April 3, 2025 • 41 mins
“Ease of use is what drives adoption,” Tandem Diabetes CEO John Sheridan explains to Bloomberg Intelligence about what can fuel further insulin-pump penetration. In this episode of Vanguards of Health Care, Sheridan sits down with BI analyst Matt Henriksson for an in-depth interview about Tandem’s Mobi pump, designed for discretion and simplicity, and the AI-powered Control-IQ Plus algorithm, now approved for both type 1 and type 2 diabetes. The conversation also touches on the company’s international market strategy, value-based reimbursement and future product development, including the tubeless Sigi.
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Episode Transcript
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Speaker 1 (00:20):
Welcome to another 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. We are pleased to have with us
today John Sheridan, CEO of Tandem Diabetes, a medical device
company that is a key leader in expansion of automated
(00:40):
insulin delivery systems or AIDS for short. These next generations
of insulin pumps can help diabetic patients track their glucose
levels and maintain a healthy level. You can dive deeper
into the financials by typing in TNDM equity go on
your Bloomberg terminal. John, thank you for joining us today.
Speaker 2 (01:00):
Thanks for having that. It's good to see you again.
Speaker 3 (01:02):
It's good to see you too.
Speaker 1 (01:04):
There's a lot to catch up since we were last
on about a year ago. But maybe let's start with
a quick overview of Tanum Diabetes for those who are
new to the space, and also kind of your path
to how to get into the CEO role, into your
current role today.
Speaker 2 (01:22):
Sure diabetes is a very challenging condition. When people have diabetes,
they have to think about every second of every day.
Anything they do, whether it's just going out for a walk, eating,
going to sleep, exercising, you really have to plan it.
And as a result of that, there's a significant cognitive
burden that comes along with diabetes. I mean, it's just tiring.
(01:44):
And Tannas started in two thousand and seven, and I say,
if you look back in that timeframe, to make matters worse,
a lot of the insulin pump companies were having problems
with the user interface. They were complicated, people were making mistakes,
there was adverse events, and so that industry had somewhat
of a bad name. And I think that you know,
Kim b Look and staff who and Dick Allen who
(02:05):
founded Tanhem, saw this as an opportunity, and so we
got together a group of engineers who were very focused
on user centric design, people who had expertise in human
factors and and they carefully evaluated exactly how people interact
with the pump, and we developed a system that's simple,
intuitive and easy to use, something that's very consistent with
(02:29):
what your experiences when you're interacting with your phone. You know,
you don't have to really learn it. It's easy enough
to figure it out. And that's a very important aspect
of the product. So people even called it the iPhone
of insulin pumps, and that was the TEETHLNG pomp which
we introduced back in twenty twelve, and since then we
have we have we've basically added sensor integration, We've added
(02:52):
algorithms on the pump that actually, as you mentioned, the
AI AID systems, and now we have new pumps as
well that that kind of broaden the portfolio of products
that we provide the diabetes community. My personal journey here
at Tandem was I started off as the CEO. I
was responsible for all the R and D, the operations,
all of the regulatory quality functions, and ultimately in twenty nineteen,
(03:16):
I was promoted to the CEO. And you know, I'm
more of an operations oriented CEO. I like to be
really engaged in what's going on with the company and
when we have I think the company's done an amazing
job helping people with diabetes and I'm very proud to
be part of it.
Speaker 1 (03:32):
Yeah, that's interesting. Maybe we can jump a little bit
more into just you know you as we talked about
the iPhone of insulin pumps, because yours was the first
one to have a touchscreen function, and that kind of
paved the way of kind of this you know, cycle
of innovation that's taken place over the past ten years.
Maybe to start though with kind of what you were
(03:53):
also talking about, how earlier insulin pumps were creating more
or new problems compared to the traditional kind of multiple
daily injections, and so walk us through kind of you know,
the battle these patients had to go through as they
had either pick you know, injecting themselves with insulin and
(04:14):
hoping they gave themselves the rice doses versus those kind
of early versions of the pumps and what you know,
some of those problems that you know, we're making it
worse overall, and why people were hesitant to adopt those
pumps initially.
Speaker 2 (04:28):
Yeah, I mean I think that uh, Diabetes Banting actually
uh discovered that insulin from pigs injected into people could
actually uh eliminate the effect of or could basically it
can make up for the fact that your pancreas has
stopped working. Because when you have type one diabetes, typically
as a pediatric or adolescent, your your pancreas function function
(04:53):
stops and you don't produce insulin and it's obviously insuluence
needed to you know, just to continue to live. And
so from that point in time, in the early nineteen hundreds,
people were injecting themselves with insulin and as you said,
it's you know, it's something that you have to watch
her carefully. There weren't very good mechanisms at that point
in time to see what was your blood sugar, so
(05:13):
you didn't know as you were injecting it whether you're
you know, you're high or low. And you know if
you if you actually inject too much insulin, your blood
shirt can go low, you can get you can you
can pass out and worst case dive if you don't
have enough insulin. The opposite happens. You still you get
sick and you'll pass out, and you know, there's significant
negative impact. So what has happened over time is that
(05:36):
the first the first devices that came to market were
simply pumps. All they did is provide insulin to you
every five minutes. There was no algorithm, there was no measurement.
In the meantime, the sensor technology has improved substantially and
the sensors are body worn sensors. They communicate using Bluetooth
to the pump, and so now the page can actually
(05:58):
see their blood cirger levels on the pump and make
decisions on how to dose their insulin. And subsequent to that,
we've implemented algorithms on this system today, and these algorithms
are predictive and that they look out thirty minutes in time.
They see where your blood sugar is now and where
it's been, and they make it and make a decision
on where it's going to be in that thirty minutes,
(06:18):
and they will either provide more insulin or they'll attenuate insulin.
But they basically manage the blood sugar control by providing
the appropriate amounts of insulin as you need it. So
there's been a substantial improvement in the control that people
receive when they use pump. Yeah.
Speaker 1 (06:40):
And so I think you know, the kind of takeaway
there is that there's this trifecta. You got the pump, yeah,
the CGM which is reading the glucose levels and giving
that data to the pumps, and then you got the
third trifecta, which is the algorithm, and kind of all
those three together get to that automated insulin delivery system, which,
as you said, was the t Slim product, and so
you have the teslim product, but you know, you also
(07:01):
have recently launched the Mobi device and that kind of
how does that product, you know, differ from the t
slim platform and maybe how does it even potentially complement
it as in your portfolio of products.
Speaker 2 (07:16):
Well, I think that when you look at diabetes, uh,
it's it's it's not a one size fits all conditioned
people want to wear their devices differently, they want to
interact with the pump differently, they want to control it differently,
and so it's it's a you know, it's it's very
diverse in terms of how people use and want to
use these devices. And so because of that, you know,
we think that there has to be you can't you
(07:38):
can't meet everybody's k needes with just one device. We
need a portfolio product, and so the tip the tees
Slim was the first product we brought to market. It
has a touch screen. As you said, the algorithms on
the pump, you you could you can upload software onto
the system automatically and and improve the function of the
systems over time. There's a lot of interesting it's rechargeable,
a lot of interesting features about it. It's about the
(08:00):
size of a credit card and then maybe about a
half inch thick. The mobile device that we just introduced
about a year ago is half the size of the
Tees Slim and it's controlled entirely by a mobile app.
It's very, very light, and in fact, one of the
things that people say now is they forget they have
it on. And this is back to I mean, if
(08:21):
you look at the market today in the US is
about one point nine million people who have type one
diabetes and need to use insulin every day. About thirty
five to forty percent of them use a pump today.
So the majority of people still use needles. And I
think one of the issues is the therapeutic benefits, and
I think AID systems really have gone a long way
(08:41):
to improve that. But the form factor of the pump
is also an important piece. And with a mobile app
and a very light pump, you can control the pump
and it's very convenient because all you have to do
is interact with your phone. It's very convenient, and it's
also it's great and so again you don't have to
(09:02):
take your pump out to interact with it. With Moby,
you can simply interact with your phone and if you're
sitting around, most people are interacting with their phones all
the time, so you could be managing diabetes and no
one knows that. So that discretion, the convenience and the
freedom because of the weight and the fact that it's
so light and very wearable, it's just it's another element
(09:26):
of the portfolio that we're working on. Now.
Speaker 1 (09:29):
Is this someone that are you seeing in the initial
launch of this product that most of the patients are
wearing it on their arm like an on the wear
pump or is it still kind of in the pocket
but just so small that it can really be fit
in the pocket that no one notices that it's there.
