Analyst at Bank of America. Next up, we have Beta Bionics, Stephen.
Stephen Feider.
Feider.
Yeah.
That's right. Okay. Chief Financial Officer. We have Blake, investor relations, right?
That's right.
Great. Maybe to start out, you reported a strong Q1, beat your revenue 2.5%. Maybe just high- level what trends you're seeing in the quarter and drove the beat versus expectations.
Well, happy to be at the conference. Thanks for hosting us. Let me just say that. It's good to be up here with you. The main tailwind that we have for our business that allowed us to outperform and, you know, what we're excited about is, we're seeing more and more adoption in the pharmacy channel. In the first quarter, we had a high 30s% of all of our new patients get reimbursed through that channel. Why that's important is for patients who are considering purchasing a pump, the out-of-pocket that you see in pharmacy is something like $25 or less per month, whereas contrasting that to the DME reimbursement, excuse me, the out-of-pocket is closer to somewhere in the range of $500-$1,500.
Dramatic difference in price, and that creates a much easier product for the patient to purchase, better for Beta Bionics. The number two is we're expanding the field sales team. We did an expansion in the first quarter of 2026. We are continuing to expand into the second quarter, and the guidance that we've communicated is that we'll grow the territory presence in the U.S. by at least 20 territories in 2026, and all of that will be front-loaded the first half of the year. What I'm telling you here in saying that is that we're both growing adoption for our product because we have new territories.
We're a differentiated product with growing confidence in the outcomes of what we're doing and the automation that's embedded in the product. That's in terms of the same store sales. You know, we're also growing the actual field sales presence. There's a lot of places in the country that don't have familiarity with the iLet, and by growing the field sales team, we're, you know, that's allowing us to expand our footprint and, you know, grow awareness of the product.
When you think about Q1, now that you've seen all the other reports, how do you think your share trends in Q1 and, like, when you look at the other kind of pump reports from new patient starts?
We're evaluating Q1, and I think that even just from the meetings I've had with investors already today and the, you know, post, like, all of the pump companies now reporting, I think the perception is that maybe Q1's performance or Q1 in total for new patient starts across the entire pump industry was a little soft. I think I may agree with that. However, the seasonality did not surprise us at all. I think our pump, our performance in terms of new patient starts in Q1 was in line with expectations, and there's nothing that I would point to that compressed insulin pump adoption in Q1 that, you know, for the market to, like, come to understand as to why the results were they were.
I think that people just don't appreciate that Q1 is the biggest step change seasonally. The drop from Q4 to Q1 is the biggest step change seasonally that we see in insulin pumping. We actually, like, feel really good about our Q1 results, and for the tubed insulin pump market, we think we're doing great. We're actually beating the competition. Our sales reps are performing at a level of efficiency that's exceeding the other tubed pump companies and all that to say we are going to need a patch pump to win in this market, and we'll launch one at the timing that we've communicated in the past. We just feel really good about our spot.
On seasonality, a couple of quarters ago, you were saying kind of less seasonal Q4 to Q1, you know, is more of a headwind versus like normal typical seasonality in Q4. Now you have one of your competitors talking about more seasonality in Q1. Like how do you kind of match up the two?
Yeah, I think well, what I guess I've been consistent with my communication is that I think that in terms of the step changing seasonally, and this is by looking at the patterns of seasonality for the last five years, trying to normalize for new product launches, trying to normalize for any outsized like one-time factors. We see the largest step change downward from Q4 to Q1, a medium step change upward from Q1 to Q2, flat Q2 to Q3, a small step change up from Q3 to Q4. Now we're back to that large step change down, and that's trying to normalize for like all factors. I've actually seen the market that way, like, for a while.
Look, one thing to note is when you compare what I just said to our last year's results, meaning Q4 2024 to Q1 2025, the step change down wasn't as strong, we did launch a product right at that time. We launched the Color iLet. I think that that sort of mucks up the comparison. The way that I just communicated is how I've seen it since I've been in the industry.
