So, welcome back. We're in the afternoon sessions and thrilled to have the management of Tandem here. Leigh and John, thank you for traveling to warm New York, and especially from your cold Southern California home. Anyway, I want to talk. I'm going to start big picture.
Before you ask any questions.
Oh, I'm so sorry. You did tell me that.
We have a new corporate counsel, and I've been asked to read this. Today's discussion will include forward-looking statements. These statements reflect management's expectations about future events, product development timelines, and the financial performance and operating plans, and they speak only as of today's date. These statements are not guarantees on future performance and involve a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied in our forward-looking statements. Further details related to our forward-looking statements can be found on the Safe Harbor slide included in Tandem's corporate materials.
Can you say it backwards? Thank you.
That's the first time I've ever had to do that.
I'm glad I was here for it.
Yeah.
Okay. So, insulin pumps. Can you give us sort of an update on where you think the market is? Market penetration, Type 1 versus Type 2. Let's just sort of lay the groundwork for the rest of the conversation.
Sure. You know, I would say that if you look back to 2017, prior to any of the companies on the market today having automated insulin delivery systems, we would say that approximately 25,000 to 30,000 people came to market annually, and that the penetration rate was in the mid-20s. We brought Basal-IQ to market in 2018 and Control-IQ again in 2020, both of which really drove substantial uptake in MDI conversions. Insulet, in about 18 months ago, also introduced the Omnipod 5. Medtronic brought the 780G to market here last year in the last two quarters. Beta Bionics is now on the market. And so there's been an increase in the number of companies that provide AID therapy. And, you know, the results are—are fantastic.
I mean, all of the systems on the market today really have produced good results where people see in their daily lives a substantial improvement in how they feel, but also a meaningful reduction in the risk of the longer-term comorbidities. So, AID is really driven, a substantial uptake. And I think that we have seen the number go from 25 to, I think, in 2022, it was, maybe 75,000 to 80,000. And the penetration rate is today, we would say, between 35% and 45%. So meaningful growth. We do believe that that number can get up to 65%. And we think that's something that, you know, with new innovation, with technology that reduces the burden of diabetes, we expect to see it in the increased adoption.
Okay. So this is a question I actually just had at lunch, which is, how many years did it take you to get to 35%-45% for Type 1s? And how many years do you think it takes to get to your 65% number?
Well, I think you have to say, first of all, let's just think of it was 2018. You know, I think the 35%-45%, what it's today, so it's four or five years-four or five years to get here. But you all also have to recognize that we were the only player in the market, you know, for the first three of those years. And it's really been something that's, you know, as more and more people come to market with systems that improve the overall outcomes, as the, you know, organizations like, the American Diabetes Association recommend this therapy, for their patients. And as physicians become aware of the benefit it provides, we expect to see that number get up—you know, get up to 65%.
So I don't think it's impossible to see that number get to 65% in the next, you know, four or five years.
Okay. What about for Type 2s that are insulin-dependent?
Yeah. Type 2 is a different story. Right now, there is no approved AID system for use with Type 2. We all—I mean, Tandem, Medtronic, and Insulet all have pivotal studies underway right now to get the indication. I think that the—roughly, I would say the companies will have the therapy available in the 2025 timeframe. So that's what I think that will be the, you know, the driver, the catalyst to see uptake within the Type 2 community for pump therapy. I would say that today, though, it's very under-penetrated. In the U.S., there's roughly 2.3 million people that have insulin-intensive Type 2 and about 100,000 use pumps. And so less than 5% penetrated. And I think if you go OUS, it's significantly higher in terms of the number of people using—or, excuse me, having Type 2. And the penetration is even less there.
The catalyst really is, not just providing insulin via pump, but providing insulin via pump using a CGM and having the closed loop.
That's right. I think it's really the closed-loop. The AID system is what's going to be driving the uptake in Type 1 and Type 2.
Okay. So let's spend some time on your AID system. Obviously, you have Control-IQ with G6. Remind us, do you have approval with G7?
We have approval with G7. So it turns out that, a couple of years ago, the FDA introduced this concept of interoperability. And so the system consists of an algorithm, a sensor, and the pump. And you can have those all approved as interoperable systems. Once they're interoperable, you can pretty much integrate all of them into one system, and use the algorithm without any regulatory requirements.
Okay.
