All right, welcome back. Good afternoon. I'm Larry Biegelsen, the Medical Device Analyst at Wells Fargo, and it's my pleasure to host this session with the management team from Tandem Diabetes. With us, we have John Sheridan, President and CEO, and Leigh Vosseller, Executive Vice President and CFO. The format is a fireside chat. If anybody has a question, please raise your hand and I'll call on you. John and Leigh, thanks so much for coming back to our conference.
Thanks, Larry. It's great to be here.
Can I just say one thing?
Oh, please. Sorry.
Yes. I, we may be making forward-looking statements, and because of that, we'd like you guys to check out our safe harbor statement on our website. Thank you.
Got it. Sorry about that.
That's all right.
All right, so John, let's start off with the big picture question. Tandem's gone through some ups and downs over the past, handful of years or so. 2024 seems to be a turning point for the company, Mobi being the primary catalyst here. Where do you think Tandem is today? What do the next three to five years look like?
I'll just start off by saying, thanks for coming today. We're excited about where we are in the market at this point in time. I think that, you know, we have a unique strategy. It's a portfolio strategy. If you look at the diabetes market, it's very segmented. You know, there's people who want to control, interact with, and wear their device differently, and because of that, we do not think a single pump is going to meet the needs of the entire market, so we're developing three. We've had t:slim on the market now for over 10 years, and this year, we introduced Mobi. Mobi is doing great on the market. We also have a development project now called Sigi, which is a complete patch pump.
Our plans are to integrate all three of these systems with the latest sensor technology, and to provide a great algorithm as well to improve the patient experience. So with Mobi, at least, we're seeing great progress. I think what we find with Mobi is it redefines wearability. People can basically put it anywhere they'd like on their body. One of the highest compliments we get from Mobi is that people actually forget they have it on, and that's exactly what we want. We want to completely eliminate the cognitive burden or the burden of just having a device on your body twenty-four seven, and Mobi is certainly doing that. We also have the best algorithm on the market, and as a result of that, we are seeing a good uptake in the market this year.
I think that another thing that we've got going on right now, which I think we might talk about, is the pharmacy channel. We're making good progress in the pharmacy channel. We're talking to most of the major PBMs and many of the payer organizations, and we're doing this for a couple of reasons. One, we're doing it to reduce the out-of-pocket for the patients. We also want to improve the efficiency of the prescribing process. We also think that there's a benefit in terms of reimbursement, having additional reimbursement. So if you look at the reimbursement addition that we get from the pharmacy channel, and you compare that, combine that with the benefits that we have from a margin point of view with the newer products, we expect to see gross margin improvement as well.
I think these two steps, the new products as well as the pharmacy channel, will drive gross margin improvement and profitability improvements, which we think are very important to the business. The other thing that's happening now is we're wrapping up our Type 2 study, which we're very excited about. We expect to have submission to the FDA before the end of the year and a product on the market in the first half of 2025. With that, you know, I think we expand the TAM of our total available market. We're excited about where we're going. I think we're addressing the main issues that the investment community has had with Tandem. I think we're proving, you know, we're doing what we say, and so we're excited about 2024 and beyond.
That's helpful. So if you want, we'll ask about pharmacy later.
Okay. Please do.
Maybe a question for Leigh about the guidance. Your U.S. outlook assumed new patient growth would be flat to slightly down for the year when you set the initial 2024 guidance. It sounds like you're now baking in some upside from Mobi. Is that fair? And, how should we now be thinking about, you know, new patient growth as flat to slightly up? Maybe just update us on the components of the new guidance.
Sure. So we did recently raise our guidance to 15% growth year- over- year, and when we came into the year, we originally established it based on two major building blocks, which were coming from supply sales growth and from growth from our renewal opportunities, and to your point, we had made an original assumption that we could capture at least as many new patients as we did in the prior year, maybe slightly down. That was implying that we weren't factoring in any opportunity or upside that might come from new product introductions, and Mobi, you mentioned in particular. We have other new product introductions that came into the market with the G7 launch and the Abbott FreeStyle Libre 2 launch, but Mobi has obviously been the star of the show.
