Wednesday, May 01, 2024

by David Kliff of the Diabetic Investor

I doubt anyone would argue that we have seen major advancements in diabetes technology. Conventional fingerstick glucose monitors (BGM) while still around are being replaced by Continuous Glucose Monitoring Systems (CGM). Insulin pumps have become Automated Insulin Delivery systems using CGM and sophisticated insulin dosing algorithms which learn. Insulin pens once “dumb” devices have transformed into “smart” connected devices.

There are a plethora of apps which do everything from tracking activity to helping patients more effectively manage their diabetes. It’s not an understatement to say our mobile phones have become a valuable healthcare tool. Throw in all the websites which help patients and social media sites where patients can help each other and it’s easy to see why technology has changed diabetes management and healthcare in general forever. 

However, thanks to drugs like Ozempic, Wegovy, Mounjaro and Rybelsus, some believe there is no future for all this whiz bang way cool technology, that their future is bleak. Publicly traded companies such as Dexcom and Insulet have seen their shares prices plumet as analysts falsely believe that these new therapies will dominate diabetes/obesity management. 

It's easy to understand why they feel this way as these therapy options are very effective, simple to use and in high demand. Therapy adherence is not an issue with these latest drugs. Patients want to use them and are willing to pay $1,000 a month or more to do so. Understandably, shares of Novo Nordisk and Eli Lilly have taken off like a rocket due to the high demand for these therapies. 

Yet the perception that they will kill the future for diabetes technology is just that, a perception. Here’s why: 

1. To date, none of these therapies are approved for people with Type 1 diabetes.
2. While extraordinarily popular they are NOT for every patient.
3. As effective as they are, physicians are loath to change a treatment paradigm which is working.
4. Given their cost and how they work, patients regain weight if they stop taking them. Yes, reimbursement is improving but it’s still not widespread.
5. Recent evidence suggests that CGM sales are being enhanced by these therapies as patients once they lose the weight use CGM technology to help them keep the weight off. 

Let’s examine the Type 1 market first. As you know patients with Type 1 diabetes must have insulin. Even with the advanced AID systems only 35% of Type I patients use this technology. Old fashioned syringes remain the cheapest and most popular insulin delivery option. Insulin pens, even the connected version, are the second most popular option. 

Put simply given the size of the market, which unfortunately continues to grow, these systems have plenty of room to grow. Patients already using this technology will NOT abandon it because of these new therapies. These technologies also have another advantage as they are widely reimbursed and therefore cheaper than the newer therapies. 

The wildcard is the larger Type 2 market. Intensive insulin management has grown in popularity but these patients who either don’t produce enough insulin or don’t absorb insulin well or both are candidates for the newer drugs. The unknown questions are how many will either convert to the new drugs and how many will be out on them and not even get to using insulin. 

In the near term my belief is while some Type 2 patients will adopt the newer drugs as whole, they will not hurt usage of diabetes technology. As we mentioned earlier, the newer options are not cheap and if they are already doing well using diabetes technology, why switch? 

Insulet is the perfect case study here. The Omnipod system is very popular not just with Type 1 patients but also patients with Type 2 diabetes who previously followed multiple daily injection (MDI) therapy. The Omnipod is discreet, easy to use, widely reimbursed, available via the pharmacy channel while producing solid patient outcomes. Is it possible that sales of the Omnipod will be impacted in the future? Of course, but we are talking about years not months in the future. 

Dexcom is the perfect case study for CGM. Besides being a critical component of the newer AID systems and widely adopted by patients following MDI therapy, CGM is also becoming a general health and wellness tool. Abbott the makers of the Libre CGM recently noted that sales of Libre have been positively impacted by the newer therapies for the reason I stated earlier. 

It should be noted that Novo Nordisk and Lilly have connected insulin pen options which communicate with Dexcom’s and Abbott’s CGM systems. These are the companies that are dominating the GLP-1 market. They know full well that not every patient will adopt GLP-1 therapy. Simply put, insulin usage will not fall into the abyss because of their other drugs. 

Suffice it to say, in the near-term diabetes technology is alive and doing very well. The long-term impact in the Type 2 market remains unclear but it would NOT prevent me from recommending companies like Dexcom and Insulet as investment options. Change as we know happens slowly in diabetes/obesity management. There is no question whatsoever these new drugs are game changing. Their impact cannot be understated. But to paraphrase Mark Twain, reports of diabetes technology death have been greatly exaggerated.