Dexcom rumored to be in talks to buy Insulet

Insulet’s CEO, Shacey Petrovic, announced her retirement on the most recent quarterly earnings call. Could have a significant impact on the diabetes technology market.

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Interesting - here is an article about it. Wonder how that would impact upcoming tech!

https://www.bloomberg.com/news/articles/2022-05-23/dexcom-is-said-in-talks-to-acquire-device-firm-insulet

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Bank of America announced this morning that they very much doubt Dexcom will buy Insulet:
Commenting on the reports that the medical device company DexCom (NASDAQ:DXCM) is in talks to acquire the insulin pump maker Insulet (NASDAQ:PODD), a group of analysts at Bank of America argues that a deal between the two diabetes players is unlikely.

The Bloomberg report about discussions between the firms sent Insulet (PODD) shares sharply higher, while DexCom (DXCM) fell in the post-market Monday. However, none of the companies commented on the news.

Maintaining the Overweight rating and $600 per share target on DexCom (DXCM), BofA analysts led by Travis Steed question why the company would risk executing such a massive and costly deal that would potentially dilute its equity.

The analysts note that only about 8 million patients make up the insulin delivery market in the U.S., compared to DexCom’s (DXCM) potential market opportunity of more than 100 million patients.

Therefore, they argue that the transaction could signal a distraction from DexCom’s (DXCM) long-term market opportunities outside insulin patients, which according to them, “are becoming more important over the next 5 years.” A deal would indicate that the company was less bullish on the long-term prospects, the team added.

Wells Fargo analysts led by Larry Biegelsen agree, pointing out that the vertical integration in the diabetes device space has not worked well for the rival device maker, Medtronic (MDT).

“While we don’t see this as a near-term risk for a combined DXCM/PODD, it could be in the future if their technology falls behind in one key area,” the team added, noting that in the past, DexCom (DXCM) has been ambivalent about which pump manufacturers to partner with.

As for the positives of a likely deal, Wells Fargo highlights the synergistic benefits, potential to raise bargaining power with payors, opportunities to increase international sales growth, and chances for diversification.

Meanwhile, Canaccord Genuity argues that the deal comes ahead of the new product cycles for both companies: Omnipod 5 for Insulet (PODD) and G7 for DexCom (DXCM).

Noting that the deal would impact DexCom’s partnership with Tandem Diabetes (TNDM), the analysts highlight the potential of the deal to drive synergies between the companies ahead of the launch of Insulet’s (PODD) O5 Automated Insulin Delivery System.

“In sum, at first glance, we think the reasoning for a deal here passes the sniff-test,” they added, reiterating the Buy ratings on Insulet (PODD) and DexCom (DXCM), given the current market backdrop and opportunity for new product launches.

DexCom (DXCM) is trading ~8% lower in the pre-market, while Insulet (PODD) has added ~11%. The rival pump maker Tandem Diabetes Care (TNDM) is trading flat.

Source: Seekingalpha.com 5/24/2022 SA Breaking News

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Focusing on being the best at CGM and partnering with multiple pump makers for automated delivery seems like the best course for Dexcom both as a business and in terms of serving the needs of diabetics so I’m certainly hoping it won’t happen. But, I lack an MBA so I don’t have the kind of expertise that led J&J to buy Animas only to close it a few years later.

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Somebody got a nice fat bonus when that deal closed . . We don’t need an MBA to appreciate that!

Except we already know that Dexcom is indeed interested in getting into the pump market. They made that quite clear when they acquired TypeZero in 2018. It makes zero sense for them to have an insulin delivery algorithm without an insulin delivery device.

I know potential news means nothing until something actually happens, but it is interesting. There’s so many patents in the pump industry that it’s nearly impossible to get anywhere without a sharing agreement or acquiring someone else’s patents and intellectual property.

And this is what happens when the money people don’t talk to the medical people. The device manufacturers have their eye on the ~30 million person prize that’s growing every year, not a measly 8M. And that’s not even counting the international populations beyond the US. They’re coming for the Type 2 market hard, and Tandem is leading the way in pursuing Type 2 indication for Control-IQ (based off of the same TypeZero algorithm Dexcom now owns) and targeting their next Mobi pump towards Type 2s. You better believe the others are targeting the same audience.

