33):
But that's true for me. So when I were a CGM,
you know, it's and it's everybody's a little bit different.
But I would say I shouldn't used a bagel. I
should have said. What I should have said was scrambled
eggs and coffee, right, because you want to start with protein. Yeah, right,
And I don't live with diabetes. But but I've actually
learned a lot just from wearing, you know, a CGM
to see how my body reacts. And it's true, you know,
(42:53):
the starchy foods, they're certainly not good for Jim. I'll
tell you that.
Speaker 1 (42:57):
So yeah, oh yeah no. But it's like I said,
it's not the first time I heard the bagels being
the one that skyrockets it. So you talked about the
iOS for G six, and this is where you know
it comes maybe a little more complex because you know,
you're you're integrating the Omnipod dash, you're integrating the Omnipod
(43:18):
five with these various c gms from Abbot and dex
common Are. There is there a third CGM that you've
made either well.
Speaker 2 (43:26):
So, so when we launched so Are, our goal is
to give our our customers are potters sensory choice. Okay,
whatever sensor you know you'd like to use. But you know,
they're really four leading sensors on the market, and the's
two from Abbot and two from dex Common. Right, so
it's dex comes G six and G seven, and it's
(43:47):
Abbot's Libre Freestyle two and Libre Freestyle three. And they've
now put a put a monoicer on that with plus.
So the two plus is intended for connecting the pumps
and the three plus is intended for connecting to pumps.
And when we launched in twenty two, I always say
it was our minimum viable product because it was the omnipod,
the great omnipodform factor with our first algorithm, which is
(44:10):
a great algorithm, was our first algorithm with Android code base,
and with one sensor, the G six versus a great
sensor obviously, so that's our you know, if you think
about that as the platform, we want to expand that
platform and give tons of choice. And so this year
we launched with G seven in the middle of the years.
So now if you're in the US, you can have
G six or G seven. We've been asked we'll bring
our integration for Libra two plus to the US by
(44:32):
the end of the year, so how you can use
libray if you want to. And we've also obviously just
launched the iOS app. We're just talking about the Apple
Phone apps. So now in the US we've got by
the end of the year have three sensors and you
have iOS just on G six if you want to
stay in G six and then we'll roll out you know,
we'll continue to expand that in Europe. We launched with
(44:54):
G six in the UK and Germany, and then we
took the libr two integration into the UK and into
the Netherlands. When we launched the Netherlands, that was a
sensor of choice launch, so you can choose in the
drop down menu, you can choose a G six or
a Libre two plus. Lib two plus is lib two
form factor and censor is very very widely adopted in Europe.
(45:15):
So that's you know, there's a there's a pond to
fish in there. For us, there's a market to fish
in with Leebra two. So we have that integration in
the UK in France around the G six, but we'll
be we have to do a regulatory filing to get
Libre too, so we'll be doing that soon. And then
we've announced we'll bring and we'll continue to roll out
Libra to the solution with G six and Libra two
across our European markets, and we'll bring G seven in
(45:36):
the first half of the year to our European markets
as well, and then we're working on Libre three. So
that's the next that's the next cab off the rank.
Speaker 1 (45:42):
And so kind of because what's the interesting thing is
that most of these cgms, and maybe Abbott two plus
is not an ic GM technically yet.
Speaker 2 (45:50):
No, it is. It is. Oh yeah, so the plus
is are icgms. Okay, okay, that's right.
Speaker 1 (45:53):
And so basically but so but it sounds like there's
still a little bit of a follow up time between
when they're because you know, the FDA was talking about, oh,
any ic GM can work with any aid pump. That's right,
But it sounds like there's a little bit of a
follow up time to kind of really get them integrated.
So what's kind of the behind the scenes there to
(46:14):
kind of get from the approval to actually to that.
Speaker 2 (46:17):
Why can't you just throw a switch? Right? Yeah, So
it's a great question. So this is again we could
go way in the weeds here, and plus I'm not
an engineer, so I'll get out of my depthquigive, but
I'll just tell you a couple of things. One, the
FDA is I think very forward thinking and making the
ICGM regulatory categorization, so that says if the CGM meets
certain specs, it can be used with AID systems, and
(46:38):
the AID system has to meet certain specs. But the
challenge technically is that all four of those sensors have
a different communication protocol, they have different radio chips, they
have different data encryption, right, so there's still an engineering
effort with each of each of those four. So the
two dex Come sensors and the and the two Lebas sensors.
There's another technical challenge for us, which is our our
(47:00):
system is unique and that the pod remains autonomous, but
it has to be able to be in sync with
both your controller and the CGM. So if you leave
your controller at home with the pod POD's still running,
the algoes in the pod, right, It's not in the phone,
it's not in the cloud. The ages in the pod.
But then when they all get back together, they all
have to recognize each other and they have to be
in the same scores and all that stuff. So there's
(47:21):
a there's a there's an extra engineering task for us,
which is you know, it's not trivial, it's complicated sometimes.
And then in Europe the regulatory is different because you
have to do a ce mark for the systems and
then you have to demonstrate with evidence that you know,
every integration delivers as an AID system. So that's that's
why it's a little bit slowering your up for everybody.
Speaker 1 (47:42):
Yeah, and you know, why don't we take off our
engineering head and we'll put on the CEO. Had to
close out.
Speaker 2 (47:48):
Here, everybody, everybody on my team will be relieved.
Speaker 1 (47:51):
Yeah, yeah, but it's you know, it's I never want
to say the what's next, but you know when there's
the CEO and with you know, as you say, there's
clever engineers out there creating new devices. We talked about
with Intel and you know Andrew Growth with the Paranoia
Survival book he wrote, which I guess you know that
(48:14):
could be another conversation about Intel today versus back then.
But how do you see guiding insult in the next
three to five years to be able to have that
competitive advantage. Still, what what do you see as you
can improve on and you know what are kind of
your your goalposts that you're seeing.
Speaker 2 (48:32):
Yeah, we're going to continue to drive around what the
patient needs. Right, our whole mission in life is to
is to simplify the lives of people living with diabetes,
and so working from what the patient needs back will
continue to drive massive innovation. And then I'll talk a
little bit about commercial. But from an innovation point of view,
we want the simplest possible war experience. We want the
(48:55):
simplest possible pod, we want the widest choice of sensor experiences,
we want the easiest possible use with apps. We want
to provide personalized care through data products, and we want
to simplify all of that for the physician. So we
have a very clear lead on all of those fronts
and we're going to extend that lead by driving innovation.
(49:16):
And you know, our financial results help us with that,
Matt as you know. So you know we've gone from
three years ago not producing profit, not producing free cash flow.
