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Tandem Diabetes Shares Riding High

MEDTECH: Tandem Mobi to Take Spotlight at June Conference

SAN DIEGO – Tandem Diabetes Care Inc. (Nasdaq: TNDM) is enjoying a healthy amount of investor interest this spring with its stock price hitting a 52-week high of $53.69 on May 31.

Though not profitable at the moment, the maker of insulin pumps showed improvement in its most recent quarterly results, sees room to grow its target markets, is moving into international markets and is working to integrate two companies that it acquired in 2022.

John Sheridan
CEO
Tandem Diabetes

“We’re a growth company,” CEO John Sheridan said in a recent interview. “We are always looking for investments to increase the competitive nature of our product portfolio, or just to grow the business faster.”

Acquiring two businesses “put pressure on operational expenses, and it did get us to the point where we were not profitable,” he said, adding that he expects profitability later in the year.

Tandem Diabetes markets its products under the names t:slim X2 and Tandem Mobi.

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One internet source, MarketBeat, recently reported that institutional investors and hedge funds increased their stakes in Tandem Diabetes during the third, fourth and first quarters. Eminence Capital, for example, reportedly bought 2.3 million shares in the last quarter.

New products are on the horizon. “We have the most exciting pipeline in diabetes,” Sheridan said.

One item in the pipeline is the Sigi patch pump being developed by AMF Medical SA of Saint-Sulpice, Switzerland. Tandem agreed to pay $215.3 million for AMF Medical in a deal announced in December 2022. The Sigi patch pump could be on the market as soon as 2026, according to research note from Mike Kratky, an analyst with Leerink Partners.

Tandem’s other recent acquisition – announced in July 2022 – was Capillary Biomedical, an infusion set developer based in Irvine.

A Segmented Market

Tandem is developing a portfolio of products to serve its market.

“It turns out that diabetes is not a one size fits all condition. It is a very segmented market,” Sheridan said. “People who have diabetes, they want to interact with a pump differently, they want to control it differently, they want to wear it differently.”

The CEO sees growth potential in serving people who give themselves insulin injections, people with Type 1 or Type 2 diabetes, as well as in domestic and overseas markets.

Adoption in the Type 2 diabetes market “remains a largely untapped opportunity,” with approximately 5% penetration in the U.S. today and less outside the United States, Kratky wrote in a May 29 note.

A Public Debut; a Product for the Pocket

Next weekend’s American Diabetes Association conference in Orlando, Florida will serve as a coming-out event for Tandem’s Mobi System, billed as the world’s smallest, durable automated insulin delivery system. “This is really the first time we get to show the world what Tandem Mobi is like,” Sheridan said.

The conference, set for June 21-24, comes four months after Tandem Mobi’s commercial U.S. launch.

Tandem Mobi is small enough to fit into the coin pocket of a pair of blue jeans. A user can clip it discreetly to clothing.

Product users “forget they have it on,” Sheridan said. “That’s a real win for us.”

The device is cleared for use by people with Type 1 diabetes age 6 and up. Its Control-IQ technology can help keep glucose levels in range by using continuous glucose monitoring values to predict glucose levels 30 minutes ahead and automatically adjusting insulin delivery every five minutes. Tandem has the best algorithm in the business, the CEO said.

At the end of May, Tandem Diabetes announced that Tandem Mobi was fully compatible with Dexcom G7 and G6 continuous glucose monitoring systems. Dexcom (Nasdaq: DXCM) is also a San Diego company. The t:slim X2 also works with the FreeStyle Libre 2 Plus continuous glucose monitor from Abbott (NYSE: ABT). The company gives users choice, Sheridan said.

A tubeless version of Tandem Mobi could be on the market by 2025, Kratky wrote.

25,000 Pumps Shipped; Guidance Grows

Shares of Tandem Diabetes closed Wednesday (June 12) at $47.35 – up 67% from the beginning of the year. The shares’ 52-week range has been $53.69 to $13.82, with the low water mark hit in November.

In the first quarter ending March 31, Tandem reported a net loss of $42.7 million on sales of $191.7 million. In the same quarter of 2023, it reported a net loss of $123.9 million on sales of $169.4 million. The company reported that it shipped 25,000 pumps in Q1, up from 23,000 in the year-ago quarter.

After items, Tandem reported a net loss of 63 cents per share. That beat the consensus estimate of the analysts surveyed by Yahoo Finance, which was a 76 cent per share net loss.

For the entirety of 2023, the business reported a net loss of $222.6 million on total sales of $747.7 million.

When reporting first quarter earnings on May 2, the company forecasted non-GAAP sales of approximately $868 million for the entirety of 2024 (up from its previous guidance of $850 million) and $205 million in the second quarter.

Tandem Diabetes has work ahead. It faces intensifying competitive pressures, Kratky said, and execution will be essential.

“Some investors may continue to view TNDM as a ‘show me’ story until management delivers a series of above-consensus earnings,” the analyst said in an April note, when he upgraded Tandem from Market Perform to Outperform.

Sheridan sees good things ahead.

“We’ve been innovating faster than our competitors,” he said. “That creates a moat for us.”

Tandem Diabetes Care Inc.
FOUNDED: 2007
CEO: John Sheridan
HEADQUARTERS: San Diego (Del Mar Heights)
BUSINESS: Global insulin delivery and diabetes technology company
STOCK: TNDM (Nasdaq)
REVENUE: $747.7 million (2023)
EMPLOYEES: 2,400, primarily in the U.S., Canada and Europe
WEBSITE: tandemdiabetes.com
CONTACT: 858-366-6900
SOCIAL IMPACT: Tandem Diabetes estimates that with its rechargeable battery technology, 27 million disposable batteries have been kept out of landfills
NOTABLE: Tandem’s new building is designed around the circadian rhythm of human beings – the physical, mental and behavioral changes that follow a 24-hour cycle that responds to light and dark

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