Dive Brief:

• New patient starts are at "all time record highs," Insulet said Monday coming off the full launch of its Omnipod Dash wearable insulin pump and second quarter revenue growth of 43%. The "vast majority" of those pumps were shipped through the pharmacy channel, where Insulet has now secured coverage for about half of all U.S. covered lives, CEO Shacey Petrovic told investors on an earnings call.
• Also enjoying a surge in adoption is Tandem, whose worldwide pump shipments were up 290% to 21,258 devices during the second quarter.
• Among the catalysts moving multiple daily injection users to insulin pump therapy is wider uptake of continuous glucose monitors, which familiarize users with wearable technology and give constant data that can be used to manage glucose levels more precisely, Petrovic said. 

Dive Insight:

As competition between Insulet, Tandem and market mainstay Medtronic grows, so too does the overall population of Type 1 and insulin-dependent Type 2 people interested in switching to pump therapy.

That recent trend has led to quarter after quarter of double-digit growth among pump pure-players. Insulet currently pegs its total addressable market at 10 million people and predicts a roughly 10% compound annual growth rate for U.S. sales of Omnipod, with Insulet's international markets just slightly behind.

After an all-around consensus-topping quarter, Insulet raised full-year revenue guidance to the range of $700 million to $715 million, while Tandem projects yearly revenue growth of up to 99%, or $350 million to $365 million.

Petrovic pegged the U.S. market for Omnipod as having a roughly 10% compound annual growth rate, with Insulet's international markets falling somewhere in the 5% to 10% range.

More sales made via pharmacies are also making it easier to reach people with Type 2 diabetes. Petrovic said the company has "started to see a tick up" in Type 2 users but "it's too early really to call it a trend." She also credited the growing adoption to their pay-as-you-go model, which she said makes it the only insulin pump available without an upfront charge or four-year lock-in period.

The company also reported coverage has reached more than 50% among Medicare lives and 60% of Medicaid lives, up from about a third and a half, respectively, at the end of the first quarter.

During its third consecutive quarter of accelerating U.S. growth, Insulet began production on a manufacturing line in Acton, Massachusetts, dragging down the company's gross margin. The company expects to continue the ramp up in supply chain investment, with plans to open a second U.S. line later this year.

U.S. manufacturing won't be sufficient to meet domestic demand for at least another year, CFO Wayde McMillan said. "Like everybody, we're waiting to get the details on the latest round of tariffs and what exactly those mean," McMillan told analysts, but he said tariff impact to date has been immaterial.

Even with the full commercial launch of Dash only happening this last quarter, Omnipod Horizon, which the company said last year had been awarded breakthrough device status by FDA, will be a key focus in the next year. The product is on track to begin a pivotal trial in the fourth quarter of 2019 and is slated for market launch in the second half of 2020.

When asked whether the company would file for FDA's alternate controller enabled (ACE) insulin pump designation, Petrovic said the company "[hasn't] shared that yet" but "fully [expects] to take advantage of that pathway" at some point. 

The ACE designation was established in February with FDA's authorization of competitor Tandem's t:slim X2 insulin pump, currently the only pump fully interoperable on the market. The company expects to introduce its Control-IQ algorithm in the fourth quarter of this year, pending FDA authorization.

Given Insulet's beat-and-raise trend this year, Jefferies analysts said the company's forecast to become a billion-dollar company in 2021 "could prove conservative."

Analysts were similarly bullish on Tandem, which improved profitability during the quarter.

"It is not every day we witness a beat and raise story of this magnitude," BMO Capital Markets analyst Joanne Wuensch wrote. "We had previously acknowledged that the 60% growth in 2Q18 represented an 'easy' comp, yet this delivery puts it to shame."

Tandem also said last week it will offer FDA-authorized software updates or features as they become available to t:slim X2 users through the end of 2020, which it said makes it the only company offering a tool for remote updates.