Okay. That's helpful. Just the overall health of the pump market and some, you know, Type 1 a little more penetrative than Type 2. When you look at the overall health of the market, is the market maturing? Is it slowing? Is there still a lot of opportunity for the kind of sustained double-digit growth?
I think the pump market is far healthier than what perception currently believes. Type 1 market continuing to grow. I don't wanna co-comment specifically on like what I obviously have a perspective on what it's going to grow this year, what it grew last year. Depending on which analyst model you look at, you could get a different number. Healthy growth certainly last year, a lot of that driven by Type 2, but still growth in Type 1. I see the same for the market going forward.
New patient starts in 2026. You talked about a lot of variability and trends throughout the year. You know, I think you still talked about 21,000-23,000 new starts. Just trying to understand what gives you the confidence to meet that and help us understand some of the, I guess, the variability that you talked about.
Well, we didn't we don't guide to new patient starts. We have You know, we, of course, understand that the consensus is built from the analyst models, we do our best to shape the analyst models to where we'd like them to be, feeling good of about the new patient starts consensus, again, acknowledging that we do have some control over how those numbers get created. I actually feel like new patient starts is reasonably predictable for our business. You know, we have sales territories, now we have enough experience and historical data to suggest what a current territory's expectations can be based on their ramp rates. To me, that's actually an area of our business that is reasonably predictable.
I assume that you're gonna be taking continued share kind of at the same rate in guidance, or?
Well, look, I like I just said, I a moment ago, I'm proud of how we're winning in the tubed pump market. I think we will continue to be a winner in terms of where, you know, getting new patients from that particular subset of the patients who are willing or are currently wearing an insulin pump. I think, you know, some of it that if I was gonna like, you know, confirm or give you a number as to what we thought our market share was gonna be for the rest of the year, it would almost sort of be like forecasting what the patch pump competitors' new patient starts are gonna look like, which I don't really wanna do.
What I will say is that I really like our position here, and that we've built a differentiated product. We've got grown confidence in the algorithm that we have. The clinical outcomes are fantastic. We have all the cash we need, and we're set up perfectly to launch our patch pump into, you know, into a market that clearly that's what a lot of patients would prefer.
When we do, I, you know, I really like our position.
Right. What do you think about, I guess the competition at the market, the form factor is converging.
Yeah
more to a patch pump. You're kind of one of those converters, if you will. How do you think the market starts to compete when form factor is more the same? Is it more on the algo, and how do you continue to differentiate that?
Well, I think that the form factor. To be a patch pump that I would consider to have a credible chance to beat the incumbent, I think that you have to have a patch pump user experience that is as good or better than the incumbent. That's perhaps obvious. What's maybe not obvious is when you actually look at the solutions that our competitors are planning to bring to market, there are some significant deficiencies relative to what the incumbent is. I don't really see, like, a patch is a patch is a patch pump. Like, by the way, there already are patch pumps that are cleared that no one really cares that much about, and no one's trying to go buy because they're inferior to the incumbent, like I just said.
I think one really notable characteristic that is, like, an obvious user experience disadvantage that we haven't really come to fully appreciate yet is that if you have to recharge your device, like, meaning you either have to carry two reusable portions of the device, or you have to take your device off and then recharge it, like, to me, that's such an inferior experience relative to the incumbent patch pump that I don't see that as a competitive form factor. Let's say we, like, look at our product that we plan to bring to market, Mint, and with the incumbent patch pump, which I think Mint is as good or better of a user experience.
What's going to matter, to get to your real question, is the algorithm and the clinical outcomes, and the ease of use for patients, and the ease of use for the healthcare provider, primary and pharmacy reimbursement. All those areas. That's where I think Beta Bionics is a market leader. We need this, you know, form factor and also ultimately to, you know, compete at the grand level.
Are there potential improvements on your algorithm as well?
I don't have any specific commentary on that. Here's what I'll say. Here's what we're not doing. We're not sitting back and just saying, "This is gonna be our algorithm for here and evermore.
Okay.