And so after our second quarter results, we did add a little bit more to the guidance for the remainder of the year that factored in some of the benefit we've been seeing in the first half of the year. I think I would highlight, though, that we're still in the early launch phases, so the information we have today, I would call early data points. They're very encouraging and exciting for what we think the new products can bring to the business, but we would like to see more sustainable trends before we make a call on putting in anything more to the guidance. But we did put a little bit more in there, and you could say that would be coming from new pumpers.
But flat to slightly up is how we should think about.
I think that's fair, yes.
Okay. And then one encouraging data point for the Q2 call was your MDI conversions grew year- over- year for the first time in several quarters. How sustainable is this growth? And do you... It seems like MDI starts have to be up year- over- year in 2024 for you to hit the new patient guidance.
So we did see our highest number of MDI conversions in six quarters, which was a great milestone for us. It's showing again the benefit that we're seeing from the new products and how they're helping attract more customers to Tandem. And from here forward, we do expect to see continued MDI growth, not only in 2024, but in years beyond. Our products are squarely focused on attracting people who have not used pump therapy before as their means for managing their diabetes.
... That's helpful. And historically, you had a split 50/50 MDI conversions and competitor conversions. That's now it's climbed a bit north of, I think, 55, 45, you know, in favor of MDI. Is that accurate? And second, how do you see this evolving, going forward with increased competition, and one of your competitors, you know, having a smaller installed base?
Yes, yes. So we did, in the first half of this year, start to see that MDI conversions took the edge. So I would say a little more than half of our new pumpers came from the MDI opportunity, and that was as anticipated. To your point, the opportunity to attract from some of the other competitors has been coming down, and with new products in the market, we expect that they all will hold on to their own base at a higher rate than we have seen in years past. And that was all built into our plan. So we assumed that that would begin this year and that it would be multiple years we would continue to see MDIs grow at a faster rate than the competitive conversion.
Okay. The big picture, still confident in new patient growth in 2024, driven by MDI conversion, despite, you know, for those of us who look at it closely, the competitor conversions are flat to down.
Absolutely.
Okay.
Yep.
All right, so before we dive into Mobi, one housekeeping item. You initiated an FDA recall for t:slim iPhone users back in March. I think that's still ongoing. What's the latest status here, and how confident are you this won't impact sales?
Yeah, so we implemented an improvement back in the March timeframe, which we knew would reduce the problem, but it wasn't the root cause resolution. And we've been working with the FDA for the last couple of months. Last maybe two or three weeks ago, we did actually implement the root cause solution, and so that's now been... it's on more than 90% of the phones that are out there in the market. So the people who are impacted now have the technology resolution, and we're seeing a substantial reduction in the incidence of the battery drain that the people were experiencing. So we feel like we've got it. We're monitoring it very carefully, and we're very close to the FDA. We have a great relationship with the FDA.
We're working with them to make sure that they're satisfied with the solution as well.
Any concerns about kind of customer complaints, any, you know, attrition, sales, any concerns?
I don't think that attrition is going to be an issue. We've been very open with the patient population about what's going on, and we've been getting, you know, as I said, a series of improvements. There have been complaints. There have been people who have experienced the problem, but that number has come down dramatically as this most recent solution has been implemented onto the marketplace. And the great news about it is the pumps are updatable, and the phones are updatable, and it's a relatively easy process. And so I think over a two- or three-week period, to see that over 90% of the affected products that are out there have been resolved is a very positive situation.
Okay, just to button that up, you don't expect a material impact on the business?
Not at all.
Okay. Okay, moving back to new starts, but focused on Mobi. What % of new starts are Mobi... were in Mobi, let's just say, in Q2, and where do you see that going over time?
Sure. So we haven't actually shared the breakdown of Mobi versus X2, and that comes back to the portfolio approach. Mobi brings a new, great opportunity to market Tandem to the world, and people are calling in. It doesn't necessarily mean they choose Mobi every time they make the call, but it does bring business overall. But we've been very pleased with where we have seen Mobi come in so far. It did grow month over month, all the way across the first half of the year, and we look forward to what opportunity it can bring in the future. Because it seems to be attracting, from early data points, people from different populations than maybe we haven't been able to attract in the past, particularly looking at, for instance, the peds market.
We saw more people from that population coming to Tandem with Mobi than we have seen in the past.
One thing we did say on the call was that for Mobi, more than half of the starts were new starts. They were new to Tandem, and then more than half of those were MDI conversions.
Got it.