Insulin is currently seen as a last resort for Type 2s, because it’s painful, scary, and there’s a lot of stigma associated with it. But the reality is that the vast majority of Type 2s aren’t able to meet the current ADA goals. Each and every single one of them is a potential insulin user/pumper when the new technologies make it more approachable, accessible, safe, and discreet.

I do wonder if Insulet is the right company at this time, though. Since talk is already starting about Medtronic divesting it’s diabetes division, which is currently bleeding money… seems like that would be a better target than a currently successful company. And then it’s open season for them on everyone currently using Medtronic sensors, too. Medtronic fell out of favor because Tandem brought a better AID algorithm to market. But Dexcom could put the TypeZero algorithm on the familiar hardware so many people love, and come out back on top. I’m not sure how the patent sharing agreement Medtronic has with Tandem impacts deals like this, though.

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The countervailing argument is that Dexcom has over 2B in cash. It has to find somewhere to go. Why not Insulet? Cash on hand is not a productive asset if it is not invested.

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Oh no, I hope they don’t f up the pump market, an try to force you onto their pump to use dexcom. I don’t use any of the dex/ pump controls for insulin on my tslim and most likely never will.

Dexcom has been one big disappointment. Sold out for money, never made a better, lower cost device etc.

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I’m guessing that if this deal goes through, Dexcom will no longer integrate with Tandem Tslim in the future. Omnipod/dexcom will be the only other integrated option besides Medtronic. What a horrible loss for us if that ends up being true. Everything is driven by money and business convenience, not optimal care and options for diabetics.

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Man I wish there was a laugh react for comments because that really got a chuckle out of me.

Yes it does seem that they have only made slight improvements over the years, some of those improvements being for themselves to get more money, like making it harder and harder to restart a sensor which made things difficult for many without good insurance.

I think it is worth noting that the G7 has been developed in partnership with Verily who is owned by Alphabet, i.e. big monies. I’d be curious how that might affect things.

I’m not sure how to feel about the new push towards Type 2. I worry that we will be thought of less and less with products as we Type 1s are a much much smaller market. It may also increase the blending of type 1 and 2 in the general public’s eye who already think all diabetes is the same.

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Whatever they do you can be sure it will be to enhance their bottom line, not to help us. But marketing to type 2 may make it cheaper, I doubt it though.

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Please remove that partial quote of mine from your post. I really don’t appreciate being misrepresented. If someone didn’t read my entire post and just saw that, they might actually think I was criticizing Dexcom’s choice to acquire TypeZero… And I most certainly am not. I think TypeZero was/is groundbreaking and life-changing technology, and deserves support and continued investment. No matter who that comes from!

I might worry about where the future will take us and how it affects our choices, but I did NOT say what your post implies.

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I highly doubt either one of those sentiments will occur. They’re concerns that have passed through most of our minds, I’m sure… But it just doesn’t make financial sense for Dexcom to impose such limitations, not when there are other CGMs out there and new ones being developed.

Plus, the new ACE designation makes the sensors interchangable. Dexcom is the only current one with that designation, but Libre 3 will have it and you can bet the new ones in development will have it. With increasing competition in the sensor market, they need their product to be as accessible as possible.

This is precisely true. They’re looking to expand their user base, not curtail it. It’s actually a good thing, I think. We wouldn’t have any diabetes tech at all if companies weren’t profitable. It takes money and investors for research, development, and government oversight. And it takes competition for those assets to drive innovation. While I’m sometimes disappointed in the choices these companies make (I’m looking at you Tandem and your voluntary choice to sit on the Mobi because you think you haven’t milked the X2 to it’s full potential yet) , I still believe that they want to bring us excellent products that improve our lives. We wouldn’t buy it otherwise!

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Here’s a speculative article about the merger rumor…seems to cover all the bases! The prevailing wisdom seems to be that if this merge really happens Dexcom still needs to maintain and expand its share of tubed pump users and MDI users.

