Memorandum

Medtronic MiniMed 530G threshold suspend insulin pump, Enlite sensor secure FDA approval; launch in next several weeks - September 27, 2013

Executive Highlights

  • Medtronic just announced that the FDA has approved the company’s MiniMed 530G with Enlite (threshold suspend insulin pump and Enlite CGM sensor). 
  • Launch of the MiniMed 530G system is expected in the next several weeks.
  • As a condition of approval, Medtronic will conduct a post-approval study, engage in direct patient follow up, and make certain manufacturing accommodations.
  • Recent MiniMed Revel pump/CGM buyers can upgrade for free per Medtronic’s New Technology Program. In-warranty patients will be able to upgrade for $399.

Just this morning, Medtronic announced that the FDA approved its MiniMed 530G with Enlite, the US version of the Veo (the MiniMed 530G with Enlite is very similar but not identical to Veo)! Medtronic will begin ramping up production “immediately” to prepare for a launch “in the next several weeks.” The approval reflects a ~15-month review process by the FDA (though it’s really been a four-year journey, as the pump was launched outside the US in more than 50 countries in September 2009). This news comes well ahead of management’s most recent estimate in Medtronic’s F1Q14 call, which called for approval of the MiniMed 530G by April 30, 2014 (though that itself was management’s third delay in an estimated approval timeline).  

As a reminder, Medtronic received a warning letter from the FDA on September 19 related to its insulin pump quality systems. This morning’s press release explains that Medtronic has already addressed many of the observations noted in the warning letter and is committed to resolving those that remain as quickly as possible. Indeed, as part of the approval, Medtronic will conduct a post-approval study (slightly surprising considering the onerous ASPIRE inpatient and in-home studies), engage in direct patient follow up, and make certain manufacturing accommodations.

The MiniMed 530G “Threshold Suspend” (the US terminology for “low glucose suspend”) automation feature automatically stops the delivery of insulin if CGM glucose levels reach a preset threshold and if the patient is unable to respond to the Threshold Suspend alarm – the press release notes that this is to be set by a healthcare provider from 60-90 mg/dl (vs. 60-110 mg/dl in the Veo). Once the threshold is met, the MiniMed 530G system will first alert the wearer with an alarm. If the user does not react, the system will suspend all insulin delivery for two hours. Insulin delivery can be resumed at any time. In short, the system works exactly the same as the Veo.

Medtronic will have upgrade options for both recently new and existing patients, and the devil will be in the details – which are not available yet but will be in about 60 days. We do know that customers who enrolled in the company’s New Technology Guarantee Program are eligible for a free upgrade to the MiniMed 530G/Enlite CGM. (These customers purchased a Revel system with CGM through a special promotion Medtronic ran for several months.) Additionally, later this year, Medtronic will have a Path2System program, which will allow in-warranty customers to upgrade for about $399. How many patients can qualify for this is undisclosed for now. Sensor pricing isn't yet known, and we assume there will be a premium for the six-day sensors, so something more than double the price of the three-day sensors. 

Overall, we see this news as a big step for patients (less hypoglycemia, better CGM), a leap forward for the FDA (continuing encouraging signs), and a big win for Medtronic (helping its struggling US business – it will be interesting to see which groups of patients will be paying full cost for the pump). We discuss why in the bullets below, along with thoughts on what it means for the industry (more competition) and the key questions in artificial pancreas development. Medtronic already has the MiniMed530G and Enlite sensor up on its US website, www.medtronicdiabetes.com. Impressive timing!  

 

 

Additional MiniMed 530G Details

  • The MiniMed 530G with Enlite is only labeled for patients 16 years and older. Medtronic will continue to manufacture the Paradigm Revel system with the Sof-sensor for patients ages 7-15 years. Encouragingly, the company does have an approval from the FDA on the study protocol and plans to begin it shortly. We would guess many HCPs will prescribe the MiniMed 530G off label, though we’ll have to wait and see. 
  • As we understand it, US patients will not be able to use the Enlite sensor with a previous generation pump. This reflects the FDA’s approval of the MiniMed 530G as “a system.”
  • Given the positive ASPIRE in-home data, we wonder if Medtronic will be able to obtain better reimbursement for the MiniMed 530G. For now, the same reimbursement (HCPCS) codes as other pumps will be used at launch. Medtronic has also applied for a new code with CMS for sensor-augmented pumps. The company will be evaluating additional reimbursement codes based on this new category of devices – this is certainly a long and uphill battle. 