We're guiding this year to fourteen point five percent operating income,
which is a huge lift, and we generate a lot
of free cash flow, and so we can fund all
(49:36):
that development and we can continue to outrun our competitors
on the innovation side. On the commercial side, we have
huge modes in access already, right, So pharmacy channel is
a huge thing for us, and it's a huge thing
for our customers. We're very well established there. Pick up
your pods or we pick up the pharmacy. We'll continue
to extend our reach in the US down into all
of those patients that are living in the high writing
(49:58):
PCP practices and so that we can extend and the
benefits of Honion Pod five to them. And then we'll
expand internationally. We'll take Omnipod five and all of our
markets and we'll start to get into new markets and
new geographies. And so my vision is that we're just
gonna We're going to continue to outrun there. We're not
complacent because the needs are not met, right, So patients
need simplicity. We're going to drive simplicity. We're going to
(50:20):
continue to drive simplicity, and from a competitive point of view,
we're just going to keep out running everybody.
Speaker 1 (50:25):
Well, I think that's a great place to end this conversation.
I look forward to our next felve month check up
and see how the business is doing.
Speaker 2 (50:34):
But no, So Matt, I just want to say this
is it's Diabetes Week, and I think you're going to
post this. We're doing this, we're doing this early in
the week, but I think you're going to post this
interview on Diabetes Day, okay, so that we're in town
for that, you know, So you know we're ringing the
bell this week, and so I just want to say,
there's so many people living diabetes. The awareness of it
(50:54):
is continues to be low, the awareness of technology solutions
are low. For anybody out there living with diabetes or
has a level one living diabet you're not alone and
there are a lot of people here to help, including insulin.
Speaker 1 (51:04):
That's great to hear. Well, Jim, thanks for joining us today.
I appreciate it.
Speaker 2 (51:07):
Matt, thank you very much.
Speaker 1 (51:08):
And thank you to our listeners for tuning in today.
We hope you join us for future episodes, and if
you'd like to stay up to date, you can click
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Take care
Welcome to another exciting episode of the Vanguards of Healthcare series.
My name is Matt Hendrickson, the medical technology analyst at
Bloomberg Intelligence, which is the in house equity research platform
of Bloomberg LP. Returning with us today Jim hollingshead CEO
of Insulin, a medical device company that is the key
leader an expansion of automated insulin delivery systems or aids
(00:44):
for short. They launched its omnipod five pump, which automatically
adjusts insulin dosing to help diabetic patients to maintain healthy
glucose levels. You can dive deeper into the financials by
typing in po d D equity go on your Bloomberg terminal.
Welcome back and thank you for joining us today.
Speaker 2 (01:02):
Thanks Matt, it's really great to be back with you
and Jim.
Speaker 1 (01:05):
We were sitting here about a year ago. A lot
has changed in that year, But why don't we start
with kind of, you know, a little bit more about
what Insulate does and maybe we can start a little
bit of a quick overview of how the last twelve
months have been.
Speaker 2 (01:21):
Sure so insul It is revolutionizing diabetes care with our
omnipod five product platform, which, as you just alluded to
in the intro, it's wearable, disposable, waterproof, tubeless insulin pump
that has automated dosing. It's small, it's very discreet. You
wear it on your arm, you wear it on your stomach,
and it just determines how much insulin you need over
(01:43):
the course of three days, and then you replace it
when it runs out of insulin at the end of
three days. Takes away all the complexity of decision making
for people living with diabetes. There's a huge burden of
living with diabetes. Tracking your blood sugar, deciding how much
insulin you need over the course of any given day,
over the course of the diabetes doesn't take any time off.
There's no vacations from diabetes. So with the really simple
(02:07):
ease of use of the product, plus the automated insulin delivery,
it just really removes the burden of diabetes, replaces all
kinds of injections and just the whole burden of it.
We've had a great year. We launched Omnipod five in
August of twenty twenty two into the Type one market,
and because of all of the value propositions of omnipod five.
It's easy use, its access discretion. We've just had a
(02:30):
huge run. We've had tremendous growth in new customer starts.
We've were now clearly in first place from a manufacturer's
point of view. Number one prescribed plump my number one
prescribed aid system in the US, number one patient choice
in the US. We're now number one in Europe. We've
taken omnipod five to only four countries in Europe and
we're number one in those markets. And we're really excited
(02:52):
because we just got clearance to help all the people
living with type two diabetes as well.
Speaker 1 (02:56):
Yeah, and why don't we just dive first into the
type one Because if I did my math RNE, I
looked at the calendar correctly, this is we're entering the
third year of the launch of omnipod five for this
type one patient. But based off of your third quarter results,
momentum is still strong in that adoption. So what has
(03:17):
been driving that adoption into year three and how do
you kind of see that runway playing out over time
as we go into twenty twenty five.
Speaker 2 (03:26):
Yeah, we've continued to have great, great momentum in the
Type one business, and we launched back in August of
twenty two, huge new customer starts for US, and we
keep leading that and our target market is really people
that went diabetes who are using what's called multiple daily
injections or you'll hear us shorthanded MDI multiple daily injections,
(03:47):
and those are the people who are still giving themselves
injections with you know, with a syringe or with an
insulin pen needle. Omnipod five is so much simpler to use,
and it actually produces much better health outcomes, and it's
so discreet, and so we've been growing that part of
the market. If you go look at the penetration, I
just go back to the type one market in the US,
there's about one point seven million people living with type
(04:08):
one diabetes, and type people living with type one diabetes
need insulin every day all the time, so one point
seven million people. That market for technology for pumps is
only about forty percent penetrated. Still, so omnipot five is
so easy to use, it's available in pharmacy channel where
you get your insulin. You know, its outcomes are great.
(04:28):
It's so discreet that we've driven so much growth and
so we've overtaken all the other pumps in the market.
Really actually did that really quickly from a new customer
start point of view, right after launch, and that momentum
in Type one continues. We have a really clear strategy
to continue and extend our lead in Type one in
the US market, and that's gone on this whole time,
(04:50):
just this quarter, and on late August we got FDA
clearance for Type two. And I know you want to
get more into type two, but we've had significant new
customer starts with Type two patients. Actually for quite a
while we had our Omnipon Dash product there. We were
getting off label prescriptions in September right after we got clearance.
So last month we saw a clear lift for people
living with insulin needing insulin requiring type two as well.
(05:13):
And that's a big market for US. That's about three
times the size, so it expands our TAM in the
US by another three x.
Speaker 1 (05:20):
Yeah, and we'll definitely dive into that a little bit
more just with the Type one though. Going back to that,
though you talked about the forty percent penetration, Intuitively, I
would think that as you mentioned, like having a patch
on your arm, you can almost forget about it, or
as forget about it as much as you can when
you're treating diabetes versus having the syringes with you in
(05:41):
your pocket and having to do the manual calculations. What
is it what does it take to get that forty
percent penetration rate to a fifty or sixty percent penetration rate?
And I know, and you know the continuous glucose monitors
side of the business, they always talk about kind of
for that type one patient a penetration rate that could
reach eighty percent in the future. Is that something that
(06:03):
is a goal for you or what is kind of
your near term or medium term goal for kind of
getting penetration rate for that type one patient.
Speaker 2 (06:10):
Yeah, it's a great question, Matt. You know, if I
come back to our CGM partners, you know, we work
very closely with the two leaders in that space who
are dex Com and Abbot as you know, and I
always say, the CGM providers are actually paving road for us.
