Memorandum

Insulet Omnipod Dash receives FDA clearance for Bluetooth pod, touchscreen PDM; six-month limited launch this summer, full launch in early 2019 – June 4, 2018

    Executive Highlights

    • Insulet has received FDA clearance for Omnipod Dash, its color touchscreen PDM handheld, Bluetooth-enabled pod, and paired secondary display iOS apps. A limited market release is expected in 2H18 (lasting six months), with full availability in early 2019. The Dash PDM will be available for free with the purchase of pods – this was not necessarily expected and is very cool. Each Dash system will ship with Ascensia’s Contour Next One BGM.

    • The Dash PDM brings a far more modern design to Omnipod, offering a terrific (and much-needed) upgrade from the current PDM. Dash’s addition of Bluetooth and Wi-Fi allow for passive data upload and remote updating/monitoring; a consumer-grade color touchscreen experience (via a locked down Android phone) keeps Omnipod competitive with Tandem; and the Dash platform allows for more compelling software-deployed innovations (Horizon AID [automated insulin delivery], U500, U200).

    • The Dash PDM makes Insulet’s hardware more competitive with Tandem’s current t:slim X2 and Medtronic’s future Bluetooth-enabled insulin pumps – all while keeping the same compelling tubeless pod that resonates so strongly with many former MDI users. We assume the Dash PDM is not a very expensive device (as a locked down Android phone), which could also theoretically help on the access front.

    This morning, Insulet announced FDA 510(k) clearance of Omnipod Dash, its much-improved color touchscreen Personal Diabetes Manager handheld (a locked down Android phone), Bluetooth-enabled tubeless pod, and paired user/caregiver secondary display apps on Apple iOS.

    A six-month limited market release (“Dash Ahead”) will begin later this summer, with a full launch in “early 2019” – both in line with 1Q18. Dash will have a big ADA 2018 presence in a couple weeks, both in a product theater and at a VIP event. No EU or Canada approval (or clearance) or timing has been shared.

    The new Dash PDM will be available for free (once every four years) with the purchase of pods. We’re elated to see no expensive upgrade fee for current users, a testament to Insulet’s differentiated recurring revenue business model (i.e., driven by ongoing pod sales, not PDMs) and the company’s enormous commitment to making things as easy as possible for patients.

    The size of the limited launch is unclear – we might guess <1,000 patients. Insulet will choose a select number of US endocrinologists, who will then choose patients for whom Dash should be prescribed. Insulet’s marketing brochure looks great – we very much appreciate the “real world” perspective and the diversity of patients shown. Additionally, we appreciate very much the commitment to 24/7 phone lines to discuss access.

    Dash was submitted to FDA in January, meaning this 510(k) review was a fairly fast ~five months – considering the major human factors update, move to new PDM hardware, and addition of Bluetooth and apps, that’s a big win and strong execution from the Insulet regulatory team. (For context, Insulet’s second-gen pod and PDM had an ~19-month FDA review!) Dash easily hits and probably exceeds a bit the JPM goal for a 2H18 limited launch although zooming back, the launch comes roughly 6-12 months delayed from the initial November 2016 Analyst Day hope to launch in “late 2017.”

    Overall, Dash looks like an outstanding product, a terrific upgrade from the current (clunky) PDM that came out five years ago, and a design that moves Insulet in all the right diabetes device directions:

    • The addition of Bluetooth and Wi-Fi connectivity enable passive pump data upload (to Glooko) and smartphone secondary display, unlock remote over-the-air software updating, and propel caregiver monitoring (notably, well ahead of MiniMed 670G);

    • A consumer-grade, large color touchscreen experience (via a locked down Android phone) significantly improves on the current button-driven PDM handheld and keeps Insulet more competitive with Tandem;

    • The Dash platform lays a groundwork for future software-deployed innovations, especially the Horizon Automated Glucose Control system with Dexcom’s G6 (launch in 2019-2020, with hotel data at ADA) and the U500/U200 pods with Lilly. Importantly, Insulet will be able to leverage the same Dash PDM, pushing the innovation out with new software;

    • The secondary display apps give Insulet valuable smartphone experience as diabetes devices increasingly put functionality on the phone; and

    • The Dash PDM’s user experience will (hopefully) port over to a user’s own smartphone over time, eliminating the need for a PDM at all (our speculation).

