The highly anticipated FDA clearance for Omnipod 5 is now anticipated by “the end of June or shortly thereafter” – this is similar though not quite the same as previous statements that FDA clearance was expected in the first half of the year. This is similar to what we heard from Tandem yesterday about smart bolus features and Tandem’s t:sport insulin pump though of course Tandem’s “big” approval of the Control-IQ came in mid-December, 2019, less than a quarter before WHO pronounced the global COVID-19 pandemic.
Despite delays at the FDA related to COVID-19-related backlogs, Insulet had previously maintained expectations to receive FDA clearance in the first half of the year and while we believe that this is still generally the case, a slight hedge has also been created, which is smart in our view since it’s difficult to interpret all the FDA responsibilities currently. It’s also likely challenging to understand how FDA capacity has changed not only due to new COVID-19 related diagnostics, but also due to less capacity on the part of the regulatory leaders and their teams due to a host of other factors. This new timeline now places the limited launch for the Omnipod 5 hybrid closed loop system into 2H21. Full market release of the system will likely happen late in 2021 or early in 2022. As a reminder, Omnipod 5 will be available exclusively through the pharmacy channel in the US and priced at parity with Omnipod DASH, a major win for access.
Impressively, Insulet once again reported record total revenue of $252 million in 1Q21, rising 27% YOY (+24% operationally) compared to 24% YOY growth in 1Q20. Sequentially, sales were relatively flat compared to 4Q20 which is impressive given Insulet’s sizeable US Omnipod business and the typical seasonal trend towards lower 1Q revenues. US Omnipod revenue came in at $143 million, up 23% on a very tough comparison to 35% YOY growth in 1Q20. OUS Omnipod revenue totaled a record $90 million in the quarter, rising 23% YOY on a tough comparison to 29% growth in 1Q20.
Insulet’s global Omnipod userbase has now “passed a quarter million” – this is a major milestone and we were very glad to hear it. Although this figure isn’t that different from Insulet’s 4Q20 userbase update in February, when the company shared that it has “~250,000” global Omnipod users. Insulet recorded its second-highest ever new patient starts figure in 1Q21, falling just short of the record set in 4Q20. As a point of comparison, Tandem shared its userbase update in its 1Q21 call yesterday and has “nearly 240,000” users to-date. Tandem also shared a figure of “more than 150,000” users now on Control-IQ. Of course, Medtronic still boasts the most pump users of the three with an estimated “~249,000” users on its MiniMed 670G system alone as of 1Q20 – that figure is certainly much higher now, particularly with MiniMed 780G launch internationally.
In 1Q21, Omnipod DASH accounted for “over 70%” of new patient starts in the US, up from “over 65%” in 4Q20 and “approximately 65%” in 3Q20 and 2Q20. The growing adoption of DASH comes as Insulet has secured coverage for “over 75%” of covered lives in the US across type 1 and type 2 populations, up slightly from “approximately 75%” in 4Q20. Overall, Insulet’s pay-as-you-go, pharmacy channel, no upfront-cost, Omnipod DASH system continues to drive a number of positive trends for the company. “Approximately 45%” of Insulet’s total US product volume ran through the pharmacy channel in 1Q21, up from “over 35%” in 4Q20. Insulet also estimated that “between 35% and 40%” of new US customers in 1Q21 were patients with type 2 diabetes.
Insulet reported its 1Q21 financial results this afternoon on a call led by CEO Shacey Petrovic and CFO Wayde McMillan. See our top highlights below.
- Omnipod 5 Highlights
- Financial Highlights
- 1. Record revenue of $252 million, rising 27% YOY; US Omnipod revenue of $143 million (+23% YOY); OUS Omnipod revenue of $90 million (+23% YOY)
- 2. Insulet increases low-end of FY21 guidance, now guiding for revenue growth of 16%-20% (from 15%-20%); US Omnipod guidance increased to growth of 22%-25%
- 3. Net loss of $0.0 million; gross margin of 66%, rising 230 basis points YOY; $850 million in cash and short-term investments
- Omnipod DASH Highlights
- 1. Global Omnipod userbase has “passed a quarter million” in 1Q21; record first quarter new customer starts; retention remains “very stable”
- 2. Omnipod DASH drives “over 70%” of new US starts; “over 75%” US covered lives for DASH; 45% of total US volume through pharmacy; 35%-40% of new US users are type 2s
- 3. International rollout of DASH: Expansion into Turkey in 1Q21, plans for Australian launch “later this year”
- Analyst Q&A
Omnipod 5 Highlights
1. Omnipod 5 limited launch delayed until 2H21; FDA clearance now expected “by the end of June or shortly thereafter”
The highly anticipated FDA clearance for Omnipod 5 has been delayed to “the end of June or shortly thereafter.” Despite delays at the FDA related to COVID-19-related backlogs, Insulet had previously maintained expectations to receive FDA clearance in the first half of the year. This new timeline now places the limited launch for the Omnipod 5 hybrid closed loop system into 2H21. However, Ms. Petrovic was clear that this delay is not expected to have a material impact on Insulet’s guidance and revenue for 2021 as the launch of Omnipod 5 in 2021 was to be limited in nature. Full market release of the system will likely happen late in 2021 or early in 2022.
