Tandem Diabetes Care, Inc.
Q4 2018 Earnings Call Transcript
Published:
- Operator:
- Good day, ladies and gentlemen, and thank you for your patience. You have joined Tandem's Fourth Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference may be recorded. I would now like to turn the call over to your host, Chief Administrative Officer, Susan Morrison. Ma'am, you may begin.
- Susan Morrison:
- Thank you. Good afternoon and thanks everyone for joining Tandem's fourth quarter 2018 earnings conference call. Today's discussion will include forward-looking statements. These statements reflect management's expectations about future events, product development, timelines, and financial performance, and operating plans and speak only as of today's date. There are risks and uncertainties that could cause actual results to differ materially from those anticipated or projected in our forward-looking statements. A list of factors that could cause actual results to be materially different from those expressed or implied by any of these forward-looking statements is highlighted in our press release issued earlier today and under the risk factors portion and elsewhere and our most recent Annual Report and Form 10-K, and in our other SEC filings. We assume no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or other factors. In addition, today's discussion will include references adjusted EBITDA, which is a non-GAAP financial measure. Adjusted EBITDA is a key measure used by us to evaluate operating performance, generate future operating plans and make strategic decisions for the allocation of capital. Please refer to the Investor Center portion of our website for further information. Also released today was our succession plan announcement, which included changes for two of today's call participants. Kim Blickenstaff, who has been Tandem's President and CEO for more than 12 years will assuming the newly created position of Executive Chairman. John Sheridan, who has been our Executive Vice President and Chief Operating Officer since early 2013 will succeed Kim as President and CEO effective this Friday, March 1st. These gentlemen have worked extraordinarily hard in their roles for Tandem through the year and has been fundamental towards success. We're excited for them to continue serving our Company in their new role. Kim will opening up today's call, followed by a business overview and product development update from John. And then the financial view and outlook from Leigh Vosseller, our Executive Vice President and Chief Financial Officer. With that I'll turn the call over to Kim.
- Kim Blickenstaff:
- Thanks Susan, and welcome everyone to today's call. First is a comment that when we hired John six years ago, he was with the thought one day you will be my successor. I admit him prior to Tandem and knew the successful career from Digirad to CardioNet and Volcano. In his role as EVP and COO, for Tandem, he's exceeded my expectations. Our company's positive momentum is continuing to build. And the board and I are confident John's ability to drive Tandem to its next phase of success. In my new role as Executive Chairman, I'll be focusing on our external and corporate strategy efforts, and then continuing to build Tandem's board for the future, while John advances the organization's day to day activities. This time last year when we started to see the positive momentum shift in our commercial business, my attention and that of all the directors began to have a greater focus on the Company's longer term strategy, as well as our board composition. Our goal was transition from a domestic venture backed insulin pump startup to a self-sustained global diabetes technology company. We were looking to expand our vision that inspired the diabetes care portion of our name. To do so, we knew that the addition of skills and expertise and wireless consumer technology, connected health and from global organizations would be important to both the board and manage the level they help lead us through this transition. Last year, when Rick Valencia, the President of Qualcomm Life joined our board. It was a first step in this direction. In just a short time, Rick already has proven to be instrumental on our board. More recently in the first quarter of this year, we welcome Becky Robertson to our board. I have known Becky for more than 20 years and we serve together on the board of product health. She has impressive track record of helping medical device companies, scale her roles as an engineer, entrepreneur, corporate executive and board member. Her experience with a diverse range of technology and business models combined with our strategic vision further strengthens our board as we prepare for the Company's next phase of growth. We're also further strengthening our management team with new areas of expertise. That you saw last week, we hired Manuel Jaime as our Senior Vice President, Technology and Digital Health. Manuel did some consulting work with us a few years back when we were just starting to explore mobile strategy. From that experience and with this more than 20 years of experience in mobile connectivity and cloud technology, we knew he was a right fit to lead us into development of our Connected Health Solutions and the globalization of our data management applications along with working to ensure the superiority of customer and company data. We will be investing in each of these areas in 2019, in addition to our automated insulin delivery programs, and t
- John Sheridan:
