Evening to those of you joining on the East Coast and in Europe, and good morning to those joining from Asia and Australia. I'm Ryan Weispfenning, Vice President and Head of Investor Relations at Medtronic. Thanks for joining us for our Virtual Diabetes Group Investor Briefing to discuss our diabetes business and the clinical data that is being released in connection with the American Diabetes Association 80th Scientific Sessions Virtual Meeting. While we're not together in Chicago as originally planned today, I do hope everyone is staying safe and our thoughts continue to go out to those that have been affected by the global COVID-nineteen pandemic. So switching to the next slide here.
Okay. I want to note that we could make some comments that may be considered forward looking statements and actual results might differ materially from those projected in any forward looking statement given risks and uncertainties, including those related to the impact COVID-nineteen has had and is expected to continue to have on our business. Additional information concerning factors that could cause actual results to differ is contained in our periodic reports and other filings that we make with the SEC, and we do not undertake to update any forward looking statement. I encourage you to go back and read this slide. The slides and videos that we're presenting today will be available on our website, investorrelations.
Medtronic.com, at the conclusion of today's presentation. I also want to note that if you experience difficulty seeing or hearing the videos that we're presenting today, they will be available for viewing on our website, investorrelations. Dotcom following today's presentation. So today's webcasted event will last about an hour with a presentation given by members of our diabetes leadership team, including Sean Salmon, Executive Vice President and Diabetes Group President Doctor. Bob Vigorski, Chief Medical Officer of our diabetes group and Ali Diannady, Vice President of Research and Development for Our Diabetes Group.
Following the presentation, we'll host a Q and A session where we'll take questions from the sell side analysts who have joined by the Webex platform. For the Q and A session, I want to reiterate for the sell side analysts that what was on their invitation that we sent next to your name. So with that, I will turn the event over to Sean Salmon. Sean?
Great. Ryan, thank you very much. And thank you all for joining us today. What I thought I'd do is just really start off here talking about what we've been doing to reinvigorate the diabetes business. I'm going to share with you in just a second here sort of a new look at the strategy that we're laying out for how we're going about and approaching the business.
And of course, anytime you have a strategy, it's important that you have organizational structures built to support the execution of that strategy, most importantly, having the right talent in the right roles and a culture that really supports the point of view of that strategy and how we're all working together. So a lot of my time has been spent on building these blocks out and I'll take you through that in a moment. It's also important to remember that we have some work to do to get this business back to growth and we're certainly committed to returning ourselves to very strong growth. But we do have considerable strength, so we can leverage, including our long history in this business, deep connections and relationships we have with healthcare providers and the extent of our organization that is really far reaching both globally, which is still continuing to perform very, very well. And with United States where we are deeply ingrained with a strong support network that we can leverage.
There's some other things that you'll hear when we talk about the pipeline from Ali De Anadi about the strong capabilities that we have, most importantly within the data science and artificial intelligence realms. As I said, we are committed to strong growth and with an improving pipeline that you're going to see laid out here, we expect get ourselves into a place where we are accretive to the Medtronic weighted average growth rate. That pipeline of products that Bobby is going to take you through is very compelling. And I think the nuance I'd like to point out here and as I talk about the strategy is really about how we're putting the patient in the center of what we're doing and really thinking about design thinking and experience of the patients, what's going to drive how we go about innovating for patients. So if I take you through that strategy, it's really about refocusing ourselves where we're strong, focusing on our core customers, those type 1 dependent and type 2 insulin using patients And really meeting them where they are.
A patient goes through patients go through very different journeys, whether they're newly diagnosed or they're maybe it's a parent who's dealing with challenges of their child, either dealing with their disease or going off on their own for independence. There's a whole bunch of things that happen in that journey. And it's really, as we'll talk about a little bit here, often a very challenging one. The burden of this disease is very, very difficult for patients. And where we think we can unlock that journey and make things better is by providing insights and for those who want an automation to really get them to be free and independent of their disease to the best that we can offer.
And we'll tell you more about that in just a minute here. But really the emphasis of our strategy is on the entire customer experience. It's not just the products, it's just how they all work together and how our support network and really every touch point that a patient's going to encounter and their relationship with us is enhanced and made better for their benefit. And as I said, we put a strategy and a structure together and we really structured the organization around that customer experience with big pillars of support for the innovation investments we're making as well as our support network. Further to the point about investing in our growth, we've also done some things.
We had a press release this morning talking about a really unique partnership at least in medtech that we've forged here with Blackstone. Blackstone has had this proven model of adding funding to accelerate biotech and pharma, particularly on clinical trial funding, but other types of funding. The agreement we've reached with them can provide up to $337,000,000 of incremental funding, which will help us to accelerate the development of future diabetes technologies that will improve outcomes and lead to greater usability and simplification of those technologies. This will be expense and we will expense the R and D line and there will be an offset on the P and L. There's no net P and L impact and there will be a low to mid single digit royalty upon the successful commercialization of these technologies.
So before we get into the new technology, I thought maybe good to take a step back and think about 670 gs. 670 gs continues to be launched in many markets around the world and we've leveraged the learnings from other markets about how to best go about that. And we're now at something like 250,000 patients with really strong time range results that have been consistent everywhere in the world and hovering around that 70% realm. But we also know that there's areas of improvement for both the product, which we'll talk about to advance hybrid closely, as well as the ways that we can learn about launching products with the right kind of training and support infrastructure that we can leverage in the future. What I thought we could do though is we got a video we're going to play for you here that takes you through a patient's experience and maybe helps frame up the conversation we're about to have.
Hello. My name is Jen McVean, and I'm a pediatric endocrinologist and a person who's been living with type 1 diabetes for 32 years. I started hybrid closed loop therapy with the MiniMed 670 gs in June of 2017 and it's changed my life. That being said, there is still room for improvement. Living with Type 1 diabetes remains challenging.
