All righty, welcome. Thank you, everybody. It's Patrick from the MedTech team, as many of you know. We disclaimers. You're probably not gonna read them, but they're here if you so desire. Much more interestingly than disclaimers, we've got John and Leigh here, CEO and CFO of Tandem, respectively, for what should be a great conversation in a very dynamic market. John, I think you had a couple of-
Yeah, I just wanted to mention that we may be saying some forward-looking statements, and so if you could just look at our safe harbor policy, which is on our website, that'd be great. Thank you.
Yeah, love it.
Looking forward to being here, Patrick.
Yeah, of course. I mean, maybe not to dive right into Mobi, but diving right into Mobi, how's the feedback on the launch been? How are you feeling about things? Anything you'd wanna call out, type 1 feedback in particular, and how, how things are going with Mobi?
Great. It's actually going very, very well. We're very excited about the product. As you know, we have a portfolio approach. We believe the market is very segmented, and you need to have multiple products to address the different ways people want to control, wear, or interact with the device. We have t:slim X2 on the market now for probably about ten years or so, and Mobi is just coming to market. Mobi is about half the size of the t:slim X2. It has a bolus button on it. It's controlled by a mobile app, and the beauty of that is that you get a great deal of convenience and discretion. I mean, you can be interacting with the mobile app while sitting at lunch with friends and basically managing your diabetes, and no one knows you're doing that.
I guess the importance of the bolus button is that for, if for some reason you were to lose your cell phone or lose the power, the system continues to work. The sensor talks to the pump, and the pump has the algorithm on it. If it does come a point where you need to give yourself a bolus, you can, and it's pre-programmed, so it works very, very well. I would say that, you know, if you talk to people in the market, they're very surprised by how small it is when they first see it. It's very, very light, even when it has insulin in it. I think what's really happened here is that it has redefined wearability.
I think the argument or the competitive argument before was it's tube-tubeless, and that's not the case. It really is about wearability. I think that with Mobi, you can practically put it anywhere you would like on your body. It comes with an adhesive sleeve, so there's a patch-like experience if you'd like to have that, but you can always disconnect, which is very, very important. One of the things that I really appreciate when people talk about it is they say they forget they have it on. Interestingly, Leigh wore it for about ten days, just as a, as, you know, in engineering sort of, with saline, and she said that to me several times, that you just forget you have it on, which I think that's the ultimate compliment.
We had two sites do relatively extended large studies in our sort of pre-market access. Barbara Davis Center actually presented the data. They had collected data that surveyed patients. One, we just asked them, "Did you like it?" We had people who were MDI users, they were patch pump users, they were other tubed pump users, and they were Tandem users. I, what we were very surprised with was just how high the scores were. If very satisfied and satisfied, you know, the scores were in the mid to high 80s, which is a very good score. We asked people, "What was it, what about it did you really, what appealed to you?" It was the fact that it was small, light, and wearable.
There was a group, if you—the thing that kind of surprised us was when you looked at the former patch users, when they commented on it, I think that the size was not as important because, of course, the device that they have or had been using is small also, but it was the algorithm. It was the performance of the algorithm they were very impressed with, and that was really what drove them to the pump. We're excited with it. We're in the early stages. We're just getting started.
As we talked about in the second quarter call, the second quarter call was the highest number of MDI starts we have seen in the last six quarters, and we—largely driven by Mobi. I think if you look at the data from Mobi, more than half of the Mobi starts were new to Tandem, and then more than half of those were MDI. It is doing just what we want it to. We think it is growing the market. It is getting people who are using pumps and needles today onto a much better therapy. As I said, we are very excited about the start.
I know it's always difficult to talk about a competitive environment, but it's been a bit of a pickup in competitive conversions towards you guys. I mean, is that something you would expect to continue going forward, or is that more of a front-loaded new product that then the market returns back to sort of switching rates that were historically stable?
No, I think that, you know, we think the market's going to continue to grow. I mean, we right now, as you, you probably know, it's, there's one point nine million people in the U.S. that have type 1, about the 30%-45% penetrated. We think that can get up to 65%. In order to do that, you know, we've got to get to MDI starts in excess of 100,000 annually. And I think that this is an interesting year because last year there was a great deal of new product activity.