During Q&A, Ms. Petrovic was asked whether the delayed approval timeline for Omnipod 5 was potentially related to the system’s smartphone control. The question was particularly pertinent as Tandem announced yesterday that its mobile bolusing feature will also be delayed by a few weeks. However, Ms. Petrovic expressed that this is not the case for Omnipod 5, stating, “I don’t believe this is due to anything but just the workload frankly at the Agency, and we’re really sensitive to that. They’ve done an incredible job navigating through all of the challenges related to the pandemic. Our local team – our review team – has been incredibly responsive and collaborative, and so we feel very good about where we are. We’re in the final stages of the review process, and I don’t believe that there’s any sort of any other drivers outside of the workload tied to the pandemic. In fact, we gave ourselves quite a bit of buffer in the timeline, and so my remarks are really prompted by the fact that we’re getting through that buffer, and so the review process is taking a bit longer than we expected, but we’re in the final stages and feel good about where we are.”
Pivotal data for Omnipod 5 was read out at ENDO 2021, showing Time in Range improvements of +2.2 hours/day to 74% in adults and adolescents (n=128) and +3.4 hours/day to 68% among pediatric users (n=112). Across both groups, reductions in hyperglycemia accounted for the majority of users’ Time in Range improvements, but adults and adolescents did also see reductions in hypoglycemia. Similarly, to other AID systems, Omnipod 5 also drove significant Time in Range improvements for patients overnight. A significant percentage of patients, 53% of children and 66% of adults, also achieved A1c values <7% over the course of Insulet’s 3-month pivotal trial. According to comments from Ms. Petrovic on today’s call, we can expect additional Omnipod 5 data at “conferences in June,” (we assume this means ADA 2021 or ATTD 2021) on the use of the system in pre-school children, patients transitioning directly from MDI to Omnipod 5, and quality of life outcomes among participants enrolled in Insulet’s Omnipod 5 pivotal trials.
During prepared remarks, Ms. Petrovic outlined Omnipod 5’s launch emphasizing price parity with Omnipod DASH. This was not the first time we heard management confirm pricing parity with DASH, and while we are glad to know it is still a priority for increasing access, it is also effectively declaring a value of $0 for algorithm development and execution – we’d love to know if perhaps it does assign a value for that and that the “price” of the traditional pump is effectively going down. Additionally, as we had previously heard, Omnipod 5 will be available “exclusively” through the pharmacy channel, and Ms. Petrovic shared today that Insulet has already secured “some coverage” from payers, and that the company is “right where we expect to be” in terms of coverage at this point. Insulet currently has 75% covered lives in the US for Omnipod DASH – presumably, all these people will have access to Omnipod 5, as well, but whether or not Insulet receives a premium from payers for Omnipod 5 will depend on ongoing negotiations. Given its price parity with Omnipod DASH and access through the pharmacy, Insulet expects most Omnipod 5 users to have access to the system for a monthly pharmacy co-pay of “under $50.”
Insulet plans to expand its “30 days of freedom” free trial period to new Omnipod 5 users. Currently, the program is available for patients interested in Omnipod DASH and will be also be available for Omnipod 5, as well, when that system is in full launch (i.e., late 2021/early 2022). So far, Insulet’s free trials have proved useful with “the vast majority” of patients who use the 30 days of freedom trial staying on the product. The ability to try Omnipod 5 for 30 days free is certainly a differentiating factor from other AID systems currently on the market which require a much larger upfront cost and years of commitment.
2. Preschool (ages 2-6) indication “on track” for “end of year” with FDA submission expected “shortly”; type 2 feasibility study now fully enrolled; Abbott integration “underway”
Management shared several specific updates on sub-projects for Omnipod 5 and plans for future indications and algorithm enhancements. Perhaps most notably, we heard updates on Insulet’s work toward an expanded Omnipod 5 indication for preschool-age type 1s (ages 2-6) and for type 2s. The first phase of the preschool study is now complete and “progressing well” through the planned 12-month extension phase, which is intended to allow Insulet to collect longer durable outcomes. Notably, all trial participants have elected to stay on for the 12-month extension phase to continue using Omnipod 5. Reiterating its position from 4Q20, Insulet continues to prepare to submit the first phase of the preschool data to the FDA “shortly” to support an expanded indication. Although Insulet’s preschool efforts are “on track in a normal world” for a label expansion “by the end of this year,” Ms. Petrovic cautioned that that timeline is somewhat difficult to predict due to the FDA’s workload and bandwidth.