Speaker 2 (09:46):
Yeah, we've done studies on this, but in fact, when
we were rolling it out, we worked with a couple
of large diabete centers just to make sure everything was
working properly. And what we found out is about there's
about eighteen ways people can wear it. You can put
it in your pocket if you'd like. Of course, we
do have an adhesive pat or a sleeve that you
can just you know, move it. You can just insert
it into the sleeve. People put it on their app
(10:08):
the moon, they put it on their arms, their legs
pretty much anywhere they like. And by fact vi virtus
of the fact that you control it by a cell phone,
you don't have to interact with the pump at all.
It's all through the cell phone again. That's that's one
of the big advantages that come with it. Interestingly enough, though,
there are still a lot of people that like uh
that like Teslam, they want to have the control on
(10:29):
the pump itself. They feel more comfortable that they're not
as they're not as secure when it's it's going through
a mobile app. So, you know, so those are a
couple of the factors that you know that are that
we think are important and the need to have this
portfolio approach.
Speaker 1 (10:45):
Yeah, And what's interesting though, is that you mentioned a
couple of times now that the mobile app and that
you know that kind of opens the door for other
developments in the future, and I think we'll get into
those in a little bit. But let's let's turned onto
the algorithm part, because you also just announced the approval
(11:05):
of control iq plus. Why don't we just start with
what was the original control IQ and what control iq
plus ads on top of that original algorithm?
Speaker 2 (11:18):
Sure, well, we introduced control iq back in twenty twenty.
It was really the first functioning aid system on the
market and it did incredibly well. We co developed the
algorithm with the University of Virginia their Diabetes Technology Center.
They spun out a group called pige zero and we
licensed the technology from them. You know, subsequently, we have
(11:39):
done a lot of work on the algorithm ourselves. We've
continued to improve it and ConTroll aq q plus has
a couple of expands the user base that can interact
with the system. Control a q when it first came
to market was for eighteen years in older, and control
a Q plus actually goes down to two years older
for people with type one. We've also added the indication
(12:02):
for people with type two, which is another large market.
I mean, essentially doubles the size of our TAM and
it's a significantly underpenetrated but majority of the people who
have insolent intensive type two use pens and needles, just
a small percent of juice pumps, so it's a big
opportunity for us to get into that market. There's a
(12:23):
number of other features on this there's a personalization in
their simplification. All of these things are designed to reduce
the burden of diabetes because we think easy of use
is what drives adoption. And as I mentioned, in type one,
it's penetration rate of pumps is thirty five to forty
We think that can get up to sixty five percent plus.
And that's really that's the growth opportunity we have as
(12:44):
a business when it comes to the type one market.
Speaker 1 (12:48):
That's interesting. And then so this is approved for both
the type one and the type two. Where do you
see the type two penetration Right now you're talking about
how that was kind of most of them are still
doing multi multi daily injections or smart pens or things
like that. I'm assuming that that penetration is much much lower.
Speaker 2 (13:06):
Yes, it is. In fact, when you look at the
there's about two point three million people in the US
that have insulin intensive type two. There's there's tens of
millions of people that have type two diabetes. But there's
a progression where you go from diet and exercises and
mechanisms to try to control it to medications to basil
insulin and then to basel bolus insulin when you have
(13:28):
type two, and that's that's when you're basically using basil
bullets insulin with type two, it's exactly the same treatment
and therapy that you would get if you had type one.
And so, as I said, there's two point three million
people that have insulin intensive type two and about one
hundred thousand people use a pump, so it's only five
percent penetrated. And I think that the AID systems have
(13:51):
just now started to become approved for use with type two,
so we see it as a big market. We've done
quite a bit of research with people that have insulin
intensive type two and we think that this is a
you know, I think with with the simplification, the form
factor improvements, the therapy improvements that come along with the
pump using pumps with AID systems today, we believe more
(14:13):
and more people are willing to consider wearing a pump
twenty four to seven. So we think it's a it's
a big market opportunity for Tandeman and the other you know,
pump companies that are out there because essentially, as I said,
it doubles the tam for the people that you know
that use that have insulin intensive and need DEBT therapy.
Speaker 1 (14:31):
Yeah, and so you know, one of the things too
with the type two is that in an in conjunction
with the control iq plus approval. You also presented data
on the Type two patients using automated insulin delivery with
the control iq plus algorithm. What were some of your
(14:53):
takeaways from that data that was presented.
Speaker 2 (14:57):
Well, first of all, it was a randomized controls which means,
you know, we had a control group as well as
a study arm and it's the only study that's been
done in Type two where an RCET was used. We
saw substantial The other thing too, is there was a
number of subgroups of people, people who use g LP
ones a s g L T two's people had different
body masses, educational levels, just age, the weight. All of
(15:22):
these things were incorporated intently into the study and we
saw when you look at that on the whole, we
saw a very substantial improvement in their blood sugger control
measure if you measured it in A one C A
and C dropped on average from A point two to
seven point three, which is a big, big drop honestly,
(15:43):
And you know what that means is it means on
a daily basis, when you're blood sggers in control, you
feel better, you wake up and then you just feel
better and it's like you're not noxious, you're not tired.
But the other important aspect of this is when you're
blood siggers controlled, you eliminate or you reduced to life
clihood of some of the longer term come moorbidities that
come along with type two diabetes, such as you know,
(16:06):
cardiovascular disease, retinopathy. There's a variety of different conditions that
are significantly problematic for people with type two and type
one if you don't have fleedgic control. So so the
system basically it's discrete, which is important to people with
type two, and it also has great therapeutic benefit. It's
(16:27):
easy to wear, and so I think that you know,
again it's a big market opportunity for tand and and
for the other pump companies that are out there.
Speaker 1 (16:35):
Yeah, and you know, suddenly I also caught my attention
was the time and range, the increase in the time
and range from forty eight to sixty four.
Speaker 2 (16:44):
Yeah.
Speaker 1 (16:45):
I also caught my attention was just the high percentage
of patients before the trial began that were still using CGM.
So this is something that you've seen an improvement based
you know, you build off of that CGM, but you
can still see further improvement off of that CGM use.
And then the same thing with the g LPs. There
was a significant portion of the patients that were already
(17:05):
on either g LPs or sglps and all those, you know,
building improvement off of those just shows the continued use
for insulin pumps. One of the things that is catch
my attention. I'm curious your thoughts on was the YEP
used to you know, we we there was a shift
(17:27):
a few years ago from the A one C type
of measurements as the endpoint to the time and range
measurements within kind of the glucose levels between seventy and
one eighty. What are your thoughts about what's the right
measurement that diabetic patients should be looking at when they
look at, you know, their insulin pump readings or is
(17:48):
it kind of they're just you know, they're they're they're
cohesive with each other.
Speaker 2 (17:52):
Well, A one cs are typically measured every three months,
and so it's a it's a it's a relatively long
time to understand how your bloodcher control is doing. It's
an important measurement. Though. The good the good news about
the CGM systems is they provide real time data. You
get measurements on your on the pump or on your
(18:12):
phone roughly every five minutes, and you can look at
your time and range. Time and time and ranges are
more immediate and uh uh, it's just real time measurement
of your bloodshirger and your blood your could control uh
and time and people who have time and range between
you know, or if it's greater than seventy percent, which
is really what the standard is for AID systems, they
(18:33):
can live a substantially normal life, you know, because of
the control and the effect it has on you know,
just how you feel on a daily basis. And so
I think that what's happened is that because it's immediate,
because you it's there's another mechanism I think to understand
and control your your diabetes more effectively. It's become a
very important part of CGM and pump pump therapy, that
(18:57):
that particular measurement.
Speaker 1 (18:59):
Yeah, yeah, it just you know, and also yeah, it
just helps with you know, knowing your day to day
and everything, knowing which direction so you can try to
stop it before it happens. Moving then to you know,
you have these approvals, you have this clinical data out
you're starting to get into now this the two point
three million who have you know, type two insulent intensive diabetes.
(19:23):
Walk us through the commercial rollout that's going to take
place in the US over this year, because you're still
continuing to roll out MOBY and now you have this
new algorithm, and now you have this new patient population
that you're you can go after. Walk us through that strategy.
And then just before that as well, I just want
to make sure I understand. So control i q plus
(19:45):
is approved for type two, but is is the MOBI
device approved yet for that population base or is it
just going to be with the T SLIM at this point?