    We include Dash pictures below from recent conferences, which definitely steps up Insulet’s hardware and software game to keep up with Tandem and ahead of Medtronic.

    As expected following JPM, each Dash PDM welcome kit will include a Bluetooth-enabled Ascensia Contour Next One blood glucose meter, which sends results wirelessly to Dash and right into the bolus calculator. Other Bluetooth-enabled BGMs will not send data to Dash at launch, though we’d guess they could be added over time. (The current PDM’s embedded Abbott FreeStyle BGM has been taken out in Dash – a loss for Abbott, and although not too big considering the focus on Libre, 99% of people with diabetes still do use BGM, not CGM.)

    The actual Dash PDM will not display Dexcom G5/G6 CGM values; this will have to wait for the full PMA submission as part of the Horizon hybrid closed loop system. Instead, Insulet will offer an Apple iOS Today widget on the iPhone lock screen (see below), which will allow users to see their pump data (e.g., insulin on board) side-by-side with their Dexcom data. Since the pod cannot talk directly to a user’s own iPhone, the Dash PDM must be nearby and will relay the data to the Omnipod Display app/iOS Widget. We wonder if Insulet will consider integrating with FreeStyle Libre over time – scanning a Libre sensor with Dash would be a terrific form factor.

    This is Insulet’s first major product launch since the second-gen smaller Omnipod and slightly redesigned PDM came out over five years ago in February 2013 – wow! We’re glad to see the company pursuing a limited market release, as there will no doubt be learning from users, lots of manufacturing and inventory scale up, and plenty to learn on the app/software fronts. Investors were clearly excited, as Insulet’s stock price hit a record high of ~$95 (market cap: $5.6 billion).

    Get more details below, including pictures of Dash and our questions.

    Other Dash Design Details

    • As expected, Dash is not backwards compatible with current Omnipods, since the communication now relies on Bluetooth. We assume all users will move to Dash over time – especially once automation is added with Horizon – though Insulet will continue to support the current configuration, per the Dash FAQ on Insulet’s website.

    • Along with Dash, Insulet will launch “Omnipod Display” and “Omnipod View” apps, enabling secondary display of pump data relayed from the PDM. These are only on Apple iOS at launch, with Android to follow. Omnipod Display will allow users to discreetly monitor their PDM data on their own smartphone, along with a cool feature called “Find my PDM.” This is the first we’ve heard of the latter, which sounds awesome and we assume it will allow a user to ping the PDM via Bluetooth from the Omnipod Display app on their own phone (like the Apple Watch’s ping my iPhone feature). If the PDM was lost in another place, perhaps it could connect via Wi-Fi for location; we assume the PDM’s cellular will not be turned on, though technically it would be feasible with a locked-down Android phone and a SIM Card. Omnipod View allows parents and caregivers to monitor their loved ones’ diabetes; up to 12 followers can be added.

      • As noted last month, Insulet and Bigfoot are launch partners with Google for Android Protected Confirmation, enabling secure insulin pump control from phone. Insulet has not shared timing or even confirmed publicly that direct smartphone control could be available, though we’d speculate it is in the pipeline. Wearing only an on-body pod and controlling it from a user’s own smartphone (no PDM needed) would be truly compelling.   

    • The Dash PDM has a very large four-inch screen, a slim thickness of 0.39 inches, and weighs 6 ounces. For comparison, Tandem’s t:slim X2 has a much smaller 2.4 inch screen (diagonal) and is actually thicker at 0.6 inches. t:slim X2 weighs only 3.95 ounces (with a full cartridge), ~33% less than the Dash PDM.