So that's, you know, a positive result, and we're, you know, very pleased with it.
Good to hear, and you released Mobi with G7 a couple months ago. How has that helped accelerate the launch?
I mean, G7's a great product. It's a form factor improvement, warm-up improvement. So you know, we definitely draft off the CGM technologies, and we are off of Dexcom. You know, Dexcom has done a nice job of upgrading their install base to G7, and so when Mobi was on G6, there was a number of people out there who were already using G7, and so there were people waiting until it was available. And so, you know, we think it's a great product. It's a great combination, and we think it's gonna continue to drive, you know, the improvement in MDI conversions, as Leigh talked about.
That's helpful. And Libre 3 integration, that is for 2025?
It's 2025. We haven't said specifically when. I'll say that it's going to be implemented on t:slim and Mobi, and it'll also be available in the OUS markets as well.
It'll also be available where?
OUS.
But Mobi is not available OUS.
It'll be available on the Libre, on t:slim, and then when Mobi is available, it'll be available on Mobi as well, OUS.
Are you gonna tell us when Mobi will be-
I'm not going to.
Okay. You said you were gonna make forward-looking-
That's-
Make forward-looking-
All but that.
But that?
All but that.
Okay. Why no clarity on Mobi OUS timing? And-
I think that there's unpredictability associated with the regulatory process, and I just don't want to make any commitments until we have certainty. Right now, the MDR, the new guidelines in the EU are more complicated than they have been in the past, and they're also... Again, when you look at the sort of average time companies are getting through the MDR approval process, it's just unpredictable.
Okay. All right. So you think-
It's certainly very, very important. We understand the importance of that, and we're trying to get this done, but I think making a commitment at this point might be premature.
So the first time we hear about it will probably be when you have CE Mark, or would you tell us-
I think when we have more confidence on the approval process.
Okay, thank you. All right. So, Okay, so Libre 3 U.S., it's a scaled launch in 2025. Sorry, and outside the U.S. on t:slim. But, anything in 2024? Is there a limited launch in 2024 with Libre 3?
Um.
And is it an early 2025 launch or-
We're not gonna say. I haven't said this publicly, and I think I'll probably refrain from saying.
Okay, so you haven't been specific on the time.
That's right. Yeah.
Okay, except to say 25.
Yeah.
Got it. Okay. And then on competition, we talked a little bit about this, John, before the fireside chat. What are you seeing from some of the newer pumps in the market? And how are you thinking about new competition? You know, anyone who was at ADA saw there were some new comp players in the market-
Yeah
- or coming to the market. We've seen two approvals, I think, this week. How are you thinking about the competitive environment?
Honestly, it really hasn't changed. The way I look at it today is our primary competitors today are Insulet, Medtronic. And at OUS, it's really Insulet, Medtronic and Ypsomed. And that's those are the primary. I mean, there's I mean, Beta, of course, is in the marketplace, but they're just getting started. I think they're an early entrant. And as far as I understand, the other products that have been approved are not on market yet. I mean, they're I think they're in the process of getting ready, but they're not on market, so we're seeing very little activity. I'll say that, you know, some of those pumps are not sensor integrated. They don't have algorithms. And so I, you know, I think that that's a, that's a...
I mean, it's I believe AID systems today are table stakes to get into this market and have effective competitive position. Without them, I can't imagine that they're going to compete. Why would somebody wear a pump for the first purposes of wearing a pump, where you can have the therapy benefits of AID?
Fair enough. But I think the assumption is they'll eventually integrate.
That's true. Potentially. I think they have... I mean, for a startup to do that, it's expensive. It takes quite a bit of funding, and there's a lot of people that are out there right now, and I can't imagine that all three or four of these companies are gonna be successful getting funding. When you consider that each of them are going to need on the order of $300 million-$400 million to commercialize the technology and get to the point where they've got a business that can sustain a product for four years.
While we're on this topic, let's, you know, touch on the Medtronic Abbott integration. Maybe big picture, what do you think the implications are?
I think that it makes sense for Abbott. Abbott wants to have as many customers using AID systems as possible because there's much better retention, if you will. People who use AID systems, they use a sensor every day, and so that's just, it's a, it's their best business, actually. And then I think that with Medtronic, I'm actually surprised. You know, they were going on their own. It was surprising to me that they actually introduced that relationship at the same time they introduced Simplera. But, you know, I think it's a complicated implementation. This is something that's going to take two years for them to actually get something on the market. We'll have Libre three on the market next year, which is gonna give us an advantage, I think.