Speaker 2 (19:55):
Sure, well, let me answer that question first. It turns
out that a couple of years ago, the FDA came
up with the concept of interoperability. And so if you
have a designation for your pump as an interoperable pump,
and you have interoperable c HM and an interoperable algorithm,
you don't have to qualify the pump. You can just
(20:16):
immediately use the sensor and a qualified algorithm with the pump.
So as soon as we of course got the mobile
pump approved as an interoperable pump and so as soon
as that was the case, we could put the algorithm
on it. We just recently got approval ad for controlly
key plus as you've mentioned as an interoperable algorithm, so
that can go on all of our pumps immediately. And
(20:37):
it's it's a it's a minimal regulatory requirement to get
that onto your pump. There's no filing, it's just basically
letter to file internally, but it's it's it's something they
have to did that is it was a really smart
thing to do. Substantially reduces the time that they have
to spend on these on the filings. It also reduces
the burden and time for us to get new products
(20:58):
to market.
Speaker 1 (20:59):
Yeah, and you know, so basically then the key takeaway
there is that it's the algorithm that's kind of the
main catalyst here for getting into the type two adoption.
Speaker 2 (21:10):
In the US. It's really the algorithm for both type
one and type two. It's really what's the most important thing,
and it's the thing that the FDA wants to be
sure is thoroughly tested from a clinical point of view.
And that's why we have to do relatively extensive studies
that take you know, up to a year and can
cost quite a bit of money. Those are the things
that are needed to test out new algorithms to get
(21:31):
them onto the systems.
Speaker 1 (21:33):
Okay, so I feel like I'm not making a big
enough deal of the fact that the algorithm got approval recently,
but that this is a significant catalyst for opening up
the Type two space in the US.
Speaker 2 (21:44):
Absolutely, it's huge. I mean, we do have about thirty
thousand people today who are using tandems pumps with the
existing algorithm off label. But now that it's just it's
now approved widely, you know, we can make it available
to everybody who uses a tandem pump. Because we have
the ability to automatically. We have a half a million
(22:05):
people who use our pumps today. We can make the
algorithm available to everybody who currently uses our pump free
of charge. And so the thirty thousand people that have
Type one can now update their pumps automatically get the
new algorithm as well as the Type one community. Because
there's there's it's the same algorithm that's now being used
by both the Type one and Type two community, and
(22:26):
it has benefits to both. So we want everybody to
have access to it.
Speaker 1 (22:29):
Gotcha, so it's the full type one and the thirty
thousand Type two who are off label can now get
that new algorithm and everything. So how do you roll
how do you how let's go back to that then
the commercial rollout, because the type two population, the business
model is different from the type one based off of
kind of the call point with the doctor right.
Speaker 2 (22:51):
Well, you know, there are endos, A significant number of
people with insolent attempsive type two do go to endocrinologists
is where people with type one go. There are also
high prescribing PCPs who also they prescribe a lot of insulin,
and they also prescribe pumps. And so we already interact
(23:14):
with and sell to endos and PCPs who prescribe a
lot of insulin and and and that, and there's in
that sort of community. There's quite a few people who
use who have type two. There are there are more
PCPs out there that still have that that you know
work with people with type type one. That present an
opportunity for us. And so I think that initially the
(23:36):
plan is to go in a pilot manner to a
sort of a meaningful sub section of our current installed
base and working with physician is too to be here
that the training is clear and it's it's uh, it's
useful to make sure all of the marketing messages are
good to be sure that pump works properly. So there's
a pilot period that we're just about to embark on
(23:57):
it just a matter of weeks from now, where we'll
have evaluate how all of the systems that we put
in place to support type two work and as we
if you know, if we have to make changes to
iterate to to make some improvements, we'll do that on
a smaller scale and then we will expand out to
the rest of the sales organization, you know, in time
as as as we get more and more comfortable with
(24:19):
what we've got. So there's you know, there's uh, there's
questions about how much insulin do people with type two use.
Do they prefer a smaller pump with a smaller amount
of insulin or they want something that's larger. So there's
a lot of questions out there that you know, are
still to be to be determined. We're very pleased for
the data. We think that's going to be very compelling
for these positions. You know, market access through payer programs
(24:41):
is something we also have to evaluate some payer programs
are particularly the government Medicare Medicaid. Uh. They they will
ultimately let people take the pump, but they do have
some hurdles that they put in place in order to
be sure that they qualify. So so we just we'll
be working with these day organizations showing our clinical data,
(25:04):
you know, and trying to eliminate those those hurdles as well.
Speaker 1 (25:08):
Yeah, and so what I mean, let's let's dive into
that a little bit more. What are some of the
hurdles there? And also, you know, one of the other
changes that has taken place over the past decade or
so has been the shift from patients being able to
get their pumps almost exclusively through a Durable Medical Equipment
distributor or DME now through the pharmacy channel. How is
(25:32):
that shift, especially with you know, tandem and the tees
SLIM and the movie still considered kind of a durable pump.
How do you how's that transitioned into the pharmacy channel
going and how can that potentially benefit the patient and
you and the future.
Speaker 2 (25:51):
Well, I would say that when you look at the
pharmacy channel compared to dm E, one of the immediate
obvious benefits is that there's lower out of patient there's
no out of pocket costs for the patient, which is
very important in terms of getting people onto the pump.
It's also it's easier to get access to the technology
on the pharmacy channel. And so the teslam pop has
(26:12):
been in the dm E channel from the very beginning,
and we just introduced MOBI a year ago and since
that we have since that time, we've been working to
get Moby into the pharmacy channel and we've had quite
a bit of success. There are some concern initially that
this wouldn't be an appropriate kind of product to work
in the pharmacy channel, but we've kind of gotten past
those thoughts and the sort of the payer organizations that
(26:35):
are part of the pharmacy system are very open to
having our pumps in there, and so right now it's
just a matter of getting contracts in place, and we
have currently about twenty percent of covered lives under contract
for MOBI, and we'll be looking to expand that this
year and beyond for sure, and there's also opportunities, I
think to consider teeslim in that channel as well, and
(26:56):
at a minimum, tess they have disposable supplies that go
along with teslam that people use every couple of days.
That's another option for us would be to sell those
through the pharmacy channel. So yeah, so I think that
again it's it's lower out of pocket, it's easier access,
and so there definitely are advantages to using the pharmacy channel,
(27:18):
and you know, we intend to take advantage of that
with the products. I think it's a particularly important aspect
for Type two for us as well.
Speaker 1 (27:27):
Yeah, because and then you know, it surprises me as well,
is that I would have expected that the payers would
have covered the pump regardless of what channel it went through.
But based off of you saying that you know twenty
percent of the payers, twenty percent of the pharmacy channel
is covered by payers, it's it doesn't sound like that.
(27:50):
So it sounds like you have to now go through
with each payer to kind of convince them to go
through this process. And then is the main takeaway from
that conversation with the payers being that it limits the
upfront costs of the pump and it's comicized to the
pay as you go model that we're seeing with some
of these other pump business models out there.
Speaker 2 (28:14):
Well, let me just if we just look at the DME.
For instance, there's commercial plans which represent let's just say
seventy eighty eighty five percent of all plans really are
at the commercial plans, and the government plans Medicare and
medicaidor are about fifteen percent. All of the commercial plans
cover type one and type two, and there's really no
there's there's there's probably in the dm there's a little
(28:37):
bit more paperwork that's required to but it's not considered
a hurdle. It's just information that's required to provide to
the to the pay organic pay or organization when it
comes to type to or when it comes to the
pharmacy channel. We are we are working with a large
group of payer to get contracts in place. We have
(28:59):
only been doing this now for about a year, and
in that timeframe we've got, like I said, twenty percent
of covered lives under contract, and we're going to continue
to work with other payers that we haven't contracted with
yet to get our products in the pharmacy channel and reimbursed.
So it's just it's it's not that they it's just
(29:20):
a matter of us getting agreements in place. So we
actually have access to the various elements of the pharmacy network,
and I think that it's it's not going to happen overnight,
but we've made really good progress. We're happy with that.
And as I said, we think that access to both
d M and the pharmacy channel, you know, gives us
a balanced reimbursement strategy as we go forward, and we'll
(29:43):
use whichever one we believe is most effective and cost
effective for the patient.
Speaker 1 (29:50):
Yeah, that makes that makes sense. And so you know,
shifting kind of quickly from the US to the international market.
You've seen some strong growth there over the past few years,
as you know, each new countries come out with T SLIM,
But twenty twenty five is going to be a transition
year as you kind of shift over to the direct sales.