Well, what's the true burden of type 1 diabetes?
You know,
the burden of type 1 diabetes is not finger sticks. The true burden of type 1 diabetes is the mental burden, the exhaustion from having to micro analyze every piece of food I put into my mouth every day of my life. I just want to be able to eat a piece of pizza or some mac and cheese And I have to suffer the consequences of a high glucose or a low glucose afterward if my calculations were off. Highs and lows feel miserable. I also want a tighter target.
120 has been okay. But if I had a lower target, I know I could spend more time in range. And for those of us living with type 1 diabetes, we perform our best at work and play when our glucose values are in the normal range. And so with a lower target, I could spend more time in range and I would be able to spend more time living my life and less time worrying about type 1 diabetes.
So as you heard in the video, there's certainly a lot of burden that goes along with the disease of diabetes and nothing more vexing than real time guessing and real time burden. Just and I thought it might be helpful to kind of walk through what that experience looks like for a patient. So for a lot of us, we get hungry, we figure out what we want to eat, we decide and let's say we want to have a piece of pizza and we eat that piece of pizza and everything is good. When you're if you can kind of build the slide out here a little bit. Okay.
So when you take that piece of pizza and you have diabetes, your first thought is where's my blood sugar right now? So you check your blood sugar with other means that you have to do that. And then you got to start thinking through, okay, what's in this meal I'm going to eat? You got to catch your carbs. You got to also think about depending on what you're eating, if it has a high fat content or if it's got a fiber or protein, that will affect when does your blood sugar going to rise.
That's assuming you just sort of know what's in the food and often you don't. You also got to think about how many carbs have you already eaten, if you've had a snack recently or more importantly, how much insulin do you already have on board. And it's important for that because then you've got to also think into the future, okay, what am I about to do? I'm going to go to bed a couple of hours. I want to be not so low when I'm going to bed because I tend to go low at night.
Or maybe you're going to go exercise and you don't want to be too low because when you exercise, you're going to drop. Or maybe your blood sugar is trending in one or another direction. Then you have to get into thinking about how much insulin do I need to get? How much of a bolus do I need to get? Should I give a pre bolus?
There's a whole bunch of math that goes on trying to trade off all these things. And frankly, it is a lot of guesswork. So let's say you pre bolus and you have to determine how long am I going to wait before I eat because it takes a while before insulin takes action. So can you continue to build that slide out? Thanks.
And then on the next one there, so you get to the point where you say, all right, fine, I think I'm going to be okay. And you do your bolus and you start to eat. And a lot of times things go fine. You feel fine, but you're going to be watching, watching to see what happens with trends. Sometimes it doesn't go well.
Maybe you forgot the bolus. So you miscalculated and you realize you didn't do that. Or somewhere along the line, you get into either going low or going high. And this can be really frustrating. You can be chasing a high for hours at a time only to overshoot to a low and trying to correct for that.
They call these roller coaster days. So if you look at what this is like and imagine what that would be like day after day, meal after meal, it's a tremendously challenging burden for patients. It's even more burdensome for a parent or a child to think it through. And 3 quarters of patients find CAR TAN to be difficult to do. For those who actually do it, maybe 2 thirds of those folks get it wrong.
And myth boluses, no matter how attentive you are, is a frequent event. So one of the areas of burden reduction and trying to make for a more independent living for these patients living with diabetes is to really focus in on these areas. I'll leave you to talk about some areas to go a little bit further, but this all really starts for us with this advanced hybrid closed loop system and the 780 gs system. Now Bob's going to take you through in just a moment here a couple of things. First of all, the strong glycemic results that we saw and the strong outcomes for both time and range and importantly for the safety at which we obtained that time and range.
But there's really 2 differentiating advantages that I'd like to point out and you'll see eliminate a little bit here from Bob. The first one is obviously that real time burden is what we're targeting and we make that real time burden easier to deal with. And we do that by providing auto corrections every 5 minutes as needed 24 hours a day, 7 days a week. I'm calling it mealtimes, but maybe a bump up at night, you can correct from there as well. This ability to have both basal adjustments as well as those folds adjustments every 5 minutes is a truly differentiated feature.
And Bob will expand on that a little bit here and tell you what I mean by that. But the second one is the number one request that we get on our algorithms that we hear from the community is that they want to target more normal levels of glucose. They want to set a lower target. And of course, they want to be able to do that safely. So our device now allows you to set the salt target, 100 milligrams per deciliter, which is the lowest in a commercially available system.
You could do that for the daytime or the nighttime. So that is the number one need. People want it and we're looking like we can deliver that in a safe way with this product. Now what's really, really important here is not just these outcomes and the problems we're solving. We really got to work to improve on the user experience.
And as Bob will also show you in a moment here, we measured that in this and other studies and we see a vast improvement in that user experience. We learned a lot from 670 gs as I said at the outset here. And a lot of the things about 670 gs that pioneered a category of automating insulin delivery was this sort of underlying belief that if you were in an auto mode, you would not be as safe as if you were in a manual mode. So a lot of these interruptions that patients. And a lot of that has been gone, been taken away.
Most importantly, the nocturnal alarms, the ones that wake up either the user or the or maybe sleeping in proximity to them in a really inappropriate way and in a jarring way. So that user experience is something we focus on. We're going to continue to work on that as Ali will take you through some of the ideas there. But it's important to know that this is using the same Guardian sensor that we have today. So we've seen this big improvement even before we improve the sensor and of course that's on the roadmap as well.
So with that, let me turn it over to Bob Burgerski. He's our Chief Medical Officer. And Bob, why don't you take it away?
Thank you, Sean, and thank you everybody for tuning in. I'm Bob Vegerski. I've been with Medtronic a little over 5 years now and I'm an adult endocrinologist as President of the Endocrine Society. I spent 27 years on active duty at Walter Reed where I ran a diabetes institute that was focused on using technology to help our soldiers, sailors, marines, their families, our retirees, help them better match their diabetes. When I retired 5 years ago, I came to Medtronic and still see patients as a volunteer at Walter Reed.