For Patients - Less Hypoglycemia

  • As a reminder, very encouraging results from the ASPIRE in-home study of the MiniMed 530G were presented at ADA 2013 and simultaneously published in the NEJM (Bergenstal et al., 2013). For the full details, see page 90 of our ADA 2013 report at http://close.cx/ADA2013FullReport. The trial showed a 32% reduction in nocturnal hypoglycemic events and a 38% reduction in mean area under the curve (magnitude plus duration) of nocturnal hypoglycemia events. Notably, these benefits occurred without an increase in A1c levels. The data was stronger than many expected, and we wonder if it was submitted to the FDA following its release. Medtronic featured these statistics quite prominently in its EASD 2013 exhibit hall booth – see our report at http://www.closeconcerns.com/knowledgebase/r/3623657f.
  • Also at ADA, low glucose suspend with the Medtronic Veo eliminated (!) severe hypoglycemia without any increase in A1c. This data came from Dr. Trang Ly’s (Princess Margaret Hospital, Perth, Australia) randomized controlled trial (228-OR) comparing low glucose suspend (LGS) with the Paradigm Veo to pump-only therapy over a six-month period in 95 patients with hypoglycemia unawareness. Dr. Hans DeVries called it “the most important study at this whole meeting.” For more details, see pages 90-92 at http://www.closeconcerns.com/knowledgebase/r/94f937d8

For Patients - Better CGM

  • The new Enlite sensor features several improvements over the previous Sof-Sensor, including a reported 31% improvement in overall accuracy. As a reminder, the MARD of the Sof-Sensor was 19.7% (per the label), implying that the official MARD of the Enlite sensor is ~13.6%. Additionally, Medtronic reports that the Enlite detects up to 93% of hypoglycemia episodes when predictive and threshold alerts are on (we’re not sure how many of these are false alarms, though it’s great to see such a high number).
    • We would note that there has been ongoing debate in the scientific community as to the accuracy of the Enlite sensor. At ADA 2013, Dr. Steven Russell presented a head-to-head-to-head accuracy comparison of the Abbott FreeStyle Navigator, Dexcom G4 Platinum, and Medtronic Enlite CGMs in 24 patients simultaneously wearing all three sensors in 48-hour closed loop experiments. Dexcom’s G4 Platinum was the most accurate sensor (MARD: 10.8%, 85% in Zone A of the Clarke Error Grid), followed closely by Abbott’s FreeStyle Navigator (12.3%, 84% in Zone A); both were much more accurate than Medtronic’s Enlite with the Veo algorithm (17.9%, 68% in Zone A). Certainly, it’s very challenging to compare across studies, though the head-to-head-to-head, independent nature of Dr. Russell’s study makes it very credible – that said, this was a very small study, as noted. Additionally, we are not certain about calibration specifics, which certainly affect results.  
  • The Enlite sensor is 69% smaller and 38% shorter than the Sof-sensor – this is a major improvement and should not be underestimated in our view. The Sof-Sensor’s large needle gauge and pain factor was a complaint of many HCPs, patients, and parents. The new Enlite sensor also has a simpler sensor insertion process with a 90-degree insertion angle (vs. 45 degrees with the Sof-Sensor) and a hidden introducer needle. According to Medtronic, in a clinical study of the Enlite sensor, 80% of people agreed that they did not feel the sensor under the skin and 71% stated that the insertion was pain-free. For those Medtronic pumpers that are skittish about CGM due to pain or needle fears, these Enlite improvements could be a very significant advance.
  • With two next-generation CGM approvals in the US in the last 12 months (Dexcom’s G4 Platinum was approved on October 5), we believe that the improved iterations will help to overcome some of the patient and provider perceptions concerning accuracy and hassle that have hampered uptake in the past. Further, we expect renewed commercialization efforts to help raise awareness to the benefits of CGM, which could facilitate patient-driven uptake. According to Dexcom CEO Terry Gregg’s comments in 3Q12, the CGM category has 6-7% penetration in the US diabetes market and “the tipping point” could come around 8-9%.