And we're not gonna stop innovating. So we will continue to innovate, and by the time that product comes to market, we'll just see where we are.
What, what will you have, I guess, in two years on the market?
I think that we'll have Mobi, of course. Mobi will probably be OUS. We've got the Libre 3 integration. We've got algorithm enhancements. We've got Mobi tubeless. We have all these things that are coming, and not far off will be Sigi. So we have all of these great products coming to market in that time frame.
Got it. That's helpful. Do you think they'll need a clinical trial within, say, two years? I mean, there's a question mark, you know, for the integration.
That's an important question. I mean, typically, if it's going to be an interoperable system, if it's going to be an interoperable pump and an interoperable sensor, which the Libre 3 Plus is, you have to have an interoperable algorithm, and their algorithm today, it's not interoperable. It's basically, it's been approved through a PMA process. So I'm not exactly sure how they're gonna solve that problem, but that's something they're gonna have to deal with the FDA.
Got it. And internationally, you touched upon some of the competitors outside the U.S., like Ypsomed. How is the competitive landscape different outside the U.S.?
I think with the exception of Ypsomed, it's roughly the same as it is in the States. I. The only difference is that Insulet doesn't have the advantage of the pharmacy channel, OUS. And so, you know, that levels the field a little bit. I think we understand the importance of the market. The market's twice the size of the U.S. market. It's less penetrated, and a lot of the health systems in these foreign countries now understand the benefits of AID systems and are encouraging their patient populations to consider AID systems. So we are, this year, working to get Tandem Source and our mobile app, OUS, which I think is important for Mobi, certainly. And I think that we're working to get Libre 3 there, working to get Mobi there.
In order to have Mobi on the market, OUS, we really do need Android, and so that's something that's also going on. But, you know, we are really focusing on trying to get the technology that we have available today in the U.S. into the four, the OUS markets and actually, in the future, introduce products simultaneously in the U.S. and OUS.
Leigh, you know, it's difficult to kind of have a sense of, like, the underlying trends in the international business because of the issues last year. And the guidance implies, I think, Q3 and Q4 sales down on an absolute dollar basis, I think year- over- year, or is it sequentially? I think sequentially, right? So why do you expect that? And you know, I think you mentioned pump demand grew 10% in the second quarter. So is that... I mean, I guess, is that continuing? What's implied in that second half guidance for pump demand?
Sure. I'll start first with, since we finished our transition to our new distribution center, middle of last year, what you're starting to see in terms of real shipments, both on supplies and pumps, is more closely mirroring true market demand. So going forward, you can think about that as what looks like real demand in the market. We did see, though, because you couldn't see it in the numbers, that our demand for pumps in the second quarter was up almost 10% year- over- year. So that shows that there was great growth in the business outside the U.S. When we factored in for the guidance, when we thought about what we were factoring in for the year, we anticipated that it would get a little more noisy from a competitive perspective as new products were being introduced.
Just taking lessons learned, especially from what we saw in the U.S. in the last two years, no matter how competitive we are with the new product, there's always disruption. We wanted to factor that in to make sure we were anticipating what disruption could occur before things settle back into a normal. Right now, we're just being cautious about what could happen as new products are rolling out.
Got it. And the France and U.K. issues on reimbursement, are those resolved, or are still issues there?
I would say, yeah, so France, if you're probably talking about the new rebate that was implemented last year, and we had a one-time effect in the fourth quarter of the implementation of that. But now it's factored into the normal ASPs, and so it's hardly any effect on the business. In the U.K., this was an upside opportunity, actually, which is that they established a new standard of care for certain populations within the Type 1 community. So it actually means opportunity going forward for more and more patients being brought to pump therapy.
Okay, and that's in place now?
It... Yes.
Okay, and OUS renewals, Leigh, when does that become meaningful?
Right. You can really think about that as becoming more meaningful in 2025. So we first launched into the OUS markets in late 2018. And so that would imply that the first, based on the way you look at it in the U.S., that the first renewal opportunity would have been late 2022. But I'll just remind you that our distributors outside the U.S. tend to have stock more on their shelves, and so really, you can think about the warranty start dates being a quarter or two past those initial stocking points. So that's one piece, that it starts a little bit later than what you may see from a shipment reporting perspective. The second piece is this is new for a lot of our distributors in those markets.