So I keep my finger on the pulse of what's going on with my patients and with my colleagues. And I'm really pleased to be able to tell you a little bit more about what's going on with this algorithm and with the 780 gene. I'm going to present data from 2 of our pivotal studies, one from the U. S. And one from New Zealand.
But before I do, I want to just emphasize something that tells you a little bit more about the algorithm. So if you have a normal pancreas on the left and you eat a piece of pizza that's shown in the lower left and the green line is someone who does not have diabetes, your blood sugar never goes up over 140. The pancreas responds immediately. It doesn't wait 30 minutes, an hour to give extra insulin. It's giving extra insulin all the time in a very tight balance to keep the sugar within a certain range.
But if you're like that person with the gray line on the left and you have diabetes and you eat that piece of pizza, your sugar is going to go up. If you take a bolus, you may mitigate that, but it's going to go up to 300 and they'll stay there for an hour, 2, 3, 4 depending on how many pieces of pizza you eat. This is going to be a problem for you short term and long term. Now in the center, what happened with 670 was that if you ate that piece of pizza and didn't bolus or you bolus but miscalculated as you heard Jen McBean talk about the difficulty in the meal and Sean explained, the 670 mitigates that rise. So now you're yes, you go up, but even if you bolus, you have some backup here in keeping that from going up more than in this case, around 180 or so.
In our new system, the 780 on the right, this really has your back. I mean, it starts to kick in every 5 minutes and it doesn't wait for an hour to kick in as our competitors' Tandem's algorithm does. It fine tunes this every 5 minutes. So it mitigates that rise and you can see that it doesn't go up as high and the entire area under that curve for the first hour is much lower. So that's the principle of that algorithm.
It's as close as we can get at the moment to mimicking what a healthy pancreas can do. And in effect, it really has achieved some remarkable results. So let me yes. So we ran these 2 pivotal studies and we designed them specifically to cover a broad range of patients because if you just take patients who are adults, adults do quite well in clinical trials and even in the real world. But if you don't have adolescents and children in your pivotal trials, you're missing some of the patients who really need this modus.
So in the U. S. Pivotal trial, we started with a relatively well controlled group. These were adolescents and adults, so 14 years and above. And then in the New Zealand trial shown on the right, this was a much more poorly controlled group starting include younger children aged 7 and above.
In fact, over 50% of the subjects were either children or adolescents. So let me show you the results of the U. S. Pivotal trial. The target for this device can be adjusted, but it was designed to be targeted at 100 milligrams per deciliter.
And that's because, as Sean mentioned, this is what our patients want. In 670, it was 120. So the algorithm was designed for 100 milligrams per deciliter and you can change the active insulin time from anywhere from 8 down to 2 hours. The lower the active insulin time, the better the performance of the system. So what I'm showing you here in the first column of results is what the time in range and the time below range are 76% and 2.9% if you have a 2 to 3 hour active insulin time.
If you have just a 2 hour active insulin time, the time in range is 79% And actually that importantly, you get that higher time in range without sacrificing more hypoglycemia. And if you look at the daytime and nighttime, particularly the nighttime, you see that this time in range and time below range is into the mid to high 80s. And this is really unprecedented. I've never seen this and I think most of my colleagues have never seen this. And so this is really where we're going and where we come with this device to be able to achieve times and ranges that are not only high for the target range, but low for the time below range.
Now in our adolescent population, this is even more difficult to achieve. And we know adolescents are challenging for a whole bunch of reasons. They want to be independent. They don't want people to know they have diabetes. They have these raging hormones and hormones actually cause insulin resistance.
So they need more insulin, but how much, when and how often is often difficult to determine. And in the end, they're poorly adherent for all these reasons to their therapy, whether the therapy is injections or in this case, it's automated insulin delivery systems. Their mean A1C is 8.7% and over 80% are not controlled. And on the right hand side, what I wanted to just highlight was the data from the T1D exchange registry, which has over 22,000 patients in 83 clinics in the United States. And it shows that these teenagers, this 10 to 20 and young adult 25 year olds are really very challenging.
And interestingly, they completed a survey in 2012 and again in 2018 and it actually got worse. And in that 6 years, there was introduction of a lot of technology, you would have expected it to get better, but actually it's getting worse. And so this is a particularly challenging population that we want to study and understand how do these devices and how does R7 AAVT actually perform in this population. And here's the study from New Zealand. So this again, 100 milligrams per deciliter target, the time and range was 73% at the end of the study.
This is a randomized crossover trial. It was up 23% or 14 points from their baseline. The time above range decreased by 12 points or 32%. Time below range was also low and decreased. Mean Sensor Glucose was down and they stayed in closed loop 96% of the time.
And in the U. S. Pivotal, they were in closed loop 95% of the time. And the more you're in closed loop, the more automated the system is, the better your performance is going to be because we take the exigencies of life out of the hands of the patient and to some degree and let the automation take over. The safety of both of these trials was excellent.
There were no severe hypoglycemia and no DKA while the patients were in the trial. But as Sean pointed out, importantly, getting good glycemic results is only part of the issue. We really want to get better usability and solve for what patients want. And we were very gratified to see that it's easy to use in both these studies 95% to 96% of the patients said it was easy to use. It was easier to use because they were in closed loop.
95 plus percent of the time they had to do fewer finger sticks and the automation took over 22% of the time. So of all their boluses, almost over a 5th were automated. And these are boluses that they may not have given had they not had this device or had not had it in auto mode. So this is where the beauty of these algorithms take over. And really when we ask patients what they thought about this, one patient said, I forgot I had diabetes today.
