Memorandum

Tandem 3Q14 – 74% year-over-year sales growth, with pump shipments rising 59%; 480-unit t:slim submitted to FDA – November 17, 2014

Executive Highlights

  • Sales of Tandem’s t:slim insulin pump and related supplies totaled a record-high $13.5 million in 3Q14, a 74% year-over-year (YOY) gain from 3Q13 and a 31% sequential increase from 2Q14.
  • Tandem shipped 2,935 t:slim pumps in 3Q14, a 59% YOY increase from 3Q13 and a 31% sequential increase from 2Q14. Since launch in August 2012, 14,422 pumps have been shipped, which Tandem estimates is ~3% of the total US insulin pump market.
  • Tandem submitted a 510(k) application to the FDA for the t:flex insulin pump (larger capacity 480-unit reservoir). Management still expects a six-month FDA review.

Tandem reported 3Q14 financial results on November 6 in a call led by CEO Mr. Kim Blickenstaff. Below, we enclose the call’s top 10 financial and R&D highlights, followed by Q&A.

Financial and Business Highlights

1. Sales of Tandem’s t:slim insulin pump and related supplies totaled a record-high $13.5 million in 3Q14, a 74% year-over-year (YOY) gain from 3Q13 and a 31% sequential increase from 2Q14. For the full year, sales are estimated to be in the range of $48-$50 million, a slight downgrade from the previous $48-$54 million range.

2. Tandem shipped 2,935 t:slim pumps in 3Q14, a 59% YOY increase from 3Q13 and a 31% sequential increase from 2Q14. Since launch in August 2012, 14,422 pumps have been shipped, which Tandem estimates is ~3% of the total US insulin pump market. Approximately half of Tandem’s customers converted to the t:slim from MDI.

3. The average productivity of the sales force increased in 3Q14, and management expects that trend to continue for the remainder of the year.

4. Sales to distributors increased quarter-over-quarter from 70% in 2Q14 to 76% in 3Q14. The benefit is greater access to patients, though the margins are lower.

5. Tandem’s overall gross margin was 33% in 3Q14, flat from 34% in 2Q14 and 33% in 3Q13.

6. Tandem reported cash of $82 million at the end of 3Q14, a decline of $14 million from 2Q14. Financial resources are sufficient for operating needs for at least the next 18 months.

7. Management cited a small field sales force as the biggest competitive headwind. Medtronic’s “huge coverage” and “aggressive” pump trade-in program were mentioned, as well as Asante's “regional efforts” through a free trial program.

R&D Pipeline Highlights

8. On par with previous expectations, Tandem submitted a 510(k) application to the FDA for the t:flex insulin pump (same t:slim pump body but with a larger capacity 480-unit reservoir). A six-month FDA review is still expected, meaning launch could take place in 1H15.

9. Tandem also has a PMA application under FDA review (submitted in July) for the t:slim integrated with the Dexcom G4 Platinum CGM – a 12-18 month review is still expected, putting approval in the July 2015-January 2016 timeframe.

10. Following the 3Q14 call, Tandem announced compatibility with diasend Clinic, a web-based platform capable of downloading more than 100 diabetes devices.

Financial and Business Highlights

1. Sales of Tandem’s t:slim insulin pump and related supplies totaled a record-high $13.5 million in 3Q14, a 74% year-over-year (YOY) gain from 3Q13 and a 31% sequential increase from 2Q14. This marks two straight quarters of YOY growth exceeding 74% and four straight quarters of growth over 47% - of course, it’s still early days of commercialization and sales ramping, so the early performance is not an indication of where things will be in the future. Management cited two primary drivers of the increased revenue: the 1Q14 sales force expansion (36 to 60 territories/reps) and the growing recognition of Tandem within the diabetes community. Overall, the 31% sequential growth was particularly encouraging, as it suggests the new sales force is indeed coming up to speed.