Yeah
... which we think creates turbulence, where people are waiting, they pause. This year, now there's four products in the market essentially that are all, they've been on the market now for a while, and I think we're going to see kind of more stable growth. I think that we believe that Mobi is gonna drive continued MDI growth for us.
That type 1 penetration growth, I mean, some- at least in my conversations, when people talk about type 1, they're like, "Oh, it's all endos taking care of these patients." It doesn't seem like that's true. There's a big chunk of PCPs still taking care of those patients. I guess where I'm going with this is: do you feel like Mobi and a platform with a good algorithm, with an attractive form factor, can help convert some of those type 1s that have been looked after by a PCP at maybe a slightly better rate than some of the more complex pumps of the past?
Yeah, absolutely. I mean, I think our premise is ease of use drives adoption. I think that we actually do work with PCPs today. Our sales organization targets people or physicians based on their insulin usage, and there are many PCPs who use quite a bit of insulin, therefore, they are prescribing pumps for people with Type 1. We think absolutely this device is going to appeal to that community.
When we think about integration, any update on timelines of Libre 3 and that side of things, and how the integration plans are looking?
Yeah. So, we've been working with Abbott now for a couple of years. We have FreeStyle Libre 2 Plus integrated onto the t:slim X2. We've indicated that next year we're going to have it integrated onto t:slim X2. Sorry, the FreeStyle Libre 3 will be on t:slim X2 and on Mobi. And we'll also have FreeStyle Libre 3 in the US markets on t:slim X2. Big year for us. We think it's, you know, it's going to be a very exciting period for us because there are so many people who use the FreeStyle Libre 3 today. In fact, there's roughly 300,000-400,000 people in the US who have Type 1, that don't use a pump, that use the FreeStyle Libre 3. It's just a big market opportunity for us to get in there and start to help people understand the benefits of the therapy.
Most of the audience, people listening, are probably specialists, but just in case to level set everybody, it might be worth going through the Tandem Choice Program, just to give an idea of what that is and the normalization of patient starts and how that's been affecting things a little bit over time.
Yeah.
That'd be helpful.
Sure, I'm happy to talk about that. The Tandem Choice Program is an offering that we have for people who are already in warranty with Tandem pumps, to give them the ability to switch to the Mobi platform before their warranty expires. Because ordinarily, an insurance company will not pay for a new pump within warranty. We offer that to all of our in-warranty customers who have at least a year left in their warranty cycle. The opportunity to begin switching just started in the end of the second quarter, and it will last through the end of the year. It does come with some very complex accounting treatment, and what we've done is we've been reporting non-GAAP financials, which exclude the impact of that program.
When you look at our non-GAAP financials, what you are seeing are true, true sales, if you want to call it that, at full price to Tandem, exclusive of any people that are switching. Once the program expires, then we'll go back to normal, just GAAP financials. Hopefully we'll get that out of the way here pretty quickly.
I wonder if we could switch a little bit to Type 2, because it's a very topical space, and there's a lot of focus on it in general. We can touch on the clinical side, but I was interested in, in some of the comments around penetration-
Yeah
that you, you made recently around a potential 25% penetration. How are you guys feeling about that? Maybe clarity for, for those in the audience of, of which patients you're assuming-
Right
sort of fall into that broadly. Is it just the intensives? Just, where you see Type 2 penetration ultimately?
Sure. I think if you look at the progression of, of Type 2, you ultimately get to the point where you need basal and bolus insulin, not unlike somebody who has Type 1. Your pancreas begins to lose its performance, and you develop insulin resistance, and you need a lot of insulin on a daily basis. These people are definitely candidates for pump therapy. If you look at the size of the market in the U.S. today, it's about 2.3 million people who have insulin-intensive Type 2. About 100,000 use a pump, so it's less than 5% penetrated. We have been doing quite a bit of market sort of research in the community, and we find that there's absolutely interest.