So just like in the U.S., we had learnings to go through in order to get to these good capture rates that we have today. They're in that building process, building, learning how to expect to go about going through the renewal process. And so really, we expect for it to be a more meaningful contribution in twenty twenty-five. Right now, what you're seeing in our markets is really mostly about attracting new people to Tandem.
That's helpful. All right, so let's transition to Type 2. You gave us an update. I think you said, "Finished by the end of this year or file by the end of this year?
I think the study will be finished in a few weeks, and then we'll compile the data and submit it to the FDA by the end of the year. We, you know, this algorithm has been reviewed three times. In fact, the actual algorithm that's going to be used for Type 2 has now been reviewed by them once, and so they've seen it already. So it's really a review of the clinical information.
This would be for Mobi and t:slim?
It will be for Mobi and t:slim.
You think Mobi will be the workhorse in Type 2?
Probably so. I think that the discretion and the convenience that comes along with the size of Mobi, in addition to the mobile app, will probably be more. I think they're just more appealing to the Type 2 community. Because there's a negative social stigma, I think they don't, people do not want you to know they have diabetes, and I think that with Mobi, it's probably, as I said, the most discreet option.
Type 2 today is 5% of your-
It's roughly 20,000, and we have, you know, 450. So, it's a small number at this point in time. But we do see a small number of people coming into Tandem monthly, you know, off-label for Type 2. Obviously, when we're able to market it, you know, I think, we think there'll be a significant opportunity there.
So when we think about new starts, should we use that ratio, that 20,004 over 450? In other words, if I think about your new starts today, if it's 5%, use a number, where does that go over time? And so that, you know, all else being equal, if you keep the Type 1 kind of constant-
Mm-hmm.
What could the bump in Type 2 mean?
Yeah, I think we've done quite a bit of market research lately, and we find that there's definitely interest in pump therapy in the Type 2 community. I think we're, you know, we thought in the past it might go from 5%-15%. I think now it's possible over the next three to four years to get up in the territory of 25% or plus, 25 plus. So it's a big opportunity, and I think the fact that, you know, our competitors are moving in this direction as well is actually a positive thing. Because in this market, it's about creating market awareness and developing the market.
I think having multiple pumps with clinical data, multiple companies that are out there selling to this community, will help affect the physicians' awareness, and I think that, like I said, I think this is gonna be a meaningful part of our growth story, and we're excited to continue on.
I'm sorry, in-
We're excited to continue-
Right
the progress that we're making right now.
So Insulet's 25% now. They've been as high as 35%-40%. New starts-
New starts.
-Type 2 as a % of new starts.
Yeah.
You think that on that metric, you can, with Mobi, you can get to 25% of your new starts?
No, no, I'm saying that the market penetration-
Oh, penetration-
-will go-
Can go from that five today.
From five to twenty-five in-
Twenty-five
three to four years. Yeah.
What about your new starts, like, using Insulet as an analog? Do you think you could see a similar ratio at some point?
I think it's hard to pinpoint that at this point when you think about what do you think about the U.S. Type 1 penetration, right? So we expect to see an acceleration in both with the new technologies coming, so it's hard to say where that balance might shake out from a percentage perspective as a part of the pie, but we do see both being meaningful contributors going forward.
Yeah.
Got it. All right. All right, Leigh, we'll stick with you, and-
Okay
... you get the 2025 question, okay?
Too soon.
You know, it's part of the Wells Fargo Healthcare Conference, you know. Everybody, I have to treat everybody fairly.
Right.
Yeah.
At a high level, Leigh, anything you want to highlight about next year in terms of puts and takes?
Sure. Well, we can just. Let's talk about a baseline first. So much like when we came into 2024, the recurring piece of our business has become substantially greater than it has in years past. So if you just start with the opportunity that comes from supply sales growing, we have renewal opportunities growing again pretty substantially. By comparison, this year, about 70,000 warranty expirations in the market in 2024, but next year, that's gonna grow to over 80,000 again. So just those two pieces alone can provide nice, a nice growth tailwind as we go into 2025. And then right now, I would say we're still accumulating the data points on the new products and thinking about how those might turn into real sustainable trends that we can talk about for 2025.