And because you need a CGM for automated insulin delivery,
and we can come back to you know, the sensors
(06:31):
and our roadmap for sensors and things like that. But
the penetration of CGM in the US in both the
Type one and the Type two space have been really
good for us because it gives people an experience of
wearing a product on body, which is great for Omnipod five,
and it provides that CGM background. There's like a market
there with people using CGM, and so we need the
CGM sensor to be able to dose with omnipod five.
(06:54):
We think penetration can go very high in the Type
one space in the US. So we've said publicly that
we think that penetration is sitting there about forty. We
think it can go into the seventies with you know,
with CGM paving the road in front of us, and
we believe we'll be the player to drive it there
because penetration got into the thirties. With the competing pumps
(07:15):
on the market, which is who we compete with. Those
pumps are tubed pumps. They tend to be larger. You
wear them externally on a belt or you know something
like that. They have tubes. Hence tube pumps. They have
a canula that then leads to a needle set tube
get stuck on a door knob. Kid can't sleep with
it in bed overnight when you prime it. When you
set it up, you have to prime the tube and
bleed an air bubble as a very inconvenient use case.
(07:36):
So omnipot five so much more convenient, available in pharmacy,
connects to leading sensors, and we think penetration can go
very high on the type ones. Yeah.
Speaker 1 (07:45):
I didn't even think about the sleeping just because I mean,
I know I roll around a lot when I sleep.
I mean I haven't rolling around with a tube and
everything that I never connected that together, especially now too,
especially in the summer months, when people are wearing T shirts,
I'm noticing the pod much more then I'm noticing a
pump in the tube in someone's pocket.
Speaker 2 (08:03):
Yeah, which is interesting, right anymore? Right, so you see
you see, you know that you see a lot of
people with some sort of CGM on their arm, and
now you're seeing more and more people with pods on
their arm. And that's because we're driving so much growth.
Speaker 1 (08:14):
Yeah, and so let's let's jump into that the new
market opportunity then with omnipod five for the Type two patients.
I know last year we were talking about how you
were prepping the data for the Secure T two D
pivotal trial. That data came out in June. Why don't
we just start with kind of what were the key
(08:35):
takeaways of that data to support the use of omnipod five.
Speaker 2 (08:39):
Sure, you know, I'll tell you honestly that we could
do a whole podcast on secure T two D. The
trial was just so the outcome of that trial was
so amazing. So the first the main thing just to
say is so Secure T two D was our pivotal
trial with the FDA to get clearance for the space
for insulin using people who live with type two diabetes.
(09:01):
The headline is, you know, we met all the endpoints,
we had great outcomes, and we got clearance. And I'll
just say the data were so good that we actually
got clearance in sixty seven days. It's almost unheard of,
you know, so a five to ten K filing, this
is supposed to be ninety days. They usually run one
hundred and ten or something. Sixty seven days we got
the clearance. So fantastic data. Just the headlines fantastic A
(09:21):
and C improvement at all levels. So the patients in
the study were people living in type two who were
on insulin therapy. Of some sort basil or intensive multiple
daily injection therapy, and they were uncontrolled. They had uncontrolled
A and C. So it went from seven, which is
above guidelines, to up to nine plus everybody got benefit.
So the overall benefit was a point eight A and C,
(09:43):
which is a big material number, but the benefit increased
with the baseline A and C, so people who had
an A and C above nine got a benefit more
than two points of A and C, so really incredible results.
The results were similar for people on basil only insulin
and MDI, which is you know, we had deliberately put
basil only in because we wanted to test that that
(10:04):
part of the market. Everybody uncontrolled benefited from omnipod five therapy,
and then really strikingly, whether or not the patient were
on GLP one therapy, they benefited almost identical benefit, no
statistically different benefits between the GLP one arm or the
GP one participants and the people who were not on
(10:25):
a GLP one, which had been a big controversy at
this time last year.
Speaker 1 (10:28):
That's another thing that we could talk about, yeah for hours,
and yeah, actually let's just go with that GLP one
because that's interesting. So what was the theory or because
you know, there was always the the pro GLP camp
was saying that you don't need to have insulin if
you're taking these glp ones. So what was the thesis
for that for the GLP one cohort? Was it that
(10:50):
there wasn't going to be as much of an improvement
because they had already seen improvement with glps.
Speaker 2 (10:54):
Well we had, so we've said all along, So the
GLP ones you and I were talking prew about this, right,
So GLP one therapy in the most modern class or
GLP one is you know, the class that's been introduced
over the last couple of the last few years, have
been prescribed in type two diabetes since twenty seventeen, and
so we've had a lot of experience in that space.
(11:15):
And so last year when it was when the wave
of GLP one's kind of hit Wall Street, what we
said all along was glp ones are great drugs, and
we think that we think golp ones are great drugs.
They help people, they control they improve glyceman control, but
they don't cure type two diabetes, and people continue to
progress type two diabetes as a decaytal you know, sort
of fifteen twenty year progression of disease for people, and
(11:38):
GLP one's slow that progression, but they don't cure type
two diabetes. They don't fix the pancreas, and that's the
real root issue. So people tend to still progress to
needing insulin therapy and so so last year at this time,
we were out telling people this doesn't impact our business
opportunity because it doesn't cure the disease. And since then
we've done a lot of work. We've looked at healthy
(11:59):
con you know data, we looked at claims data, and
then of course the big thing is the secure T
two D data. We had seen in our own you know,
sort of a pre trial that we did about a
year and a half two years before secure T TWOD
that the people using golp ones and the people not
using glp ones both benefited from omnipod five. So we
also knew it then from a feasibility trial, but now
(12:22):
we've been able to document that, so I think it's
really clear. We still think golp ones are great drugs.
They benefit people in type two and in other ways.
Obviously they've taken off broadly, but we know that if
you're on a GOLP one, you'll benefit from omnipod five
if your A one C is uncontrolled. And we also know,
interestingly from the claims data, really large data set shows
(12:44):
that people who initiate GLP ones are actually more likely
to initiate insulin therapy in the next twelve months, and
if they drop off of GLP ones, they're even more
likely to initiate insulin therapy. So last year this time,
everybody thought it would be a headwind for us. It's
actually probably a tailwind. But pushing aside the business side
of it, yeah, we know that they help patients, but
(13:06):
the only delay progression, and then once people are on
GLP ones and their disease progresses and their anecson control,
they will benefit from homnipot five therapy. We've just demonstrated
that really clearly.
Speaker 1 (13:17):
Yeah, And I think what you're just showing that clearly
too is that if they just were on insulin, it's
the same benefit, that's right. Yeah, And so for our listeners,
when we were chatting before this recording, I mentioned to
Jim that I did a search of the number of
times GLPS was mentioned in this most recent third quarter
twenty twenty four Ernie's call versus the third quarter last year,
(13:39):
and it was mentioned thirteen times in third quarter twenty
twenty three and only two times in this recent quarter.
And the only reason it was mentioned two times was because.
Speaker 2 (13:50):
You because I mentioned it twice, right. I think I
mentioned in the context of secure TTD because the study
results are just so striking.