Because of course we're not. Algorithm's a core competency of us, but I haven't commented publicly on, like, what exactly we're considering.
Yeah. I'm just trying to think about your competitive positioning. If you're competing on the algorithm, other companies obviously advancing their algorithms, continuing to close the loop, if you will.
Just like how does your offering stack up as those other algorithms have been talked about come to market?
Yeah. We have to maintain a lead, which means continued innovation. I like to call this disrupting yourself. The disruption of ourself means make improvements to fully automated or, you know, fully closed loop algorithmic technology for insulin only, and then also to have bi-hormonal technology, which means, you know, automated for insulin and glucagon. We've talked about the merits of that product in the past too.
Right. On patch pump, I know you're not gonna say a lot, but just if you can help us understand, one question that we get is: How can Beta manufacture this product? That's kind of maybe how I'd ask the question. You know.
at your scale, ability to manufacture the demand and that's kind of where competitors have gotten tripped up in the past on patch pumps.
I brought one to make my point a little. Figured you'd ask something like this. Okay. We have this is Mint. This is the reusable portion here. This is what you would fill up with insulin every three days, then replace with the adhesive, and you throw that away. Here is the reusable portion. There's no recharging required for this. What happens is, you are wearing the patch pump when they both are assembled. You take this off your body, you set the reusable aside, and then you put the reusable back onto the new one. Okay? That's that. That's the step we're adding. The key thing you asked about manufacturing is the reusable portion lasts two years. It's where all the expensive components live. The bill of materials is actually pretty high on this.
It's fully waterproofed, everything. No recharging, to reiterate. The actual, like, thing that you have to make at, you know, millions and millions a year of is this disposable portion. Yes, that is hard, but what should give investors' confidence that we, Beta Bionics, can pull it off, I think number one is the design decision. Like, actually think about what is really in here. It's two batteries, a cannula. You know, so you have to put a needle in the exact right place, of course. There's a bonding mechanism to bond to the reusable portion, yes. There's adhesive. Like, that's kind of it. Reservoir. That's not like, you know, obviously in a highly regulated, sterilized, clean room environment, like, that is difficult.
It's not like building what the patch pump incumbent is doing today, which by the way is insanely impressive, is building a fully disposable patch pump every three days for, like, under $10. That's on my estimate, not theirs. That's impressive. This is just a way easier design, all right? Number 2 is we already do it, meaning we already make disposable products that, like, millions and millions of disposable products with sterilized clean room environment, semi-automated manufacturing equipment in Irvine. We already do that today. We make the cartridge and the cartridge connector, and we have a massive install base that uses one of those every three days, each of those. This is not a new skill for us.
We're not, like, standing up, like, you know, "How are these guys gonna create a, you know, clean room environment?" This is already a core competency. I think that should, you know, help you understand.
What's the hardest part of the whole process?
The hardest part of the whole process is this is a CFO answering a manufacturing engineering question. Obviously, I have an opinion 'cause I'm really close to the project. I think it's just needle placement, like getting it dead on, which by the way is the hardest part about the cartridge connector too. Like, it has to be, like, you know, extremely precise. The tolerance is really small.
To get the needle through the cannula.
No, like you put, like, you know, what's gonna happen is the needle inserts when you push this insertion mechanism in.
Like, when you actually place the needle in this particular device every time, like making millions and millions of them, the precision of that has to be, like, so dead on.
Okay.
Like, that, you know, to do that in like a, in a semi-automated manufacturing environment with, like, machining is, like, reasonably difficult.
I see. Okay.
Yeah.
If it's not right, then the pump fails and doesn't inject.
Yeah. Yeah. Well, you'd have testing mechanisms in place.
Right.
You would never, like, you know, ship one but that it would cause scrap and Yeah.
Okay. No, that's helpful.
Right.
I guess the plan is still.
We'll commercialize it by the end of 2027.
Okay. That's more depending on manufacturing, not FDA approval?
