Insulet President Provided Critical Misinformation, Misled Investors

I. Overview of PODD recent key competitive commentary

 

In all three (3) of our previous reports on Insulet Corporation’s (PODD) we addressed Medtronic Plc’s (MDT) recently approved next-gen insulin pump known as the 670G. We have conducted a substantial amount of research of this product offering and its expected near-term impact on competition in the insulin pump sector. We previously detailed how Dexcom, Inc. (DXCM), Tandem Diabetes Care Inc. (TNDM) and MDT all confirmed that the 670G’s impending launch in the spring of 2017 was negatively impacting their businesses right now. The general theme explained by these companies was that patients know the 670G and other innovative products are coming to market soon so they are waiting for those products rather than buying the currently offered insulin pumps. We explained that PODD is the only insulin pump manufacturer we know of who has recently claimed that the 670G is not impacting their business. We found this curious so we conducted some additional research to determine if this claim by PODD was plausible.

 

II. PODD confirms MDI patients make up 70% of the type 1 diabetes market – this is the opportunity every player in the sector should be focused on

 

During a recent conference call with investors, President & COO Shacey Petrovic made the following statement.

 

“We target that the more than 70% of the market that has not adopted pump therapy.”

 

We understand this statement to mean that PODD agrees that approximately 70% of diabetes patients who use multiple daily injections (“MDI”) to manage their diabetes. On November 15, 2016, a William Blair analyst also confirmed in an analyst note that the MDI portion of the sector is 70%. That is an overwhelming segment within the market. No competitor should be ignoring it.

 

III. Petrovic claims 670G is not focused on MDI patients which represent 70% of the market

 

During another recent conference call with investors, Ms. Petrovic made the following statement.

 

 

 

IV. We spoke with Medtronic to confirm Ms. Petrovic’s statement was at a minimum “misinformation”

 

There are several topics Ms. Petrovic has discussed in recent PODD earnings calls that can be described as questionable or misleading – we will leave the rest of her comments out of this discussion for now. We have chosen to focus this report on just one basic concept that Ms. Petrovic claimed in the paragraph above in a clear “matter of fact statement.” So, is MDT’s 670G focused on the MDI market?

 

The following quotes are taken from direct discussions we had on December 2, 2016 with a member of the Medtronic’s diabetes therapy consultant team.

 

 

 

On December 1, 2016 we also spoke with a member of Medtronic’s investor relations team, Tracy McCartney. We asked the following question. She provided the answer.

 

 

 

V. DXCM and TNDM shares collapsed upon confirmation of the 670G competitive threat, PODD is due for an adjustment now as well

 

On November 2, 2016, DXCM and TNDM both admitted the pending 670G launch was impacting their businesses. Their share prices collapsed 20% and 59% respectively. PODD was unwilling to admit that the 670G is a legitimate competitive threat. We believe the “misinformation” distributed by Ms. Petrovic was the main reason PODD’s shares have not collapsed in the same manner as DXCM and TNDM shares. With this example in this report, we believe we have shown Ms. Petrovic’s commentary should be viewed with skepticism. Given what we know of Mr. Sullivan, the CEO, and Ms. Petrovic now as well, investors really do need to question every member of this management team. In the meantime, investors should ask why would Ms. Petrovic decide to say what she said if she wasn't in a desperate position. We think business at PODD is much worse then the management team is letting on - and/or they can see the next-gen products coming and realize they have little chance to compete with new technology when their own product which is supposed to be innovative is actually becoming outdated and old news.

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