 

3Q13

4Q13

2013

1Q14

2Q14

3Q14

Sales (millions)

$7.7

$10.2

$29.0

$8.1

$10.3

$13.5

YOY Growth

---

343%

1,060%

47%

86%

74%

Sequential Growth

40%

32%

---

-21%

27%

31%

  • Pump sales accounted for 86% of total sales in 3Q14, similar to 85% in 2Q14 and down slightly from 89% in 3Q13. Sales of t:slim pumps grew 68% year-over-year, while supplies more than doubled. This is to be expected as the company’s installed base grows.
  • For the full year, sales are estimated to be in the range of $48-$50 million, a slight downgrade on the top-end from the $48-$54 million range given in the 2Q14 call; Tandem is only 66% of the way to the low-end of the guidance, though it should make it if the upcoming quarter resembles the positive performance in 4Q13 (35% of FY13 sales came in 4Q13). The original sales guidance was driven by assumptions around the sales force expansion, reps’ productivity ramp-up, progress on the payer contracting front, and new and changing competition. In Q&A, management said the guidance tightening mostly stemmed from an  underestimated impact of the sales force expansion (and associated disruption of existing territories).

2. Tandem shipped 2,935 t:slim pumps in 3Q14, a 59% YOY increase from 3Q13 and a 31% sequential increase from 2Q14. Notably, Tandem’s shipments in the first nine months of 2014 have already exceeded total 2013 shipments. Since launch in August 2012, 14,422 pumps have been shipped, which Tandem estimates is ~3% of the total US insulin pump market (it was not specified if this was type 1 only or all pumpers, but we assume the former). Extrapolating, that would put the US pump market at ~476,000 type 1 patients. At DTM 2014, Dr. Bruce Bode estimated the type 2 insulin pump market at ~100,000-150,000 patients in the US – this area  continues to grow and we believe that type 2s may well be even more open to Tandem as a newer pump player as they do not have as much history with traditional players and we believe the simplicity message is even more powerful with this group

  • Tandem continues to see approximately half of its customers report that they converted to the t:slim from MDI. It’s encouraging that this metric has held steady over the past four quarters, since the potential market of MDIs is so much larger than those currently on pumps (~30% of type 1s by the most recent estimates we’ve heard). To boot, of course, many type 2 patients that are not on insulin should be on insulin and they may well be more open to pumping since there is more discretion associated with pumping than with using syringes or pens, for many patients. While ~50% of new Tandem patients coming from MDI is lower than Insulet’s ~70%, this is a critical metric to monitor for all companies in the pump industry, as it is a key indicator of market expansion. While Medtronic’s large sales force, strong ties with HCPs, aggressive upgrade efforts, and strong pipeline make it hard for any new entrant to steal significant share away,, the pump market is ripe for expansion in terms of converting MDIs, and companies like Insulet and Tandem can make significant in-roads on this front.

 

3Q13

4Q13

1Q14

2Q14

3Q14

Cumulative since launch (August 2012)

Pump Shipments

1,851

2,406

1,723

2,235

2,935

14,422

YOY Growth

807%

185%

102%

64%

59%

---

Sequential Growth

36%

30%

-28%

30%

31%

---

Cumulative % of Installed Base New to Pump

Not given

45%

48%

~50%

~50%

~50%

3. The average productivity of the sales force increased in 3Q14, and management expects that trend to continue for the remainder of the year. However, remarks also stated that the 1Q14 disruption negatively impacted Tandem’s sales trajectory in the third quarter. This was consistent with remarks from the 2Q14 call, where management said the larger sales force was expected to reach steady state productivity after 9-12 months, meaning the greatest impact will be seen in the fourth quarter. Last year, Tandem recognized 35% of its full-year sales in the fourth quarter following a 1Q13 expansion from 11 to 36 territories/reps. The company will need a similar performance in 2014 to hit its revenue guidance.

4. Sales to distributors increased quarter-over-quarter from 70% in 2Q14 to 76% in 3Q14 (and up from 66% in 4Q13 and 68% in 1Q14). This represents four straight quarters of rising distributor sales, which translates into (likely) greater patient access but lower margins. The largest contributing factor was an increase in shipments to distributors that recently entered into exclusive distribution arrangements with certain insurance payers (no specifics provided). While this new arrangement has afforded members easier access to Tandem’s products as an in-network benefit, the downside is lower margins for Tandem.

  • Tandem now has a contract with United Healthcare through a distributor, and the recently expanded contract with Kaiser is up and running (allowing Tandem to serve ~90% of Kaiser’s 9.5 million covered lives on a direct basis). In these early days of Tandem’s commercialization, awareness building and market acceptance are much more important than the higher margins from direct sales – in other words, the tradeoff of lower margins for immediate access to patients (via distributors) seems like the right strategic move.   