Well, yeah. The Gantt chart for this project is big, of course, but the two, like, big items are there's the regulatory bar and then there's, like, the manufacturing readiness bar. Our estimation is that the manufacturing readiness bar will take longer than the regulatory bar. We've started them both in parallel, of course. Like, they're not, you know, we're not waiting to get a clearance before we work on manufacturing capability, but that is the gating item in our mind currently.
I guess 'cause you probably assume, like, your existing patients are gonna switch over, so you're gonna on day one manufacturing need a decent amount of capacity.
Yeah. Not only will some of the existing patients wanna change over, but, you know, new demand, perhaps pent-up demand from, you know, announcements before you launch it. Yeah.
Okay. Maybe just give us a state of affairs in the pharmacy channel. You know, you talk to a lot of payers, PBMs, just kind of the, I guess, receptivity to moving more of these devices into the pharmacy channel.
Yeah. Okay. Well, I said at the start of the conversation why pharmacy is a major advantage, 'cause it's a lower out-of-pocket cost for patients. That's a big one, we actually, you know, it's advantage reimbursement model for us as a company. It looks more like a subscription model. I don't want to revisit the entire business model. I've done that a ton. It's, you know, no upfront. We don't get paid upfront for the pump itself, and then we get paid over time in a recurring revenue model relative to DME, where it's all upfront. I believe that over time, insulin pumps will be reimbursed as a pharmacy benefit. I think that it's clear to me that's what payers actually prefer. It's advantage for the company.
People jump from insurance to insurance and the way that modern-day consumerism works is you pay for things when people are on your product and they're actually using them. Like, in the eyes of a payer, like, the payer wants to pay if the patient is using the device and, on their insurance, not like, "Hey, I bought them a pump this year, and then next year they're on a different insurance plan." That's not the idea. You get the point.
I think the important question I want to answer here, and I'm actually going to ask Blake to help me with this, but I think there's a lot of concern amongst the investor world that I'd hope to clear the air on a bit, and it's that there's this big cram down in price risk in pharmacy. Like, oh, once everyone moves to pharmacy, could a rogue decision maker at one of these companies create a race to the bottom in price that puts all this downside pressure in on insulin pumping? Or is that already kind of looming, you know, this is something that all the companies are aware of and they're just not? The answer to that is no.
I'll do my best here to like attempt to tell you why I believe that I feel strongly that the insulin pump market in terms of price and pharmacy is reasonably well protected. There's some risk. I just don't see that. I don't see that for us. I hope we as an industry can get better at communicating why. Here's my attempt. Number 1 is that insulin pumps are not commoditized products. When a doctor prescribes a patient with an insulin pump, Number 1, it's based on that patient's needs because the actual user experience with the algorithm is dramatically different from one patient to another. Whether they can or are willing to interact with the device, their sophistication with counting carbohydrates, the settings that they set that they manage, all that is starkly different.
The other thing in terms of, sorry, I'm losing my train of thought. Blake, you mind helping me out here?
Sure. The other thing beyond the commoditization is just, you know, in terms of the actual profile of profitability and gross margin of these different companies in terms of even where the market leader in insulin pumps is today that's getting reimbursed in the pharmacy channel there. We would argue that they're not, you know, that the industry in general isn't making money hand over fist such that it would become a clear target for payers to want to desire to cut price. We think that pricing in general can be competitive, but also highly rational and is highly rational today, which wouldn't necessarily create a cram down on price.
Beyond that, I would just, you know, encourage folks to think about this not necessarily as like a pure medical device, but we are talking about the pharmacy channel and there are numerous pharmaceutical analogs in oncology, immunology, you name it, where there are different classes of drugs that treat different patients for different reasons, whether it's biomarker based, whether it's severity of your condition. A really good example of this is the inflammatory bowel disease market. There's about eight drugs in that market from, I think, call it like 2004 to today. You know, don't quote me on exacts here, but there's about 18 years there where because these different classes treated different people for different reasons, 18 years where price not only sustained, but actually increased over the long term.