Speaker 3 (30:11):
Walk us through.
Speaker 1 (30:14):
The rationale for that shift from the distributors to the
direct sales and you know, kind of almost putting on
your CEO hat here, How did the strategy have to
then build out your team or you know, how does
that kind of delegation work as you kind of are
expanding and building out the franchise out there.
Speaker 2 (30:35):
Sure, so we have been in the OUs markets since
twenty eighteen, We at that point in time began to
take advantage of the fact that Johnson Johnson decided to
exit the market and there were a lot of distributors
in the OUs countries that wanted an insulin pump, and
we were able to work it out. And so today
we're covered. We're in twenty five different countries outside the
(30:57):
United States, and if you look at our business, it's
roughly a third of our business, so it's it's grown
very quickly in that timeframe, you know. So it's been
five or six years now, and typically you know, there's
a you know, as companies mature and they know the markets,
they understand the KOLs, you understand you know, the systems,
the reimbursement systems, et cetera. In these these markets, it's
(31:19):
not uncommon for companies to go direct by themselves, to
hire their own sales force, to have their own bricks
and mortar and to sell the product and selves. And
by doing that, you have a closer relationship with the
with the market, with the with the people who have diabetes,
with their physicians. And you also, you know, benefit from
from the margin benefit that comes to the company when
(31:40):
you're not paying a distributor to do that. And so
I mean we see ourselves as in operating at a
hybrid where we'll have you know, a cadre of distributors
and then we'll also have our own operations. And this
is a thing that you know, it takes time. It
takes us this this year of twenty twenty five, we
have let several of our distributors know this that this
(32:01):
is happening, and we're working with them in the transition.
But the transition will not occur until January first of
twenty six. So we're building our own salesforce today, you know,
establishing the capabilities and systems to support the product us.
And as I say, this is not an uncommon process
were companies to go through, as have they been in
(32:22):
markets for you know, extended periods of time. But we
have a great group of distributors and you know, again
we intend to have a hybrid of both distributors in
our own direct operations.
Speaker 1 (32:34):
Yeah, and so then what's I'm curious though, is about
what what made this year kind of the year to
do it versus maybe wait another year or do it
a year earlier. What were some of the you know,
the signs that you were looking at to say, Okay,
this is the right time to do it.
Speaker 2 (32:51):
Well, I think that it's. Uh. I think it's a
couple of things. First, I would say that over the
last year, we'd have brought on new leadership in our
US operations and o US operations, people who have a
great deal of experience in doing this going direct. They
understand how to develop the systems, the organization, the infrastructure
(33:12):
to support it offshore. And I think that was a
that was definitely an important element of that. And I
think that you know, as as this is also something
that's going to improve profitability as we go on, and
I think, you know, we need to show steady improvement
and profitability and that's that's that's the second way. So
I think it was just timing. It was it was
(33:32):
the right time. We have the right team, and profitability
is uh, you know, it is something that we're really
focused on as an organization and this is a key
element in eating our objectives. Yeah.
Speaker 1 (33:45):
No, it definitely seems like the right step for you know,
how you build it out. And I've seen other diabetes
companies themselves be able to go from distributor to direct
in that same manner. Let's let's let's round out the
rest of the call with kind of the pipeline, Cause
we talked a lot about exciting things that just launched
or has been in the market for a while, but
there's there's some that you still have a pipeline full
(34:06):
of new potential products and accessories add on things like that.
Why don't we start with Moby Because you talk about
Moby being a smaller form factor, you talk about it
being discrete and everything. The one thing they think about is,
you know, it's still using a infusion set right now,
and I know one of the developments in the long
(34:27):
run was going to be having one without an infusion set.
So just direct on the body where I'm curious how
those developments are going, and anything else than within the
MOBI that kind of can be more of a I
don't want to say traditional on the wear pump, but
you know one that can be kind of that, you know,
(34:47):
on the wear pump that you would have on your
arm or your leg or something like that.
Speaker 2 (34:51):
Well, I think that we're we're still in the midst
of the rollout from MOBI. Moby currently has it has
it has been on the market for really out about
a year It's currently integrated with the Xcom G six
and G seven sensors, the G seven being the most
advanced sensor that that dexcompass in the market. It's also
(35:12):
integrated with iOS and it turns out that you know,
the majority of people in the US use io s,
but as we start to go o US, Android is
a more important UH phone factor there as well. So
so we're we're in this year we'll be integrating it
with Android. We're also integrating both Teslam and will be
(35:34):
with the Freestyle Livery three from Abbott, which is their
competitive sensor. It's a it's a it's a sensor that's
actually done quite well in the US market and in
the OU S O U S markets and so you
know it UH by having the pumps provide choice, people
who are using these sensors now have the opportunity to
consider using pump therapy. So it's a that's a very
(35:55):
important feature that we're going to be adding this coming year.
We're also so in the midst of going to get
ce Mark on Mobi so we can get it into
the OUs markets, and we expect to have cee Mark
this year as well. One of the really exciting things
about Moby is we have a tube less version of MOBI.
We have it's a it's really just the supplies where
(36:19):
there's a different cartridge and there's an infusion plate instead
of an infusion set, and you can wear MOBI exactly
like you would for a tube less system. And that
is important because it gives people maximum versatility and how
they wear it so and we think that's a really
important factor, is you can wear it with a tube
or without a tube, and there's reasons why you would
(36:40):
want to use each. And then, as you said, we
also have a fully tubeless product we call SIGGI that's
under development right now, and that will round out the portfolio.
So we'll have three products. We'll have t Salin, we'll
have Moby, which is maximum versatility, and then we'll have
Siggy which as a as a tube less offering. And
(37:03):
as we look at the marketplace, there are definitely people
out there that would not come to pump therapy unless
there's a tube less option, and so we we believe
that we need all three of these processes. I said,
just to deal with the different segments of the diabetes community.
Speaker 1 (37:18):
Yeah, no, there's there's like I said, there's a lot
in the pipeline for future innovation. So maybe we just
close out this episode. So you've been with Tandem if
I did my math right about nearly twelve years, the
last six years as CEO. During that time, we kind
of highlighted a huge change that took place in the
(37:40):
insulin pump market, and you know, continuous innovation on the
patch where you know, aids, touchscreens, mobile apps. You're seeing
more competitors enter the space, You've seen competitors leave the space.
You know, twenty twenty five, there's more headlines too because
(38:01):
of a new or not new, but a new IPO,
so that that company is gained more attention. And that
doesn't even go about then you have your own internal
developments with pipeline, with salesforce change, things like that. As
the leader of the company, how do you keep the
(38:21):
employees focused on the Tandem future and being able to
drive all these innovations and developments and commercial rollouts and everything.
Speaker 2 (38:31):
Well, I think that one of the great things about
Tandem is the fact that we are mission driven as
a company, and every single employee within the company understands
that we're trying to improve the lives of people who
have diabetes. And we're doing that in two ways. One,
we're innovating, I mean innovation extraordinary innovation and customer service
are two of the areas that we have most of
our focus. I think that if you look back over
(38:53):
the last twelve years, Tandem has innovated faster than our competitors.
We have done more interesting things, and we we have
the most exciting pipeline in diabetes. So I think that's
very important. But customer service is also hugely important. And
I think that if you look at there's third party
entities out there that look at NPS scores for your
service and and Tandem and consistently ranked highest. And so
(39:17):
how do you get there? Again? You you have to
have this dogged focus on helping people with diabetes. You
have to develop a customer excuse me, a culture within
the business where you treat people with respect, you're transparent, uh,
you know, you're just you're honest with the employees. And
then I think you have to hire great people. And
(39:37):
but I think it's the culture of the mission driven
aspect of the business, the fact that we are focused
on innovation and customer service, and the fact that we
have great people. You know, that's that's that's how you
do it. You have to you have to have all
of those things firing and all, you know, all cylinders.
And I think that's that's how Tanamis has progressed and
(39:58):
and continued to grow. And I think that's what's going
to help us, you know, continue to grow and profitability
and in revenue in the future. So we're very excited
about our future, and you know, we look forward to
helping more people with diabetes.
Speaker 1 (40:13):
Yeah, and I look forward to seeing the next twelve
months because I feel like when you're back on this
series in twenty twenty six, it's going to look like
a different tandem than it does today.
Speaker 2 (40:23):
A lot will have happened in the last two in
this coming year for fear.
Speaker 1 (40:27):
Oh yeah, well, John, thank you for joining us today.
I appreciate you hopping on.
Speaker 2 (40:32):
All right, Matt, good talking to you.