So, for instance, in the case of the G7, it's interoperable. We can have it used with our t:slim pump and the Control-IQ algorithm without any regulatory—it just has to do a letter to file. We don't have to do a filing. It simplifies the process for doing that. The only thing that really requires a clinical trial is the algorithm itself. Any changes that we make to the algorithm, we have to do a clinical study for it. When we do that, it can be used in that interoperable system from that point forward.
Okay. So, but you've been—you said on the earnings call that you didn't think, really, the ramp would be when G7 in the spring.
Yeah. I think that—so, we just introduced a brand new pump called Mobi.
Yep.
Mobi right now has G6 on it. G6 is the—it's the generation ago for Dexcom sensors. We introduced Mobi with G6 because Mobi is a brand new pump platform for us. In our testing phase, we wanted to be certain that the system was working properly. We didn't want to introduce another variable like the G7 that, you know, where we didn't have as much experience. So we are working hard now to get the G7 onto Mobi. We expect that to happen here in the late spring. We think that's probably. There may be people out there today that are going to wait until Mobi has G7 on it before they purchase a pump. When that becomes, it's—I mean, it's commercially available today with G6.
When we introduce it with G7, the system, the pumps that are in the market today are updatable using remote software updates. But we think that that will, there'll be another group of people who would now be purchasing the system because it has that implementation.
Okay. So just to be clear, t:slim, G6, and G7, not yet Libre. Mobi, G6, not yet G7.
That's right.
Actually, we have Libre on X2.
Okay. Excellent. And that you're marketing all of them right now.
That's right. When you buy an X2 pump today, or excuse me, yeah, a t:slim pump, you can, you log into it, you open up the screen for, you know, sensors. And you can choose between a G6, a G7, and a Libre 2 today.
Okay. How do people make decisions? I mean, I would assume, and does it really matter to you?
We are Switzerland when it comes to the selection of a sensor. We do not want to get into any of the competitive dynamic. We just want to make the choice available to people who are using the system. All of those sensors are good sensors. But people have reasons for selecting one or the other. And we don't, again, that's, that's personal choice. I think, you know, we really believe that we're driving towards wearability and choice. And those are the things that we think are going to drive adoption of technology with the best algorithm that's on the market.
Just go backwards for a second. When does Mobi with Libre come out?
We haven't said that specifically, but it's a fast follow.
Fast follow, meaning 2024.
We're basically, because of competitive dynamics, we've begun to refrain from actually indicating specific dates. I think as we come close to commercialization, we'll basically indicate at that point in time. But we're working very aggressively to get Libre 3 onto Mobi and also into the European markets, OUS markets.
Okay. Let's spend some time on Mobi. How's that launch going?
It's going great. We've had it on the market now for about. We've had it in a limited launch with about 150 people for four months now. And the feedback has been overwhelmingly positive. We knew it was going to be a good product. We knew it was going to be a product that actually got us back to the point where we saw more MDI conversions on the product. But it's really exceeded our expectations. And the things that people like about it, first of all, it's very small. It's light. We sell it with an adhesive patch. So you can wear it with a very short infusion set. And you know, what people are saying is they forget they have it on. And one of the descriptions that people use is that it's liberating. It's controlled entirely by a mobile app.
And because of that, you don't have to interact with the pump at all. And that's why people forget to have it on. So you have the convenience of a mobile app, but it's also very discreet. And I think that, you know, the combination of those two, the fact that you can put it any place you'd like on your body—I mean, we have a couple of people who ran marathons recently, wore it on their leg.
I was looking at those pictures online. I was like, "It's on their leg."
There's people who wear it, you know. I was talking to somebody in the office the other day, and they had it right here, right below their shoulder. You know, but you can put it anywhere you want. That's the idea of wearability. Depending on what you're going to do and where you're going to go, you can put it where you'd like. You can take it off if you'd like to as well, which is very important.
Do you think that Mobi, and this is something I'm trying to get my head around, and I think we've talked about this in the past, is it cannibalizing your t:slim franchise? Is it expanding your t:slim franchise? How do you think about, well, you may be agnostic or Switzerland to which CGM partners with your pump. I don't think you're agnostic to Mobi versus t:slim.
Yeah. We believe that the diabetes community has many segments to it where people have differences in how they want to wear and how they want to control the pump.
Okay.
We think that our portfolio approach is the best way to basically get at those different segments. We think there's absolutely going to be continued use for t:slim, which is a tubed pump. Mobi will be tubed or tubeless with great flexibility in terms of how you wear it. Then Sigi, the product that we're working on right now, is a patch. We think that there's a need to have all three of these different form factors to address the needs of the market.