Insulet’s type 2 feasibility study is now fully enrolled, and per Ms. Petrovic, the “results are illuminating.” During her prepared remarks, Ms. Petrovic drew upon the preliminary (n=4) type 2 feasibility data presented at ENDO 2021, which showed “encouraging results” with Time in Range improving from 27% to 59%, a 7.7 hours/day improvement among the four participants. Following the feasibility trial, Insulet will move into a pivotal trial. Prior to the pivotal, Insulet may make changes to the algorithm depending on the final results of the feasibility study. However, based on commentary during Q&A, it seems that based on currently available preliminary data, Insulet may not need to make changes to the algorithm prior to a type 2 pivotal trial.
During Q&A, Ms. Petrovic shared that Insulet’s integration of Omnipod 5 with Abbott CGMs is “underway.” As a reminder, this integration will require an additional FDA submission, but it will not require “any clinical work.” As a reminder, FreeStyle Libre 2, though cleared as an iCGM in June, still comes with a contraindication against use with AID systems. Despite this, Insulet has continued to reiterate its long-term intentions to integrate FreeStyle Libre into its AID system (see EASD 2020 and JPM 2021 remarks). Employees are Insulet are already working on integrating FreeStyle Libre with Omnipod 5 and in February, Ms. Petrovic promised updates in the future after Omnipod 5 gets to the market with Dexcom compatibility.
On a software front, Insulet continues to look toward advancements beyond Omnipod 5 that will “offer significant value to people living with both type 1 and type 2 diabetes.” Insulet doubled its product development workforce last year, “virtually all of” which “took place in some sort of software function,” which management shared to showcase the “significant focus” that Insulet has on software development. As a few examples of projects conducted by this expanded workforce, management shared that Insulet is working to: (i) advance its algorithms for improved ease of use, greater automation, and better outcomes; (ii) expand the sensors and phone platforms with which it integrates; and (iii) improve its data insight and decision support capabilities “to generates insights for pts, payers, and clinicians.” While management offered few details on these projects, they did note that once Omnipod 5’s full market release is complete, they will share more details.
1. Record revenue of $252 million, rising 27% YOY; US Omnipod revenue of $143 million (+23% YOY); OUS Omnipod revenue of $90 million (+23% YOY)
Insulet reported record total revenue of $252 million in 1Q21, rising 27% YOY (+24% operationally) on a tough comparison to 24% YOY growth in 1Q20. Sequentially, sales were relatively flat compared to 4Q20 which is impressive given Insulet’s sizeable US Omnipod business and the typical seasonal trend towards lower 1Q revenues. For the quarter, 27% YOY growth represents an outperformance compared to guidance from 4Q20 for 20%-24% YOY revenue growth. Growth in the quarter was driven almost entirely by Omnipod sales with total sales of $233 million growing 23% YOY (+19% operationally) and outperforming guidance. Drug Delivery also contributed significantly in the quarter, coming in right in the middle of its guidance range at $19 million (+130% YOY). With the exception of 4Q20 which saw total revenue growth of 18%, 1Q21 marks the 10th quarter of >20% YOY growth for Insulet in the last three years which is certainly a testament to the company’s expanding user base and strong product offerings.
US Omnipod revenue came in at $143 million, rising 23% on a very tough comparison to 35% YOY growth in 1Q20. Sequentially, sales fell slightly from a record high of $149 million in 4Q20. US growth was driven by increased Omnipod DASH adoption and the “continued [channel] mix benefit” of moving into the pharmacy channel, where Insulet realizes higher per-patient revenue. Insulet continues to see strong growth in the pharmacy channel which now represents “approximately 45%” of US volume, up significantly from “over 35%” of US sales in 4Q20. Omnipod DASH continues to represent the majority of new patient starts in the US, accounting for 70% in the quarter – this compares to “approximately 65%” in 3Q20 and “over 65%” in 4Q20. On new patient starts, Mr. McMillan shared that 1Q21 “were a record for any 1Q in [Insulet’s] history, and second only to the very strong Q4 [Insulet] achieved last year.” With Omnipod 5 expected to get FDA approval and launch in the near future, we anticipate Insulet will continue to see strong US revenue and growth – though it’s hard to forecast exactly, given the increased value associated with higher time in range, which we believe Omnipod 5 will bring to virtually all users, we also won’t be surprised to see sharply higher growth in demand, which may well be very offset by higher development and marketing and access expenses. This is pure speculation at this stage, of course.