Speaker 1 (40:33):
Thank you, yep, and thank you to our listeners for
tuning in today. We hope you join us for future episodes,
and if you want to stay up to date, please
click the subscribe button on Spotify or your favorite stream platform.
Speaker 3 (40:44):
Take caresses us abases
Welcome to another 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. We are pleased to have with us
today John Sheridan, CEO of Tandem Diabetes, a medical device
company that is a key leader in expansion of automated
(00:40):
insulin delivery systems or AIDS for short. These next generations
of insulin pumps can help diabetic patients track their glucose
levels and maintain a healthy level. You can dive deeper
into the financials by typing in TNDM equity go on
your Bloomberg terminal. John, thank you for joining us today.
Speaker 2 (01:00):
Thanks for having that. It's good to see you again.
Speaker 3 (01:02):
It's good to see you too.
Speaker 1 (01:04):
There's a lot to catch up since we were last
on about a year ago. But maybe let's start with
a quick overview of Tanum Diabetes for those who are
new to the space, and also kind of your path
to how to get into the CEO role, into your
current role today.
Speaker 2 (01:22):
Sure diabetes is a very challenging condition. When people have diabetes,
they have to think about every second of every day.
Anything they do, whether it's just going out for a walk, eating,
going to sleep, exercising, you really have to plan it.
And as a result of that, there's a significant cognitive
burden that comes along with diabetes. I mean, it's just tiring.
(01:44):
And Tannas started in two thousand and seven, and I say,
if you look back in that timeframe, to make matters worse,
a lot of the insulin pump companies were having problems
with the user interface. They were complicated, people were making mistakes,
there was adverse events, and so that industry had somewhat
of a bad name. And I think that you know,
Kim b Look and staff who and Dick Allen who
(02:05):
founded Tanhem, saw this as an opportunity, and so we
got together a group of engineers who were very focused
on user centric design, people who had expertise in human
factors and and they carefully evaluated exactly how people interact
with the pump, and we developed a system that's simple,
intuitive and easy to use, something that's very consistent with
(02:29):
what your experiences when you're interacting with your phone. You know,
you don't have to really learn it. It's easy enough
to figure it out. And that's a very important aspect
of the product. So people even called it the iPhone
of insulin pumps, and that was the TEETHLNG pomp which
we introduced back in twenty twelve, and since then we
have we have we've basically added sensor integration, We've added
(02:52):
algorithms on the pump that actually, as you mentioned, the
AI AID systems, and now we have new pumps as
well that that kind of broaden the portfolio of products
that we provide the diabetes community. My personal journey here
at Tandem was I started off as the CEO. I
was responsible for all the R and D, the operations,
all of the regulatory quality functions, and ultimately in twenty nineteen,
(03:16):
I was promoted to the CEO. And you know, I'm
more of an operations oriented CEO. I like to be
really engaged in what's going on with the company and
when we have I think the company's done an amazing
job helping people with diabetes and I'm very proud to
be part of it.
Speaker 1 (03:32):
Yeah, that's interesting. Maybe we can jump a little bit
more into just you know you as we talked about
the iPhone of insulin pumps, because yours was the first
one to have a touchscreen function, and that kind of
paved the way of kind of this you know, cycle
of innovation that's taken place over the past ten years.
Maybe to start though with kind of what you were
(03:53):
also talking about, how earlier insulin pumps were creating more
or new problems compared to the traditional kind of multiple
daily injections, and so walk us through kind of you know,
the battle these patients had to go through as they
had either pick you know, injecting themselves with insulin and
(04:14):
hoping they gave themselves the rice doses versus those kind
of early versions of the pumps and what you know,
some of those problems that you know, we're making it
worse overall, and why people were hesitant to adopt those
pumps initially.
Speaker 2 (04:28):
Yeah, I mean I think that uh, Diabetes Banting actually
uh discovered that insulin from pigs injected into people could
actually uh eliminate the effect of or could basically it
can make up for the fact that your pancreas has
stopped working. Because when you have type one diabetes, typically
as a pediatric or adolescent, your your pancreas function function
(04:53):
stops and you don't produce insulin and it's obviously insuluence
needed to you know, just to continue to live. And
so from that point in time, in the early nineteen hundreds,
people were injecting themselves with insulin and as you said,
it's you know, it's something that you have to watch
her carefully. There weren't very good mechanisms at that point
in time to see what was your blood sugar, so
(05:13):
you didn't know as you were injecting it whether you're
you know, you're high or low. And you know if
you if you actually inject too much insulin, your blood
shirt can go low, you can get you can you
can pass out and worst case dive if you don't
have enough insulin. The opposite happens. You still you get
sick and you'll pass out, and you know, there's significant
negative impact. So what has happened over time is that
(05:36):
the first the first devices that came to market were
simply pumps. All they did is provide insulin to you
every five minutes. There was no algorithm, there was no measurement.
In the meantime, the sensor technology has improved substantially and
the sensors are body worn sensors. They communicate using Bluetooth
to the pump, and so now the page can actually
(05:58):
see their blood cirger levels on the pump and make
decisions on how to dose their insulin. And subsequent to that,
we've implemented algorithms on this system today, and these algorithms
are predictive and that they look out thirty minutes in time.
They see where your blood sugar is now and where
it's been, and they make it and make a decision
on where it's going to be in that thirty minutes,
(06:18):
and they will either provide more insulin or they'll attenuate insulin.
But they basically manage the blood sugar control by providing
the appropriate amounts of insulin as you need it. So
there's been a substantial improvement in the control that people
receive when they use pump. Yeah.
Speaker 1 (06:40):
And so I think you know, the kind of takeaway
there is that there's this trifecta. You got the pump, yeah,
the CGM which is reading the glucose levels and giving
that data to the pumps, and then you got the
third trifecta, which is the algorithm, and kind of all
those three together get to that automated insulin delivery system, which,
as you said, was the t Slim product, and so
you have the teslim product, but you know, you also
(07:01):
have recently launched the Mobi device and that kind of
how does that product, you know, differ from the t
slim platform and maybe how does it even potentially complement
it as in your portfolio of products.
Speaker 2 (07:16):
Well, I think that when you look at diabetes, uh,
it's it's it's not a one size fits all conditioned
people want to wear their devices differently, they want to
interact with the pump differently, they want to control it differently,
and so it's it's a you know, it's it's very
diverse in terms of how people use and want to
use these devices. And so because of that, you know,
we think that there has to be you can't you
(07:38):
can't meet everybody's k needes with just one device. We
need a portfolio product, and so the tip the tees
Slim was the first product we brought to market. It
has a touch screen. As you said, the algorithms on
the pump, you you could you can upload software onto
the system automatically and and improve the function of the
systems over time. There's a lot of interesting it's rechargeable,
a lot of interesting features about it. It's about the
(08:00):
size of a credit card and then maybe about a
half inch thick. The mobile device that we just introduced
about a year ago is half the size of the
Tees Slim and it's controlled entirely by a mobile app.
It's very, very light, and in fact, one of the
things that people say now is they forget they have
it on. And this is back to I mean, if
(08:21):
you look at the market today in the US is
about one point nine million people who have type one
diabetes and need to use insulin every day. About thirty
five to forty percent of them use a pump today.
So the majority of people still use needles. And I
think one of the issues is the therapeutic benefits, and
I think AID systems really have gone a long way
(08:41):
to improve that. But the form factor of the pump
is also an important piece. And with a mobile app
and a very light pump, you can control the pump
and it's very convenient because all you have to do
is interact with your phone. It's very convenient, and it's
also it's great and so again you don't have to
(09:02):
take your pump out to interact with it. With Moby,
you can simply interact with your phone and if you're
sitting around, most people are interacting with their phones all
the time, so you could be managing diabetes and no
one knows that. So that discretion, the convenience and the
freedom because of the weight and the fact that it's
so light and very wearable, it's just it's another element
(09:26):
of the portfolio that we're working on. Now.
Speaker 1 (09:29):
Is this someone that are you seeing in the initial
launch of this product that most of the patients are
wearing it on their arm like an on the wear
pump or is it still kind of in the pocket
but just so small that it can really be fit
in the pocket that no one notices that it's there.
Speaker 2 (09:46):
Yeah, we've done studies on this, but in fact, when
we were rolling it out, we worked with a couple
of large diabete centers just to make sure everything was
working properly. And what we found out is about there's
about eighteen ways people can wear it. You can put
it in your pocket if you'd like. Of course, we
do have an adhesive pat or a sleeve that you
can just you know, move it. You can just insert
it into the sleeve. People put it on their app
(10:08):
the moon, they put it on their arms, their legs
pretty much anywhere they like. And by fact vi virtus
of the fact that you control it by a cell phone,
you don't have to interact with the pump at all.