Don't we all wish our patients would say that? One said she was surprised it was the same sensor. The experience was so different from 670. And another was in 100% time and range for 3 weeks. And another quote was, I just love this.
I love this device. I don't want the study to end. In fact, we had one father tell us that we'd have to send in the National Guard to take away that device from them. And we do have a continued access program for the U. S.
Pivotal study and virtually all the patients have opted to stay on the device. So with that, I'm going to hand this over to Ali and let him tell you a little bit about our future pipeline. Ali?
Thanks, Bob. Thanks, Bob. So with that pipeline update, we wanted to talk about where we are on our journey. And so Medtronic has been along this goal of getting to a fully closed loop system for some time now. And with advanced hybrid closed loop, we've accomplished another step.
But in saying that, we are by no means done and are committed completely to the diabetes community in getting there. And that's where personalized closed loop comes in. Its intention is to automatically handle these meals, which as both Sean and Bob have described is the toughest part of diabetes management. And competitively speaking right now, we are in the middle of our own feasibility studies, building our models in order to strengthen the algorithms and creating new ways to solve this that are differentiated, things that you wouldn't typically see within the standard context of a system, but adding in additional ways and means of being able to predict and detect when meals are happening. But in the near term, in line also with what Sean and Bob have said, the improvements we have made with A HCL or 780 gs will be very meaningful to patients and we know that because since the launch of 670 gs, we've been constantly asking people many, many times what is it that they want to see within the next gen system.
And consistently the algorithm to be active all the time, do more. And most often, the thing that I hear time and time again is help me deal with my meals better to keep my sugars in check. So with a lower target of 100, improving the time in auto mode up to 96% as shown in our clinical trial and simplifying the meal management with our auto corrections, we're covering these specific needs. And essentially, this is what we set out to do with the HCL to begin with, while still improving the overall experience of the system. So, of course, products as we see them today are not just algorithms.
It takes a lot more to create a good system. And specifically, the user experience is paramount. So with that said, we have mentioned before, we submitted the hardware for the MiniMed 780 gs, which is actually the 770 gs. And with it, the pump will now be Bluetooth connected, allowing it to have a smartphone display, also allowing it to be followed by care partners so that information from parents or caregivers can be seen while a child is at school or away from home. And in addition, now with COVID around us, it's capable of automatically uploading the information to our CareLink system, which is something that both caregivers and patients like because they can actively see the information as we go.
And so in this world of virtual follow ups, it would allow for that to be virtually seamless. And then last but not least, it's upgradable. And specifically, of course, software is able to do that. So when a patient makes a buying decision, they're making that decision based on a 4 year commitment. And now with this hardware and system in place, we'll be able to upgrade them to new features like sensors and other capabilities that we couldn't historically make available to them.
And all of this can be done wirelessly through their phone. So our intention therefore is for the 780 gs to be a free upgrade for those folks that purchase the 770. And additionally, we have built in the compatibility of some of our future products as well, inclusive of something I'll talk about, which is our ZUH sensor and our extended wear infusion set, which will increase the wear of that infusion set to 7 days from typical today of being of 3. One thing I forgot to mention is that the 770 gs includes an age indication expansion down to the 2 year olds, which of course is another set of population that are very, very difficult to manage and really could use the help of automated insulin dosing. We held off submitting for that label expansion to make sure that the sharing capabilities were available for parents and that's why it's bundled here as we see it.
So in the same vein and perhaps more importantly for us, we also know that the sensor is a critical component of the system. And in the near term, we're intending to launch the ZEUS sensor. This won't be its marketed name, but it's what we have been calling it internally. The goal for ZEUS is to reduce the finger sticks significantly and only require them at the beginning of wear, specifically within the first 12 hours of wear, given that it is when the sensors are across the board least accurate. That's not just for us, but competitively speaking as well.
In addition, the performance goal is to meet the iCGM criteria, essentially allowing it to become a non adjunctive sensor. So in parallel to that, we are and have made quite a bit of progress on Synergy, which is our new disposable form factor. And I'll do a double click on that in the next slide. And to put it into perspective, we've had the same relative form factor now with Guardian Sensors 3 and in our history for a long time. And it has served us and our patients well historically, but they are ready as we are now for something different.
So much so that we have opted to go completely disposable and eliminate the need for a separate transmitter altogether. This allows us to reduce the volume of the product rather dramatically since we have eliminated an interface. And without having that interface as well, there is no longer a need for overtapes. So that's been eliminated also. The good news here is that by making it smaller, thinner and with no over tape, patients will notice it a lot less on their bodies and it will be able to be a lot more discreet for where they would like to wear it.
Additionally, as it turns out, the footprint of the tape is one of the major sources of discomfort for patients and we have minimized that while maintaining the reliability of it so that it can stay on the body for its intended duration of life. It utilizes the same algorithm from ZEUS with calibrations on day 1 for now. And last but not least, the insertion has been made very, very simple, minimizing the need for exhaustive training and potentially even allowing patients to self start. When we say that, it's really 3 steps to get it on to the body. Removal of the cap, place it where you would like it on the body and then press.
I have a video that I'd like to show you so you could see it in action. So, as noted, it was pretty simple, removing that cap, placing it where you would like on the body and then press. I mean, the whole thing takes less than 10 seconds to get it going. And in addition to that, there's no more parts to snap together, no extra overtape and bottom line, no hassles. It's been designed to be easy enough to allow a person to put it on the back of their arm with their non dominant hand.
So taking myself as an example, I'm a right handed person. I could use my left hand and place it on the back of my right arm without a whole lot of gymnastics, very simply it can get placed there. And this is especially important because patients need to rotate their insertion sites and to minimize that scarring as a result of that by doing that rotation, they would like to be able to do this without asking for help and have that independence and of course not to bother their caregivers. So then getting back to the entire system, in the near term, we are going to have a new hardware set for the smartphone display app allowing for care partners and this indication expansion that I mentioned with 7 70 gs, better control with the means of lowering time and hyperglycemia with the 5 minute auto corrections that the 780 gs brings to bear and less of a need to constantly correct for incorrect carb counting without the scare or the fear of additional hypoglycemia. All of that's packed into that one system.