For the FDA - A Leap Forward

  • The press release notes that the MiniMed530G is the first device cleared under the new FDA product classification, “OZO: Artificial Pancreas Device System, Threshold Suspend.” As a reminder, the FDA issued its final guidance on artificial pancreas device systems on November 9, 2012 (see our report at http://www.closeconcerns.com/knowledgebase/r/d8ed7b95). In that document, the FDA combined the previously separate low glucose suspend and artificial pancreas device system (APDS) draft guidances into a single document. However, it also separately divided artificial pancreas systems into three categories: threshold suspend systems, control-to-range systems, and control-to-target systems.
    • As we noted back in November, the theme of the FDA’s AP guidance document is “flexibility,” a word that is emphasized starting in the background section on page two. Encouragingly, the finalized guidance included pretty much everything that JDRF asked for in its comments on the draft guidance. At the time, we felt most strongly that the guidance would help speed the path to market for predictive low glucose suspend systems (PLGS), which must only show that they significantly decrease hypoglycemia over standard care – highly achievable in our view given the strong performance these systems have demonstrated in computer simulations and outpatient trials thus far. As of the most recent update in August, Medtronic’s predictive system, the MiniMed 640G, is expected to launch internationally within the next seven months. We hope that the MiniMed 530G approval also speeds up its timeline in the US.
  • There’s no question that the approval of the MiniMed 530G is a major step forward for the Agency and a really good sign for the entire field. We remember the 2010 FDA/NIH Artificial Pancreas Meeting like it was yesterday – the FDA’s Dr. Patricia Beaston closed her morning talk by highlighting the significant scientific challenges associated with approving low glucose suspend systems. At the time, she paid particular attention to the need to externally validate the system. In her words, “you can’t use the system to evaluate if the system works.” She was highly concerned with the inaccuracy of CGM, noting that CGMs have high false alert rates of 60%. It’s certainly been a long road for Medtronic from that point, including several clinical studies to demonstrate the aforementioned benefits for patients.
    • We’ve heard from several researchers that the FDA is moving in the right direction on the artificial pancreas. Certainly, the previously mentioned guidance was a win in its own right, though FDA reorganization has also improved things. On February 13, 2012, Dr. Bruce Buckingham and other closed-loop investigators received an FDA communication that oversight of the AP would be moved to the Office of In Vitro Diagnostics (OIVD), the same unit that reviews CGMs and meters. The goal of the move was to streamline things. In his April 2012 talk at Clinical DTM, Dr. Buckingham said, “It seems like a new day.” For the team’s recent studies at the time, the FDA had reviewed, processed, and responded to requests within 30 days. Overall, he believed that the move resulted in a “much, much quicker”  study process. His views also echoed Dr. Howard Zisser’s thoughts during the subsequent Q&A.

For Medtronic - A Catalyst for the US Business

  • Said management on the F1Q14 call, “Slow insulin pump system sales continued in the United States due to the delayed launch of the MiniMed 530G.” Indeed, F1Q14 was characterized as “another challenging quarter” in the US, with sales of $208 million representing a 3% year-over- year decline, the third straight quarter of negative stateside growth (the first time we’ve ever seen this since we’ve been tracking Medtronic).
  • Management has maintained for the past three quarters that the US business is expected “to return to solid growth” once the 530G launches in the US. Medtronic deferred $11 million in revenue in F1Q14 in anticipation of future customer upgrades to the 530G, an accounting move that certainly negatively impacted sales (a total of $33 million has been deferred to date). Once the approval does come through, growth will certainly look more impressive once all the deferred revenue is recognized.
    • As a reminder, the international launch of the Veo and Enlite were accompanied by a doubling in Medtronic’s growth rate in insulin pumps (10% to 20%) and CGM (~20% to 49%). While the international base of sales is lower than the US base of sales, we certainly expect an uptick in stateside performance once the MiniMed 530G is on the market.

For the Pump Industry - Competition

  • It will be interesting to see how the insulin pump space develops with this approval. Medtronic is the most dominant player in the US insulin pump space, with ~67% US market share by sales in 2Q13 (by our estimates). The company has historically done a great job of holding on to its installed base, and this approval should help on that front. What will be even more interesting is to what happens with non-pumpers and non-Medtronic pumpers.
  • There are certainly a lot of pumps in the pipeline in the near-term future:
    • Animas Vibe/Dexcom G4 Platinum: FDA just sent back a round of questions; launch timeline appears to be around late 2013/early 2014.
    • Asante Snap: Controlled Northeast launch in spring 2013, with more territories planned. Downloadable controller slated for 4Q13 launch.
    • Insulet: Just launched its second-generation OmniPod and is seeing extremely strong uptake (see our report at http://close.cx/Insulet2Q13), though we believe it is primarily still growing the market rather than taking share from competitive pumps.
    • Tandem t:slim/Dexcom G4 Platinum: FDA submission expected before the end of 2013. We assume this will be a 2014 launch.
    • Other insulin delivery devices: Calibra Finesse (further clinical trials in 2013), Cellnovo (plan to file in the US in 2014), CeQur PaQ (focused European launch in 2013 or 2014; recent funding for US regulatory activities), Valeritas V-Go (already launched in the US)  