It's all through the cell phone again. That's that's one
of the big advantages that come with it. Interestingly enough, though,
there are still a lot of people that like uh
that like Teslam, they want to have the control on
(10:29):
the pump itself. They feel more comfortable that they're not
as they're not as secure when it's it's going through
a mobile app. So, you know, so those are a
couple of the factors that you know that are that
we think are important and the need to have this
portfolio approach.
Speaker 1 (10:45):
Yeah, And what's interesting though, is that you mentioned a
couple of times now that the mobile app and that
you know that kind of opens the door for other
developments in the future, and I think we'll get into
those in a little bit. But let's let's turned onto
the algorithm part, because you also just announced the approval
(11:05):
of control iq plus. Why don't we just start with
what was the original control IQ and what control iq
plus ads on top of that original algorithm?
Speaker 2 (11:18):
Sure, well, we introduced control iq back in twenty twenty.
It was really the first functioning aid system on the
market and it did incredibly well. We co developed the
algorithm with the University of Virginia their Diabetes Technology Center.
They spun out a group called pige zero and we
licensed the technology from them. You know, subsequently, we have
(11:39):
done a lot of work on the algorithm ourselves. We've
continued to improve it and ConTroll aq q plus has
a couple of expands the user base that can interact
with the system. Control a q when it first came
to market was for eighteen years in older, and control
a Q plus actually goes down to two years older
for people with type one. We've also added the indication
(12:02):
for people with type two, which is another large market.
I mean, essentially doubles the size of our TAM and
it's a significantly underpenetrated but majority of the people who
have insolent intensive type two use pens and needles, just
a small percent of juice pumps, so it's a big
opportunity for us to get into that market. There's a
(12:23):
number of other features on this there's a personalization in
their simplification. All of these things are designed to reduce
the burden of diabetes because we think easy of use
is what drives adoption. And as I mentioned, in type one,
it's penetration rate of pumps is thirty five to forty
We think that can get up to sixty five percent plus.
And that's really that's the growth opportunity we have as
(12:44):
a business when it comes to the type one market.
Speaker 1 (12:48):
That's interesting. And then so this is approved for both
the type one and the type two. Where do you
see the type two penetration Right now you're talking about
how that was kind of most of them are still
doing multi multi daily injections or smart pens or things
like that. I'm assuming that that penetration is much much lower.
Speaker 2 (13:06):
Yes, it is. In fact, when you look at the
there's about two point three million people in the US
that have insulin intensive type two. There's there's tens of
millions of people that have type two diabetes. But there's
a progression where you go from diet and exercises and
mechanisms to try to control it to medications to basil
insulin and then to basel bolus insulin when you have
(13:28):
type two, and that's that's when you're basically using basil
bullets insulin with type two, it's exactly the same treatment
and therapy that you would get if you had type one.
And so, as I said, there's two point three million
people that have insulin intensive type two and about one
hundred thousand people use a pump, so it's only five
percent penetrated. And I think that the AID systems have
(13:51):
just now started to become approved for use with type two,
so we see it as a big market. We've done
quite a bit of research with people that have insulin
intensive type two and we think that this is a
you know, I think with with the simplification, the form
factor improvements, the therapy improvements that come along with the
pump using pumps with AID systems today, we believe more
(14:13):
and more people are willing to consider wearing a pump
twenty four to seven. So we think it's a it's
a big market opportunity for Tandeman and the other you know,
pump companies that are out there because essentially, as I said,
it doubles the tam for the people that you know
that use that have insulin intensive and need DEBT therapy.
Speaker 1 (14:31):
Yeah, and so you know, one of the things too
with the type two is that in an in conjunction
with the control iq plus approval. You also presented data
on the Type two patients using automated insulin delivery with
the control iq plus algorithm. What were some of your
(14:53):
takeaways from that data that was presented.
Speaker 2 (14:57):
Well, first of all, it was a randomized controls which means,
you know, we had a control group as well as
a study arm and it's the only study that's been
done in Type two where an RCET was used. We
saw substantial The other thing too, is there was a
number of subgroups of people, people who use g LP
ones a s g L T two's people had different
body masses, educational levels, just age, the weight. All of
(15:22):
these things were incorporated intently into the study and we
saw when you look at that on the whole, we
saw a very substantial improvement in their blood sugger control
measure if you measured it in A one C A
and C dropped on average from A point two to
seven point three, which is a big, big drop honestly,
(15:43):
And you know what that means is it means on
a daily basis, when you're blood sggers in control, you
feel better, you wake up and then you just feel
better and it's like you're not noxious, you're not tired.
But the other important aspect of this is when you're
blood siggers controlled, you eliminate or you reduced to life
clihood of some of the longer term come moorbidities that
come along with type two diabetes, such as you know,
(16:06):
cardiovascular disease, retinopathy. There's a variety of different conditions that
are significantly problematic for people with type two and type
one if you don't have fleedgic control. So so the
system basically it's discrete, which is important to people with
type two, and it also has great therapeutic benefit. It's
(16:27):
easy to wear, and so I think that you know,
again it's a big market opportunity for tand and and
for the other pump companies that are out there.
Speaker 1 (16:35):
Yeah, and you know, suddenly I also caught my attention
was the time and range, the increase in the time
and range from forty eight to sixty four.
Speaker 2 (16:44):
Yeah.
Speaker 1 (16:45):
I also caught my attention was just the high percentage
of patients before the trial began that were still using CGM.
So this is something that you've seen an improvement based
you know, you build off of that CGM, but you
can still see further improvement off of that CGM use.
And then the same thing with the g LPs. There
was a significant portion of the patients that were already
(17:05):
on either g LPs or sglps and all those, you know,
building improvement off of those just shows the continued use
for insulin pumps. One of the things that is catch
my attention. I'm curious your thoughts on was the YEP
used to you know, we we there was a shift
(17:27):
a few years ago from the A one C type
of measurements as the endpoint to the time and range
measurements within kind of the glucose levels between seventy and
one eighty. What are your thoughts about what's the right
measurement that diabetic patients should be looking at when they
look at, you know, their insulin pump readings or is
(17:48):
it kind of they're just you know, they're they're they're
cohesive with each other.
Speaker 2 (17:52):
Well, A one cs are typically measured every three months,
and so it's a it's a it's a relatively long
time to understand how your bloodcher control is doing. It's
an important measurement. Though. The good the good news about
the CGM systems is they provide real time data. You
get measurements on your on the pump or on your
(18:12):
phone roughly every five minutes, and you can look at
your time and range. Time and time and ranges are
more immediate and uh uh, it's just real time measurement
of your bloodshirger and your blood your could control uh
and time and people who have time and range between
you know, or if it's greater than seventy percent, which
is really what the standard is for AID systems, they
(18:33):
can live a substantially normal life, you know, because of
the control and the effect it has on you know,
just how you feel on a daily basis. And so
I think that what's happened is that because it's immediate,
because you it's there's another mechanism I think to understand
and control your your diabetes more effectively. It's become a
very important part of CGM and pump pump therapy, that
(18:57):
that particular measurement.
Speaker 1 (18:59):
Yeah, yeah, it just you know, and also yeah, it
just helps with you know, knowing your day to day
and everything, knowing which direction so you can try to
stop it before it happens. Moving then to you know,
you have these approvals, you have this clinical data out
you're starting to get into now this the two point
three million who have you know, type two insulent intensive diabetes.
(19:23):
Walk us through the commercial rollout that's going to take
place in the US over this year, because you're still
continuing to roll out MOBY and now you have this
new algorithm, and now you have this new patient population
that you're you can go after. Walk us through that strategy.
And then just before that as well, I just want
to make sure I understand. So control i q plus
(19:45):
is approved for type two, but is is the MOBI
device approved yet for that population base or is it
just going to be with the T SLIM at this point?
Speaker 2 (19:55):
Sure, well, let me answer that question first. It turns
out that a couple of years ago, the FDA came
up with the concept of interoperability. And so if you
have a designation for your pump as an interoperable pump,
and you have interoperable c HM and an interoperable algorithm,
you don't have to qualify the pump. You can just
(20:16):
immediately use the sensor and a qualified algorithm with the pump.
