Memorandum

Cellnovo submits patch pump and touchscreen controller for FDA 510(k) clearance – November 16, 2016

Cellnovo announced today that it has submitted a 510(k) to the FDA for its patch pump and touchscreen handheld controller with an integrated BGM. The review is expected to last “several months,” and the last update called for a US launch by the end of 2017. The FDA submission comes  two quarters later than the previous “2Q16” goal. This is clearly an important milestone for Cellnovo, but a lot to take on for the young public company at this stage. Cash stood at just €15.6 million as of 3Q16, which we estimated would last three around more quarters. Sales of the patch pump system in current European markets (Italy, UK, France, Netherlands) totaled €301,218 in 3Q16, as just 68 new pump orders were fulfilled in the three-month span (total of 520 since launch). Management said that it was limiting expansion until more automated manufacturing transfers over to Flex, and once the transition is complete, manufacturing capacity will increase from 50,000 cartridges to 600,000 per year. Assuming three days per cartridge, that takes current capacity from supporting just over 400 patients a year to just under 5,000 – still fairly small, but presumably this could expand if demand is there. (For context, Insulet will produce 17 million three-day pods this year for its 100,000 users.) We wonder how quickly the FDA review will go and whether Cellnovo can raise more funds to scale up. The pump market has never been more crowded in both the US and Europe, though Cellnovo’s cellular-enabled handheld and patch pump (with a short infusion set) could find a niche, especially before Insulet updates its PDM next year. This news comes nearly a week after Tandem announced the NIH-funded International Diabetes Closed Loop (IDCL) Trial will use its t:slim X2 pump, leaving out Cellnovo’s pump in the US (though perhaps used at the EU sites).

 

-- by Brian Levine, Adam Brown, and Kelly Close