Memorandum

Cellnovo 2Q17 – Sales of €287,000 down 10% YOY, up 55% sequentially; only 59 devices shipped this quarter; financial runway extended until mid-2019 – July 26, 2017

Cellnovo announced its 2Q17 financial update in a press release yesterday, reporting still-modest sales of €287,000 for the quarter. This reflected 55% sequential growth compared to a very weak 1Q17, and a 10% YOY decline relative to 2Q16. On the plus side, financial resources are now expected to last to mid-2019 – combining €7 million in cash at the quarter’s end, €17.5 million recently raised via a capital increase from healthcare investors, and €20 million obtained through a loan agreement with the European Investment Bank. Still, Cellnovo continues to have a lot to prove – can it scale and compete in a tough market? Pump shipments remain quite low, totaling just 59 new devices for this quarter and 97 in 1H17, down 57% from 1H16 (total since launch: 688). Sales remain limited by manufacturing capacity for insulin cartridges and the move to restrict new users until the transition to Flex manufacturing is completed; this continues to get pushed back and now full ramp-up is expected to begin in August, with cartridge delivery scheduled for September. A 51o(k) was submitted to FDA in November for the patch pump and touchscreen controller, though this has not been mentioned in several quarters (launch expected by the end of 2017, per 3Q16) – we wonder if a US launch has been de-prioritized. Cellnovo continued work on automated insulin delivery this quarter, including promising data as part of Diabeloop’s system at ADA. The companies have since launched a CE mark pivotal trial with results expected by end of 2017 (launch possible in 2018). In April, Cellnovo and TypeZero separately announced a non-exclusive worldwide licensing agreement, giving Cellnovo the right to commercialize TypeZero’s Artificial Pancreas technology within a Cellnovo patch pump (possible launch in 2018, presumably in Europe). We’re glad to see the young company pushing ahead, though execution on many fronts (R&D, clinical trials, manufacturing, sales) will need to be outstanding to keep up in the dynamic pump field.

  • Cellnovo has established a network of international distributors, including Spain, Greece, and Australia, with plans to expand into South America in the future; we see this as a bit premature, given all the runway in Europe and still-limited scale.

 

-- by Maeve Serino, Adam Brown, and Kelly Close