5. Tandem’s overall gross margin was 33% in 3Q14, flat from 34% in 2Q14 and 33% in 3Q13. While 3Q14 gross margins benefited from increased volumes, the improvements were offset by increased overhead cost in several areas: (i) expanded quality organization; (ii) larger warehouse space to address increasing production volumes; and (iii) to prepare the organization to support a PMA product (i.e., the t:slim pump integrated with the Dexcom G4 Platinum). The high percentage of sales flowing through distributors also negatively impacts gross margins – management said that at current production volumes, infusion set sales are usually “lost” when sales flow through distributors, and the gross margin on these pump supplies is consequently negative. Variability in quarterly gross margins is still expected as Tandem scales operations, improves its processes, implements automated manufacturing equipment, and adds new products to its manufacturing capabilities – it is, of course, a key potential driver of upside and we think there is a lot of room for opportunity here.

6. Tandem reported cash of $82 million at the end of 3Q14, a decline of $14.4 million from 2Q14. Happily for the company, the burn rate was a slight improvement from $16.5 million in 2Q14 and $14.6 million in 3Q13. The 3Q14 cash expenses included a $1 million milestone payment to Dexcom (for FDA filing of the t:slim G4) and a final $1 million license fee payment to Smiths for patents acquired and licensed in 2012. Subtracting those out, the cash burn of $12.4 million was a significant improvement indeed.

  • Management believes financial resources are sufficient for operating needs for at least the next 18 months. Cash burn is expected to continue to move down as sales ramp up, and Tandem does have access to $30 million in financing available through Capital Royalty. The company has enough of a runway to go a couple of quarters before deciding whether additional financial resources are needed long-term, and if so, what form these should take. As a reminder, the company’s IPO in November 2013 raised $125 million.

7. In discussing the competitive landscape, management cited a small field sales force as the “biggest headwind.” The call also acknowledged Medtronic’s “huge coverage” and “aggressive” pump trade-in program – according to management, the latter “can be a pretty weighty deciding factor” when patients are making a decision about a pump, as it can reduce co-pays and “probably turns the decision from product features to price.” Management recognized that Asante's regional efforts have been effective in “certain states,” particularly its free trial program. However, management did emphasize that Asante is “not national,” so it's not a major impact – that is clearly a solvable problem for Asante however and we’ll be very interested to watch this!

R&D Pipeline Highlights

8. On par with previous expectations, Tandem submitted a 510(k) application to the FDA for the t:flex insulin pump (same t:slim pump body but with a larger capacity 480-unit reservoir). Management still expects a six-month FDA review, meaning launch could take place in 1H15. Once commercialized, t:flex will offer the largest insulin reservoir on the market (far ahead of 315 units in the Roche Accu-Chek Spirit and 300 units in the Medtronic MiniMed 530G and Asante Snap). According to Tandem’s market research, approximately two-thirds of surveyed endocrinologists cited “limited volume capacity” as the number one barrier to pump adoption for type 2s that require daily rapid-acting insulin. Tandem estimates that ~1.2 million type 2s in the US need daily rapid-acting insulin.

9. Tandem also has a PMA application under FDA review (submitted in July) for the t:slim integrated with the Dexcom G4 Platinum CGM – a 12-18 month review is still expected, putting approval in the July 2015-January 2016 timeframe. Management has beenextremely pleased” with FDA interactions since the submission and remains confident in its ability to bring this device to market. However, there was sincere caution about accelerating the timeline: “I think the conversations are going, from our standpoint, as well as we could expect them to go. But we still can't change our timeline based upon what we know today – we still have too much to do.” The timeline is actually somewhat speedier than the ongoing ~19 month FDA review of the Animas Vibe. As of Dexcom’s 3Q14 call, the Vibe was “nearing” FDA approval, and the companies were gearing up for a commercial launch that could come before the end of 2014.

10. Following the 3Q14 call, Tandem announced compatibility with diasend Clinic, a web-based platform capable of downloading more than 100 diabetes devices. The move is a very smart one for Tandem and allows the company to join pretty much every device company out there (except Medtronic) in offering compatibility with the web-based platform. Though Tandem put lots of effort into its own web-based t:connect software, many more providers are familiar with Diasend – we have often heard that an ability to download onto familiar software makes all the difference in the world for HCPs in supporting a pump, and thus adding compatibility with Diasend seems like a no-brainer for Tandem, for HCPs, and for patients.