So as soon as we of course got the mobile
pump approved as an interoperable pump and so as soon
as that was the case, we could put the algorithm
on it. We just recently got approval ad for controlly
key plus as you've mentioned as an interoperable algorithm, so
that can go on all of our pumps immediately. And
(20:37):
it's it's a it's a minimal regulatory requirement to get
that onto your pump. There's no filing, it's just basically
letter to file internally, but it's it's it's something they
have to did that is it was a really smart
thing to do. Substantially reduces the time that they have
to spend on these on the filings. It also reduces
the burden and time for us to get new products
(20:58):
to market.
Speaker 1 (20:59):
Yeah, and you know, so basically then the key takeaway
there is that it's the algorithm that's kind of the
main catalyst here for getting into the type two adoption.
Speaker 2 (21:10):
In the US. It's really the algorithm for both type
one and type two. It's really what's the most important thing,
and it's the thing that the FDA wants to be
sure is thoroughly tested from a clinical point of view.
And that's why we have to do relatively extensive studies
that take you know, up to a year and can
cost quite a bit of money. Those are the things
that are needed to test out new algorithms to get
(21:31):
them onto the systems.
Speaker 1 (21:33):
Okay, so I feel like I'm not making a big
enough deal of the fact that the algorithm got approval recently,
but that this is a significant catalyst for opening up
the Type two space in the US.
Speaker 2 (21:44):
Absolutely, it's huge. I mean, we do have about thirty
thousand people today who are using tandems pumps with the
existing algorithm off label. But now that it's just it's
now approved widely, you know, we can make it available
to everybody who uses a tandem pump. Because we have
the ability to automatically. We have a half a million
(22:05):
people who use our pumps today. We can make the
algorithm available to everybody who currently uses our pump free
of charge. And so the thirty thousand people that have
Type one can now update their pumps automatically get the
new algorithm as well as the Type one community. Because
there's there's it's the same algorithm that's now being used
by both the Type one and Type two community, and
(22:26):
it has benefits to both. So we want everybody to
have access to it.
Speaker 1 (22:29):
Gotcha, so it's the full type one and the thirty
thousand Type two who are off label can now get
that new algorithm and everything. So how do you roll
how do you how let's go back to that then
the commercial rollout, because the type two population, the business
model is different from the type one based off of
kind of the call point with the doctor right.
Speaker 2 (22:51):
Well, you know, there are endos, A significant number of
people with insolent attempsive type two do go to endocrinologists
is where people with type one go. There are also
high prescribing PCPs who also they prescribe a lot of insulin,
and they also prescribe pumps. And so we already interact
(23:14):
with and sell to endos and PCPs who prescribe a
lot of insulin and and and that, and there's in
that sort of community. There's quite a few people who
use who have type two. There are there are more
PCPs out there that still have that that you know
work with people with type type one. That present an
opportunity for us. And so I think that initially the
(23:36):
plan is to go in a pilot manner to a
sort of a meaningful sub section of our current installed
base and working with physician is too to be here
that the training is clear and it's it's uh, it's
useful to make sure all of the marketing messages are
good to be sure that pump works properly. So there's
a pilot period that we're just about to embark on
(23:57):
it just a matter of weeks from now, where we'll
have evaluate how all of the systems that we put
in place to support type two work and as we
if you know, if we have to make changes to
iterate to to make some improvements, we'll do that on
a smaller scale and then we will expand out to
the rest of the sales organization, you know, in time
as as as we get more and more comfortable with
(24:19):
what we've got. So there's you know, there's uh, there's
questions about how much insulin do people with type two use.
Do they prefer a smaller pump with a smaller amount
of insulin or they want something that's larger. So there's
a lot of questions out there that you know, are
still to be to be determined. We're very pleased for
the data. We think that's going to be very compelling
for these positions. You know, market access through payer programs
(24:41):
is something we also have to evaluate some payer programs
are particularly the government Medicare Medicaid. Uh. They they will
ultimately let people take the pump, but they do have
some hurdles that they put in place in order to
be sure that they qualify. So so we just we'll
be working with these day organizations showing our clinical data,
(25:04):
you know, and trying to eliminate those those hurdles as well.
Speaker 1 (25:08):
Yeah, and so what I mean, let's let's dive into
that a little bit more. What are some of the
hurdles there? And also, you know, one of the other
changes that has taken place over the past decade or
so has been the shift from patients being able to
get their pumps almost exclusively through a Durable Medical Equipment
distributor or DME now through the pharmacy channel. How is
(25:32):
that shift, especially with you know, tandem and the tees
SLIM and the movie still considered kind of a durable pump.
How do you how's that transitioned into the pharmacy channel
going and how can that potentially benefit the patient and
you and the future.
Speaker 2 (25:51):
Well, I would say that when you look at the
pharmacy channel compared to dm E, one of the immediate
obvious benefits is that there's lower out of patient there's
no out of pocket costs for the patient, which is
very important in terms of getting people onto the pump.
It's also it's easier to get access to the technology
on the pharmacy channel. And so the teslam pop has
(26:12):
been in the dm E channel from the very beginning,
and we just introduced MOBI a year ago and since
that we have since that time, we've been working to
get Moby into the pharmacy channel and we've had quite
a bit of success. There are some concern initially that
this wouldn't be an appropriate kind of product to work
in the pharmacy channel, but we've kind of gotten past
those thoughts and the sort of the payer organizations that
(26:35):
are part of the pharmacy system are very open to
having our pumps in there, and so right now it's
just a matter of getting contracts in place, and we
have currently about twenty percent of covered lives under contract
for MOBI, and we'll be looking to expand that this
year and beyond for sure, and there's also opportunities, I
think to consider teeslim in that channel as well, and
(26:56):
at a minimum, tess they have disposable supplies that go
along with teslam that people use every couple of days.
That's another option for us would be to sell those
through the pharmacy channel. So yeah, so I think that
again it's it's lower out of pocket, it's easier access,
and so there definitely are advantages to using the pharmacy channel,
(27:18):
and you know, we intend to take advantage of that
with the products. I think it's a particularly important aspect
for Type two for us as well.
Speaker 1 (27:27):
Yeah, because and then you know, it surprises me as well,
is that I would have expected that the payers would
have covered the pump regardless of what channel it went through.
But based off of you saying that you know twenty
percent of the payers, twenty percent of the pharmacy channel
is covered by payers, it's it doesn't sound like that.
(27:50):
So it sounds like you have to now go through
with each payer to kind of convince them to go
through this process. And then is the main takeaway from
that conversation with the payers being that it limits the
upfront costs of the pump and it's comicized to the
pay as you go model that we're seeing with some
of these other pump business models out there.
Speaker 2 (28:14):
Well, let me just if we just look at the DME.
For instance, there's commercial plans which represent let's just say
seventy eighty eighty five percent of all plans really are
at the commercial plans, and the government plans Medicare and
medicaidor are about fifteen percent. All of the commercial plans
cover type one and type two, and there's really no
there's there's there's probably in the dm there's a little
(28:37):
bit more paperwork that's required to but it's not considered
a hurdle. It's just information that's required to provide to
the to the pay organic pay or organization when it
comes to type to or when it comes to the
pharmacy channel. We are we are working with a large
group of payer to get contracts in place. We have
(28:59):
only been doing this now for about a year, and
in that timeframe we've got, like I said, twenty percent
of covered lives under contract, and we're going to continue
to work with other payers that we haven't contracted with
yet to get our products in the pharmacy channel and reimbursed.
So it's just it's it's not that they it's just
(29:20):
a matter of us getting agreements in place. So we
actually have access to the various elements of the pharmacy network,
and I think that it's it's not going to happen overnight,
but we've made really good progress. We're happy with that.
And as I said, we think that access to both
d M and the pharmacy channel, you know, gives us
a balanced reimbursement strategy as we go forward, and we'll
(29:43):
use whichever one we believe is most effective and cost
effective for the patient.
Speaker 1 (29:50):
Yeah, that makes that makes sense. And so you know,
shifting kind of quickly from the US to the international market.
You've seen some strong growth there over the past few years,
as you know, each new countries come out with T SLIM,
But twenty twenty five is going to be a transition
year as you kind of shift over to the direct sales.
Speaker 3 (30:11):
Walk us through.
Speaker 1 (30:14):
The rationale for that shift from the distributors to the
direct sales and you know, kind of almost putting on
your CEO hat here, How did the strategy have to
then build out your team or you know, how does
that kind of delegation work as you kind of are
expanding and building out the franchise out there.