Mobi tubeless, still on track for, I think it's 2026, is what you said at ADA?
Yeah. We're again, we're continuing to work aggressively on these products. I think as we get closer to communication to commercialization, we'll definitely let people know when specifically they'll be available.
If you're an endocrinologist or a PCP that's recommending this pump.
Yeah.
Wouldn't you want to have that conversation start off with Mobi on a tube and then when the next model comes along?
Oh, absolutely. Yeah. I think what happens now, though, is that the physician has to talk to the patient who's decided to actually move to pump therapy and show them what the options are that are available and let them understand the pros and cons of each and let them choose. That's typically what happens. They're the biggest influencer when it comes to someone going to pump therapy and which pump they actually choose. So, I mean, I think that we definitely think that the form factor of Mobi is appealing. And a significant number of people are going to choose Mobi. You had mentioned cannibalization. I think that it's possible that there's going to be some cannibalization out there. But we also think there's a distinct market segment that this will appeal to. And as a result of that, it will drive more MDI.
It'll drive more penetration into the MDI group.
Okay. From an economic standpoint, Leigh, do you care Mobi versus t:slim?
From a sales perspective, it makes no difference. The price is the same when it comes to reimbursement. But from a gross margin perspective, Mobi is going to be one of the single biggest drivers of our gross margin expansion in the next 3-5 years. We have a long-term goal of achieving 65% margins. And Mobi gets us more than halfway there. The pump itself is the beginning piece of it. So it has a 10%-15% lower manufacturing cost when you get to scale. And we're cautioning people that 2024, we aren't at scale, obviously. And so it will be dilutive to margins in the first half of the year. But as we exit 2024, we should start to see it being accretive to margins. Then, the cartridge is about a 20% lower manufacturing cost.
You'll start to see that in the coming years as the Mobi cartridge becomes a larger percent of what we're shipping in terms of supplies. It's a multi-year expansion opportunity.
Do you have a Mobi with you?
I do. I have to unpack it.
Oh, sorry. I should have warned you of that in advance. If it's going to take a while, it's okay.
I'll just take a sec.
There you go. Excellent. How's it getting this through TSA?
So this is t:slim.
Okay.
Our product on the market.
So this is your-your go-to product right now.
This is Mobi right here.
This is Mobi, which is, oh, much smaller.
It's at least half the size.
Yeah. It's at least half the size when you do it that way. And the pod piece of it—not sorry to use the word pod. The pump piece of it is right here.
Yeah. This is the disposable piece right here. And that's the pump.
That's the pump and the disposable piece. So where I'm heading, and you probably see this, is how do you price the difference? Is this, does this remain, and you just put the insulin in here, or?
What you do is, when this comes, it comes with a little apparatus around it.
Yep.
You basically just take your insulin vial, and you attach it to the apparatus. You just draw the insulin into the reservoir.
Okay. And so if that's disposable, how often do you dispose of it?
Typically, every three days.
Every three days, that goes.
Right.
Okay. And then, so it doesn't come preloaded with insulin.
No.
You have to get the insulin and put it in there.
That's right.
So when you move into the pharmacy with that, and on your call, you said you expect one pharmacy, at least one, I think, is the language this year. What piece of it is purchased from the pharmacy? How do I think about moving this device into the pharmacy and not this one?
Yes. So the whole system is expected to be available through the pharmacy channel. To be very clear, that means mail order, not retail. You're not walking into a pharmacy and picking up any piece of it.
Okay.
At least initially, that's something to think about in a long, longer-term situation. But what we've done is a lot of homework, in the past about what will allow us to get into the pharmacy channel. And I would say a year ago, there was still a question of if a durable pump would be accepted in the channel. But now we firmly believe that that question's taken off the table. So it's not if. Now it's about building the infrastructure to support it. So we have to put systems in place. We have to work on packaging, and we're actively negotiating contracts. And so we're going to be very thoughtful and prudent about those contracts. Two important goals are that we can lower the out-of-pocket costs for the patient, and ideally, that we would get appreciation on the revenue line.
But either way, at least as good as our DME contracts. And so that's to come, that's what we're working on right now.
Right now, if I went to buy t:slim, that's $several thousand upfront you get into your pocket. How does the economics work for that?