OUS Omnipod revenue totaled a record $90 million in the quarter, rising 23% YOY on a tough comparison to 29% growth in 1Q20. Despite continued COVID-19 related shutdowns and a somewhat slower vaccine roll-out in much of Europe, Insulet is seeing a strong recovery driven by increased adoption of Omnipod DASH with “the majority” of new international patients starting on Omnipod DASH, according to comments from Mr. McMillan. Mr. McMillan also shared that 1Q21 benefitted from the “timing of PDM orders which can vary quarter-to-quarter” across distributor channels. While this is not a boost Insulet expects to receive consistently, and it may become less of a factor with eventual smart phone control for Omnipod 5, it was certainly a positive for the quarter.
Drug delivery closed out the quarter with $19 million in revenue, more than doubling (+130%) YOY, largely driven by an increased interest in remote medication delivery due to COVID-19. Since 3Q16, Insulet’s Drug Delivery business revenue has hovered around $15-$19 million and hasn’t received significant attention during earnings calls, but with increased interest in at-home delivery of therapies, Insulet has seen significant revenue increases over the last year, most notably in 2Q20 when Drug Delivery revenue was a record $24 million. Drug Delivery is not expected to be a growth driver in the near future as Insulet is largely focused on its primary Omnipod business.
2. Insulet increases low-end of FY21 guidance, now guiding for revenue growth of 16%-20% (from 15%-20%); US Omnipod guidance increased to growth of 22%-25%
Insulet today raised the low-end of its full-year guidance to 16% making the new full-year 2021 growth range 16%-20%. Insulet had previously been guiding for revenue growth of 15%-20% YOY. Based on $904 million in revenue for FY20, 16%-20% YOY growth represents FY21 guidance for $1.05-$1.08 billion. Notably, if this guidance is met, 2021 will mark Insulet’s first year with over $1 billion in revenue. This would meet Insulet’s revenue target first set out at Investor Day in 2016.
Insulet also updated its US Omnipod revenue guidance to 22%-25% growth for the year, compared to 21%-25% previously. The guidance change is “driven primarily by Omnipod DASH volume growth, the benefit of [Insulet’s] efforts to drive expanded access and awareness, [Insulet’s] differentiated pay as you go model, and the mixed benefit [Insulet] realizes in the pharmacy channel.” For Insulet’s OUS Omnipod business, management raised full year 2021 guidance to 11%-15% growth (compared to 10%-15% previously) and Mr. McMillan shared that Insulet expects its international business “to be impacted by the pandemic and related challenges, combined with the compounding impact of new customer starts in 2020.” Based on figures from this quarter, Insulet certainly appears to be on track to meet these targets.
Insulet also provided guidance for 2Q21, sharing that Insulet expects to see 11%-14% YOY total revenue growth ($251-$258 million). Looking specifically at Omnipod, Insulet is guiding for growth of 14%-17% ($230-$236 million) with US Omnipod growth of 17%-20% ($151-$155 million) and OUS Omnipod growth of 10%-13% ($80-$83 million). At this point, Insulet does not expect Drug Delivery to continue its strong performance, instead issuing guidance of revenue declines of 16%-24% for 2Q21 due to “the normalization of order volumes in the current year as compared to elevated levels in the prior year due to the pandemic.” As a reminder, 2Q20 represents a tough comparison for Insulet as the company saw a $4-$5 million benefit related Omnipod inventory stocking and record Drug Delivery revenue.
3. Net loss of $0.0 million; gross margin of 66%, rising 230 basis points YOY; $850 million in cash and short-term investments
Insulet nearly broke even for the quarter, reporting a (rounded) net loss of $0.0 million. This compares to a $2.1 million net loss in 1Q20. Operating expenses in the quarter totaled $151 million, up from $119 million in 1Q20; however, Mr. McMillan attributed this increase to pipeline investments, including the ramp to launch of Omnipod 5 and Insulet’s growing direct-to-consumer marketing campaign.
Turning to margins, Insulet continues to make progress, reporting a gross margin of 66% in the quarter, up 230 basis points YOY. Per Mr. McMillan, margin improvement was driven by manufacturing efficiencies as well as the continued shift into the pharmacy channel. Though we didn’t hear any updates on manufacturing today, as of 4Q20, Insulet had installed its third “highly automated” US manufacturing line and had opened a second contracted manufacturing site in China.
As of the end of 1Q21, Insulet had $850 million in cash and short-term investments. Mr. McMillan characterized Insulet’s cash position as “strong” and Insulet does not have any debt maturing until 2024. Additionally, Mr. McMillan shared that Insulet recently completed a $500 million term loan B financing, as well as a $60 million revolving line of credit. Insulet plans to use its term loan B financing to pay down a “portion” of the outstand convertible debt due in 2024 to “lower [Insulet’s] cost of capital while also maintaining flexibility to pursue future strategic investments.”
