FDA approves Tandem’s t:slim X2 with Dexcom G5 CGM integration; US launch commences, including free software upgrade for current t:slim X2 users – August 28, 2017

This morning, Tandem announced FDA approval and commercial launch of its long-awaited t:slim X2 insulin pump with integrated Dexcom G5 CGM (via Bluetooth). The approval comes in time to hit the previous “summer 2017” timeline, and marks an ~6-month FDA review following submission earlier this year. Launching on the day of the announcement is quite impressive, considering the prior plan was to do so “within 30 days of approval.”

The t:slim X2 with G5 is approved for 6+ years; retains Dexcom’s non-adjunctive (insulin dosing) indication for G5; and also enables simultaneous G5 data viewing on Dexcom’s own iOS and Android apps (enabling remote monitoring with Dexcom Follow, watch viewing, automatic data upload to Clarity, etc.). As a reminder, the G5 transmitter can pair with two devices.

In outstanding news (and as expected), Tandem’s 12,000+ current t:slim X2 customers will be able to software update their pumps from home and add G5 integration for free – nice! Individual emails are being sent directly to t:slim X2 users with instructions on how to perform the update. We assume this will happen quite quickly. We saw a demo at Tandem’s ADA media day and were very impressed with the speed and straightforward update process.

This news is a major win for Tandem’s current users, who get rapid access to a very meaningful product update, as the current t:slim G4 lacks remote monitoring, does not have Dexcom’s more accurate Software 505 algorithm, and does not enable use of Bluetooth. Of Tandem’s total ~57,000 users, ~80% are not on the t:slim X2, meaning the prior upgrade program is in place – customers can move from the original t:slim or t:slim G4 to the X2 for $399-$799. This is a favorable deal relative to Medtronic’s 630G/670G upgrade path, which charged customers $3,100 or $599 (depending on pump purchase date; most fell into the $3,100 bucket).

The approval is a significant business win for Tandem and a critical competitive advantage in a dynamic insulin pump market. This pump is the first to launch with Dexcom G5 integration – Animas’ OneTouch Vibe Plus was approved in the US and Canada as of last December, but has not yet launched – and allows Tandem to finally show the power of remote software updating pumps from home (Mac and PC compatible). G5 integration is the first key innovation to leverage the Tandem Device Updater, escaping the challenging four-year hardware replacement cycle that can no longer keep up with diabetes innovation (particularly in the faster-moving CGM field). We expect to see all insulin pump companies move to this remote software update model, though Tandem has done the hard work to get there first.

This milestone might also help de-risk the regulatory path for Tandem’s upcoming predictive low glucose suspend (PLGS) product, which just started its pivotal study and is expected to launch in summer 2018 – the only difference between t:slim X2/G5 and PLGS is the addition of the straightforward PLGS algorithm. Obviously getting the G5 piece and the Device Updater through the FDA at this point lays critical groundwork for the PLGS product.

Not missing a beat, Tandem has already updated the t:simulator app with the X2/G5 user interface, and we’ve included screenshots below. G5 data on the t:slim X2 seems to have a pretty identical interface to the previous G4 iteration, including the Dexcom sensor graph, number, and trend arrow on the home screen. Insulin-on-board is still on the home screen right under the CGM graph, which should help prevent insulin stacking in a non-adjunctive CGM era. We assume patients can calibrate on either the G5 mobile app or pump, and the other will update just like using the standalone receiver (the transmitter has the brains). When CGM is turned off, the t:slim X2 pump removes the graph and puts the Bolus & Options buttons back in the center.

Otherwise, the t:slim X2/G5 retains the same slim profile (“38% smaller” than the 630G/670G), a large color touchscreen, a rechargeable battery (~5-day life), USB connectivity, a 300-unit reservoir, and watertight construction (IPX7: 3 feet for 30 minutes).

Read on for more on the pump, competitive implications, screenshots, and our questions.

• How will the t:slim X2/G5 compete with Medtronic’s MiniMed 670G hybrid closed loop (launch to nearly 35,000 Priority Access customers to complete this fall) and Insulet’s upcoming Omnipod Dash (FDA submission in 4Q17)? The 670G has the obvious edge on automation for now, though is still not widely available, given Medtronic’s ongoing CGM sensor shortage and the slow rollout following FDA approval in September 2016. Will customers ready for a new pump wait for the 670G to launch more broadly (following the Priority Access Program rollout), or will they go for the t:slim X2 with G5 instead, holding out for Tandem’s automated algorithms expected in 2018? The Omnipod Dash compares pretty favorably to Tandem’s t:slim X2 on the touchscreen and user experience front (from what we’ve seen), though Insulet won’t have G5 integration on the Dash handheld at launch (only integration on the phone), and the Android device is larger than the t:slim X2. The t:slim X2 edges out both Insulet and Medtronic on Bluetooth integration and a non-adjunctive CGM sensor (G5) integration. All in all, with think the t:slim X2 with G5 is a very competitive product, though clearly, we’ll have to say what happens to sales in late 2017 and early 2018.
  