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Robyn makes an excellent point about Dexcom’s buying TypeZero. Apparently, vertical integration is in Dexcom’s plans.
As a consumer, I would love to be able to buy my pump, CGM and algorithm all separately. I even remember there was talk about a South Korean pump that could be controlled by a phone and you could install whatever software you wanted to control it and use whatever CGM you wanted to work with the software.
Ultimately, though, in terms of getting FDA approval and making a safe device that route may be neither realistic nor wise.
I wish Dexcom the best. I think they make a life-changing product.

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I am not sure what the ace design is, but I will have to read about it. Libre was useless for me, no alerts, not a real cgm and even more inaccurate with no way to calibrate.

I disagree, dexcom became a billion dollar company and they still have yet to design a better device that is truly low cost and accessible to everyone, even without insurance.

That was a choice they made and their motivation was not to help pwd as they said they planned to do in the start, but to make big bucks. They also put a lot of energy into stopping people from restarting sensors and never dropped the sensor price. And fired perhaps all of their cs workers in the US so they could hire cheap labor elsewhere.

I have never agreed with the common excuse given that such companies need all these profits to do research etc. it is simply not true that all of their profits go into that. Most developments are made by actual researchers in small groups- if they come up with something then one of the huge conglomerates takes over. 10 years and we have not seen a better device accessible to all which is significantly cheaper.

For me it is far from perfect but it is still the only device that can help me have a halfway livable life so I am still at their mercy 10 years later. I have no choice other than to somehow buy it because there is no alternative, but who knows how long I will be able to continue to.

I find the greed and the negligence in the whole medical community to be horrific. Profit off of people who have no choice and who need various treatments/ devices etc. to stay alive and live etc.- dexcom is still not affordable to everyone and still exorbitantly over priced for those who somehow manage to afford it without ins or with it.

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The logic behind these financial folks opinions makes sense except for one thing. Non-invasive glucose monitors are about to come to market.

G-wave is already in clinical testing in Europe and been designated by the FDA as a breakthrough technology. Five companies that I know of are close to clinical trials. One in Seattle is testing in the US and is confident that they will be ready to approach the FDA this year. These companies may not bring products to market for several years but they are coming.

Non-invasive glucose monitors would destroy Dexcoms business. They have a reason to diversify and hedge their bets to stay in the highly lucrative diabetes consumable equipment market.

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Dexcom announced today:

  • DexCom (NASDAQ:DXCM) shares surged ~9% in the pre-market Tuesday after the medical equipment maker said it was currently not in active discussions for a merger transaction.
  • Issuing a statement in response to recent media reports and speculation as well as the upcoming American Diabetes Association conference, DexCom said: “We wish to confirm that Dexcom is not in active discussions regarding a merger transaction at this time.”
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I hope so.
I heard about “the dream beam” the year I was diagnosed—1992. It was coming in “about five years”

The sick joke of diabetes tech is that everything is always just 10 years away.
That’s propaganda from people working for medical supply and device makers and the organizations that they sponsor like the ADA, to keep their cash cow customers with diabetes quiet as they continue rake in profits from tech that they developed decades ago. A patent runs out? Make the license fees exorbitant, tweak a formula, mix two old things together and get the mix grandfathered easier, faster, and cheaper than the original products. The FDA’s standard isn’t better, but as safe and effective as the originally approved tech.

Unlike what we heard years ago, these are working tech, mostly from new companies and venture capital that doesn’t have a huge past investment in now old tech or huge cash flow deriving from it.

Dexcom and Tandem were like these new companies when they started in 1999 and 2006. They got their products to market with FDA approval in under 10 years.

Some NI-CGM’s are being tested in the field right now, others are approved for use. The first gen field units were the size of cigarette packs, the next will be armbands or watches. The roadblock won’t be tech, but the FDA and pushback from established companies.

Check out Afon, GlucoActive, GlucoModicom, Cnoga Medical, Hagar/GWave, Know Labs (soliciting teters near Seattle WA), GlucoTrack (waiting for CE approval), GlucoSense (Approved and use in Europe),