People who are near-term pumpers, people who have, you know, they have, they have... They're, they're employed, they've got good insurance, they've got a network of people who care about them, and they also care about their health. These are people who are absolute candidates to use a pump. As the pumps become smaller, more discreet, and the therapeutic values are significantly beneficial to the Type 2s, we think it's a market that's going to grow. We have done some research, as I mentioned, and we think that in the next three to five years, we could see that number grow from 5% to the mid-20s, and potentially even further in time. It's an exciting opportunity for us.
As you indicated, you know, I think the three major companies that are in the pump space today are all either have completed, or about to complete, or in the process of doing studies to enable the algorithm to get approved for the indication of Type 2.
Exactly. On that point, I think you really recently announced the last patients have made it through the trial. I mean, even qualitatively, any sense for how things have gone, how the patient experience was? Anything at all, just even vaguely and qualitatively.
For the study, that's just wrapping up. We're just weeks away from finishing it now. The data is still blinded, but we have had some feasibility studies. In the feasibility studies, we saw actually even better improvements in time in range for these groups. The people loved the pumps. They wanted to stay on them afterwards. I think that, you know, as I said, we do believe that there's an opportunity here for these types of technologies to really help the community. You know, I think that, you know, we're looking forward to getting the study completed. Our plans are to accumulate the data, process it, and get the filing into the FDA before the end of the year. We would expect to see a product probably on the market in the first half of 2025.
Type 2 is obviously there's, there's a bunch of key differences between that and Type 1 as a patient cohort. I mean, maybe to, to drill into a few of those. The total insulin requirement is dramatically higher. What are you-- what are your expectations amongst that intensive pool for those who will be applicable to use a smaller reservoir from one side of your product platform to those who will need a larger one?
Right.
You know, like that insulin requirement, obviously, the requirement comes down using a pump in the first place. But any, any view yet on, like, how much that limits who can use what platform?
I think that's back to this issue of having a portfolio of products. Because t:slim X2 has a 300 unit reservoir, Mobi has a 200 unit reservoir, and Sigi, which is our full patch device, uses a prefilled insulin cartridge. We've been sensitive to this, and I think as we've developed the products, we've also optimized the filling and changing process of the cartridge. The device actually comes with a—the cartridge comes with a fixture that you can connect up simply to a vial of insulin and then just draw the insulin in it. It doesn't take very much time at all. It's very simple. You know, that's obviously an optimization from t:slim X2, which is going to be necessary for people who actually do use more insulin.
When it comes to Sigi, changing out the prefill cartridge is very simple. It does not take much time at all, and that is just another, you know, another benefit of the technology. Yeah.
To what extent, not to stereotype, but behaviorally, Type 1 has often dealt with their condition for many, many, many years. It's not really progressive, per se. A Type 2, it's a very different setup from a patient standpoint. To what degree is the importance here of the algorithm and the ability to take some of the burden off the patient's hands to manage time in range, HbA1c, and things like that? How much do you think the ability to remove things like carb counting in general matters for that patient pool?
I honestly think that's something that matters to both Type 1s and Type 2s. I think certainly with the Type II community, we think simplicity is a very important feature that needs to be designed into the user interface as well as the algorithm. The degree to which you can eliminate, you know, a cognitive burden of diabetes for that group only will improve the uptake, is what we think. I think that when we look at the user interface as when... and also when we look at the algorithms, we are looking at ways to do that, to substantially reduce the needed interaction with the system, but at the same time, providing, you know, equivalent or better results that we're seeing today with the existing algorithms.
With, you know, finance people, we all love spreadsheets, and we love nice, thick lines between distinct groups so that you can model things. Is there an argument that within Type 2, a lot of the patients who are categorized as basal, it's just because the doc feels that MDI, are they really gonna be that compliant? Actually, their HbA1c is, I don't know, eight and a half. It's not at seven anyway. Actually, in some ways, these patients would still be very applicable for pump therapy, even though technically they're falling into that basal pool. Do you have any sense if, A, is that a valid line of reasoning, and B, do you feel like that's a meaningful proportion of that basal pool?