Speaker 1 (13:57):
But it just shows you what a difference a year
can make, as you know, people, you know, the dust
settles and people can see how the business model actually
is really impacted or not impacted at all.
Speaker 2 (14:06):
Exactly here we are, yeah, and you know it's worth
it's also worth pointing out that we continue to have
growth in type two. So we were we our previous
generation of product, which is omnipoon Dash, had the label
for type two, and it had when we've had a
lot of growth for you know, we call our users potters.
We'd had a lot of growth with Potters with omnipon Dash.
When Omnipod five came to market, a lot of our
(14:27):
prescribing physicians started to use it off label. We weren't
promoting it, but they were using it off label in
the type two space. And so you know, about a
quarter over that span since Omnipod five about it, twenty
to twenty five percent of our starts have been in
type two diabetes with those two combined products. We just
got clearance in August, and in September we had a
noticeable lift just the last month of the quarter because
(14:48):
we could now, you know, sort of take that one
arm that had been tied behind our reps backs and
go off and promote. Right, So we untied that arm,
and and so you could you could already see it.
There's a huge need. There's so many people with type
two struggling with their control and Omnipod five is going
to be great for them.
Speaker 1 (15:05):
Yeah, and actually, let me before we go into the
commercial strategy around launching omnipod five for the type two patients.
I'm curious you mentioned sixty seven days from day of
submission for FDA approval, which you're right, it's much faster
than ninety days. And it was also much faster than
kind of the last four and a half years for
diabetic products, because COVID related testing products was approved by
(15:31):
the same division right that was doing diabetic products. One,
the data was very compelling, that's one of the factors.
But is there were there other factors involved too. Was
there a larger division still that was trying to do
COVID and diabetics that now can focus on diabetics, or
and also was there kind of conversations that you were
(15:53):
having with the FDA ahead of time to help streamline
the process. It was a kind of a combination of
all three.
Speaker 2 (15:58):
It was a couple of things. I should say. I
want to get credit to the FDA because the division
of the FDA that deals with both diabetes technology and
with you know, the COVID tests, right, is called o
HT seven. And you can imagine they were so we
talked about this last year. They were so backlog during
COVID because they were they were working on all these
submitted home tests for COVID, right, so they created a backlog.
They've really done a great job of getting back to
(16:20):
where they're caught up. So that's the first thing I'll say,
just kudos to the FDA moving so fast through COVID
and now you know, as they're moving. But there's a
couple of things that that were a little different about
maybe maybe a little different about this submission for OMNIPOD five.
The first was we had been able to go into
the FDA with real world evidence and this is this
could I could end up being long winded on this,
I'll do it short. Every Omnipod five user is cloud connected, okay,
(16:43):
and so that means we get actual usage data. And
so we've been able to do a pre sub with
the FDA that demonstrated and basically said this is what
we think we're going to see in the study. So
we had a feasibility trial that was like an external
trial that we'd set up. We were able to share
some of our reilroad evidence with them and say this
is this is you know, and get approval on the
protocol and say this is what we expect. And so
so there was a way in which the nature of
(17:06):
the technical nature of Omnipod five helped us with the
pre sub and I think it probably ended up giving
I'm not going to speak for them and they're not
going to they're probably not going to say right, but
I think it probably gave them some more confidence in
the submission. And it just shows why omnipod fives data
connection and cloud capability is so important and it will
speed up other parts of our business as well. And
so so the pre sub with that, but then the
(17:27):
data we're so clean. I mean, this is you know,
I've been in and around biotech and medtech for I
don't know twenty some years. When our team presented the
results of secure T twod to me, right, I'm on
like a zoom call to the slides, and you know,
we got like I don't know, twenty seven slides into
the study, and every slide was a good news page
like everything. We saw this and then we saw this,
(17:49):
and so I actually stopped the team and said, wait, okay,
what's the bad news because I've never seen I've never
seen a clinical trial go through where there wasn't some
shoe that dropped where you were like, oh no, that
we didn't get this there or but yeah, right, honestly,
there's nothing like that in this trial. I mean, it's
just it's I've never seen a trial like it, and
I think that, you know, I mean, I can't speak
(18:10):
for the FDA, but I think the investigator saw that
and it was the same thing there, you know, no
adverse events, you know, really key findings for type two
like one of the things that's a huge barrier to
writing insulin in the type two space is docs are
worried about hypoglycemia, right, and that's been a strength for
the omnipod five algorithm the whole time. We have very
low hypoglycemia with our automatic dosing, and hypoglycemia is what
(18:33):
tends to send you into the R right, So so
we've written the algorithm to be very protective in that
way a while still driving great time and range and
great overall results. We saw the benefit and Omnipod five
so no increased hypoglycemia. So it removes that worry. And
the other thing that stops docks from a clinical point
of view writing is they're just not sure how to dose,
you know, So if you're going to initiate a write
(18:55):
a script and initiate a type two patient on insulin therapy,
it's hard to gauge that initial dose for patients. Our
algorithm moves with the patient, right, and so it removes
all the complexity of trying to choose a starting dose
for docs. So we saw those things in the study.
We saw minimal weight gain in the study, you know,
(19:15):
which is another big worry about you know, if I
put them on insulin, they'll end up very minimal weight
gain in the studies. So it was just such a
clean result and so obviously beneficial to people who were
struggling to control their glycemia.
Speaker 1 (19:30):
Yeah, and I mean all those things just yeah, the
data just keeps piling up and piling up. Well. Caught
my attention though, when you were discussing the real world
data is the on cloud connectivity with the omnipod to
the central cloud database, because I remember you were talking
about this last year, and I remember you were talking
(19:50):
about how your career path was from res MED and
we just had Mike from RESMD on for a r
episode and he was talking about the on cloud connectivity
for their sleep apnea treatment and it's you know, you
made the comment that it carried you know, this is
just a skill set or you know, a knowledge base
(20:11):
that you carried over from there to insul it. And
now it's just it sounds like it's materializing into something
that is actually you know that can benefit or speed
up product approvals and things like that. And I'm assuming
also improves the algorithm to you know, you know, tweak
it here or there for things that you see. Have
(20:32):
you seen it come to full fruition yet or do
you see more coming from it.
Speaker 2 (20:35):
Oh, there's much more coming. I mean, it's coming to
fruition now. And we're doing a lot of things that
I can talk about. We're doing some things I don't
want to talk about for competitive reasons, Matt. But but
let me just tell you a couple of things. Well,
let's start with the concept. So basically, we have all
this data, right so, and what's powerful about it is
every user that uses omnipot five is connected, as I said,
(20:56):
and so we take that data and we can see
into all the corners of usage. So if you think
about it, a patient who might you know, have an
app from another pomp might upload the data into the cloud.
And but a patient that takes that step is we know,
just in practice but also kind of by definition, they're
very engaged, right, so they're really managing, so they're willing
to upload the data whatever or their physician is demanding.