Omnipod DASH Highlights
1. Global Omnipod userbase has “passed a quarter million” in 1Q21; record first quarter new customer starts; retention remains “very stable”
Insulet’s global Omnipod userbase has now “passed a quarter million.” While hugely exciting, this figure isn’t that different from Insulet’s 4Q20 userbase update in February, when the company shared that it has “~250,000” global Omnipod users. Prior to 4Q20, Insulet had not shared a userbase update since 4Q17 (when its installed userbase was ~145,000), so it’s hard to tell how quarterly userbase growth is trending long-term. That said, Insulet did record its second-highest ever new patient starts figure, falling just short of the record set in 4Q20. That’s particularly impressive given the seasonally weaker first quarter. During Q&A, Ms. Petrovic shared that retention has been “very stable” and is expected to remain stable with the launch of Omnipod 5.
As a point of comparison, Tandem shared its userbase update in its 1Q21 call yesterday and has “nearly 240,000” users to-date, meaning that Insulet continues to slightly edge out Tandem in terms of installed userbase. Tandem also shared a very cool figure of “more than 150,000” users now on Control-IQ. Of course, Medtronic still boasts the most pump users of the three with an estimated “~249,000” users on its MiniMed 670G system alone as of 1Q20 – that figure is certainly much higher now, particularly with MiniMed 780G launch internationally.
2. Omnipod DASH drives “over 70%” of new US starts; “over 75%” US covered lives for DASH; 45% of total US volume through pharmacy; 35%-40% of new US users are type 2s
In 1Q21, Omnipod DASH accounted for “over 70%” of new patient starts in the US, up from “over 65%” in 4Q20 and “approximately 65%” in 3Q20 and 2Q20. The growing adoption of DASH comes as Insulet has secured coverage for “over 75%” of covered lives in the US across type 1 and type 2 populations, up slightly from “approximately 75%” in 4Q20. We didn’t hear Medicare and Medicaid updates, but a year ago in 1Q20, “over 50% of Medicare” and “approximately 70%” of Medicaid beneficiaries had coverage for DASH. Overall, Insulet’s pay-as-you-go, pharmacy channel, no upfront-cost, Omnipod DASH system continues to drive a number of positive trends for the company:
“Approximately 45%” of Insulet’s total US product volume ran through the pharmacy channel in 1Q21, up from “over 35%” in 4Q20. Going back further, this metric was “over 30% in 3Q20, “almost 30%” in 1Q20, “over 25%” in 4Q19, “over 20%” in 3Q19, 15%-20% in 2Q19, and 10%-15% in 1Q19. Ms. Petrovic reiterated comments from previous quarters sharing that the “majority” of DASH users pay “less than $50/month” out of pocket through the pharmacy channel, which is on-par for what they would pay for MDI therapy, making DASH an affordable alternative. During her prepared remarks, Ms. Petrovic once again argued that Insulet’s “US pharmacy channel and pay-as-you-go business model are eliminating long-standing access barriers. This combination uniquely positions Insulet to further penetrate both type 1 and type 2 insulin intensive markets.” As a reminder, Omnipod 5 will launch only in the pharmacy channel, making past efforts in expanding pharmacy coverage for DASH even more valuable.
Ms. Petrovic estimated that “between 35% and 40%” of new US customers in 1Q21 were patients with type 2 diabetes. This is in-line with the statistic shared in 4Q20, but up significantly from “approximately one-third” in 3Q20. During Q&A, Ms. Petrovic noted that the percentage has “ticked up” every quarter” and is “probably growing faster than our total new customers, which are growing quickly as well.” Ms. Petrovic also reaffirmed Insulet’s confidence in the type 2 space more generally: “Our success in the type 2 population does not rest on Omnipod 5 for the insulin-dependent type 2 user; we have an outstanding value proposition with Omnipod DASH, and you can see it in the adoption trajectory. We are uniquely differentiated in this space because of the simplicity of DASH, because of our market access position with DASH, and because of our business model, and it's showing in the growth of that segment. You add to that clinical outcomes and the data that was published this quarter looking at those 3,600 patients and showing of a 32% reduction in total daily dose of insulin and such an improvement in A1c – that's just really, really powerful.” For more on Insulet’s prospects in the type 2 space, see above for our discussion of Insulet’s efforts toward an indication for Omnipod 5 in type 2s.
In-line with historical figures, “approximately 80%” of new customers are coming from MDI. This figure has been holding steady at ~80% since 1Q20, which is impressive given Insulet’s necessary transition to virtual trainings due to COVID-19. It is also worth noting that Tandem typically sees ~half of its new customers coming from MDI, suggesting Insulet is doing more to expand the overall pump market. During the call, Ms. Petrovic continued to highlight the “30 days of freedom” program, which allows US patients with diabetes to try Omnipod DASH for free for 30 days. “The vast majority” of trials result in patients continuing on the product and Ms. Petrovic called the program “wildly successful,” particularly at converting MDI users.