That included multiple different drug classes and even biosimilar entrants in some where maybe that drug was used to treat a small portion of patients. Yes, sure, the brand drug, you know, did see price compression from the biosimilar, but the rest of the market still held up in terms of pricing. It wasn't until HUMIRA had a biosimilar entrant in 2023 and HUMIRA treats outsized proportion of these patients in that eight drug market that the actual broader market started to see price compression. Until or unless, and we would argue that we are a long ways away from this, but until or unless there's a level of commoditization in insulin pumps and dosing algorithms that creates that level of commoditization or that the more patients can benefit from a variety of different therapies for different reasons, we just don't expect to see that pricing compression.
I'd encourage folks to think about it that way. Insulin pumps are prescribed specifically for the type of pump that a patient or physician thinks that a patient would benefit from. There's numerous factors that influence the outcomes from lifestyle to insulin sensitivity to things like exercise that just make different algorithms work for different reasons. The combination of all of those factors make us quite confident. We believe that pricing is going to be quite sustainable for a long time in this world.
How do you think about or how important are like rebates and tiering on different PBMs for insulin pumps?
All right. Well, pharmacy benefit plans have three different tiers in terms of pharmacy coverage. That's well understood. Our product is going to always fall, and Mint will be the same, fall into or for the foreseeable future will be a Tier 2 or T ier 3 product. We evaluate which position, either Tier 2 or Tier 3, that we want based on the economic model associated with that position. I'll explain. There's a difference in the amount of rebates that you pay, like the manufacturer pays to be covered as Tier 2 versus Tier 3. So just take whatever that, you know, just imagine that difference is, say, like I'm just picking a number, 5%. That's the rebate difference. Well, the other difference between a Tier 2 and Tier 3 position is the copay that the patient pays when they're covered on that particular product.
That copay difference is not perfectly clear to us, but we have a really strong sense of what that copay difference is between Tier 2 and Tier 3 when we're deciding which position we want to target. What we do is we look at it again in this hypothetical. We look at that 5% difference that we'd have to pay in rebate for Tier 2 versus Tier 3. Because we buy down copays, all patient copays to $25 or less, which is what we do currently on iLet. You know, we're not sure what we'll do yet on Mint. Because in this case we buy down copays, we can look at how that 5% in gross dollars is going to compare to the difference between the copay buy down that we'll have to pay to get Tier 2 versus Tier 3 position.
If the rebate is going to cost us, say, $40 per month difference to be on Tier 2 and the rebate to get to Tier 2 position, we would only pay, let's say, like $25.
We actually would prefer to be on Tier 3 in this particular case, because buying Tier 2 costs us more than the rebate difference. To a patient, this is all opaque. Like, the patient doesn't see what their copay is. The buy-down happens automatically, and that's kinda how we think about it. I get a lot of questions about, and I'm glad you asked this. I get a lot of questions about how this dynamic works and, it's actually really simple, I hope is the takeaway there. That's just a math problem.
To make something crystal clear, 'cause we get this question a lot, but the pricing that we've disclosed in the pharmacy channel, that is net of all the things Stephen just described. It's net of copay assistance, net of rebates, net of any other discounts.
Okay. When you think about the difference for the patient between Tier 2 and Tier 3 , it's the copay is all they see.
They don't even see it.
You buy it, they don't because you buy it down, right?
Yeah. They don't.
The patient, it's net neutral depending on what tier it is.
Exactly.
What else matters between Tier 2 and T ier 3?
It's, uh-
Any other factors?
It's just a rebate and copay.
Okay.
Yeah, that's it.
Okay.
Yeah, that's it.
Why not any Tier 1
Tier 1 is, like, generic.
Okay.
Pumps are not close to generic.
Okay. You wouldn't even go there? Okay.
Yeah.
I'm still learning the pharmacy channel.
Yeah, it's good.
It is. That's what I get as an analyst.
I actually, again, I think I'm trying to communicate this as, like, a really simple concept, but I do appreciate that the investor world, like, needs to understand this because I started our whole conversation by saying that the move to the pharmacy model is a major advantage for us, advantage reimbursement. I think understanding the dynamics of it and giving confidence is important.
