Future Pods--Does this guy have it wrong?

The quote that got me thinking... does he have it wrong, or do I?

"On the CGM front, its partnership with DexCom is moving forward. Insulet remains very focused on integrating DexCom's G4 sensor into its OmniPod (think of an OmniPod with a cannula at each end). We believe a product in this configuration would offer Insulet a differentiated product relative to the competition."

Is Insulet planning a pod with a CGM sensor? I think the CGM sensors last 7-10 days vs the 2-3 for the pump... Am I missing something?

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Special Report from the ADA: William Plovanic Identifies Companies with Promising Diabetes Solutions, Prospects

http://www.investorideas.com/news/2012/main/06211.asp

News about The Life Sciences Report

June 21, 2012 (InvestorIdeas.com Newswire) Every year, top researchers and physicians meet at the American Diabetes Association Scientific Sessions. This year, Canaccord Genuity Analyst and Managing Director William Plovanic reported back on promising developments and what they could mean for the companies behind them. In this interview with The Life Sciences Report, he explains why he is so positive on the space in general and about certain companies in particular.

The Life Sciences Report: You recently attended the72nd Annual Scientific Sessions put on by the American Diabetes Association (ADA) in Philadelphia. What were the major takeaways?

William Plovanic: We attended scientific sessions and spoke with a number of management teams. Overall, we came away with clarity on new product introductions across the three major growth categories: continuous glucose monitoring (CGM), hospital continuous glucose monitoring and insulin pumps. We were also encouraged by management feedback as it related to U.S. Food and Drug Administration (FDA) interaction and projected regulatory timelines for next-generation products.

TLSR: What did you learn about continuous glucose monitoring?

WP: The conference had a significant CGM focus, which is encouraging as we believe the FDA logjam appears ready to break open. The data continues to shine positively on CGM, reinforcing our belief that the current and next-gen technologies will become standard of care. It is still our belief that CGM will be the gold standard for type 1 diabetes.

TLSR: What was new in the hospital CGM space?

WP: In-hospital CGM remains a large market opportunity-we estimate +$1 billion in the U.S. alone. However, getting these products through the FDA continues to be challenging. The FDA needs to set its standards and expectations before U.S. pivotal trials can move forward for devices in this space. Furthermore, given the complexities of measuring glucose in intensive care units (ICUs), we remain cautious as there is little to no prospective data in the intended-use population base.

In a nutshell, most of these products are still "research projects." As a result, companies are targeting the European Union as the first market for commercialization. From our conversations, it appears the players have shifted positions, with OptiScan (private) beginning measured European commercialization, GluMetrics Inc. (private) deep in a large intended-use clinical trial, and DexCom Inc. (DXCM:NASDAQ) ($11.56/Buy) working out the next step with Edwards Lifesciences Corp. (EW:NYSE).

DexCom seems to be making progress on approval of its G4 CGM system. Management indicated at the conference that it could be given the nod before year-end 2012, which is ahead of our first half of 2013 estimate. The company could start a pediatric study in the next quarter to facilitate label expansion. Early snippets of G4 data looked positive, with single-digit mean absolute relative differences (MARDs) realized in day two of sensor usage, which is a major improvement from the mid-teens for Dexcom's Seven Plus unit.

Another company, Echo Therapeutics Inc. (ECTE:NASDAQ) ($1.69/Not Rated) is developing the Prelude SkinPrep and Symphony tCGM systems, which together form a transdermal CGM system. The systems are noninvasive and continuously collect data and wirelessly transmit it every minute to a remote monitor. Management plans to target the in-hospital market first. We believe the system is ideally geared more for the ward rather than the ICU or step-down unit. Like most products in the space, we are aware of very little to no prospective data on intended-use patients.

TLSR: What developments did you see in the insulin pump space?

WP: 2012/2013 is set to be a year of new market entrants, with multiple competitors moving toward commercialization and entering the U.S. market. We are excited to see different competitors target specific market segments within the pump market.

We continue to be bullish on Insulet Corp. (PODD:NASDAQ) ($19.80/Buy), as we would not expect the new competitors to impact Insulet's market share or win rate of new pumps. Insulet management provided an update on the current regulatory status of its next-gen insulin pump (Eros), noting it had received only a handful of questions from the FDA. Commentary led us to believe the questions were "drill-downs" into previous questions rather than anything unexpected. Management noted an expectation that answers would be submitted within the next week or two, positioning the company on track for approval in the next quarter or two.

The current agreement with Abbott Laboratories (ABT:NYSE), pairing its glucose test strip with Insulet's pump, expires in March 2013 and Insulet has already entered into a nonexclusive agreement with Animas Corp. (aJohnson & Johnson [JNJ:NYSE] company). We will be watching the outcome of these agreements in 2012, as Insulet will pick the company that will benefit from its huge installed base of high-volume strip customers. On the CGM front, its partnership with DexCom is moving forward. Insulet remains very focused on integrating DexCom's G4 sensor into its OmniPod (think of an OmniPod with a cannula at each end). We believe a product in this configuration would offer Insulet a differentiated product relative to the competition.

Valeritas Inc. (private) was profiling its V-Go, a simple one-day pump for type 2 insulin-dependent patients. It is an evolutionary pairing of the patch pump and insulin pen. The V-Go is a completely mechanical basal-bolus insulin delivery device designed as a disposable, one-day-wear device. V-Go delivers a preset basal rate (0.83, 1.25 or 1.67 units per hour) and on-demand bolus (two units) dosing. Valeritas is positioning the product with a different approach to reimbursement, taking the pharmacy benefit route that current insulin pens use. The company is well funded, with $150 million raised in September 2011.