  • We wonder if Tandem will also choose to integrate with Tidepool’s platform, which is now compatible with Asante, Dexcom, and Insulet. We can’t imagine this won’t happen! At last week’s FDA meeting on bolus calculators and device interoperability, Tidepool CEO and supremely highly regarded type 1 father Mr. Howard Look argued for open, liberated data that breaks out of proprietary company siloes. Patients, he said, should be able to access and view their data however they choose (“And when you increase choice, you can reduce the burden of managing diabetes”). Like Dr. Cafazzo, Mr. Look emphasized that data access and interoperability will create an ecosystem of type 1 diabetes apps and software, with a wide variety of applications that could include: (i) fitness/exercise data integration; (ii) research databases and interfaces (e.g., for closed-loop algorithms); (iii) mobile apps that make dosing easier; (iv) remote monitoring. “We don’t know what are the best ideas!” he exclaimed. Mr. Look urged the FDA and industry to move ahead by:
    • Releasing data access protocols for EXISTING devices
    • Exposing RESTful APIs for cloud services (“a way for cloud services to talk to each other. Downloading a CSV is good; exposing a restful API is better. We have an open offer to any company out there – we’re happy to help with that”)
    • Adopt standards like IEEE 11073. “Companies like Asante, Dexcom, and Insulet should be applauded – that is making things better. That is reducing the burden of managing diabetes. (As a reminder, these three companies are compatible with Tidepool’s platform.)

Pipeline Summary

Pipeline Product

Timeline

t:slim G4
t:slim insulin pump with Dexcom G4 Platinum CGM integration

FDA PMA filing in July 2014; 12-18 month review expected.

t:flex
t:slim with a larger capacity 480-unit reservoir

FDA 510(k) filing in 3Q14. Six-month review expected; ~1H15 launch.

t:dual
Dual-chamber t:slim in partnership with JDRF

JDRF Partnership announced on January 8, 2013. JDRF supporting Tandem with up to $3.0 million in performance-based milestone funding through September 2015 to complete development, testing, and manufacturing.

t:sport
Smaller t:slim controlled by wireless touchscreen handheld

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Questions and Answers

Q: On guidance, you talked about the original guidance and now moving to the lower end of the range. When you think about those variables, which I think were sales expansion, disruption, the payer contracts, the competitive dynamics, which was the most significant that promoted you to move to the lower end of the range? Or were they all equal factors?

A: It is probably an equal factor among all of those. I think for us, maybe a slight edge would go to the productivity of the reps and what the disruption has done to those folks – primarily how it affected our existing reps that were onboard prior to the expansion.

I'd say we underestimated the disruption of the current incumbents that we had and what those territory splits might do to their productivity. So we probably had them a bit on the high side in our forecast. I think that's probably one of the biggest single effects we've had here on lowering that guidance.

I don't think we've changed our expectations of what their ultimate productivity is. I think it's just they're moving slowly upward. And I think there in the third quarter, we actually did see that progress take place. So it was just a matter of watching it carry out.

Q: So I'm hearing you say that things are trending in a positive direction or more as expected now?

A: Correct.

Q: Turning to the new distributors. I just want to make sure I'm understanding your thinking here. Your language suggests you're a bit less optimistic at least in the near-term on a better mix. Given the trends in the last few quarters is 76% the right way to think about it for the next few quarters? Do you feel differently about your thoughts expressed in the past about a 70/30 direct distributor mix or that flipping? Where are we now in thinking about all that?

A: So this arrangement took place in the third quarter, so it's in early stages. I think it is creating a lot of access for us on an in-network benefit, which helps the patient get to the pump a little quicker. I think that may sort of move that percentage – keep it there or maybe slightly higher in the near-term. Our goal is still to move it towards as much business as direct as possible. And I think that is something that we'll sort of move to as we move along. But I think for the near term, these two plans will create sort of a steady state of where we are today.

Q: In the last quarter, you said on the managed care front, you're in the middle of negotiation with several payers out there, including a couple of large ones. It sounded like you had hoped to conclude some more before the end of this calendar year. Is there any update?

A: We continue to make progress on signing payers. On the United Healthcare front, we do have a contract now through a distributor with them. So we do have access to that major piece. We had announced Kaiser previously, but we continue to make progress with payers. And we have a group in the field that is working on getting those contracts. We'd like have direct contracts as much as possible, because obviously, the pricing is usually more favorable than when a distributor is in the mix.