Yeah. You think about the payer perspective, not the PBM, but the payer is paying more per month. We talked about having it's a monthly fee, not a big upfront fee, until you're paying when they're using it. Are there any other aspects in the pharmacy channel for why a payer would prefer that over the DME?
The economic model, like we've, you know, we've talked about, yes, like if and when we retain patients for longer on our product, then the payer net pays more in the pharmacy reimbursement model than they do in DME. They see it as a risk transfer, and they like it for that reason; I'll just reiterate that point. The other important element of payers being more inclined to cover pumps in pharmacy is that they want patients on pumps. Because the out-of-pocket is so dramatically higher in DME, they see that as cost-prohibitive in many ways. You know, more patients on pumps is considered economically beneficial and just better overall for, like, health of the patient.
It also matters to the amount of work that goes into verifying and processing and monitoring the claims around where a beneficiary on that plan who's on a pump that they bought through DME for, you know, $4,000 or $5,000, what have you, and where that beneficiary actually is at that given time. That's a lot of, you know, work that's required, and there's a lot of human hours behind that goes into their SG&A line, even though it's different from, say, just there, you know, cost trend. There is an actuarial conversation around where the dollars are actually coming from.
Okay. I hear some say, like, the payers have more visibility in the pharmacy channel than the DME channel. Is that what that's referring to?
Yeah. Yeah. It's the visibility, and it's the point that if someone's on their plan benefiting from their therapy and getting those short, medium, and long-term benefits for themselves and ultimately to the payer, then they'll pay for the therapy.
Doesn't really matter for you yet, but when you do launch Mint, there's probably gonna be people, you know, in your existing DME base that wanna transfer to the pharmacy. You think about a payer who just paid, you know, however, $1,000 for a pump. You know, how do you get those patients to switch over? Is there some inhibiting factors on that side, or is it just not big enough to matter?
Yeah. There's no prohibitive blocking mechanism to allowing a patient to transition. I don't know if it's not big enough to matter. That's not really my call to make, but that will happen.
There's-
Yeah. No. Acknowledging it's not the design of the program.
Right.
That will happen, though.
Yeah. I was thinking about how easy it is to take a DME patient, an existing patient, to the pharmacy channel.
Yeah, there's no blocking mechanism in place.
Okay.
I guess the last thing I wanted I'm sorry if you guys want to wrap.
Yeah, I was gonna close, but if you have some opening things.
Yeah, I think, you know, the folks listening in here, you guys are in the investor world looking at med tech companies, and you've seen compression in diabetes, and in particular in insulin pumping. You know, we acknowledge that and we'll continue to, you know, exude our confidence that we have in what we're doing at Beta Bionics. I think one thing I would share with you is that's kind of interesting is we, you know, Sean Saint, our CEO, and I started at Beta Bionics and took over together in what I thought was a fun turnaround story in late 2022.
We laid out a path knowing that we were gonna, of course, need a patch pump in order to win. We laid out how we were going to get this device cleared, what kind of capital we were gonna need to do it, why it made sense to front-run pharmacy reimbursement and do all this work to build confidence in the product, build a brand that people were loyal to and familiar with. We've actually been charting that path, and, like, you know, beating even our own expectations. What's really interesting is, like, despite all that, you look at, like, our stock price, you know, like, how the market perceives it's a roller coaster like you've never seen. I mean, you've seen before, but it's a crazy roller coaster.
Like, internally, every employee at Beta Bionics that knows what the actual plan of the company is, what the vision is, the narrow priorities that we have, it is unwavering. We are, by our standard, we are right on plan. We are super excited about what we currently have, the outlook for iLet. When we launch Mint, we're super confident that all these decisions that we've made, that they were the right ones at the right time, and we have plenty of cash to do it. I really like our position.
Yep. Sounds great. Thank you.
Yeah.
Thanks for joining us.
Thanks.