Yeah, I mean, let me think about that for a moment. I, am, you know, I, I think that, you know, as the disease progresses, you know, I think that certainly, the people who have insulin intensive Type 2 are, are, are need-- they need both basal and, and bolus insulin. I think that the, you know, certainly basal insulin, you know, at the progression is going to be towards the people who, who act at the insulin-intensive therapy. I know I'm not answering your question, but I actually maybe you can answer it or ask it again.
Yeah, basically, just how many of the basal patients kind of would have been MDIs? It's just the doc doesn't have confidence that they're necessarily even gonna be that compliant.
Yeah.
- and they're kind of on that line.
Yeah
where they could still use a pump.
Yeah.
Because there's a difference between a basal patient who's being kept at seven very nicely and one who's not on MDI, is just taking a weekly, but is actually at eight. You know what I mean?
Yeah. I think that the real benefit of three companies coming to market with clinical data is that that's really what the physicians need today. They need to be able to see the benefits of this therapy and get more confident that it's actually gonna help them. I think that there's a market development opportunity that we have, and we need to proceed forward with. I think that's how you need to educate the PCPs for the most part, on the benefits of the therapy, and that by using this technology, you can substantially improve their experiences. Which is why I think that once they're aware of that, they'd be more likely to put somebody on a pump when maybe today they just keep them on basal.
Maybe for those in the audience who are less familiar, if you could give them a background to the importance of Control-IQ, both strategically for you guys, but then also separately to that, you know, the FDA has seen Control-IQ many times now. They're very comfortable with it.
Yeah.
That's very clear. How does a Type II filing work in a scenario where the regulator is already very comfortable that the algorithm is working very well?
Yeah, it's been on the market now for four years. It's... we believe it's the best algorithm on the market. It's the only algorithm on the market that has automated correction boluses. What you get from that is you get, as soon as you begin to use it, you get immediate and sustained improvement in your diabetes management. As Patrick has indicated, it's been under review by the FDA successfully three times now. The algorithm that was reviewed this most recent time and approved is the exact same algorithm that we intend to use for the Type 2 community, and it's the one that has been used in the studies, of course.
Because of that, you know, I think that the FDA, when they—the only thing they really are going to need to see in this review is going to be the clinical data. That would... So we believe that after they see the clinical data, it's gonna be a rather rapid review process, and we would anticipate that, you know, as we indicated, we'd expect to have the product on the market in the first half of next year.
Is there a strategic benefit, whether it's marketing or genuine evidence generation, from your trial being randomized with a control arm relative to the single-arm trials that we've seen thus far?
I would say that the, first of all, our competitors have done safety studies, which is, it doesn't have a control arm. The study that we did has a, it's a randomized control trial with a control arm. Therefore, it's, it's, I mean, it's the gold standard of clinical studies, and so I think it's meaningful to the physicians who are actually going to be looking at this data that we have done it that way. I, I would, I would also say that, there's the possibility that it gives us the opportunity to actually gain, get claims, and maybe we don't get claims from the study, but we continue to pursue that.
With the control arm, it's clear the benefits of the technology, and claims are something that I think would only improve the chances of us getting more of the market share, I think, for the Type 2 community.
Maybe to sort of get people up to speed, could you give a sense from the reimbursement or the sales force standpoint, what's in place and what you're doing to prepare for that Type 2 launch?
Yeah. Right now, we're working on a commercial strategy. We're looking at, you know, size of the sales force, of course, looking at market access, clinical data, and clinical marketing. We're in the midst of planning all of that, being ready for the release, specifically, next year. I mean, Leigh, you may want to just mention some of the reimbursement things that are available today and how it actually works in the system.
Yeah, absolutely. Today, generally speaking, Type 2s are covered for pump therapy. In the commercial world, it's a little bit easier to get someone on the product, much more like a Type 1 patient. It's really on the government side, where there is a higher burden in order to, I would say, prove that a pump is medically necessary. It's been a challenge in the industry for years, and there is a coalition, the Diabetes Technology Access Coalition, that is, on behalf of the whole industry, going to CMS to lobby for making changes to some of those requirements. A national coverage determination request was submitted, I think, roughly a year ago now, and we know that it's on the docket for review. We just don't know right now where it is on the docket.
