Memorandum

Medtronic begins shipping Guardian Connect mobile CGM in US; Sugar.IQ app also launched on iOS – June 13, 2018

Executive Highlights

  • Medtronic has begun shipping the Guardian Connect mobile CGM in the US, as expected following FDA approval in MarchThe company’s major foray into the standalone US CGM market includes the Guardian Connect app on Apple iOS (no receiver), the seven-day wear Guardian Sensor 3 (two fingerstick calibrations/day, adjunctive label, MARD: 9%-10.6%), and the reusable clamshell transmitter that adds Bluetooth. Predictive high/low alerts come up to 60 minutes in advance, a major marketing focus.
  • The IBM-Watson-powered Sugar.IQ companion app is also finally available on Apple iOS, exclusively for Guardian Connect users in the US.The long-awaited app uses artificial intelligence to find patterns in diabetes data related to food, daily routines, and CGM data. Along with no receiver, Sugar.IQ is the most differentiated aspect of the system – and this first-gen paves a path to potentially more compelling decision support over time (as shared in the Analyst Meeting last week).

    This afternoon, Medtronic announced via blog postthat the Guardian Connect standalone mobile CGM and companion Sugar.IQ app are now shipping in the US. Both apps are now in the US iOS app store – see them hereand hereand screenshots below.

    The US launch follows FDA approval in March(~two-year review!) and comes in line with Medtronic’sAnalyst Meetinglast week and the 1Q18 call. This long-awaited CGM launch comes over a year later than originally expected, but represents a critical strategic foray for Medtronic: into MDI and the high-growth standalone US CGM market.

    As previously noted, Guardian Connect does not have a receiver – CGM data can only be viewed on the Apple iOS smartphone app. This is an FDA first and a win for Medtronic, who has less hardware to maintain and can market a lower-upfront-cost system (especially vs. Dexcom’s G5/G6, which require a receiver purchase).

    Guardian Connect is approved for 14-75 year olds, uses the seven-day-wear Guardian Sensor 3, and is approved with an adjunctive label (i.e., no Medicare coverage). MARD is 9% on the upper arm and 10.6% on the abdomen with two fingerstick calibrations per day. The system still uses the familiar clamshell transmitter, which adds Bluetooth, lasts one year, and is rechargeable.

    Beyond no receiver, the big marketing focus is on a “Smart CGM” with predictive high and low alerts, which come 10-60 minutes in advance of an event occurring – we’ll be eager to hear how users like these and if there is alert fatigue. (Dexcom’s G6 new urgent low soon alert comes 20 minutes ahead of a predicted <55 mg/dl event.) All CGM data is uploaded to CareLink automatically, and caregivers can notably receive text message alerts for highs/lows.

    As expected, the IBM-Watson-powered Sugar.IQcompanion app only works with Guardian Connect – a competitive differentiator in the standalone CGM market. We were able to go through a quick Sugar.IQ tour after downloading, but actual use requires a CareLink account associated with the Guardian Connect system. The user experience and interface is identical to what we’ve seen previously. For maximum value, users will need to manually log foods in Sugar.IQ, which runs separate from the Guardian Connect CGM app. We love the “glycemic assist” feature, which allows users to “follow” certain foods and see their typical CGM response. Sugar.IQ can also read exercise data from Apple Health.

    Unlike Dexcom’s G5/G6, Guardian Connect does not have a dedicated Apple Watch app. (It only relays high/low notifications to the Watch.) However, Guardian Connect does have an iPhone lock screen widget – like Dexcom’s G5/G6 – which is vital for minimizing user burden on the phone (i.e., no need to unlock phone to view data).

    Medtronic’s first priority is an Android app for Guardian Connect, but no timing has been shared. For context, Dexcom’s G5 on Androidcame ~18 months after G5 on iOS – will Medtronic’s partnership with Samsung help accelerate things faster than that? We’d guess so.

    The US CGM market is highly underpenetrated in both type 1 and type 2, so another accurate, smartphone CGM is outstanding for patients. Compared to Abbott’s FreeStyle Libre and Dexcom’s G6, Guardian Connect does require more daily fingerstick calibrations (2 vs. 0), has a slightly shorter length of wear (7 vs. 10 days), has a slightly bulkier on-body form factor, and brings less smartphone/watch compatibility (iOS only vs. G6’s iOS/Android). That said, the Sugar.IQ app, no receiver, predictive alerts, and Medtronic’s marketing/payer muscle should certainly drive meaningful adoption for this system.

    For more on Guardian Connect, see our March approval coverageand thepreviously-shared SWOT analysis below. We covered Medtronic’s next-gen CGM and MDI Solutions pipeline in Analyst Meeting coverage last week.

    Guardian Connect – Strengths, Weaknesses, Opportunities, Threats

    Strengths

    • No receiver – smartphone-only display reduces startup cost, simplifies launch, and ensures data capture for all users
    • Sugar.IQ with IBM Watson companion app – differentiator to make CGM data more useful and meaningful
    • Guardian Sensor 3 approved for both arm and abdomen-wear 
    • Predictive alerts 10-60 minutes in advance of lows/highs
    • Remote monitoring includes text messages, plus a web app that can be accessed from any internet-connected device (no separate follower app)
    • Medtronic’s payer relationships, especially with Aetna and UHC

    Weaknesses

    • Adjunctive claim excludes from Medicare reimbursement; Medtronic cannot market “insulin dosing”
    • Reusable transmitter remains a bit clunky and requires a fair amount of additional tape
    • Two daily fingerstick calibrations, with patients also “occasionally” requested to provide diagnostic calibrations
    • Not available on Android
    • No pediatric indication – only approved for 14+ years
    • No Apple Watch app to view real-time data (only notifications)
    • Does not post glucose data to Apple Health

    Opportunities

    • New business models, given no receiver and payer relationships? 
    • Additional Sugar.IQ features, especially hypoglycemia prediction and therapy Q&A/advice
    • Android app
    • Pediatric indication (<13 years)
    • Paves the way for a Bluetooth-enabled version of MiniMed 670G/Guardian Sensor 3
    • Reducing daily calibrations
    • Moving to a disposable transmitter

    Threats

    • Abbott FreeStyle Libre and next-gen Libre, Dexcom G6, Senseonics’ Eversense – all strong standalone CGMs 
    • Will the predictive alerts have high nuisance factor?
    • Will Sugar.IQ emerge as a differentiator? Will the app see sustained engagement, particularly with max value requiring manual food logging?
    • Can Medtronic turn itself into a CGM-driven company? 

    Guardian Connect App Pictures

    Sugar.IQ App Pictures

     

    --by Adam Brown and Kelly Close