    • Aside from integrating Bluetooth, the on-body pod will remain the same: tubeless, up to 200 units of insulin capacity, up to 72 hours of continuous delivery, and waterproof. Insulet has added a blue needle cap and updated Pod label for differentiation between the older pods and new Dash pods with Bluetooth.

    • The Dash PDM has a rechargeable battery and includes a CalorieKing food library with up to 80,000 foods. The latter sets it apart from both Medtronic and Tandem; we assume enough Omnipod users leverage the library enough that it was worth maintaining it in Dash. The Dash PDM is obviously not waterproof.

    • At full market release, the Dash PDM will automatically upload pump data to Insulet-Provided Glooko whenever it is connected to Wi-Fi – this will be a terrific win for Insulet users and healthcare providers, as the current process requires plugging the PDM in manually via cable.

    Omnipod Dash Pictures from Recent Conferences

    • As we’ve seen at conferences over the past year (AACE 2018, JPM 2018, ADA 2017), Insulet has taken great care in the design of this product – see the latest screenshots from Dr. Trang Ly’s AACE presentation two week ago. Dr. Ly and team continue to impress us with their relentless focus on simplicity and usability – noted as a challenge in the face of additional functionality – in user interface design. The most prominent home screen features are for the most relevant pieces of information/ functions: insulin on board, last bolus, last blood glucose, and bolus; we find the pod activation instructions (complete with images) to be very straightforward; and recording pod sites appears simple and useful. Dr. Ly shared that these interfaces have only been tested in MDIers, to avoid bias from prior pump use, and designed so that the 75-year old with retinopathy and neuropathy can use it (we hope this is also true for a 95-year-old!). Insulet has also developed an Omnipod demo app to give potential users the opportunity to experience the look and the feel of the PDM before making a decision.

    • We like the iOS widget (lock screen), which shows insulin on board prominently and right under Dexcom’s CGM widget. Unlike the G5 transmitter (which can talk to a receiver and the smartphone app), the Dash pod will only talk to one device at launch – the Dash PDM. If a user’s own smartphone is not nearby, the Omnipod app will display the most recently received data from the Dash PDM. Since the Dash PDM is a locked down Android phone, it will have Wi-Fi, which allows passive data upload to the cloud (Glooko) and unlocks over-the-air software updates.

    Close Concerns’ Questions

    Q: How many users will take part in the Dash Ahead limited launch? Which endocrinologists will be chosen? What will the chosen endos do to convey the most learning from their patients? Where will Insulet have the most learning?

    Q: How big is the manufacturing change to add Bluetooth to the pod? Is the new PDM, as a locked-down Android phone – less expensive for Insulet to make?

    Q: Will Dash improve Omnipod adoption among MDI users? Will it positively affect Omnipod retention/attrition among current users?

    Q: How much will Insulet charge users if the Dash PDM is lost within a four-year period? As a locked-down Android phone, how expensive is each PDM for Insulet – $100? $200?

    Q: Will Insulet actually bill insurance for the Dash PDM? The FAQ notes, “With the Omnipod Dash System, customers will be eligible to receive 1 free PDM every 4 years with the purchase of Pods subject to certain conditions including but not limited to, verification of insurance.” Does the latter apply to ongoing pod ordering only, or also to the Dash PDM?

    Q: How will users choose between Insulet’s Dash, Tandem’s t:slim X2 with Basal.IQ, and Medtronic’s MiniMed 670G in early 2019? Given Insulet’s continued strong growth in MDI, we’d imagine it will see similar or perhaps accelerated growth with Dash though this will undoubtedly vary by cohort.

    Q: Will Insulet beat Bigfoot and Lilly to market with the Horizon AID product? Our AID competitive landscape currently has Tandem’s Control.IQ as a 1H19 launch, with subsequent hybrid closed loop systems (including Insulet’s Horizon) converging on late 2019-2020 launches.

    Q: How far off is direct-from-smartphone control of the pod? When could Insulet launch this via Android Protected Confirmation? What about on iPhone?

     

    --by Adam Brown and Kelly Close