In addition to that, we're going to have fewer set changes with the extended wear set and last but not least, significantly reducing finger sticks and getting that non adjunctive labeling to allow for the insulin dosing plan. So in summary and to provide a bit more of a status on these, starting from the very left there, we have completed our acquisition of Clue that will bring gesture tracking to our automated systems and it's a critical component of both our smart CGM platforms and personalized closed loop development. We have CE Mark on our extended wear set and are presenting data for our ongoing pivotal at ADA of the extended wear set, the trial is going rather smoothly and you can see that data later in the show. We have filed to the FDA the 770 gs for that approval, inclusive of the 2 to 6 year old age indication. We have completed the study on ZEUS and are prepping the reports for that filing now.
We are getting the data together. Literally, we had closed the database out at the end of May. And so there's quite a bit of work to do to clean that up and finish it, but nonetheless getting ready for it to get filed. As noted here, we had in press releases recently, we secured the CE mark for the 780 gs system and are also completing the file for that in parallel to getting the pediatric study completed. And last but not least, we have filed the IDE for Synergy and we intend to start that this summer as well.
So quite a bit happening within our walls and we have plenty more to do. So with that, I'll pass it back to Sean.
Okay. Ali, thank you. Thank you, Bob. Before we get into the Q and A here, I thought I'd sort of wrap up and just kind of reiterate some of the key points that I'd like to leave with you. First and foremost, as we're reinvigorating this diabetes business, I think you could see really a deliberate focus change in our strategy to be much more focused on delivering on that entire customer experience, whether it's the products or the way we interface with training or service.
That's really our driving goal is to make that better all the way around. Medtronic has a strong commitment to the diabetes business and we have a strong commitment to being accretive to Medtronic's growth rate when we get the profit flow out there. We're also not just investing for the near term, we're also investing for the long term. And we're doing that with just creative capital allocation that you saw, which I think is just going to be really very novel and important to our continued success. But we're leveraging those considerable strengths.
I talked about that global presence and rival support capabilities that we already have that we are going to continue to enhance and also our deep and long historic relationships with healthcare providers all around the world. So this reinvigoration really starts with 7.8 gs. Well, actually for the United States, it starts with 7.7 gs. That Bluetooth capability that Ali shared with you is really a game changer for us. It allows that upgrade path to future algorithms.
And it's also as we get this pediatric expanded label, so important to be able to share the glycemic data as well as the pump data for parents who are worried about their kids on therapy. Bob took you through some really strong glycemic control outcomes, both on the efficacy side as well as that safety side. And as we said, that user experience with the same sensor is already good, but it's going to get better. And finally, getting to that unmet need of setting a lower target and being the 1st and only ones to have that capability, we think is very much a welcome innovation into the field. The 5 minute auto corrections that we showed you, really all that means is that no matter what you eat or when you eat it, we can really simplify meal handling 24 hours a day, 7 days a week, whenever that meal may happen.
So this shift for us toward a more patient centric innovation really gives us a compelling pipeline. You saw the cadence of innovation that's going to be coming out. And we are definitely closing the loop over time, but we're also closing the near term gap that we've had in finger sticks, which is really important as all of you know. And while we're doing this, I think you see the kind of secret sauce here is the successful leverage of the investment that we've made into data science and AI and those are really paying off in the capabilities of these algorithms that we're bringing to market. And we are committed to meaningfully reducing the burden that patients living with diabetes have to suffer each and every day.
With that, I'm going to turn it back over to Ryan and we'll open it up for Q and A.
Okay. Thanks, Sean. Yes, we'll now open the call to questions from the sell side analysts. As usual, we want to try to get to as many questions as possible. So please help us by limiting yourself to one question and if necessary, a related follow-up.
If you have additional questions, you can contact me or a member of my team after the call. I'd like to remind the sell side analysts who have joined by our WebEx platform to ask a question by clicking on the hand symbol next to your name. We'll then call on you by name and unmute your line. So with that, we'll pause a moment here to assemble the queue. Okay.
Let's go to the line of Bob Hopkins. Bob, are you there?
Yes. Great, Ryan. Can you hear me okay?
I can. Go ahead.
Great. Terrific. Thanks and thanks for doing this. So just two things I'd love to get a little more color on, if okay, and I'll just list them up upfront in the interest of time. First is just on the Blackstone announcement.
Just curious, do they bring anything to the table other than cash? And if not, why not just take the dilution and the higher return if you really believe in the pipeline? And so that's the first thing I'd love to hear a comment on. And the second one is, Sean, I'd love to make sure I heard the message on what you're trying to communicate on the growth outlook for Medtronic diabetes. Previously, you've said that you don't expect it to dilute Medtronic's overall growth.
And just wanted to kind of I know you're aspiring to be accretive, but what about in the meantime? What should we what should the expectation be for growth in this division? Thank you.
Thanks a lot. Thanks for the questions. I guess the last time we talked about when we're getting back to growth, what was a little bit different. So there's certainly been some more uncertainty and there's also been a lot more de risking. So we've seen pretty meaningfully in the pipeline that we're making progress as evidenced by the CE Mark and the filings and some of the recent approvals that Ali took you through.
So we've got momentum in the pipeline that's coming through. Just on your question about why not take the dilution. Medtronic has got as you know, we've got a very broad business and first world problems in that there's so many things that we can invest in across the company that how you want to allocate your capital. Internal investment always has that really good high return on capital. You can go the other pole doing large dilutive acquisitions or some tuck in acquisitions.