That's still the open piece. And so you can envision there, it could be that we have a different business model depending on the payer. And it could look from the reimbursement side like the DME channel. It could have all the most of the economics on the pump and then ongoing pieces for the supplies. It could go the extreme other direction and be a full subscription model. Those are the pieces that we're working out. And I would say different plans have different views on the way it should be reimbursed. And so we're going to be giving more information or color on that if and when it becomes material to the business.
So, given on multiple contracts, plural, I heard, they may be different in different areas or different.
That's correct. That's correct. Right now, well, everyone's in individual negotiation. There's no set standard. What we'll learn a lot this year as we're having these introductory conversations and get a few contracts under our belt is if we can set the standard for how that's going to look going forward.
Is there a stage in the future where the majority will go through the pharmacy, or is there a benefit to continue to go through the DME?
So there is an importance to the DME channel. It's well developed. The pricing has been consistent. And we know how to do it. And so what we envision is this: that t:slim remains in the DME channel. Mobi becomes sort of a hybrid because it's starting with DME. And as we add pharmacy contracts, we'll be shifting it over. But the ultimate goal is to have Sigi go straight into the pharmacy channel. So Mobi's, in a way, if nothing else, a pilot to getting Sigi into the pharmacy channel.
Okay.
We have a number of DME contracts that are actually really good contracts where the person purchasing the pump has zero out-of-pocket. You know, so there's benefits to maintaining, you know, those relationships while, you know, expanding into a multi-channel approach.
Do you think the pharmacy is as important to the business cycle as I think Wall Street thinks it is?
We believe it can offer additional access. If nothing else, if we focus on the patient out-of-pocket, we can remove that perception that it's more costly to have a durable pump. And so, we see that there's opportunity there. There's pros and cons to both channels. And so that's what we're leery of and we're being cautious about as we move into the pharmacy channel.
Having access to both gives you the flexibility to manage, you know, how and which of the channels you use based on what might be going on.
So I'm also thinking you're picking up, well, you may not be picking up your CGM, but you're probably getting your CGM from the pharmacy. Does that help as more and more patients use a closed-loop system versus, you know, two separate systems?
Currently, they're sold independently.
Mm-hmm.
So, I mean, people purchase their CGM, you know, through the pharmacy directly, you know, and they purchase the pump once every four years.
It may offer convenience for people when they're purchasing their supplies if they have one place to go. But to John's point, they will still be sold separately.
They'll still be sold separately. You don't ever see a stage where they're packaged together.
It's a possible outcome. But we'll have to wait and see.
Okay. Okay. That makes sense. I want to talk? Are we done on Mobi? Anything else you want to say?
I mean, it's a great product. And I think that it's really going to change the direction of our growth this year. Certainly, it's not included in our guidance for the year. But I do really think that this is going to be, it's going to be the product that brings Tandem back to the growth that we've seen in the past. And the change in growth for the company really has been in MDI conversions. It's people using pens and needles deciding to come to pump therapy. What's happened in the last 18 months is some of our competitors have gotten more of that, than they have in the past. We think that with Mobi on the market, the wearability and choice options are going to help us return to that, more significant new product start percentages.
Okay. You walked straight into my next question, which is, if Mobi is not included in guidance, why not? And how much upside is-is that? I mean, I-I-I really don't want people to start thinking, "Well, it's if the guidance is for 10%, it's-it's really 20% because they can get 10% growth from Mobi.
Yeah.
I'm making that number up, by the way.
it's we and I'm not affirming or denying that. But we wanted to start the year setting expectations in a way where people could look at the numbers, and they could, I would say based on what we would call our predictable revenue streams. So they could see those numbers, and they could understand and see the line of sight and feel confident that it was achievable. So we built it, mostly predicated on the recurring supply sales, very predictable. They represented about half of our business in 2023. The renewal stream, which also has become a very predictable pattern and really important in 2024 because the number of people whose warranties are expiring this year is growing more than 30% to what we saw last year. So there are 70,000 people coming to market.
If we repeat our performance from both 2022 and 2023, we'll renew half of those people this year alone. We still have people from the last year and the year before who we will be working on the renewal opportunity. This is mostly a U.S.-focused conversation. When you line those two up, what's left is what happens with new pumpers. In our 10% growth target, what this implies is that new pumpers could be flat to slightly down from 2023. So what that's reflective of is if we were in an environment much like we saw in 2023. So if the competitive dynamics remain the same, we saw new entrants into the market. We now have trends and information on how we're competing against them and feel confident that we know what that could look like going forward.