I would say, you know, I'm gonna take an optimistic view that some changes can be made that can be favorable and beneficial to get Type 2s on the product, considering the same coalition sponsored some changes that were made in the CGM industry. We're looking forward to seeing that, and that will be very helpful with the Type II indication to be able to market and then make it simpler for a physician to prescribe it for a patient.
What should, what should we take from the fact that in Type 2, there's been some obviously modest, but definitely some off-label prescription already, essentially? Like, how, how does that factor into your thought process around how the curve of adoption looks and what the underlying demand is?
I mean, I think it suggests that there are people out there that are interested in it. I'd say these may be equivalent to early adopters, but as we said, we've done quite a bit of market research, and we think that it is a, there's a great opportunity to grow this market. There are people out there that are very interested in it. They care about their health, and they want to improve it, and I think that this is the best way to go about doing it. It's a market development act. You know, we have to develop the market, and I think that now that we're all on the verge of getting the indication, I think this is gonna happen.
I've managed to go through the entire conference thus far without using the phrase GLP, but I feel like I might as well bring it up. You know, we have a strong view on it in Type 2, but again, for some people who might be more on the therapeutic side and look less at the pump side, latest thoughts on implications for that Type 2 pool and how that interplays for you guys.
Yeah, I mean, there's some concerns that GLP-1s are going to reduce the level of insulin needs that people have as they lose body mass, and as a result, we're gonna see a smaller TAM with the Type 2 community. I can tell you that when we've done several studies now, one of the—we published results from one we did last year. Not unlike the pivotal study, we've had about half of our participants using GLP-1s, and the requirement was you need to be on the current modern versions of GLP-1s for over six months, and you need to use, you know, basal bolus insulin from MDI. When we looked at the diabetes management of that population, it was poor.
They had A1Cs in the high single digits, low teens, which is very poor control that has, you know, real significant consequences later in life, as well as just how you feel in that day. When we put them on Control-IQ, we saw substantial reductions in A1Cs. We saw them drop down to close to seven. The feeling we have is that if you're an insulin-intensive Type 2, you're using a great deal of insulin, and the GLP-1s don't necessarily help improve the control. It really isn't until you use these algorithms that you see the control improve, and therefore, it's complementary. We think there's a very important reason to have GLP-1s on the market, but they work in complement with the algorithms, and I think that... You know, I think that's something consistent with our competitors, I think, feel the same way and have said that.
I'd love to pivot on the product side and talk a little bit about Sigi, actually. Latest thoughts, timelines, quite a differentiated product, you know, and to a point, you'll have, you know, all the way from t:slim up to Sigi. It's a sort of continuum of different form factors. How do you see Sigi fitting in? How do you expect the adoption curve eventually to look like and timelines?
Yeah, we think there's definitely a group of people in the MDI community today that otherwise would not use a pump unless it's a patch pump. We think there's a need for it, and therefore, we've been developing one internally. We met AMF Medical. It's a Swiss company. We looked at their technology. We studied it carefully. We actually did quite a bit of market analysis that basically comparing it to our internal program, as well as competitive products in the marketplace, and this thing scored very, very high. To the extent that we acquired the business, and we basically discontinued what we were doing internally. The way this device works, it's a patch. It's got a very low profile. It's got great ergonomics. It has a—it's a rechargeable patch as opposed to a disposable patch.
It has a two to four-year life, for instance. There is a rechargeable element, but there is a cap that you take off to insert the insulin cartridge, and then there is also an infusion plate that has the cannula on it. This device, we think that rechargeability is very important. We're not going to be throwing away, you know, PCBs, batteries, and just other devices on an every three-day basis. I think you're all quite aware of the sensitivity to environmental issues, and that scored very, very high, as well as the prefilled insulin cartridge. The two of those together, we really think differentiates the product.