Q: Could you comment on the competitive landscape and what you saw during the quarter, whether it be from Medtronic with the 530G, or some of the newer entrants like Asante? Anything changing there that you could point out to us?

A: No. There really hasn't been any change. I think Asante's regional efforts have been effective in certain states. They have a sort of free try it and buy it program that they are offering. That often catches people's eyes, you can try this thing out for nothing and where everybody else you basically have to go through the process of getting payment and all that's upfront. So that program had effect in some limited areas. They're not national, so it's not a national impact.

But I'd say on the Medtronic front, the 530G certainly did give them something to talk about. And as you know early on, it was aggressively marketed as the artificial pancreas, but I think that has sort of rapidly changed into more of a economic buy-down program. They do trade-ins on pumps, so they'll give you an allowance that will impact your co-pay that often can be a pretty weighty deciding factor when you get to the end of the line on making a decision about a pump. So those are the two major competitive sort of headwinds and really that hasn't changed quarter-to-quarter.

Q: On the submission for the t:slim G4, could you comment on any substantive conversations with the FDA, and any unusual questions that you're getting back? It sounds like you're still pretty confident in this 12 months to 18 month review cycle timeline?

A: Right. I can't really get into the details, but I'd say the speed at which they're responding to us and sort of the depth of the questions indicate that we're in pretty good shape in terms of we're not plowing new ground. The Dexcom PMA was a fresh one in our 510(k) for the pump has been refreshed. So I think the conversations are going, from our standpoint, as well as we could expect them to go. But we still can't change our timeline based upon what we know today – we still have too much to do.

Q: You said the percentage of patients coming from MDI is still over 50%. Is that true for the quarter as well as cumulative?

A: It is.

Q: Talk about the gross margin as you see it between distributors and direct, is that holding steady with where it has been, or is it shifting?

A: The gross margin between the two sort of areas are probably fairly consistent. It's just the mix of what's happening between the two areas.

Q: So there weren't any new promotions or other things like that, that you guys used during the quarter?

A: No.

Q: Do distributors typically carry meaningful inventory as they are kind of anticipating new patient flows and are there any kind of shifts there in the quarter for you guys?

A: No, I don't think. For the most part, most of the distributors run fairly lean operations, so most of them are ordering sort of real time.

Q: As you think about things that you can control aside from direct rep productivity, have you looked at medical education, speakers bureau behaviors, and investments to try to stimulate interest both in your product as well as market conversion?

A: Yes. I'd say all those tactics are being looked at. Probably our biggest headwind is that we just haven't had much awareness because we have such a small field sales force. So when you start thinking about cracking some of these accounts, you will have accounts that have never prescribed the Tandem pump. So getting them up over the hurdle of taking on a newcomer requires all those tactics that you just mentioned. So we're really beefing up in those areas as a plan of action to begin to drive account penetration going forward.

Q: You said in the script that ASPs were up despite the increase in the percentage to distributors – did I hear that right?

A: Our overall ASP is up. And that's primarily due to the revenue recognition associated with non-contracted payers, which is on a cash basis, so that sort of drives sort of the numerator of that ASP calculation.

Q: I'm hearing that basically the change in guidance is maybe a postponement by one quarter of productivity getting back to normal, whatever normal is. Is that a fair summary of how you see it now?

A: Yeah. Fair summary. I don't want to comment if it's exactly one quarter or not, but it is something we do believe that the folks will get back on track, and they are moving up that direction now.

Q: You said Kaiser had been approved last quarter, but you weren't going to really get going until the fourth quarter. We're five weeks into the quarter. Can you comment on that? And then is there any delay on United or is that up and running?

A: Kaiser is up and running. I really don't want to comment on its impact to the Q4 results so far. United is now being accessed through the distributor.

Q: You talked about the incumbent reps and the sort of surprising loss of productivity. As Q3 unfolded, or as you've seen maybe in Q4, as reps’ overall revenue declines, do they get made whole so that they are still incentivized to drive the business during this interim disruption period?

A: Yeah, we do provide incentive programs, but we don't get into the details of that.

Q: I just want to make sure that that wasn't a reason why we may not see the productivity get back to a level that we might have seen last year, for example.