(21:18):
They download the data in the office. That for us,
every patient sends their data into the cloud. That means
we get to see the very engaged patients. It means
we get to see the very non engaged patients. And
it means we get to see all the data and
we unlike seatpeps SEAPEP. It was a revolution when when
we launched that at RESMET. I mean it changed the
market completely and it changed the patient experience a lot
in the healthcare provider experience. And we can see the
(21:40):
same thing here. But the difference is we've got data
twenty four to seven from on diabetes where SEAPEP you
might have six or seven or eight hours a night. Right,
So we can see into the corners of usaid. Now
what are we going to do with that? Right? So
it's a fantastic it's a data asset for us. We're
very careful with the data. You know, it's we deidentify it,
we keep it very safe and secure. We're obsessed with
at to privacy and security right people opt in right,
(22:02):
and so we're very diligent on that front. We've got
all this data from all our users. It's a huge
data asset and it's unique. Nobody else in the industry
has that kind of all into the edges view of
their users. So what are we to do that Already
we're using it to improve the patient experience. We have
algorithm programs running, their advanced algorithm programs that are based
(22:25):
on what we call in silica simulation, so we can
with data sciences, we can take all that data and
we could say what if we tweak the algorithm to
do this instead of that, and then you run it
through a huge computer model, say what would have been
the outcome for time and range and for hypoglycemia and
things like that. Both of our advanced algorithms have leveraged
that big data. The other thing we can do is
(22:46):
we can what they would call instrument the patient journey
in the cloud, so we can see where patients stay
on where patients drop off, and we can develop both
in our customer platform cloud based customer platform a much
more seamless patient experience, and we can start to launch
data products where we're using machine learning to do personalized coaching.
And the goal here is to personalize care. The goal
(23:08):
is to remove as many difficult steps for the patient
and for the physician and practice as we can so
streamline the whole flow, but also use tools to keep
people on therapy. And so you know, we have very
high retention on therapy, but if we can drive it
even higher, people have better outcomes. It's better for them,
better for the doc, and better for our business as well,
(23:29):
so we put the patient experience in the center, we
make it more seamless, we personalize it, we'll be able
to use machine learning for patient coaching. We'll constantly be
able to improve the algorithm and the product. It also
meets the needs of other stakeholders. So if you have
a patient who's on therapy and easy to manage in
the cloud, its streamlines a workflows for a practice. And
if you have a patient that's getting on therapy and
(23:50):
getting great outcomes and it is very satisfied, payers love
that too. So it's a big self reinforcing cycle with
all the data and we're taking steps already. We've got
other stuff up. Our sleep is coming.
Speaker 1 (24:00):
Yeah, And I think that's going to be important because
you know, you talk about patient streamlining for doctors, and
I think that's going to be important for your commercial
strategy for the type two patients. So let's dive into
that a little bit more. Because the type two patient
or the you know, the person with type two diabetes
is not going to an endocrinologist first, right, They may
(24:22):
be going just to the primary care physicians. So how
does that dynamic shift the commercial strategy for those patients
with type two diabetes versus the type one diabetes.
Speaker 2 (24:35):
Great question. So so data products will be material and
our material for both people living with type one and
type two. But you can picture a world where you
have different patient journeys and different solutions for those patients.
When you think about our current call point, you're right.
So it's the you know, our core business has been
type one. We're getting into type two. We call on
(24:57):
it largely on endocrinology practices all over the country. And
you know, most Type one patients, but not all, but
most Type one patients are in the ENDO channel, and
then a minority of Type two patients who are intensive
insulin users or in the ENDO channel tends to tilt
more towards the intensive therapy as opposed to the basel therapy.
(25:17):
And as we expand in type two, what we're doing
is we're expanding our sales force to reach down into
the next layer of practices that aren't necessarily under chronology practices.
But they look a bit like ENDO practice, isn't. We
call them high prescribing PCPs, And so what does it
mean to be high prescribing? It means they're writing a
lot of rapid acting insulin and or they're writing a
(25:38):
lot of cgms, so we know from the data that
they're treating people with diabetes. And as you go down there,
you get a different mix, you get a little bit
less type one, but there's still a lot of type
one patients down there. You still have a lot of
intensive insulin therapy using type twos, and you have a
lot of basil only type twos, and so we're expanding
our reach down into that. We've actually been expanding in
(26:00):
our salesforce all year in twenty twenty four during the year,
and we announced that we'll be expanding it, you know
four into twenty twenty five, will fill those rolls and
get down to that larger part of the practice. So
right now, in our current call point, we think we
reach about just take the type two intensive insulin therapy,
we think we reach about thirty percent of those patients
and our current call point, and with our expansion, we're
(26:21):
going to add at least ten so we'll get probably
north of forty percent of those patients we'll reach and
as we get down there, they'll have all the same
benefits of OMNIPOT five. It's you know, it's great, it's
a you know, wearable, discreete disposable available in pharmacy, pay
as you go economics really important for all those patients.
But we think especially in type two and they'll have
all the ability to run their insulin therapy off of
(26:43):
their off of their smartphone. Right, so we provide a smartphone.
We've just launched we haven't talked about this yet, mat
but we've just launched our our iPhone app, the Coos app,
and that's a fantastic app, and so you know, so
it just simplifies this. That's a data product in and
of itself. It is the iPhone app. And then we'll
launch more more data products into those practices. Already, with
(27:04):
omnipot five, you can you can log in and see
your patient in the cloud, see what they're doing. You
don't have to have them come into the office. That'll
be way more important in PCP land than it is.
I mean, it's important for endos. Endos are great time constrained,
but the further you go down into PCP, the more
the more time constrained they are, and so the ability
to remote monitor your patients see the results in cloud
to be very important.
Speaker 1 (27:25):
And so I actually I'm curious because you know, you
talked about the the PCPs who prescribe a lot of
fast action insulin. How do they keep track of the
patients throughout? Is it just simply every six months, every
three months, the patient comes in and they get their
bread and then they that's how they measure their A
(27:46):
one C with them, and that's how they track it.
Speaker 2 (27:47):
That's right, That's exactly it. So it's you know, and
if the patient comes in, right, so they want to
see them every ninety days, every two months, every every
half you know of the year, every six months, and
they'll come in and do a blood a blood drawer
or some you know, or a fingerprick to see what
their A one C is. And you know, and by
the way, it's a market that's almost completely unpenetrated by technology.
(28:08):
So we talked about the type one space where it's
forty percent penetrated right now in the type two if
you take the two sides of it, so you've got
the intensive insulin usings people that look like type ones
in their practice because they're doing multiple injections, that part
of the type two patient space is probably less than
five call it five five percent penetrated. Almost all those
patients are on an omnipod product now, right, So and
(28:31):
then the that's five percent of that part of the market,
which is about two and a half million people in
the US. So that market already is significantly larger than
the US Type one market. It's one point seven two
point five. Type two is five percent penetrate. The people
on basil only therapy who are secure data shows, secure
TTV shows benefit from omnipod five effectively zero percent penetrated.
(28:55):
And that's because PCPs don't think about pomps. That's one
of the things we found over the last year is
when we walk into one of those practices and we
say we're here to talk about automated insulin delivery through
our pump, right, they say, wow, we don't do pumps
here because they're picturing the big thing. You're wearing your
belt with the tubes and the ten hours to start
up training and all this stuff, and they know they
can't manage that in their practice. And then when they
see omnipod, the light bulb goes on and they say, wait,
(29:19):
that's that's an insulin pump. And so then they get
very interested. And so that's you know, we know that
we can develop that market and we aim to really
grow it.