When you look at them together, they are definitely different, and I think that it's a true competitor for the existing patch device on the market today, and we think it's going to do quite well. As I said, there are people who would not come to pump therapy without it, and we think it's an important element of our portfolio.
Would you say that you guys are long-term fairly agnostic between the three form factors, and you just want to kind of cover all bases?
Well, we think there's going to be a meaningful demand for all three. Now, there's gross margin benefits with Mobi, and there will also be with the Sigi pump. If the entire community wants to go to those, that's beneficial to us. We think that there's still gonna be meaningful demand for T Slim.
On the topic of gross margins, Mobi is one point. I mean, it might be worth explaining to people the COGS benefit. The other that, you know, that we had done a bit of work on was the seven-day infusion set. And love to hear from you guys about expectations for how that might affect gross margins and also the patient experience in relation to the seven-day set.
Yeah.
Sure. I'll start with the gross margin piece. Where we sit today in the low fifties with gross margin, we have aspirations of being at 65% gross margins. I would point to Mobi as being the single most important driver to getting us there. It can get us more than halfway to that point. It's a multiyear expansion opportunity. It starts with the pump, which today is a slight headwind as we're building at lower volumes, but as we exit this year, we expect it to start to become accretive to gross margin, not even at its maximum potential, but at least lower cost than T Slim. When it's at full scale, the manufacturing cost will be 10-15% lower than the X2, and the cartridge for the Mobi will be 20% lower cost than the X2.
Again, as more and more people in the installed base become Mobi users, we'll start to see the benefit from the cartridge in future years. We look forward to that becoming a bigger piece of the business and what the patients are selecting. You mentioned the extended wear infusion set technology, another opportunity. In fact, every new product that we launch in the future has a design principle where it should have at least as good as or better gross margins than the products that we offer today. The extended wear infusion set technology is a great example of that, Sigi on down the road. Those are probably the largest drivers to the gross margin opportunity. I'll add, though, that our pricing strategies are also expected to be beneficial.
We've had really good success in the DME channel alone, getting price increases. Some of those have recently been put into place and have multiyear increases already built into them for the future. We're also looking at the pharmacy as an opportunity for some price improvement, as well as improving access for customers down the road. I would say those are the top gross margin initiatives.
You brought up pharmacy, so...
Sure, happy to talk about it.
It's, I sometimes feel like channel mix dynamics get probably too much oxygen, but nonetheless. How are you feeling about that? What do you feel latest thoughts on the-- what the business model for the durable pumps, in particular, looks like in the pharmacy? Is it the same capital equipment sales system or one of your peers is going for more of a use, you know, over time, sort of, absorbed costs, metric and, system that way? How do you think this model eventually evolves, for the durable pumps pharmacy?
Sure. I'll start quickly with what the strategy is and how we're approaching it. We're starting with DME. X2 is in the DME channel today and expected to stay there. Mobi started in the DME channel, but what we're doing is we're exploring the pharmacy opportunity with Mobi as almost what I would call a test case or a pilot into the pharmacy channel, from which we're going to gain a lot of learnings with the goal to launch Sigi directly into the pharmacy channel. One of the biggest learnings is one you just highlighted, is what is that business model? What's different about pharmacy is it gives us the opportunity to explore alternative business models versus what we see in DME today. Stay tuned on what that looks like.
Ultimately, there's a chance you could see multiple variations of that business model as we're piloting the pharmacy channel. When I say that, that means it could be something that's, from the outsider looking in, structured much like DME, with heavier economics on the pump and then less or so on the supplies going forward, all the way to the other extreme, where it could be almost all on the supplies and every variation in the middle of shifting economics between the two. That's some of the learnings we're going to get as we're having these conversations with payers. I think most importantly, there's no set, no set model today, and a lot of people have equated pharmacy with subscription model, and that's not necessarily the case.
As we start to talk more about the contracts, when they're coming, we'll give more color on what that looks like for us. I just want to add that it's expected to be a very, a measured migration into pharmacy, and you shouldn't expect to wake up overnight and the next day Tandem has full coverage, and it's completely disrupting our existing business model. It's something that we're going to be selective about, and it will weave in over time. Again, ideally, we won't accept a contract that's not at least as good as or better than what we see in the DME channel today.