A: Absolutely. We do consider that in sort of driving behavior in the right direction.

Q: Have you provided any sort of sense of attrition rate that you might be seeing in the business so far (in terms of Tandem pumpers moving to different modalities)?

A: In the past we've talked about it being low single-digits and that's what we continue to see.

Q: You mentioned that the gross margin that you get from sales to distributors on the disposables is negative. Is that on the cartridge side? And is there any way to make that not negative?

A: When we service a customer through a distributor channel, we typically lose the infusion set revenue, which provides positive gross margins, and at a higher price point than a cartridge. And so what's left there is the cartridge. And at this point with the current production volumes we're producing at, it is a negative margin, and to move it to positive margin is a volume story.

Q: On your comments about capital needs and being in good shape for the next 18 months – does that suggest that there is potential for a capital raise sometime towards the end of 2015? Is that the right way to think about it? I know at the time of the IPO you said that you'd need to raise capital again.

A: There are a lot of factors we need to look at. Primarily, it's just where the direction of the business is moving as far as cash burn. We are moving down in cash burn. We've sequentially moved it down. I continue to expect that it will continue to move down as sales ramp up. We are looking at where we want to be, where we want to look at access to capital, whether it's equity capital or debt capital, and we do have $30 million available to us today through Capital Royalty that we may intend to utilize or adjust that agreement. So it's something we just need to see how things play out over the next few quarters to see where we might need to make that decision. I think we do have enough runway to allow us to go a couple of quarters to see our cash needs long-term.

Q: What is attrition in the sales organization?

A: From the sales reps side, we do have some attrition, but it’s low, very low.

Q: When you look at Medtronic, specifically as a competitor, is it fair to say that they've been a little bit of a tougher competitor than you thought in terms of turning Medtronic pumpers on to new technologies like yours? Is that a fair statement you think at this point?

A: Well, I'd say that the aggressive use of the upgrade program probably turns the decision from product features to price and that can be a tougher decision point than just features alone. But we did expect that they would be pulling out every kind of trick and stop that they have in their book. They obviously have huge coverage, I mean, they live in accounts and we don't. And so they have the ability to do a lot of different things that really limit our access. Accounts are taking a risk on in taking on a newcomer like Tandem. So I think that has a lot to do with the lack of the bodies that we have in field. I think with a smaller field sales force, they're probably a bit more effective than we thought they would be.

Q: What is the difference in pricing on accessories for a direct contract versus a distributor?

A: On a direct basis a customer generally utilizes about $1,300 to $1,500 worth of supplies a year on a direct basis. And on a distributor basis we'll lose the infusion set revenue, which is a big portion of that. Infusion sets are generally priced right around $9 and cartridges right around $3, so you can look at the relative distribution of that revenue.

Q: In our surveys, it seems that some of the long-time pump users have an aversion to switching over to pumps that haven't really had a long track record on the market. Recently, we've kind of picked up on some of these people seeming to come around to the t:slim now that it's been out there for a while now. Does that kind of mirror what you're seeing in the field, or is it kind of another way that you'd characterize it?

A: Yes. I would agree with that assessment. When you're making a four-year decision and you're looking at a relative new comer versus somebody that's been widely prescribed within an account. You have the dynamic of the healthcare provider who has got to take on the learning of a new device. And there are questions about whether the company's customer service is adequate, what's the reliability of the device, what's the overall experience on the basis of patients. And so the incumbent does have an incumbent's advantage, and that mirrors what we have seen out in the marketplace as well.

Q: On some of these type 2 products, the patch pens if you will, we are also picking up that they might ultimately become almost gateway pumps to more sophisticated pumps like the t:flex, once it comes out. Is that how you think about the opportunity there, or is it well beyond that?

A: I think that you're right, they can be a gateway, because generally what you find is that, people using pens – and I don't remember the exact stat that I've seen – but something like 50% to 70% of all people that are using pens and needles don't use them when outside the home. So wearing a patch and using insulin outside the home is a gateway to going onto to a pump because you're going to get more continuous insulin infusion therapy. I do sort of view it as a gateway product. I don't know what kind of inroads those patch pumps have made. You probably have more direct market research than we do, but I don't think they've made large impact today. But I do think that directionally, you're right about what they could be.

Q: What was depreciation and amortization during the quarter?

A: About $1 million.

 

-- by Adam Brown and Kelly Close