We're leaving aside what we think the new products can do for the business. We have extreme enthusiasm for the growth that they can bring for us. But what we want to have are trends. We want them to be sustainable trends. We don't—we don't—we have to be careful in the first couple of quarters of any launch where sometimes you have the pent-up demand coming through. We want to make sure it's something off which we can build the basis. As we see those trends in the coming quarters, we'll talk more about that in terms of informing potential guidance updates in the—in the future.
Okay. What were your new starts in the last quarter?
We don't actually break down the new versus renewals. But I can say that they did grow from Q3, and they were very much in line with our expectations. In fact, we came slightly ahead of consensus in the fourth quarter.
Did it just go out?
Yeah.
Okay.
Is it all three of us, or? Okay.
Do I get to start singing?
Is it turned on? Yeah, I think it is.
Okay. You did. Okay.
Okay.
Really close.
There you go.
Thank you.
I can hear it now.
All right. We were talking about new starts.
Yes.
In a timely manner. So it was up sequentially, but still down year-over-year.
Yes. Yes.
But if you could give me the year-over-year growth rate, was it an improved year-over-year growth rate versus the third quarter?
Not really speaking to that. The only comment that we made in terms of growth rate in that breakdown would be that renewals, year-over-year, on a full-year basis, grew more than 50%. And so focusing on the strength and the renewal performance, it was a challenging year for new starts. And we can capture at least as many in 2024 as we did in 2023. But we fully expect—or we're excited, I guess, to talk about when we see trends from the new products and what that can do for the business.
Okay. But the idea is, in your guidance, it's flat to down slightly.
Yep. Yes.
Got it. What do you think we were going to see this year at ADA?
You're going to see Mobi with a G7 on it, for sure. I'm sure that, I mean, I don't think that, you know, the larger competitors that we've got in the U.S. have anything new coming. I think that Mobi will be the newest thing. There'll probably be a lot of data on, you know, the performance of the systems that are out there. But I think that my sense is that Mobi is going to be the, it's going to be the big deal this time.
Okay. So Mobi is going to be the big deal. That's at ADA. What about data? Will we be seeing additional data of what Mobi looks like with G7 or with anything else?
Yeah. And we'll definitely have data at that point in time. We'll probably, I mean, we won't be able to see our Type 2 data until later in the year. But I think that, from our point of view, Mobi is going to be the sort of the big thing we're focused on.
Okay. So Type 2 data later in the year. Is that at a medical meeting, or will I just get a press release that says, "We've completed our last patient, and this is what we've seen"?
Yeah. I think there's actually the opportunity for us to present the data. My sense is that the data will be available in the second half. But most of the larger shows are in the fall, in the late fall.
Yeah.
So I would expect that we're going to try to present there. We're going to try to get this data filed into the FDA late this year or early next year with an approval sometime in 2025.
Okay. And with ATTD next week, you're going to Italy?
We aren't, unfortunately. We're going to be down. We're going to do a few more conferences.
Okay.
On the East Coast.
Okay.
We have a big team of people going to Florence. So, we've got some great papers that are going to be presented, all by people who are not part of Tandem. But they're all on Control-IQ and the performance of Control-IQ. And they all have, you know, they have great, great results. And I think we're excited to have this out in public.
Okay. So more Control-IQ, less Mobi at ATTD.
Yeah. That's right. Mobi's really just on the market. I think that, and it's not in Europe yet. So it's really going to be mostly about Control-IQ.
Okay. So 2025, you have the opportunity for Type 2 patients. Is that a different call point? Is that a different manufacturing line? Or is that just open the spigot?
I think to start with, the product that we're going to really focus on in the Type 2 community is going to be. It's going to be, it's going to be Mobi. I think the discretion and convenience that come along with Mobi is very important to Type 2 due to the negative social stigma that's kind of assigned to it. You know, I think that when you look at the market, as I just said, there's only about 5% of the people using pump therapy in Type 2. And I think when you have insulin-intensive Type 2, it's almost the same as it is with Type when you have Type 1.
Right.
You know, your-your pancreas is degraded in terms of performance. You have insulin resistance. So your body's just not producing enough insulin. You need that for both basal and bolus insulin. So the pump gives you just a-the pump, the AID system, gives you substantial control. Then we've-we've shown in some of our Type 2 feasibility studies that people who were using it, they were- people came from MDI. In MDI, they had very high A1Cs. When they started to use the pump, they dropped the A1Cs down substantially and into-into what would be the-the sort of the desired levels for someone with Type 2.