Insulet has already started to see “incremental new customer starts” from DTC efforts that were launched in the US last year and has now begun to pilot DTC efforts in the UK. Management noted that thus far, the response has been “positive” in the US and UK, which is encouraging for expanded DTC efforts in these geographies, as well as in other markets. During Q&A, Ms. Petrovic noted that Insulet is also working to increase provider awareness. Insulet has been “having a lot of success” with targeting endocrinologists and is “looking at” piloting PCP-targeted efforts and training and support models, which will certainly be helpful in accessing a broader type 2 population.
“I think at a high level, we believe that Omnipod has the potential to change how clinicians are thinking about therapy in insulin dependent type 2 patients, and that's because of all the things that we know already: our simplicity, our user interface, but also the simplicity and access and prescribing. With no upfront cost, no log-ins, for a physician it is just a very easy e-script. Plus, clinicians and patients can try Omnipod for free. Those are tactics all designed to change physician behavior and patient behavior, and we're having a lot of success with that in the endo office today. But you're right, we also have begun to pilot new approaches in our messaging, in our education and in our physician targeting because we know there is such a huge opportunity and because we are so well positioned in it. So, we're looking at our calls to action in DTC and how we target patients and clinicians. We're looking at piloting physician targeting of PCPs and looking at our training and support models. And I think ultimately, you're right to that awareness both among people living with insulin dependent type 2 and their clinicians is really critical to continuing to unlock this opportunity. So, I think the good news is we're having a lot of success today in the endo office with Omnipod DASH. I think if you look to the future, there's even more exciting things on the horizon both with Omnipod 5 and with our ability to move potentially into new physician segments.” – Ms. Petrovic
3. International rollout of DASH: Expansion into Turkey in 1Q21, plans for Australian launch “later this year”
Despite COVID-19 related headwinds that remain in international markets, Insulet has continued to expand its international presence, entering Turkey in 1Q21. As a reminder, Insulet expanded into five new countries in Europe and the Middle East in 4Q20 and is overall “very bullish” about its long-term international market expansion strategy. Looking ahead, Insulet is still planning to launch in Australia “later this year,” a timeline consistent with that shared in 4Q20. These efforts will expand Insulet’s global addressable market, which Ms. Petrovic estimates to currently be 11-12 million people living with insulin-dependent diabetes.
Q (Jeff Johnson, Baird): Shacey, I just wanted to start with a question on the timing around Omnipod 5. It sounds like I don't want to put words in your mouth but a couple few weeks of potential delay here. That's kind of the wording we heard last night from one of your competitors on a mobile bolus app. So, I guess two things. One is are some of these delays tied more to just the FDA is overwhelmed right now with COVID-related items or maybe overwhelmed in some other way? Are they nervous at all on phone and mobile blousing apps and just kind of phone control. Just wondering kind of what you're hearing from the FDA for that delay and how confident are you that it might be that short time period however long you want to define that? Thanks.
Shacey Petrovic, CEO: Yes. Thanks, Jeff. Well, I think it's true. It's kind of an industry-wide thing like others we are experiencing the longer-than-expected review process. I don't believe this is due to anything but just the workload, frankly, at the Agency. And we're really sensitive to that. They had done an incredible job navigating through all of the challenges related to the pandemic. Our local team – our review team has been incredibly responsive and collaborative. And so, we feel very good about where we are. We're in the final stages of this review process. I don't believe that there's any sort of any other drivers outside of the workload tied to the pandemic. In fact, we gave ourselves quite a bit of buffer in the timeline, and so my remarks are really prompted by the fact that we're getting through that buffer, and so the review process is taking a bit longer than we expected, but we're in the final stages and feel good about where we are.
Q (Robbie Marcus, JP Morgan): Thanks for taking the question. Two for me. One, Wayde, I'd love to get a sense of after you gaveguidance at the end of February on the fourth quarter earnings call, how the rest of third quarter trended? I know diabetes can sometimes have different trends than what we see across the rest of MedTech in terms of procedure volumes. And then how it played out versus your expectations throughout the rest of the quarter?
Wayde McMillan, CFO: Hey, Robbie, yeah, sounds good. And it's actually a really good question because there's quite a few dynamics rolling out and I think diabetes does have some uniqueness to it. So, what do we think about it first in the US and what we've seen in the US is really at the end of 2020, we saw the access to customers and the market really start to turn. We're still dealing with some pandemic issues in the US, but we really saw a certain level out in the end of Q4 2020, and obviously with a 23% growth rate here in the quarter start to pick up.