Speaker 1 (29:27):
Yeah and so, yeah, and it's interesting that you're talking
about the physicians who are new to the form factor
of omnipod five and just versus kind of traditional insulin pumps.
But I know there's other companies out there that are
kind of developing their own version of on the body where.
So I'm curious what your thoughts are about the market
(29:50):
overall and the specifically for on the body where. And
then I know that you know everything for all medtech companies,
pat and protection is very important. Your thoughts on your
potential note around your development.
Speaker 2 (30:03):
Sure, well, let's let's take the you know, the competitive
landscape first and we'll come back to ip On the
competitive landscape, there's you can imagine, we watched this very closely.
There is nothing on the market and there's nothing in
anybody's pipeline that looks anything like omnipod five. You know,
we've we've proven the case for wearable disposable patch pump.
(30:25):
I think there were people that thought we wouldn't be
able to do it with a I D. Now we've
proven the case. We've you know, we're clearly number one
in the US. We're clearly number one actually in Europe
now in our markets, not you know, in the fore markets.
We've we've launched Omnipod five. But so everybody's chasing there's
nothing that looks like it. First second, there's a lot
(30:46):
of work to be done to get there. And so
you know, we've we've been manufacturing wearable disposable patch pump
form factor for you know, a couple of decades, very
difficult to get. The volumes are out. We make tens
of millions of pods a year in our three factories.
You know, they're high quality, you know, safety critical pods.
(31:08):
And to get to that point, we've invested, I mean,
you put around number on it. We've probably invested a
billion dollars to get probably more actually, but we've invested,
call it a billion dollars. So, you know, it's the
there's so many moats around it. There's the design mode,
the design for manufacturer, there's there's the manufacturing scale safety,
(31:28):
there's the supply chain that goes with that. You know,
so there's there's more than seventy parts in an omnipod.
Think about the number of components. We've were making tens
of millions of pods, how many tens and tens of
millions of components that have to all be in a
supply chain, have to all be precise, you know. So
one of the things that people I think underestimate or
you know, underappreciate is how hard it will be. So
(31:50):
it's it's way more than having a design and a
prototype get to that volume, right, it's years of development,
and so we have very good motes that way. We've
obviously got the mote of all bays, we've got the
moat of our commercial excellence, you know, and then we'll
have data as a next mode. So there's a lot
of reasons to believe we're going to continue our lead,
and a lot of reasons to think that there's more
(32:12):
work to be done for anybody trying to chase than
they appreciate. That's the first thing if I go to
intellectual property side of that, because that's another moat. We
have a really strong body of intellectual property. We're almost
unencumbered as all our IP right and so you know,
we don't pay royalties to anybody's all our IP and
we also have really deep trade secrets associated with those
(32:33):
moats around you know, manufacturer designed for manufacturer precision and
manufacturing and so on. And you know, so we feel
very strongly that we've got a great body of IP
that we can protect. And you know, we've shown that
we will appropriately and aggressively defend both our patents and
our trade secrets, and so we feel pretty confident. I mean, look,
(32:54):
there are plenty of clever people and engineers and so
on out there, and we're productively paranoid, I think is
an hill saying, right, But we feel very confident in
our competitive position.
Speaker 1 (33:05):
Yeah. And you know, one of the other things too
you just talked about is your place in just the
four international markets, because I know that international or outside
the US sales is very important growth driverphy as well.
In fact, I think your twenty twenty four guidance has
higher growth in the international market than the US market.
Speaker 2 (33:26):
That's right.
Speaker 1 (33:28):
First of all, what four markets are you in currently?
And then kind of how how do you see the
expansion both within those four countries and then moving into
new European countries and then beyond Europe. How does that
how do you see that strategy playing out over the
next two three years.
Speaker 2 (33:45):
Sure, we're in We're actually in We've got Omnipod five
and four markets, right, so we're actually we're in we're
in twenty five total markets of twenty four markets outside
the US, and we've been competing with omnipot Dash and
those and with our classic model in those mores and
have done very well. Dash continues to actually perform really
well in those markets, but Omnipod five changes the game
(34:06):
everywhere we take. It's Omnipod five wins everywhere goes. And
so we launched Omnipod five in the UK last June
and twenty three June of twenty three, we launched it
in August at twenty three in Germany. Both of those
markets have performed incredibly well. You know, Omnipod five took
off in both of those markets. We've just launched in
the Netherlands and in France this year. They're both ramping.
(34:28):
So we launched and then we continue to negotiate, you know,
sort of a market access play, you negotiate with your
with distributors, and so the Netherlands and France are both
ramping nicely and we're really confident in the second half
of this year. The growth that we see in the
fourth quarter this year, the growth will see there, and
then because of our crean revenue model, we'll see that
revenue in twenty five, you know, kind of a you know,
(34:50):
get to full run rate, but it'll keep growing too.
We're driving tremendous new customer starts with omnipod five, so
it's a great play for us to continue ramping growth
in all four of those markets. But then we've and
auns we'll take it to ten more markets in twenty
five and so, and I'm going to try to do
these by memory to see if I get it right.
We're going to do throughout twenty five, and we'll do
(35:11):
five of them in early twenty five. So we'll do
the four Nordics in Italy in early twenty five. So
that's five. So we had Switzerland and Belgium. We've got
Australia and Canada in Israel coming in twenty five, and
so we'll take omnipod five to those markets where we're
already competing with Dash and we anticipate great ramp and
great reception for omnipod five and all of those markets,
(35:32):
and then we'll continue rolling it to We'll take Omnipod
five to every market we're in, and we'll also start
to enter new markets over the course of you know,
you'll see us do that on a pretty thoughtful basis
over the next couple of years as well.
Speaker 1 (35:45):
Okay, and then, actually it's an interesting segue because you know,
one of the things you're talking about, you know, your
round number, you said about billion dollars has been invested
in these manufacturing plants. Your newest plant is in Malaysia,
which kind of I feel like I'm picturing it as
coinciding with this international expansion. Correct me if I'm wrong,
(36:06):
But how has that launch? How's the opening of that
plant change maybe the expansion, the capacity expansion for international
markets as well as for your profitability as well.
Speaker 2 (36:19):
Yeah, Malaysia's fantastic because a great site. We opened it
in the summer and I had the opportunity to go
up for the official ribbon. It was running, you know,
we had kicked it off and it was it was
producing positive before I was able to get out there.
But we had this just amazing opening ceremony for a
Malaysia plant. And I'll tell you what, the local the
local team there's amazing. We had dignitaries, we had the
(36:40):
US ambassador, you know, to Malaysia at our opening was wonderful.
Four hundred thousand square feet be a really efficient plant.