Do you think sometimes people just assume because of the success of one payer in that channel, that that channel is necessarily better, probably poor choice of words than DMEs. Actually, sometimes for some patients, a DME can be a better solution than pharmacy. Does, is that something that resonates?
You're absolutely correct. We have some really good contracts in the DME channel. We have some with no prior authorization, where a patient can get a pump in a matter of days, not even weeks, but days. We have some that have zero out-of-pocket costs for the patient. That's not a plan that we would try to switch to pharmacy because it already works very well. What pharmacy also offers to us, which I didn't articulate before, was the access for the patient. It's really the ability to influence the out-of-pocket cost. That's one of the biggest objections to people moving to pump therapy, especially if they favor the durable pump, is that they usually have an $800 to $1,000 out-of-pocket for their copay.
In the pharmacy channel, we have the ability, through managing the rebates, getting on a particular tier, and influencing what the out-of-pocket looks like, or even offering copay assistance to help bring that cost down. It is not a barrier to patients moving to pump therapy. Like I said, we do have many patients that do not have near that level of out-of-pocket, but what we want to do is be able to open access for everyone.
Cynical question, I apologize. Being half British, I'm going to channel that energy. What if in Mobi, you end up making a product that's too durable and that therefore the payers then just turn around and you don't have that replacement cycle because actually it can last for every eight years? Do you see what I mean?
Yep.
Have you considered that sort of thought process?
Yes, I... That feeds into thinking about alternate business models, where shifting more economics to the supplies can be the way to go to not be so reliant, I would say, on the need to sell a pump every X number of years. That, again, gives us opportunities to think about our current business today and how we can think about future opportunities to drive more revenue, better margins, and less reliance maybe on that, that individual sale.
I will say that t:slim X2 is also very reliable.
Yeah.
We face the same issue there today. The program that we've developed to address that is we provide free software updates to people who are in warranty, and these have been meaningful updates. The Control-IQ, it was introduced in 2020, and anybody who had an in-warranty pump at that point in time got Control-IQ for free. The same thing with the G7 implementation that just occurred and the Libre 2. All of these software updates are free of charge if you're in warranty, and therefore, we're looking to incent, you know, that conversion after four years to the new system.
You need to be incentivized as well to put new innovation in the hardware. Otherwise, if you don't get paid for it, like—
That's right. That's right.
Makes complete sense. Diabetes is a dynamic space. You know, there's a lot of questions that always come up. The standard end of conference question, but things that come up that you're surprised the degree that the market focuses on, or alternatively, you know, things that you spend a tremendous amount of time on internally that don't get a lot of external airtime, that there's a disconnect there. For either or both of you, how do you, how do you feel like there's the difference between where the focus is internally and externally?
Yeah, I mean, I think that, you know, when it comes to the share price, I mean, there has been volatility for Tandem over the last eighteen months. I would say that, you know, as an organization, we recognize it does not define us. We keep our heads down, and it is all about execution and achieving the milestones. As we do that, we expect to see more stability and, you know, I think growth in the market cap of the businesses at the same time. You know, I think that it is a very dynamic market for sure. When it comes to pro-- we also have focused a great deal on our digital infrastructure. We have invested in a product we call Tandem Source.
It's a data management platform that's really directed to help physicians manage their patient population, and give them data in formats they want, and we help... It, actually, the tool itself makes their office practices more efficient. It's a one-stop shop for patients as well. They can come in to Source, they can get training materials, they can update the software, they can purchase supplies. We want to make it very much like a consumer-oriented product. This is something that's, we're wrapping around our product and technology ecosystem. I think it doesn't get the visibility because it's not necessarily generating revenue at this point in time. It could ultimately in the future, but I think for now, it does create a great deal of stickiness, and that's really what we're interested in doing.
Almost perfect timing. John, Leigh, thank you so much for the time.
Thanks, Patrick.
Thank you.
Appreciate talking to you. Thanks.