One thing we've talked about in the past that was unexpected was we thought we would see seasonality change a little bit more in Q1 in moved into the pharmacy, we have 45% of our volume in the pharmacy now and we really didn't see that. So that was kind of a unique impact. And we think it's really due to the fact that customers still have buying patterns that are related to the legacy market paradigm here in diabetes. And the traditional order patterns of buying more in Q4, as well as people throughout the value chain distributors, wholesalers, even physicians thinking about prescribing pumps at the end of the year versus the start of the year. I think it's going to take more time than we expected to see some of those seasonal trends take place.
As we think about the rest of the year for the US, I mean, really strong. We think we've got a strong guide for the second half and we start to build momentum. Just a reminder that we do have an annuity model here at Insulet and so we start to build momentum. We had a record Q1 start – new customer starts here. We had a record Q4 in 2020. If you put those two together, we're starting to build momentum up again and you see that start to build in our growth rate here in the second half that's implied in our guide.
Then, internationally is a different story. We are seeing the pandemic persist. It was longer and more difficult through the end of 2020. And we can see that as it rolls into our annuity model here in the first half of 2021. And so we'll see that persist longer internationally. Having said that we still feel we had a pretty strong growth rate 13% in the phase of the challenges that the team has seen internationally. And just to highlight a couple of the things we're dealing with where our business is concentrated in a few of the larger regions like the UK and France. And those are the regions where we've seen more lockdowns and more persistence of the pandemic. And so when some of those regions are more challenged, it's harder for our teams to get in and get customers started on new product. But I mentioned in the prepared remarks where we are seeing good traction is a lot of interest in our new DASH product. And so that is giving our teams reasons to meet with physicians and with customers. And so we are starting to see signs of improvement internationally as well. We do think it will persist a little longer into the second half and that's reflected in our growth rates. At the high end of our growth rates we get up to that 17% range, and as you know our expectations for the region are high-teens, low-20s. So optimistically if we see the pandemic start to calm down internationally as well we'll start to get back into that high-teens growth rate.
Q (Larry Biegelsen, Wells Fargo): Thanks for taking the question. Shacey, one on type 2 patients. This is second quarter in a row it was 35% to 40% do you see it stabilizing there or do you see it growing further? And secondly, how often are type 2 patients changing their pods, they tend to use more insulin so they're doing it more frequently than every three days on average? Thanks, guys.
Ms. Petrovic: Yeah. Larry, great questions. I'll start with the first one. We actually haven't really seen a change in utilization that is noticeable at the population level between type 2 and type 1. I think that comes down to a reduction in total daily dose in insulin. And, in fact, we mentioned this in the press release but we had some incredible data published this last quarter most recently or on type 2 rather the data was published in diabetes research and clinical practice. And this looked at almost 3,600 patients and demonstrated a statistically significant reduction in A1c but maybe even more surprisingly a 32% reduction in total daily dose of insulin. And that was regardless of which therapy they were coming from, multiple daily injections or previous pump therapy.
I think that points to you know the value of Omnipod and site rotation among other things. And it's probably playing out in the patient experience out there which is why we don't see broadly utilization increasing in the population. It was steady this quarter. And then the other question that you had on Type 2 was 35% to 40%. It actually has ticked up every quarter it just a broad range. So it is growing and it is probably growing faster than our total new customers which are growing quickly as well.
Q (Margaret Kazcor, William Blair): I want to follow-up on the Omnipod 5 data. Sounds really encouraging that the data is coming out nicely. I was wondering if you could give us a little bit more details on what the next steps are there. Does that – do the algorithms need to be tweaked for the type 2 patient or can we kind of move forward with what you have now and run additional data if that's what's needed? So just trying to understand what next steps are for type 2 and Omnipod 5? Thanks.
Ms. Petrovic: Sure, thank you for the question. Yeah, as I mentioned this has been an area of focus for us. We're really excited about the early data that Dr. Bruce Bode presented and we believe that the data was very positive so far with our feasibility study. So and we will take this data and if it remains positive as we close out the feasibility data we will be able to move into a pivotal but we'll sort of reserve the right to potentially make changes to the algorithm depending on the final results that we get out of our feasibility study. But so far so good the data is really encouraging to date.
Q (Jayson Bedford, Raymond James): I don't mean to be critical of the question, because obviously the growth is impressive here. But you've developed a history of exceeding estimates this quarter I'd say was at the high end but didn't necessarily exceed was there anything specific that you saw in the month of March that maybe you didn't expect.