The company had a large presence at the conference, with a busy booth and a very well-attended product theater showcase. We'll keep our eyes on this one, as its slick design and touch-screen interface are sure to catch the eye of users. That said, it is a tethered pump, and as such should not impact Insulet. Instead, it could target the market leaders Medtronic Inc. (MDT:NYSE) ($37.03/Not Rated) and Animas.

Asante Solutions Inc. (private) did not have a booth at the conference, but we met with management and got our hands on the Pearl, the company's new modular insulin pump that uses prefilled insulin cartridges. The product is expected to begin controlled commercialization by year-end 2012. Asante will also go the pharmacy benefit route and utilize the tethered pump in a pay-as-you-go model.

TLSR: Who else did you visit at the conference?

WP: Medtronic submitted a premarket approval (PMA) application to the FDA for its 530G combo CGM/pump (called the Veo internationally). The system features low-glucose suspend technology as well as the new six-day Enlite sensor, which was highlighted as having an overall MARD of 13.6% across six days of readings in type1/type2 patients. Given FDA timelines and the multiple rounds of questions seen with DexCom's and Insulet's latest filings, we believe the application is likely to take at least a year. If approved by the FDA, the MiniMed 530G system will be the only integrated insulin pump and continuous glucose monitor in the United States that automatically suspends insulin delivery if the sensor glucose value is equal to or below the low threshold value. Medtronic's PMA submission includes data from the in-clinic ASPIRE (Automation to Simulate Pancreatic Insulin Response) study, which met its efficacy endpoints. The study showed a reduction in time spent below the low-glucose threshold in people with diabetes using the Threshold Suspend Automation feature, as compared to conventional pump therapy. The in-home ASPIRE study is still ongoing.

The company is also working toward a six-day approval for its new Enlite Sensor, which is currently in the regulatory process at the FDA. Reported results showed an overall 13.6% MARD over six days of readings in type1/type2 patients.

TLSR: You said that you left feeling positive about the diabetes space. Why?

WP: We came away from the conference with the impression that there is a stronger interest in the space. We were bolstered by the innovative technologies showcased and encouraged by feedback about regulatory timelines from management. The fact that it is an election year might have something to do with a more rational (if not more reasonable) FDA.

William Plovanic joined Canaccord in 2007 as managing director, medical technology equity research analyst. He has been a publishing sell-side analyst with coverage of medical devices for more than 15 years. Plovanic's areas of coverage include orthopedics, diabetes, obesity, neuro-technologies, dialysis, aesthetics and general surgery. In 2009, Plovanic was ranked as the #2 earnings estimator for healthcare equipment and supplies by StarMine. In 2003 and 2004, Plovanic was selected as a Wall Street Journal "All Star" analyst in the medical device sector and in 2002 was named the #1 analyst by StarMine for stock-picking and performance in the medical technology sector. Plovanic is a frequent presenter at medical and industry meetings. Prior to joining Canaccord, Plovanic was a managing director and senior research analyst at First Albany (now Gleacher & Company). Previously, he worked at PMG Capital covering medical devices and products. He also worked as director of research for the capital markets division of LaSalle St. Securities LLC, where he focused on the small-cap healthcare, technology and biotechnology industries. He graduated from Bradley University with a bachelor's degree in finance and is a chartered financial analyst.

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DISCLOSURE:

1) The following companies mentioned in the interview are sponsors of The Life Sciences Report: Medtronic Inc. and Johnson & Johnson. Johnson & Johnson and Medtronic Inc. are not affiliated with Streetwise Reports. Interviews are edited for clarity.
2) William Plovanic: I personally and/or my family own shares of the following companies mentioned in this interview: None. I personally and/or my family am paid by the following companies mentioned in this interview: DexCom Inc., Insulet Corp. and TranS1 are investment banking clients of Canaccord Genuity Inc. Additional information, including disclosures regarding all securities under research coverage, is available athttp://www.canaccordgenuity.com/en/ODD/pages/disclosures.aspx. I was not paid by Streetwise Reports for participating in this story.

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Even at 2 to 3 days for the BG too, a single device would be better than 2.

I have yet to see, in my experience, a combination of two technologies that function as well as two seperate devices. Integrating a CGM function into the PDM platform would be great. But tossing a CGM sensor away every two to three days would be an incredible waste since they are designed to last at least three days.

I would prefer a "bridge" omnipod which "records" a "traditional" (far positioned) sensor data and transmit to PDM as soon as it can. So you don't loose any data, even with PDM away from you.
The omnipod with sensor + canula auto insertion has many problems, first of all insulin would be too near to the sensor to have accurate CGM data.
Then canula after 3 days as to be removed: you have to let to take away the cannula or to detach the sensor, it's complex and not cheap to do.

So the only way to have an omnipod like today (monolith, not modular as Roche Solo) with auto-inserted CGM sensor is to have a cheap sensor, with fast start, to throw away after 3 days or a canula which lasts 7 days.
Both things are far to be accomplished.

There's no limitation on the distance between sites used for delivering insulin (or even glucagon) and sensing glucose. You can actually do all 3 at the same identical site. Dr. W. Kenneth Ward and Dr. Jessica Castle, of Oregon Health & Science University have done research on that.

This is an interesting subject, since Pancreum's solution will be able to do all 3 functions, while about 2 inches apart from each other. The difference is that Pancreum's solution is modular, so the user will be able to change the insulin delivery wedge after 3 days while leaving the rest of the system undisturbed.

I can respect a little "old school" thinking. And for the most part prefer any device to be sole purposed if the purposed served benefits from that solution. But in terms of simplicity, sometimes multifunction single devices do have some benefits. Heck, the Omnipod in itself is a mix of good and bad to make a device that fits some people better than others.