Okay. Can we spend some time talking about international, the international market, the international revenues?
Sure.
Most of, not all of your OUS sales, the majority, are in Europe. Remind us which products you have in that market. How cool is it that I get to ask you which products, like plural?
Currently, we have the t:slim in the market. It's the t:slim with G6 and G7. And so those are the primary products that we've got in the market in the OUS countries. But it has Control-IQ. We've got a big year this year in terms of new products. We're bringing Tandem Source, which is our brand new data management platform that we rolled out in the U.S. last year. That'll be, you know, going country by country throughout Europe. We also have a mobile app that gives you the ability to bolus from your mobile app on t:slim, which will be coming. And then we also have the Libre 3 integration. Those are the three products that we're bringing to Europe, which we think are all going to be very compelling. I think people are excited to hear and see that.
I think it puts us in a very positive position from a competitive standpoint when you look at the organizations that we're competing against in those countries.
Can you remind us what the competitive dynamics are right now in Europe? And I'm going to add a secondary question to this. We talk Europe as if it's all one country. And it's not. So how do we think about different countries and different adoption rates?
We're in about 25 countries today. Most of them are in Europe. The big countries in Europe are the U.K., Germany, and France. That's where most of the opportunity is. I think that, you know, when you look at our competitors, Medtronic is in a lot of—I think they're in like 90 countries or more. OUS, Omnipod 5 is now moving into the OUS markets. I think they're in the U.K. and Germany. And there's another competitor in the OUS markets called Ypsomed, which has been reasonably successful, you know, in the last year or so. So it's slightly different. But it's, I mean, I think it's going to become ultimately the same competitive dynamic that we've got here in the U.S.
One on the numbers, one of the dynamics. So I know when we were going through the quarterly gate for your numbers has to do with the comp for international. Can you sort of peel that apart a little bit, please?
Yes. So there were a lot of interesting dynamics in 2023 across the year. But most notably, in the first quarter, we had the heaviest impact from a transition we were making by commencing operations of a distribution center in Europe.
Yep.
And so that's a great efficiency gain for the business. It's very well received by our distributors from their perspective, too, in terms of how they order and obtain their inventories. It also will help going forward because we won't have such a disconnect from what we report as sales versus what's truly happening in the market. And so it was disruptive in that many of our distributors had been carrying many weeks, months, three or months or more of inventory in some cases because of the transit times they were managing, from San Diego all the way to their home bases. And so what happened was, now that it's local, many of them were destocking their inventory. And so we saw about a $20 million headwind in sales in the first half of the year, about $18 million in the first quarter.
So that creates pretty easy comps for the first half of 2024 over 2023. The other dynamic I'll point to was in the fourth quarter. There was a new rebate scheme implemented in France, which impacted us for the first time. And because of the size of our installed base there, for which we've already recognized the revenue when we ship those pumps in previous years, we had to assess the potential for this rebate to impact those pumps in the coming years. And we had to take a pretty sizable reduction to sales of about $8.5 million because of that. I would call it, it's almost like a one-time effect. We will have a rebate implication every time we sell a new pump. But it'll be more at the noise level now. This was more for looking at the past.
And so embedded in our guidance going forward is to think about our pump ASPs to be about $2,300 per pump, which is similar to what we were seeing before this period of destocking and also accounts for the French rebate, embedded in there.
How much is the French rebate?
haven't given any other color other than now it will look like it will be minimal on the P&L and not very material on the ASPs, I should say.
Okay. What is the pen—we talked about, call it 40% penetration in the U.S., Type 1s going to 65%. What would those numbers be like in Europe?
It's more like 15%.
15% Type 2.
We think we can get in that same time frame in the U.S., getting to 65, let's just say 25% OUS.
Okay. And Type 2s?
Type 2s, we—you know, it's more difficult to say. I think that, it's a larger market. The dynamics in the OUS countries are different. It's reimbursements of, you know, it's a big element of, you know, of the uptake. So I think it's more predictable in the U.S. Certainly, it's a big opportunity. We're going to go after it. It's hard for me to say what the penetration's going to do there.
Okay. And how do you think about, you know, regions outside of the U.S. and Europe? I mean, there's a big world out there.