Mr. McMillan: Hey Jason, it's Wayde. I can take that one. First of all, international was above the high end of the range and the US was right at the high end of the range. So there wasn't anything too much to really complain about. As you said you know the one thing that was a little surprising to us as we were expecting some more favorable seasonality in Q1 in the pharmacy channel now that we've got 45% of our volume rolling through there. It was a small thing but that was one thing that we were expecting to see. And we do think that will continue to develop. It just may take a few years to change behavior not just for customers but all through the value chain. But other than that as you know, Jayson, we've got a lot of new things going on in both regions but in particular in the US the pay as you go model is still relatively new. Our move into type 2 is new, the DTC campaigns are new, even DASH uptake is still type 2 is now, the DTC campaigns are new, even DASH uptake is still accelerating for us. So, as we think about guidance we've got a lot of puts and takes and we're very happy still dealing with the pandemic to print the 23% growth rate on a dollar basis, I think the strongest of all the companies out there and we're continuing to expand our leadership position. And so I think as we're approaching $1 billion our growth rates don't look as impressive as some others, but we're happy to be growing stronger on a dollar basis.
Q (Danielle Antalffy, SVB Leerink): This question, Shacey, is around the type 2 opportunity and you guys have been so successful there, so I don't want to sound too greedy but it feels like there's still such an untapped opportunity today even with all the work you've done and all the success you've had at the primary care physician level. We've been doing a lot of work here and talking to primary care physicians and the fields like they manage so many of the patients. There's still a lot of opportunity. So just curious if you could talk a little bit more about and whether there's any special effort towards the primary care physician. Are you expanding your touch with the primary care physicians or just how you're going after that market from the physician's level I guess versus patient? Thanks so much.
Ms. Petrovic: Sure, Danielle. And it's a great question something we think a lot about. I think you're right, our success in the type 2 population does not rest on Omnipod 5. For the insulin-dependent type 2 user, we have an outstanding value proposition with Omnipod DASH and you can see it in the adoption trajectory. We are uniquely differentiated in this space because of the simplicity of DASH because of our market access position with DASH and because of our business model and it's showing in the growth of that segment. And then I referenced the clinical data earlier. You add to that clinical outcomes and the data that was published this quarter looking at those 3,600 patients and showing of a 32% reduction in total daily dose of insulin and such an improvement in A1c that's just really really powerful. And so I think we – I guess the other thing that we do is really address a recognized and frustrating compliance challenge that exists for the clinician and for the patient. And that's because of pods form factor and simplicity. So I think at a high level we believe that Omnipod has the potential to change how clinicians are thinking about therapy in insulin dependent type 2 patients. And that's because of all the things that we know already our simplicity, our user interface but also the simplicity and access and prescribing. With no upfront cost, no log ins and for a physician it is just a very easy e-script and then clinicians and patients can try Omnipod for free and those are tactics all designed to change physician behavior and patient behavior. And we're having a lot of success with that in the endo office today. But you're right, we also have begun to pilot new approaches in our messaging, in our education and in our physician targeting because we know there is such a huge opportunity and because we are so well positioned in it. So we're looking at our calls to action in DTC and how we target patients and clinicians. We're looking at piloting physician targeting of PCPs and looking at our training and support models. So all sorts of things. And I think ultimately you're right to that awareness both among people living with insulin dependent Type 2 and their clinicians. You know awareness is really critical to continuing to unlock this opportunity. So I think you know the good news is we're having a lot of success today in the endo office with Omnipod DASH. I think if you look to the future there's even more exciting things on the horizon both with Omnipod 5 and with our ability to move potentially into new physician segments.
Q (Joanne Wuensch, Citibank): Good afternoon everybody and thank you. I'm trying to get some timing on a couple of things. Sort of out there is the pediatric label for Omnipod 5 type 2 label for Omnipod 5 and then the integration with Abbott Libre. Can you just you might get in quarters or even first half versus second half sort of get us an idea of when you think we might be seeing those approvals.
Ms. Petrovic: Well the one thing that we have given a timeline publicly on is the pediatric label and so all of our internal efforts on that front are on track. We have collected the data finished the study everything looks good. And we're getting ready to submit shortly to the FDA on that front. And so that would put us on track in a normal world. Put us on track for a label expansion by the end of this year. You know obviously we do recognize though that we do have challenges today in terms of the workload and what the FDA is contending with. So I just caution everybody we're on track on our end and working certainly hard to make that happen.
We haven't given timelines yet on the type 2 label indication or on Libre a label indication just to indicate that that work is underway. But to give you some sense of things just remember that we are right now in a feasibility study for type 2. So the next step would be to move into a pivotal study. So there is still is some clinical work to do before we're ready to submit to the FDA for the label expansion and then for Libre, what we've said is that work is underway that will also include a submission to the FDA but not any clinical work. So that just kind of gives you a sense of what's ahead of us. And we'll get more granular with our timelines once we have Omnipod 5 into full commercial release which is a 100%, 1000% where most of the team is focused today.
--by Hanna Gutow, Katie Mahoney, Albert Cai, and Kelly Close