I kind of look at this as a return on capital perspective, somewhere in the middle. So it gives us this opportunity to do it. It's not dilutive from P and L and it allows us to really continue to invest. And I think the important thing here is we're doing that with our own engineering team, not buying something and fixing it from the outside. So it's our own teams working hard.
In terms of what does Blackstone brings to the table, obviously, this is a novel mechanism for us. We learned a lot about how to do it. But they'll be sitting on a joint steering committee with us and we'll have full access to all of their resources as well. So it's I think the facility to do this and how it all worked out, it was complicated to figure out. It was a really great collaboration.
And we'll be working closely with them as we bring the pipeline forward that they're investing.
Thank you.
Okay. Thanks, Bob. Next, let's go to the line of David Lewis. David, are you there?
Yes. Ryan, can
you hear me okay?
We can. Okay.
Thank you. So two quick ones for me. First is, Sean, just can you just update us on synergy timelines? Are we still thinking fiscal 'twenty two? And does the Blackstone deal suggest you're more committed to a world with Medtronic users with Medtronic sensors?
And then I had a quick follow-up.
Yes. So maybe I don't know, Alethia, if you want to take the timing question. Maybe I'll just answer it in. So right now, the important thing to remember about the submissions you're going to hear in the BioVue is it's hard to predict because this particular part of FDA is the part of FDA that's also involved in a lot of the COVID activity. So they'll just put that little bit of uncertainty.
So I'm not sure when a handicap timing all that great, just to say that we did submit the IDE and we think we have a really good strategy to be able to conduct research despite COVID in this presence in the cycle we've selected for the trial. So we'll tell you more as we know more, but very big milestones to get that device in there and characterized. And your second question about are we more committed than ever to work with our pipeline. I think you know that for us that tight integration system really matters a lot. And we think that the same fundamental chemistry that we're also using, we've got that.
Some of the algorithms and some of the form factors can get better and they are getting better. And Synergy is the first step there. But we can take it further. We can take our own pipeline further into lots of different areas with that other investment. Now we're not talking about what exactly we're working on with Blackstone, but it's meaningful things that are really going to matter a lot to patients.
Okay. And just a quick follow-up for me would just be, what's the earliest we could see Blackstone funded initiatives generate revenue? And it's just separate distinct from that, Sean, in terms of just broader diabetes priorities, where do patch pumps currently sit in terms of the investment priority? Thanks so much.
Yes, thanks. So just with Connect Funding, there's an obviously a gradient of what but within sort of our what they will use to get into our preferred market and that is needed improvement in that home as well.
Sean, you were breaking up there a little bit. Do you mind repeating your answer?
How much of it?
We just caught the very end.
Okay. So I think the question was about when will we see a Blackstone funded product hit the market. So there's a different cadence over time about what's coming out when, but the first of those projects would happen within our within the window of our strategic plan, which is a 5 year window. And then the second part of the question was, do we think patch pump is an area of interest and certainly it would be if it's an area of interest for patients, they're of interest for us.
Next, let's go to the line of Robbie Marcus. Robbie, are you there?
I'm here. Thanks. Sean, we saw great data from 780 gs today, But it's clear you're now going to be doing business versus your competitors with one hand tied behind your back instead of 2. And the CGM is still really the weak link here. So how do you view your competitive positioning, at least until you get synergy with not having factory calibration, do you see that as a major hindrance in the launch of 780J?
No. Look, I'm not going to tell you that finger sticks aren't important. We'd like to get those down. But there's I think a lot of attribution to the center, which is really more about some of those safety guardrails put around the pump that we'd kick people out of their auto mode and ask them to calibrate and helping to do with sensor. It was just one of these sort of safety parameters that we had built in when we pioneered that realm.
And there are some real benefits to our sensor. We don't talk about much and including it's extremely accurate on the low end, which is very, very important. Getting it wrong in the low end is really not a good thing. And that's something we want to try to retain as we make the form factor pet variant and get rid of finger 6. So as you saw, I mean, you saw the patient quote at 1 without we didn't change the sensor and the sensor got better because I think that belief is there.
We need to go as fast as we can. We need to get that sensor experience better and it's coming. But yes, it will take some time. And if we were to go to try to let another sensor in on the platform, that would take time too. So when I look at it and I say which one is better, that was tightly integrated, how fast can we get there?
And then of course, there's attachment revenue with sensors you sell in your own realm that's better for the business, right. So I think we've made things a lot better. And I wouldn't look past the advantages we're bringing. I mean, setting the lowest target, that's a huge unmet need today. And the way we can handle meals with these every 5 minute corrections is very different than anybody else is trying to do on a global thing.
Great. And maybe just a quick follow-up there. 1, the autobolassing is a huge differentiator for 780 gs versus the competition. So are you viewing this as the big selling point and one of it's clearly a big patient burden. Is that really how what attracts patients to the platform?
And maybe if you could just quickly explain what a shorter active insulin time means for us? You had some really good numbers with 2 hours and 2 to 3. But I don't think many of us are familiar with that. If you could just explain what that metric is? Thanks.
If you don't mind, Ravi, let me turn it over to Bob.
Yes. Thanks,
Robbie. This is something that has been out there in Medtronic pumps already. And what that means is the algorithm delivers insulin based on what the sensor glucose says the person is at this time and what direction it's going. And it also calculates in how much insulin is in the system already. And if it thinks that there's too much insulin in the system, it won't allow you to give an additional dose or as much of an additional dose.
So we kind of trick the algorithm into saying, well, the physiology is that the insulin might be there for the next 3 or 4 hours, but we're going to tell you it's only there for 2 hours. And by doing that, the algorithm can then dose more insulin more frequently and keep that blood sugar from going up. So it's a tuning knob that essentially lies on top of this low set point. And by doing that, it turns out and we saw this in simulations, in silico simulations that you don't get more hypoglycemia and you can get that time and range up almost to 80%. Does that answer your question?
That's great.