Speaker 2 (30:35):
Sure, so we have been in the OUs markets since
twenty eighteen, We at that point in time began to
take advantage of the fact that Johnson Johnson decided to
exit the market and there were a lot of distributors
in the OUs countries that wanted an insulin pump, and
we were able to work it out. And so today
we're covered. We're in twenty five different countries outside the
(30:57):
United States, and if you look at our business, it's
roughly a third of our business, so it's it's grown
very quickly in that timeframe, you know. So it's been
five or six years now, and typically you know, there's
a you know, as companies mature and they know the markets,
they understand the KOLs, you understand you know, the systems,
the reimbursement systems, et cetera. In these these markets, it's
(31:19):
not uncommon for companies to go direct by themselves, to
hire their own sales force, to have their own bricks
and mortar and to sell the product and selves. And
by doing that, you have a closer relationship with the
with the market, with the with the people who have diabetes,
with their physicians. And you also, you know, benefit from
from the margin benefit that comes to the company when
(31:40):
you're not paying a distributor to do that. And so
I mean we see ourselves as in operating at a
hybrid where we'll have you know, a cadre of distributors
and then we'll also have our own operations. And this
is a thing that you know, it takes time. It
takes us this this year of twenty twenty five, we
have let several of our distributors know this that this
(32:01):
is happening, and we're working with them in the transition.
But the transition will not occur until January first of
twenty six. So we're building our own salesforce today, you know,
establishing the capabilities and systems to support the product us.
And as I say, this is not an uncommon process
were companies to go through, as have they been in
(32:22):
markets for you know, extended periods of time. But we
have a great group of distributors and you know, again
we intend to have a hybrid of both distributors in
our own direct operations.
Speaker 1 (32:34):
Yeah, and so then what's I'm curious though, is about
what what made this year kind of the year to
do it versus maybe wait another year or do it
a year earlier. What were some of the you know,
the signs that you were looking at to say, Okay,
this is the right time to do it.
Speaker 2 (32:51):
Well, I think that it's. Uh. I think it's a
couple of things. First, I would say that over the
last year, we'd have brought on new leadership in our
US operations and o US operations, people who have a
great deal of experience in doing this going direct. They
understand how to develop the systems, the organization, the infrastructure
(33:12):
to support it offshore. And I think that was a
that was definitely an important element of that. And I
think that you know, as as this is also something
that's going to improve profitability as we go on, and
I think, you know, we need to show steady improvement
and profitability and that's that's that's the second way. So
I think it was just timing. It was it was
(33:32):
the right time. We have the right team, and profitability
is uh, you know, it is something that we're really
focused on as an organization and this is a key
element in eating our objectives. Yeah.
Speaker 1 (33:45):
No, it definitely seems like the right step for you know,
how you build it out. And I've seen other diabetes
companies themselves be able to go from distributor to direct
in that same manner. Let's let's let's round out the
rest of the call with kind of the pipeline, Cause
we talked a lot about exciting things that just launched
or has been in the market for a while, but
there's there's some that you still have a pipeline full
(34:06):
of new potential products and accessories add on things like that.
Why don't we start with Moby Because you talk about
Moby being a smaller form factor, you talk about it
being discrete and everything. The one thing they think about is,
you know, it's still using a infusion set right now,
and I know one of the developments in the long
(34:27):
run was going to be having one without an infusion set.
So just direct on the body where I'm curious how
those developments are going, and anything else than within the
MOBI that kind of can be more of a I
don't want to say traditional on the wear pump, but
you know one that can be kind of that, you know,
(34:47):
on the wear pump that you would have on your
arm or your leg or something like that.
Speaker 2 (34:51):
Well, I think that we're we're still in the midst
of the rollout from MOBI. Moby currently has it has
it has been on the market for really out about
a year It's currently integrated with the Xcom G six
and G seven sensors, the G seven being the most
advanced sensor that that dexcompass in the market. It's also
(35:12):
integrated with iOS and it turns out that you know,
the majority of people in the US use io s,
but as we start to go o US, Android is
a more important UH phone factor there as well. So
so we're we're in this year we'll be integrating it
with Android. We're also integrating both Teslam and will be
(35:34):
with the Freestyle Livery three from Abbott, which is their
competitive sensor. It's a it's a it's a sensor that's
actually done quite well in the US market and in
the OU S O U S markets and so you
know it UH by having the pumps provide choice, people
who are using these sensors now have the opportunity to
consider using pump therapy. So it's a that's a very
(35:55):
important feature that we're going to be adding this coming year.
We're also so in the midst of going to get
ce Mark on Mobi so we can get it into
the OUs markets, and we expect to have cee Mark
this year as well. One of the really exciting things
about Moby is we have a tube less version of MOBI.
We have it's a it's really just the supplies where
(36:19):
there's a different cartridge and there's an infusion plate instead
of an infusion set, and you can wear MOBI exactly
like you would for a tube less system. And that
is important because it gives people maximum versatility and how
they wear it so and we think that's a really
important factor, is you can wear it with a tube
or without a tube, and there's reasons why you would
(36:40):
want to use each. And then, as you said, we
also have a fully tubeless product we call SIGGI that's
under development right now, and that will round out the portfolio.
So we'll have three products. We'll have t Salin, we'll
have Moby, which is maximum versatility, and then we'll have
Siggy which as a as a tube less offering. And
(37:03):
as we look at the marketplace, there are definitely people
out there that would not come to pump therapy unless
there's a tube less option, and so we we believe
that we need all three of these processes. I said,
just to deal with the different segments of the diabetes community.
Speaker 1 (37:18):
Yeah, no, there's there's like I said, there's a lot
in the pipeline for future innovation. So maybe we just
close out this episode. So you've been with Tandem if
I did my math right about nearly twelve years, the
last six years as CEO. During that time, we kind
of highlighted a huge change that took place in the
(37:40):
insulin pump market, and you know, continuous innovation on the
patch where you know, aids, touchscreens, mobile apps. You're seeing
more competitors enter the space, You've seen competitors leave the space.
You know, twenty twenty five, there's more headlines too because
(38:01):
of a new or not new, but a new IPO,
so that that company is gained more attention. And that
doesn't even go about then you have your own internal
developments with pipeline, with salesforce change, things like that. As
the leader of the company, how do you keep the
(38:21):
employees focused on the Tandem future and being able to
drive all these innovations and developments and commercial rollouts and everything.
Speaker 2 (38:31):
Well, I think that one of the great things about
Tandem is the fact that we are mission driven as
a company, and every single employee within the company understands
that we're trying to improve the lives of people who
have diabetes. And we're doing that in two ways. One,
we're innovating, I mean innovation extraordinary innovation and customer service
are two of the areas that we have most of
our focus. I think that if you look back over
(38:53):
the last twelve years, Tandem has innovated faster than our competitors.
We have done more interesting things, and we we have
the most exciting pipeline in diabetes. So I think that's
very important. But customer service is also hugely important. And
I think that if you look at there's third party
entities out there that look at NPS scores for your
service and and Tandem and consistently ranked highest. And so
(39:17):
how do you get there? Again? You you have to
have this dogged focus on helping people with diabetes. You
have to develop a customer excuse me, a culture within
the business where you treat people with respect, you're transparent, uh,
you know, you're just you're honest with the employees. And
then I think you have to hire great people. And
(39:37):
but I think it's the culture of the mission driven
aspect of the business, the fact that we are focused
on innovation and customer service, and the fact that we
have great people. You know, that's that's that's how you
do it. You have to you have to have all
of those things firing and all, you know, all cylinders.
And I think that's that's how Tanamis has progressed and
(39:58):
and continued to grow. And I think that's what's going
to help us, you know, continue to grow and profitability
and in revenue in the future. So we're very excited
about our future, and you know, we look forward to
helping more people with diabetes.
Speaker 1 (40:13):
Yeah, and I look forward to seeing the next twelve
months because I feel like when you're back on this
series in twenty twenty six, it's going to look like
a different tandem than it does today.
Speaker 2 (40:23):
A lot will have happened in the last two in
this coming year for fear.
Speaker 1 (40:27):
Oh yeah, well, John, thank you for joining us today.
I appreciate you hopping on.
Speaker 2 (40:32):
All right, Matt, good talking to you.
Speaker 1 (40:33):
Thank you, yep, and thank you to our listeners for
tuning in today. We hope you join us for future episodes,
and if you want to stay up to date, please
click the subscribe button on Spotify or your favorite stream platform.
Speaker 3 (40:44):
Take caresses us abases
Host
Jonathan Palmer
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