Key Questions for Future Artificial Pancreas Development

  • Hybrid closed-loop vs. fully closed-loop: Although we believe that hybrid systems are the near-term future given the speed of current insulins, we have historically heard a great deal of enthusiasm for fully automated control. We wonder how much of the desire for fully automated control comes from a dream on the part of control algorithm researchers. Hybrid systems are less of a headache from a regulatory perspective, though fully automated systems are theoretically less burdensome for patients (assuming they work!) although we can imagine many patients wanting the capability to override the system. For example, we can imagine various discussions, especially early in the development math like “The AP said it was going to do this but I don’t want it to! I know better, and I want to override the system.” Early adopters will be extremely hands-on patients, which could actually present an additional development challenge from the get-go – or opportunity. Virtually the entire diabetes community believes that faster-acting insulin and better insulin delivery technology will be needed before fully automated control is feasible.
  • Insulin-only vs. insulin-glucagon control: This will continue to be a debate, though the near-term lack of a stable glucagon makes it fairly one-sided at this point. Xeris seems to be furthest along with a stabilized glucagon, with a clinical study to begin shortly. Per a recent JDRF press release, pump trials will take place over the next two years. That same press release mentioned Latitude Pharmaceuticals, who plans to begin testing a stabilized glucagon in pumps in 2014.
  • What do patients want? We believe this is a largely unaddressed question – do type 1 patients want to relinquish control to a machine? And to what extent will they be willing to do so? Ultimately, of course, there will be a range of views depending on various patients’ priorities. Some will not want the “hassle” and some will want to micro-manage the decisions and some will be at various points along a “control-relinquish” continuum.
  • What more could be done with open-loop therapy? We believe a number of important advances could quickly emerge with smarter CGM and more predictive alerts – for example, at the ADA/JDRF “Technology Night” at the 2012 Scientific Sessions, we saw an algorithm that tells patients what their blood sugar would be 30 minutes or 90 minutes ahead of time. This was developed by an entrepreneur with exceptional gifts on the mathematical front. Such advances in open-loop therapy could have a lower cost, an adjunctive claim, and perhaps a lower regulatory burden and we hope very much that patients would be able to access such technological progress much earlier than they would have to wait for the “real” long-term closed loop.
  • What is the potential market for an AP? Given the low rates of CGM penetration (5-10% of type 1s) and pumps (~30% of type 1s), the key question is how many patients will be willing to wear an AP? We believe that both open-loop as well as closed-loop systems will ultimately dramatically improve the utility of CGM and pumps and so we believe the number of patients that could be helped is vast. Already, even though there are a very high number of patients who advocate wearing pumps, it is established that insulin delivery as it stands today is sub-optimal for many patients.
    • Broadly speaking, the increasing automation that would come with an artificial pancreas has vast potential to reduce the burden current devices place on patients. Simultaneously, the clinical benefit with an artificial pancreas should also be higher relative to standard care – we believe this will be the case, although this will be key for patients to remember early stage in development of closed loop technology. Practically speaking, a predictive LGS or treat-to-range system would improve time in range and do it automatically (or with little patient input), leading to better control with fewer alarms and disturbances. This would, we believe, dramatically tilt the patient cost/clinical benefit balance in ways that have been missing with standalone devices.
  • What price premium will companies charge for an AP? What will it take for payers to cover it? Another key question is what level of clinical benefit payors will be willing to pay for. How will payers tradeoff the higher cost with reductions in hypoglycemia and/or improvements in A1c? What level of benefit will they like to see? Will the quest for reimbursement be easier than it was with CGM?
  • Academia and Industry: When the commercialization of the artificial pancreas was originally discussed (going back over a decade), the notion was that commercial entities would ultimately be able to leverage academic research to build products that would be made available to patients through companies. However, we’ve increasingly seen more interest in commercialization from academic researchers. While companies like Medtronic and Animas have their own closed-loop systems in development (Medtronic’s Veo, Predictive Low Glucose Management (PLGM), and Portable Glucose Control System (PGCS); Animas’ Hypoglycemia-Hyperglycemia Mitigation System (HHM)), academic institutions have also developed their own portable systems: the University of Virginia’s Diabetes Assistant (DiAs), Boston University/Mass General’s iPhone 4S/Tandem t:slim/Dexcom G4, and others. Ultimately we assume that academics’ companies will partner with companies, but this may not be a foregone conclusion.
    • While academia can be more nimble in terms of creating and iterating a system, companies have expertise in bringing products to market. Now, there is a pathway to market, and the fundamental question is whether some entities who are intent on having patients benefit from improvements in sensors and algorithms may try to go toward commercialization on their own. While these would likely be made obsolete eventually, we assume they expect that – but that they also may themselves be able to speed the path to the closed loop while also optimizing “hybrid” products.

 

Closer Look Coverage of the Insulin Pump Industry - 2013

Big Picture Coverage

Company Earnings Coverage

Conference Coverage

 

-- by Adam Brown and Kelly Close