  • It’s worth noting that ~60% of Tandem’s new patients in 2Q17 came from MDI. Will the t:slim X2/G5 help Tandem add an MDI population that is increasingly using Dexcom CGM? As of Dexcom’s 2Q17 call, approximately 2/3 of its new patients were coming from MDI, in line with the general type 1 population in the US. With Tandem’s t:slim X2 as the only G5-integrated pump, will Dexcom MDI users considering a pump choose it over Insulet?
• Tandem should now see some tailwind in 2H17 following three straight quarters of YOY declines on very tough comparisons. With the t:slim X2 G5 now available, the t:lock infusion set connector launching on September 5, four-year pump renewals from existing customers, and the typical Q4 seasonality, the company has some bright spots to look forward to in the back half of the year. As of Tandem’s July call, full-year sales guidance was unchanged, calling for revenue of $100-$107 million (+12% to +20% YOY). Tandem is ~37% of the way there, dead on with what it saw in 2013, 2014, and 2015 (last year was an exception, as 49% of sales came in 1H16).
  
  • The financial community reacted positively to today’s news, with Tandem’s stock up ~44% to $1.01. The market cap is still strikingly low at ~$22 million, however. As of 2Q17, Tandem had $38 million in cash on hand, meaning only enough for at least a couple more quarters. A firmer financing update is expected in Q3.
• When will Tandem launch its own app to mirror data from the t:slim X2/G5? At its AADE booth, we did see a screenshot of the planned t:slim X2 mobile app for displaying key pump data, uploading data to t:connect, and integrating with Dexcom G5 CGM (see last picture below). As of Tandem’s ADA Media Day, a launch of this app was “possible” this year; there was no update on the 2Q17 call. Such an app would pair nicely with Dexcom’s G5, feed right into the upcoming Apple Health addition of insulin data tracking, and keep up with Medtronic and Insulet’s increasing moves into apps. Moreover, it would represent the first step on Tandem’s work to enable smartphone bolusing, for which it just received a patent on last week. Dexcom has also talked about a version of its own G5 app that integrates insulin data from pumps and pens, though there has not been a recent update on this front.
• The press release and t:slim X2 website nicely emphasize the remote software update feature – “The pump that gets updated, not outdated.” We’ll be interested to see if patients and HCPs appreciate the power of this near-term, or if it will take some time to educate the market on the value of this feature. Of course, remote software updates will only get more valuable over time as automated insulin delivery algorithms launch and become more customizable.
  
  • Dexcom’s EVP Steve Pacelli has a nice quote on this front in the press release: “Dexcom has been moving its technology forward at a rapid pace, and Tandem’s ability to roll out remote software updates like this opens up exciting possibilities for faster integrations of our future products. We are excited to have our latest CGM technology integrated with their t:slim X2 Insulin Pump, and to see it offered not only to new customers but also to existing t:slim X2 Pump users.”
    • We see it as a big positive for Tandem that Dexcom is quoted in the press release. Understandably, Dexcom has increasingly focused on growing the business in the MDI market, since there is far more runway there. The t:slim X2/G5 is obviously a positive for both companies.
• Tandem is also offering eligible Animas and Roche pump users a one-time deal of $999 to use a Tandem insulin pump for the remainder of their warranty, up to 12 months. See the Touch Simplicity Today page here. This amount can be credited to the purchase of a new Tandem pump and/or supplies at the end of the current Animas or Roche pump warranty period, or may be refunded. Presumably for those with more than a year of warranty left on an Animas or Roche pump, this deal is not valid.

t:slim X2/G5 screenshots

From the t:simulator app:

From the t:slim X2 website

From Tandem’s AADE Exhibit Hall Booth

Close Concerns’ Questions

Q: Will the t:slim X2 with G5 significantly boost Tandem’s sales in 2H17?  

Q: What percentage of Tandem users currently use Dexcom’s G5?

Q: What percentage of Tandem’s non-t:slim X2 users will upgrade to the X2 for $399-$799?

Q: Will patients and HCPs appreciate the power of remote updating the pump to add CGM integration? Will more/all pump companies move to this model over time?

Q: How will current pumpers choose between Medtronic’s MiniMed 670G and Tandem’s t:slim X2/G5? How will MDI users weigh between Insulet’s OmniPod (and upcoming Dash) and Tandem’s t:slim X2/G5?

Q: Will this approval drive current Dexcom MDI users onto the t:slim X2?

Q: When will Tandem launch a mobile app to pair with the t:slim X2? What about a Watch app? How far away is an FDA-approved app for remote bolusing from the phone or Watch?

Q: Will Tandem’s PLGS product launch as expected in summer 2018? Will the hybrid closed loop with TypeZero and Dexcom’s G6 launch as expected by the end of 2018?

Q: How will Tandem’s automated products stack up to competitors on features, form factor, burden, glycemic outcomes, business model, etc.?

-- by Adam Brown and Kelly Close