Thanks, Robbie. Let's go to the line of Chris Pasquale. Chris, are you there?
Yes, thanks. I appreciate taking the questions. So one on the 770 gs and then one on the Blackstone deal. So you talked about the importance of the user experience. That was the main thing that tripped up 670 gs early in the launch.
Is the experience with 770 gs here in this interim period going to be materially different from 670 gs?
Ali, you want to take that one?
Yes. The changes are mostly coming from the fact that there is a smartphone display. And as a result of that, the Care Partner sides of it, in terms of how the alarms and the alerts and that kind of thing works, no, they are identical to the 670. However, when we get to the 780 gs, it does change quite a bit. So our intention was to whenever you change alarms and alerts, you typically need to follow that up with a clinical trial and we opted to do that with the 780 instead.
Okay. And then on the Blackstone deal, can you give us a sense for how much this increase is the annual R and D budget for the diabetes business? And you talked about the first products coming within the 5 year window. What are you gaining here in terms of time de estimate? How much does that pull forward the timeline for these products relative to what you would have been able to do on your own?
Yes. So I think the way I think about that is, Chris, is what we have done to projects or not if somebody had a sooner bet to make somewhere else in Medtronic, right. So I think it really expands what we're going to be able to bring to market, which is important. And not only does it make it go faster, because you can stand your team up sooner, but it expands what we can do simultaneously. So we've already increased as a percentage of revenue our spending into R and D and this is on top of that.
So I can tell you it's never easy when you're competing against so many great uses of capital costs. Medtronic, I used to do my old job as you know And we have an embarrassment of riches and all the things we can invest in. This is really freeing up and it doesn't have opportunity costs across the rest of the portfolio. So we really get the best of both worlds here. It's very novel and very useful.
All right. Thanks, Chris. Let's go next to the line of Kristen Stewart. Kristen, are you there?
Hi. Can you guys hear me?
We can.
Okay. Just in terms of the BlackRock deal, I know it's up to, I think, dollars 337,000,000 What's the timeline? And what will be the, I guess, milestones under which they invest more or less? And then I do have a follow-up.
Guess what dictates the pace of investments?
Yes. The funding is up to a certain amount. And I don't really want to get into a lot of detail about what those programs are. If there could be the milestones we're successful, then we take we draw down more capital. That's how it works.
But I
guess how much should we think about in an annual year of funding? How much in addition? Just to follow-up on Chris' question. Yes.
So it's going to yes, sorry, Chris, but that's going to move around, right. When you're developing products and it's really the early stage product, that's relatively cheap as you're kind of design selecting. When you get into clinical trials, it's much more expensive. When you're getting into design validations, it's more expensive still. So it'll depend on where you are and what phase of the R and D over time.
Okay. And then just with respect big picture, I guess, for the Type 2 patient population, can you maybe just talk about how you're thinking about attacking that group and how does patch pumps kind of fit into that? And is that something that is within your strategic plan timeline? Or is patch pumps just kind of more something that is outside of that window and maybe not necessarily something to give out type 2 only patient population?
Well, I think type 2 obviously is a huge opportunity for us. There's less penetration there for any kind of automated insulin delivery than there is for other means of getting insulin to these patients. But there's also the whole interplay between CGM and how you reach those patients. So insulin delivery in a way that's convenient and maybe more purposeful for the Type 2, they tend to use larger quantities of insulin, for example. There's things we can do with current technologies.
They don't need as many. If you think about it, it's a little bit easier than it is for those adolescent type 1s that we're talking about in the studies that we highlighted, right. So there definitely is an opportunity we're after. But as I said, in the near term here, we're focusing on our core business and that is more tilted toward the Type 1 just in general, although Type 2 is definitely in the strategic roadmap. Okay.
Is the timeline for patch pump?
No, I don't think we're talking about that today.
Okay. Thank you.
Thanks, Kristen. We're coming up on the top of the hour here and there's still several of you in queue. So I want to get to as many as we can here. So if you can stick to one question, I'd appreciate it. Let's go next to the line of Larry Biegelsen.
Larry, are you there?
Hey, Brian, can you hear me?
We can.
One question on Synergy. Hey, Sean. Is it possible that you can analyze the data so you won't require 2 calibrations on day 1? And is it still 7 day where? Thanks for taking the questions.
Actually, let's probably take that one.
Yes. So on synergy, it is possible that could occur. But at the moment, that's not how we're thinking about it. We're going to do the trial and see how it goes. And it is still a 7 day
one. Let's next go to the line of Matt O'Brien. Matt, are you there?
Yes.
Can you guys hear me? We can. Okay, great. Sorry to ask this question on
a Friday evening. But I recall Analyst Day years years ago where you introduced a patch bump and we're going to go down that path and we're very excited about it. It didn't really pan out. The sensors so far haven't really panned out as you'd expected. You're putting all this extra money to work here.
So I'm just wondering internally what gives you the confidence either introducing
all
these new products over the coming years introducing all these new products over the coming years versus what we've seen over the last decade or so out of Medtronic diabetes?
Yes. So Ali, maybe you could take this one. I'll just say on the front end, you learn a lot from the mistakes you make in product development, right. In my experience over the last 30 years, sometimes that's really humbling and you teach yourself a lot. So there's a lot to learn from things we did differently in the past.
And we are de risking things like the sensor pipeline pretty meaningfully and we're very confident in what we're seeing. So, Ali, is there more you'd like to add to that?
Yes, I think you answered it well. I think there's a reason at the moment that there is only one successful patch pump out there and it's because it took it 10 years to get profitable. And it's not that we didn't get to the end, we did, but the manufacturability was the issue. And so what we are doing and looking for is ways and means of making sure that the manufacturability is thought through first and that will then yield out something that we'd like.
Okay. Thanks, Matt. Let's go to the line of Jeff Johnson. Jeff, are you there? Jeff, can you hear us?