So we have three factories we have. We manufactured in China,
we manufacturing and right here, very proud to manufacturing in
the United States, right here in Massachusetts at our headquarters
in Acton. And then we've just opened Malaysia. Ma Lasia
opens up a lot of capacity for us, and it
(37:02):
gives us a lot of flexibility. So, you know, we've
opened the site. We have we have some lines running,
but we have room for more manufacturing lines, and so
that'll be a flexible capacity site for us. And we're
actually we're growing so fast we're actually already thinking about
plant for right So so we have a tremendous capacity
now and tremendous flexibility and the ability to build more
(37:23):
capacity over time to serve those tens of millions of
pods and you know, the hundreds of thousands of potters
we have on a cost on the cost basis, every
time we've opened a factory, we've learned more and so
and each factory benefits from the other factories. It's been
very interesting. So when we open Acting you know, very
highly automated, really fast, and it's almost like you know,
if you like, as a kid, if you had a trainset,
(37:44):
you would love to come and see the act in
factory because it's just so it's just remarkable with a
lot a lot of robotics, you know, a lot of precision.
And from that factory, from the acting plant, as we
improved it, we learned a lot for our China plant.
So then we improved the China plant even further and
the China plant became very very efficient. And then in
launching in Malaysia, we've learned more still and so the
(38:07):
Malaysia factory will be a creative to gross margin within
its first twelve months of use and and then and
then a creative still over that time. So we've done
a great job, or tell you what, our operations team
does a great job of continue to improve the operations
of all of our factories and it's been a big
gross margin benefit for us. And we'll continue to drive
(38:27):
our our cogs down as we go.
Speaker 1 (38:29):
Yeah, and that's always because that that allows you to
invest in the you know, you're talking about expanding your
sales for so investments rest and a and also investing
in R and D. Maybe we'll round out the episode
with just kind of R and D and development in
the future. I mean, one of the things you kind
of just quickly talked about was the iOS app. So
let's jump into that first because it's funny because I
(38:51):
feel like ninety percent of the people have iPhones. Yeah
and so, but you started with an Android app? What
was what was the ration now for starting with the
Android app? And then for the people who have iPhones,
what was what did they have when they they couldn't
have an app? Obviously?
Speaker 2 (39:08):
Yeah, yeah, So so the Android, the Android platform, this
is a pre dates almost the entire probably the whole
management team. That may not be quite right, but you
know so, but Android was deemed an easier platform to
develop on as we were early in our history, and
I think that's w It's more of a kind of
a it's a little bit easier to develop on than
you know. So you yeah, So we developed the original
(39:29):
whole platform on Android. And when I say the whole platform,
I mean all of the all of the controller technology,
and so we've been through different versions of controllers. The
original Dash product was the first time we did all
of the control on what's effectively a smartphone, but it
was it was not a download from the app store app.
It was a lockdown cell phone that had an Android.
Speaker 1 (39:51):
Based Okay, so you already had that, was po right.
Speaker 2 (39:54):
So we had the we had the Android code base,
and then because we had done that, it it was
it was just an easy next step to start launching
the Android phone app. So you can get we cover
I shouldn't know the number off the top of my head,
you know, twenty plus handsets, twenty plus Android handsets, and
from the Android app stores you can download our you know,
sort of an app for your Android phone. But to
(40:16):
your point, the iPhone has been you know, just give
me an iPhone app. It's the most requested feature that
we've had. But it was totally new code for us.
So you can imagine the big development for us to
write an entirely new code base. And there's a bunch
of technical stuff that we wanted to do with the
codebase as we did it, so we'll make it more modular,
more modern, you know that kind of thing. So it
(40:37):
took us took us some time to get the iPhone
app written. We did the LMR in the middle of
the year, so limited market release serve of the acronym
in the middle of the year. The limited market release
went great, and just on October twenty ninth, we announced
that we've launched the iOS app with G six. I'll
come back to that, launched it with G six. Within
hours of being in the app store, we jumped to
(40:58):
the number one app in the in the Apple App Store, right,
so tens of thousands of downloads. It's a fantastic app.
It's actually there's some features in it that go beyond
what's in the controller. Right. So, so you ask the question,
what do people get if they have an iPhone. In
our starter kits, we provide that lockdown cell phone controller app,
(41:19):
so you have you know, you've been provided a kind
of a lockdown phone and only is the controller. We
call it the Personal Diabetes Manager of the pdium. So
you get that starter kit. One of the reasons people
want the phone app is so they don't have to
carry around the controller. They want to get down to
one phone. They want to live in their phone, right,
and and that's especially generational, but it's true for everybody.
So now with the iPhone app, you have full control.
You actually have a couple of cool features that are
(41:41):
not in our controller. So you can see your you
can see your your glucose number on the on the
front screen. And it's got a custom foods feature so
you can sort of say, you know, this morning, I'm
every morning, I tend to have a bagel and a coffee,
and you can just load that in rather than worry
about counting the carbs every time if you're going to
give yourself a ball. Is incredibly well received app, and
(42:02):
it's just the first drop, so it's compatible G six.
We'll bring G seven onto it in the first half
of twenty five, working hard on that. Want to do
it as fast as we can, and then we'll the
iPhone app will be compatible with sensors as we go,
you know, as we expand the Omnipid platform.
Speaker 1 (42:18):
Yeah, that's interesting. We'll go into the sensors in a bit.
But it's very interesting to talk about a bagel as
the custom food that you would put in on a
morning basis because the number of Vender chronologists I've talked
to in the past and they talk about, you know,
the difference between a candy bar and a bagel, and
it was the bagel the bagelkyrock.
Speaker 2 (42:33):
But that's true for me. So when I were a CGM,
you know, it's and it's everybody's a little bit different.
But I would say I shouldn't used a bagel. I
should have said. What I should have said was scrambled
eggs and coffee, right, because you want to start with protein. Yeah, right,
And I don't live with diabetes. But but I've actually
learned a lot just from wearing, you know, a CGM
to see how my body reacts. And it's true, you know,
(42:53):
the starchy foods, they're certainly not good for Jim. I'll
tell you that.
Speaker 1 (42:57):
So yeah, oh yeah no. But it's like I said,
it's not the first time I heard the bagels being
the one that skyrockets it. So you talked about the
iOS for G six, and this is where you know
it comes maybe a little more complex because you know,
you're you're integrating the Omnipod dash, you're integrating the Omnipod
(43:18):
five with these various c gms from Abbot and dex
common Are. There is there a third CGM that you've
made either well.
Speaker 2 (43:26):
So, so when we launched so Are, our goal is
to give our our customers are potters sensory choice. Okay,
whatever sensor you know you'd like to use. But you know,
they're really four leading sensors on the market, and the's
two from Abbot and two from dex Common. Right, so
it's dex comes G six and G seven, and it's
(43:47):
Abbot's Libre Freestyle two and Libre Freestyle three. And they've
now put a put a monoicer on that with plus.
So the two plus is intended for connecting the pumps
and the three plus is intended for connecting to pumps.
And when we launched in twenty two, I always say
it was our minimum viable product because it was the omnipod,
the great omnipodform factor with our first algorithm, which is
(44:10):
a great algorithm, was our first algorithm with Android code base,
and with one sensor, the G six versus a great
sensor obviously, so that's our you know, if you think
about that as the platform, we want to expand that
platform and give tons of choice. And so this year
we launched with G seven in the middle of the years.