But I think it's just fair to say we're still early in the launch phases, so that means there's a growth opportunity that can come from the new products. But for now, we want to just basically-
Right.
Stick to thinking about those recurring pieces of the business, which provide their own nice growth opportunity.
Right, but the renewal jump is a little lower than it was this year.
It is, but if you think about it, that is, that is correct, Larry, for sure, the number of new opportunities. But we also have, I'm gonna call it the tail of people from years past, is bigger than it has been. So you have the people this year that are coming to market that won't renew in this twelve-month period, but might renew next year. So both of those combined provide a good growth opportunity for renewals.
When you came into this year, you guided to 10% growth just based on kind of the-
The recurring piece.
-recurring opportunities. The street's at about twelve next year. Is this, is that a, like, an accurate way to look at things in the sense that it's kind of similar and people aren't baking in much for beyond, you know, with the recurring revenue piece?
I would like for people to start conservative, focused on the recurring piece. And so, I think the building blocks, it's pretty easy to put that piece together and then stay tuned on more about what the new products can deliver.
Shifting gears, no reaction is kind of where, like, the consensus that I just threw out there, 12% compared to the 10% coming into this year?
Too soon to make any commentary on that.
Okay. Okay, fair enough. And then gross margin, Mobi, you said gets you halfway to 65%. And remind me, this year, the guidance is for fifty-
Low fifties. Mm-hmm.
Low fifties. I don't think you've said what your share of pumps. What share of your pumps does Mobi need to be to get there?
Right. We haven't, but I'm gonna tell you a few data points that I think might be helpful or interesting about the progression. So Mobi itself, as a system, can get us more than halfway to 65%. It doesn't all happen in the first year. Both the pump and the cartridge have cost benefits compared to our X2. So as Mobi is building up, as we exit twenty twenty-four, the pump will start to become accretive to gross margin. So that's step one going into next year. And we still have to get, you know, higher volumes to fully leverage the overhead. The cartridge itself will start to show that benefit, I would say, in future years, and it's mostly because we have to wait until that installed base becomes large enough to be meaningful in terms of the overall share.
So Mobi is a multiyear gross margin expansion opportunity. The other driving factors besides Mobi come from other new products over the next few years as we launch those. Every new product has the design principle to have a lower cost profile than existing products on the market. So think about everything that we have in the portfolio that John's talked about that we plan to launch. And then there are pricing opportunities for the business that can help drive that gross margin for us in the long term.
But does so Mobi starts to contribute to the gross margin exiting this year, you said?
That's correct.
So 2025, we should see-
Start to see some of the benefit.
Okay. How much?
Haven't quantified that yet, but-
Meaningful, but a meaningful-
Will be improvement.
It'll be visible. It'll be-
Yes.
It'll be visible. Meaningful.
It'll be meaningful.
That's correct.
Okay, that's helpful. And John, you wanted me to ask about pharmacy. It wasn't on my list of questions.
That's hard to believe.
So you talked about signing at least one contract this year in the past.
Yes, that's right.
Is that still-
Yes. So we have conversations going on right now with multiple PBMs, multiple payers. I think that, we're very confident we'll get at least one contract signed this year.
Big or small?
In terms of-
Significant contract.
We're talking to the larger PBMs, so you know, we're talking to meaningful players in the market.
The economics you alluded to earlier, similar or better to the pharmacy?
There's no reason for us to accept a contract that doesn't give us favorable economics, and that's... I mean, at a minimum, it'll be the same as, but likely, it'll be there'll be additional reimbursement.
What's the incentive for the PBM to do that?
Competition. And so there was a point in time when we were not sure if. Now we're absolutely sure. If it's a when question, and we feel very confident about the second half of this year.
This will be with Mobi?
It'll be with Mobi first. That's right.
You think once you get one, that the others fall in place?
Yeah. Why don't I talk about our strategy a little bit for pharmacy? So we are today fully in DME, and we are working to optimize that channel, and right now, we expect to keep X2 there. We ultimately want Sigi to go launch directly into the pharmacy channel. So Mobi is a hybrid, almost like a pilot for us, thinking about pharmacy. So we're building the infrastructure that you need as an organization, and there's a lot of moving parts there when it comes to how you receive an order, how you fulfill an order, rebate management, all those pieces that come with it. And then there's getting good contracts. And so back to John's point, we don't have to accept a contract if it's not right for the business. So Mobi is about learning the pharmacy space and getting in there appropriately.