Yes, I'm sorry, I was on mute.
There you go.
Just wondering, I saw the data that finger sticks were reduced by 44%, 45%. But just following up on Robbie Marcus' question on number of finger sticks. Is there any data from the pivotal on number of finger sticks that were done on an average per day per week, however many to keep the time and loop up in that 95% range? Thank you.
Okay, Bob, do you have to add that? Yes.
Let me take that.
Yes. So, of course, there is a minimum of 2 because you have to calibrate the sensor minimum twice a day and then because it's adjunctive. It was those calibrations can be used to dose insulin for. So it was in the 4 to 6 per day range that most of these patients were had by the end of the trial.
Okay. Thanks, Jeff. Next, we'll go to the line of Matt Miksic. Matt, are you there?
I am. Thanks for squeezing me in. Just a quick one, and I wasn't sure if you mentioned anything. Apologies if you did just on Tidepool and your interoperability partnering plans there or anywhere else across sort of the device space in the community?
Yes, sure. Ali, you want to talk about the Type 4 conversations?
Sure. We're actively working with them.
We have
a joint steering committee set up and quite frankly, we're building the interfaces together so that we can go ahead and put it into play. Timing of events is still a little uncertain together, mainly because they have work to do and we have work to do. So we haven't been commenting on it. But given that we now have the Bluetooth pump in front of the FDA, that's a piece that they needed. So as of right now, at least the hardware is in place.
Great. Thanks.
Thanks, Matt. Next, we'll go to the line of Steve Lichtman. Steve, can you hear
us?
Yes, I can. Ryan, can you hear me?
We can.
Yes. Thanks. So just wondering how the new pump introduction to patients sort of will happen here. Can you talk about the level of training that will be needed for physicians and patients that transition to 7 70 gs? Just how extensive is that?
And what would be the incremental training required when the 780 gs algorithm technology is pushed to them?
You want
me to take that? Yes. So this new algorithm in 780, actually the transition is going to be very easy. We know what default set points we're talking about, the set point of 100 active insulin time in the 2 to 3 hour range. And for those who already are on 770, this is going to be a very simple transition.
And we have slimmed down and truncated our training materials for this already. So we feel that this is onboarding a patient from 770 to 780 is going to be quite intuitive. For someone coming from MDI, they will have to learn the basics of pumps and sensors. But because there's a lot of features in this 780 system that eliminates a
lot of the
concerns that were there with 670, it will be much easier for the patients and their healthcare providers to onboard.
Thank you.
Thanks, Steve. Next, we'll go to the line of Brian Blicker. Brian, are you there? Ryan, can you hear us? Okay.
Then we'll go to the line of Jason Bedford. Jason, can you hear us?
I can, Ryan. Can you hear me?
We can.
Okay. Thanks. So just thinking on the earlier question about the number of finger sticks involved in use of the system and I apologize if I missed this, but do you have a non adjunctive label for Guardian Sensor 3 and if not, when do you plan on getting it?
Oli, you want to take that one?
Currently, we do not have a Guardian Sensor, a non adjunctive label on Guardian Sensor 3. Our goal is to get the non adjunctive label with ZEUS. However, the 780 gs trial was done, as Bob described, with it operating non adjunctively. So, I know that's a little confusing, but if you will, the sensor was only calibrated in order for the system to function. We were not asking patients to take blood glucose measurements in order to bolus.
Anytime within the study, they were allowed to bolus off of the sensor.
Okay. Perhaps I misheard it, but I thought I heard that there was 4 to 6 finger sticks per day. Is that correct?
Yes, I misspoke. It was Ali is exactly right. I was thinking of the question we referred to 67, I apologize.
Okay. Thank you.
Thanks, Jason. We'll take one more question. We'll go to the line of Danielle Antalffy. Danielle, can you hear
us?
Try again, Danielle. Yes, we can hear you.
Go ahead.
Okay. Sorry about that. Just a quick question on the 780 gs data that we saw today. I mean, it was obviously very positive. But one of the pieces of feedback I've gotten in the past is the 670 gs data was also very positive.
It doesn't seem like it played out quite like the data in the real world. So I was hoping you could give a little bit more color on what's different in the 780 gs trial versus the 670 gs trial or past trials that makes you confident that this is going to be representative of what we'll see in the real world outcomes with 780?
I think those I'm sorry, Bob, I'll give you a I'll give it over to you in a second. I think that those maybe the experience of what people thought it would be was a little different than the expectation set. But the glycemic outcomes are actually almost dead on for what the pivotal trial showed, maybe slightly better a year for low world data with like 8,000,000 patient hours of use. So I think that experience wasn't that great. It was and here I think that's a very, very big difference.
We keep talking about it, but that's what matters to patients. They got to live in the city every day and for them to feel good and do good is really most important. Bob, do you want to add to that?
No, no, no. That's exactly what I was going to say. Your question kind of mischaracterized what actually happened. We have, as you saw, over 100,000 patients out there that we've analyzed the data for and timing range is 70% change and the pivotal trial was 71% change. So given that pivotal trials tend to have selection bias of who volunteers, The fact that it's out there and it was 124 patients, the fact that it's out there in 100 of thousands of people getting almost the same time and range tells you that it is working in a broad range of patients as well.
And essentially, we would expect that the results in the real world for 780 would similarly reflect what happened in the trial.
Okay. That's totally fair. Thanks.
Okay. Thanks, Danielle. And I want to thank everybody for joining us today and thanks for your questions. If anyone has any follow-up questions, like I said earlier, you can reach out to me or a member of the IR team here at Medtronic. The slides and a replay of this call will be available on our website, investorrelations.
Medtronic.com, and that will happen here right at the end of the event. So thanks everyone for your continued support and interest in Medtronic and our diabetes group. And with that, we'll conclude today's event. Have a good weekend everyone.