I mean, it's a huge opportunity when you look at the opportunity, just in the 25 countries we're in, the Type 1 opportunity is almost double what it is in the U.S. The Type 2 opportunities are, again, significantly larger than the U.S. So, you know, I think that, you know, it's underpenetrated. So I think that bringing the technology that we've got to the OUS markets is a huge priority of ours. And I think that the growth rate can continue to be. It can—we can outgrow, you know, or grow faster in these OUS markets. The technology is what people are looking for. They're looking for the same ease of use and therapy benefits. And so I think that the things that drive adoption here in the States are not different when it comes to Type 1 OUS.
I think that, you know, we intend to invest significantly in that market.
Right now, it's t:slim outside the United States, timing for Mobi and timing for Sigi and timing for Mobi tubeless.
Yes. So we haven't been specific about any of those. I'd say that, you know, we're working right—we're working hard to get Mobi into the OUS markets. That's certainly something that's important for us. I would say that, that's going to happen here in the not too distant future. After that, I think that, Mobi tubeless is something that we're also working on. And I think then Sigi—Sigi would be the furthest out. Nothing has really changed from what we've said in the past. It's just more a matter of being, I think that we're just not going to be specific until we actually are closer to the actual introductions.
Okay. You talk about an LRP, maybe LRP is the wrong word, goal of 65% gross margins. How do we think about operating margins?
that 65% gross margin is, I'll first say, correlated to 1 million customers in the installed base and a 25% operating margin target.
Do you have a time frame?
We don't have a specific time frame there now. Much like the conversation around how we establish guidance for this year, we want to get through this cycle of new product launches to be able to give something more specific in terms of timing for that. But we do believe—I mean, it's in the coming years. It's not 10 years out by any means.
Okay. Incoming years. Got it. With so many new products, I'm almost shy to ask this question. Are there others?
Oh, yeah. Yeah. I think we have the most exciting pipeline in diabetes. We have the four new products that we've just brought to market in the last quarter, which are, I guess, more than throughout 2023. But that would be Tandem Source, which is our data management platform, the CGM integrations of G7 and Libre 2, and now Mobi. So that's a big lift for the organization. But it's really prepared us for an exciting 2024 and beyond. The things that we're working on right now is we're working on a technology upgrade to t:slim. t:slim's been around for quite a while. And it's an opportunity, I think, to get more advanced technology that costs less and actually address any supply chain issues that we might have as we continue to produce that in the years. And so t:slim X3 is in the works.
The Mobi tubeless opportunity, which is. It's the exact same pump that we have in the market today. It's a different cartridge. And there's a sled that you attach to your body. So it's completely a tubeless option. And this would be available to people who have Mobi. You can choose tubed or tubeless, whichever one you want.
Can you move back and forth?
You can go back and forth. It's just the disposable aspect or the supplies aspect that changes, not the pump.
Okay.
And then, of course, we've got, we've got Sigi, which is probably the furthest out in time. So that's that, and that basically, when we have those products in the market, that is what wraps up the portfolio that we think is going to be, particularly successful in this market.
If you have Mobi tubeless, do you need Sigi?
We think Mobi tubeless gives you this great flexibility in terms of wearability. There are people out there that prefer to have just a patch pump.
Okay.
And so that's really what Sigi's intended for, is people who prefer the patch. Beyond that, we've got algorithm improvements. We've also got Type 2. We've got the extended wear infusion set. You know, there's a lot that's going on in the company. And I think that, you know, we're excited about 2024 and beyond. But, you know, because of these products that we've just brought into market. But I think that, as you look in the future, you know, we have a bright future with new technologies.
You practically wrapped it up for me. So when we are here a year from now, what do you think we will be talking about?
I think there'll be, I mean, I think we're going to be talking about how Tandem's beaten and raised again, number one.
On record.
I think that the-
Leigh, you okay with that over there?
I can say it.
You can say it. That's why I'm asking. I know that. Le, you okay with that over there?
I think that, you know, Mobi is going to be a big success for us. I think there's the sense of integrations in the Type 2 data. I mean, I think the Type 2 data—and we'll talk a lot more about, you know, the opportunity that at that point, when we have it, something to share when it comes to data. And then we also have the technology that we've got here in the States today. I think in a year from now, we'll, you know, there'll be a lot of discussion about how they're going to be in the OUS markets in the specific timing of those.
Excellent. Thank you so much.
Yeah. It's been great to be here.
Thank you.
Thank you for having me.
Great to have you. Thanks.