So now if you're in the US, you can have
G six or G seven. We've been asked we'll bring
our integration for Libra two plus to the US by
(44:32):
the end of the year, so how you can use
libray if you want to. And we've also obviously just
launched the iOS app. We're just talking about the Apple
Phone apps. So now in the US we've got by
the end of the year have three sensors and you
have iOS just on G six if you want to
stay in G six and then we'll roll out you know,
we'll continue to expand that in Europe. We launched with
(44:54):
G six in the UK and Germany, and then we
took the libr two integration into the UK and into
the Netherlands. When we launched the Netherlands, that was a
sensor of choice launch, so you can choose in the
drop down menu, you can choose a G six or
a Libre two plus. Lib two plus is lib two
form factor and censor is very very widely adopted in Europe.
(45:15):
So that's you know, there's a there's a pond to
fish in there. For us, there's a market to fish
in with Leebra two. So we have that integration in
the UK in France around the G six, but we'll
be we have to do a regulatory filing to get
Libre too, so we'll be doing that soon. And then
we've announced we'll bring and we'll continue to roll out
Libra to the solution with G six and Libra two
across our European markets, and we'll bring G seven in
(45:36):
the first half of the year to our European markets
as well, and then we're working on Libre three. So
that's the next that's the next cab off the rank.
Speaker 1 (45:42):
And so kind of because what's the interesting thing is
that most of these cgms, and maybe Abbott two plus
is not an ic GM technically yet.
Speaker 2 (45:50):
No, it is. It is. Oh yeah, so the plus
is are icgms. Okay, okay, that's right.
Speaker 1 (45:53):
And so basically but so but it sounds like there's
still a little bit of a follow up time between
when they're because you know, the FDA was talking about, oh,
any ic GM can work with any aid pump. That's right,
But it sounds like there's a little bit of a
follow up time to kind of really get them integrated.
So what's kind of the behind the scenes there to
(46:14):
kind of get from the approval to actually to that.
Speaker 2 (46:17):
Why can't you just throw a switch? Right? Yeah, So
it's a great question. So this is again we could
go way in the weeds here, and plus I'm not
an engineer, so I'll get out of my depthquigive, but
I'll just tell you a couple of things. One, the
FDA is I think very forward thinking and making the
ICGM regulatory categorization, so that says if the CGM meets
certain specs, it can be used with AID systems, and
(46:38):
the AID system has to meet certain specs. But the
challenge technically is that all four of those sensors have
a different communication protocol, they have different radio chips, they
have different data encryption, right, so there's still an engineering
effort with each of each of those four. So the
two dex Come sensors and the and the two Lebas sensors.
There's another technical challenge for us, which is our our
(47:00):
system is unique and that the pod remains autonomous, but
it has to be able to be in sync with
both your controller and the CGM. So if you leave
your controller at home with the pod POD's still running,
the algoes in the pod, right, It's not in the phone,
it's not in the cloud. The ages in the pod.
But then when they all get back together, they all
have to recognize each other and they have to be
in the same scores and all that stuff. So there's
(47:21):
a there's a there's an extra engineering task for us,
which is you know, it's not trivial, it's complicated sometimes.
And then in Europe the regulatory is different because you
have to do a ce mark for the systems and
then you have to demonstrate with evidence that you know,
every integration delivers as an AID system. So that's that's
why it's a little bit slowering your up for everybody.
Speaker 1 (47:42):
Yeah, and you know, why don't we take off our
engineering head and we'll put on the CEO. Had to
close out.
Speaker 2 (47:48):
Here, everybody, everybody on my team will be relieved.
Speaker 1 (47:51):
Yeah, yeah, but it's you know, it's I never want
to say the what's next, but you know when there's
the CEO and with you know, as you say, there's
clever engineers out there creating new devices. We talked about
with Intel and you know Andrew Growth with the Paranoia
Survival book he wrote, which I guess you know that
(48:14):
could be another conversation about Intel today versus back then.
But how do you see guiding insult in the next
three to five years to be able to have that
competitive advantage. Still, what what do you see as you
can improve on and you know what are kind of
your your goalposts that you're seeing.
Speaker 2 (48:32):
Yeah, we're going to continue to drive around what the
patient needs. Right, our whole mission in life is to
is to simplify the lives of people living with diabetes,
and so working from what the patient needs back will
continue to drive massive innovation. And then I'll talk a
little bit about commercial. But from an innovation point of view,
we want the simplest possible war experience. We want the
(48:55):
simplest possible pod, we want the widest choice of sensor experiences,
we want the easiest possible use with apps. We want
to provide personalized care through data products, and we want
to simplify all of that for the physician. So we
have a very clear lead on all of those fronts
and we're going to extend that lead by driving innovation.
(49:16):
And you know, our financial results help us with that,
Matt as you know. So you know we've gone from
three years ago not producing profit, not producing free cash flow.
We're guiding this year to fourteen point five percent operating income,
which is a huge lift, and we generate a lot
of free cash flow, and so we can fund all
(49:36):
that development and we can continue to outrun our competitors
on the innovation side. On the commercial side, we have
huge modes in access already, right, So pharmacy channel is
a huge thing for us, and it's a huge thing
for our customers. We're very well established there. Pick up
your pods or we pick up the pharmacy. We'll continue
to extend our reach in the US down into all
of those patients that are living in the high writing
(49:58):
PCP practices and so that we can extend and the
benefits of Honion Pod five to them. And then we'll
expand internationally. We'll take Omnipod five and all of our
markets and we'll start to get into new markets and
new geographies. And so my vision is that we're just
gonna We're going to continue to outrun there. We're not
complacent because the needs are not met, right, So patients
need simplicity. We're going to drive simplicity. We're going to
(50:20):
continue to drive simplicity, and from a competitive point of view,
we're just going to keep out running everybody.
Speaker 1 (50:25):
Well, I think that's a great place to end this conversation.
I look forward to our next felve month check up
and see how the business is doing.
Speaker 2 (50:34):
But no, So Matt, I just want to say this
is it's Diabetes Week, and I think you're going to
post this. We're doing this, we're doing this early in
the week, but I think you're going to post this
interview on Diabetes Day, okay, so that we're in town
for that, you know, So you know we're ringing the
bell this week, and so I just want to say,
there's so many people living diabetes. The awareness of it
(50:54):
is continues to be low, the awareness of technology solutions
are low. For anybody out there living with diabetes or
has a level one living diabet you're not alone and
there are a lot of people here to help, including insulin.
Speaker 1 (51:04):
That's great to hear. Well, Jim, thanks for joining us today.
I appreciate it.
Speaker 2 (51:07):
Matt, thank you very much.
Speaker 1 (51:08):
And thank you to our listeners for tuning in today.
We hope you join us for future episodes, and if
you'd like to stay up to date, you can click
the subscribe button on Spotify or your favorite streaming platform.
Take care
Host
Jonathan Palmer
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Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!