If it's working really well and the contracts are great and it's very favorable, we could put our foot on the gas and accelerate it, or it could continue to be a learning force, and so anyone that you've seen progress in the pharmacy, it usually takes multiple years to get full access, so you can think about 2025 is gonna be probably a slow or modest start, and then we'll continue to build off of that in the future years.
Okay, that's helpful. All right, so similar or better economics?
Yep.
Okay. And then Sigi, John, you know, I guess, we've talked about this before. You had a first-in-human study that posted on clinicaltrials.gov.
Yep.
What, what's the status of that? I think like my, my notes say that that finishes at the end of September.
Yeah, we're still working on that. I think we're ready to do it, but there's other factors that are out of our control right now that are affecting the timing. Pretty sure it'll get done this year, but there's, like I said, factors outside of our control that are affecting timing.
And so you've said in the past, I think, that you don't need to do a pivotal trial for that?
No, we don't. This is going to be an ACE pump. Just like Mobi was an ACE pump, this will be one also. And so the pivotal trials are associated with the algorithm, and that's, you know, that's-
But the algorithm's clear.
The algorithm is clear, so we can put the algorithm in all of our ACE pumps, and so, you know, that the most advanced Control-IQ algorithm or the most advanced algorithm we have will be on t:slim, Mobi, and Sigi at the same time.
But Sigi still has to be filed as a 510(k).
As a 510(k) to get approval for the ACE pump.
Okay. And so if we think about... I know originally when you bought it, 2027, people were thinking about you haven't updated timelines, but you've kind of said timelines haven't really changed.
They haven't changed.
What has to happen from, you know, finishing that first-in-man trial, to U.S., you know, basically U.S. approval with the algorithm and everything?
Right now, we're in the process of hardening the design, making sure the product is reliable, safe, and efficacious. That's really what the team is working on. As parts of the team roll off of Mobi, because we're moving into more of a sustaining mode now, those people are going to be reassigned to Sigi. So we're increasing the resources that we've got on the Sigi program. And we're also bringing people to the program that have a great deal of experience developing pumps, integrating sensors, and integrating algorithms. And so that, the software element is a big new piece to the, I think, the initiative. And that's the work we've got to do. So we've got to. You know, the good news is that our team has got experience developing pumps.
We've done it a couple of times now. We've developed a miniaturized pump, and there's not a whole lot of difference when you look at that and Sigi, and so I think that we feel confident we're gonna get there. We're excited about the product and, you know, we're gonna get it to market as quickly as we can.
Got it. And just that reminder, is that 300? How many units is it?
It's going to be a prefill cartridge, and the prefill cartridge is approximately 1.6 units, 160 units.
160.
Yeah, but the benefit is that it's really it just takes a matter of seconds to take it out and replace it. So, you know, that the time I think to change the cartridge can be the impediment, but with the prefill cartridge, you pretty much eliminate that as a friction, I would say.
The Embecta, how is it gonna be different from the Embecta patch pump?
It'll be a lot smaller, and it'll be sensor-integrated and have an algorithm.
Got it.
I think that...
It's not disposable.
It's not disposable also. That's true, yes.
Okay.
I think we think that reusability is a very important part of our pipeline. The idea of throwing away, you know, circuit boards, batteries, and integrated circuits every three days is problematic for us.
You think the consumers will be receptive?
We think absolutely. I mean, when we've tested this product against our own design as well as competitor products, it really scored very highly, and I think that was one of the reasons.
All right. What did you want to cover, John, that we didn't touch on today?
You did a good job today.
So today?
Yeah.
All right. But, please,
Yeah, I just want to say, you know, it's a large underpenetrated market, and I think as a result of that, you know, all of the players that are currently in the market can be successful. We think we have the most exciting pipeline in diabetes, and I think we're addressing the fundamental issues. I think that have caused some concerns by the investment in connectivity, by getting into the pharmacy channel, really focusing on profitability. You know, and we're again very bullish about our future.
All right, great. Thanks for being here.
Sure thing. Thanks for having us.