- Thanks, Kim. I would like to start off by thanking you for all your mentorship over the last six years. And on behalf of myself and all the Tandem employees, thank you for the great contribution and leadership you've given the Tandem. We clearly would not be here without you. And you've created a great culture here at Tandem that's enabled us to attract amazing employees, retain them during difficult times and now that things are moving in the right direction, it's enabled us to innovate quickly and gain competitive advantage in this market. I look forward to carrying the torch forward in this new role and continuing your vision to improve the lives of people with diabetes through relentless innovation and revolutionary customer experience. As we look ahead, 2019 is positioned to be another year of tremendous opportunity for Tandem. Incredibly, the strength that drove our growth in 2018 are still in place today. These include are differentiated pump platform, our highly rated customer service, our automated insulin delivery programs and our international expansion. Starting with the t
- Leigh Vosseller:
- Thank you, John, and good afternoon, everyone. We began the year with enthusiasm about the changing market dynamic and what is to mean for our business. It turned out to be a year of records that surpassed all expectation. Our success is evident not only in our strong sales growth but also in our gross margin performance for the quarter profitability and dramatic reduction and use of cash. Beginning with sales, in early 2018, we laid out five key growth drivers for the year and capitalized on each of them. They were the successful launch of Basal-IQ, scaling our renewal, capturing 100% of our infusion set sales, providing an attractive solution for former Animas customers and our entry into international market. These factors drove our full year 2018 sales to $184 million, which exceeded 70% sales growth year-over-year. This is the highest annual growth rate in our history, stemming from a doubling of pump shipments to approximately 34,500 for the year of 2018. Our fourth quarter sales were $76 million, including $7 million from our recent international expansion. This brings us to $10 million in international sales for the full year of 2018, which still exceeded our expectations, even though we were unable to fulfill the entire international demand for the quarter. In the quarter, pump sales continue to be the most significant driver of our growth at 72% of total sales. Our total pump shipments were 16,200 of which 3,200 were shipped into international market. This brings us to 80,000 pump shipped in the U.S. in the last four years, which we consider a reasonable estimate of our in warranty installed base. Our renewal opportunities and renewal sales continue to scale rapidly. Through the end of 2018, warranties for over 16,000 customers have expired in total, and more than 20% of those just expired in the fourth quarter of 2018. Cumulatively, we have now recognized approximately 7,500 renewal sales since inception. In the fourth quarter alone, we shipped 1,800 renewal pumps, which is double the number we shipped in the fourth quarter of the prior year. While the majority of renewals are now generated from shipments originating in 2014, we can change the renewals from as far back as 2012. The late 2017 commercialization of our t
- Operator:
- Thank you. [Operator Instructions] Our first question comes from the line of Travis Steed of Bank of America. Your line is now open.
- Travis Steed:
- Hi, congrats on a great quarter. I wanted to get a sense for what you're seeing in the international business that that gives you confidence in the big celebration in 2019, how much of this is really adding new countries and how much of it is dependent on the Basal-IQ launch internationally?
- John Sheridan:
- This is John, and thanks for the question. I would say that the distributors have pent up demand for the Animas business since we have been a little bit late getting to the marketplace. So I mean there's just seems like overwhelming demand for the product in the OUS, particularly in Europe. In addition to that we do plan to launch into a couple of additional countries this year but I think the real issue is just being able to have a full-year of revenue for the OUS business.
- Travis Steed:
- Okay. And then maybe you can comment on what kind of acceleration you're assuming in the business late in 2019 after Control-IQ launches and also sounds like under conversation but pairs have been positive on getting more value for Control-IQ, any sense yet for how much this could be? It would be an upfront charge, or would it be something more along the lines of cost sharing?
- Leigh Vosseller:
- Hey, Travis, thanks for the question. First, I'll talk a little bit about Control-IQ and our strategy there. I mean, right now, at this point, we're still evaluating what we want to do with that. Our primary goal, though, is to work with the payers to get that incremental reimbursement. So we'll be laying out more in the future as we have more clarity. But I will say that yes, we've had very positive conversations with payers just as we talk about the savings that they can see in the system from our Basal-IQ product today.
- Operator:
- Thank you. Our next question comes from Alex Nowak of Craig-Hallum. Your line is open.
- Alex Nowak:
- Thanks. Good afternoon, everyone. John, congrats on that promotion and Kim all the best to you as you move to the Executive and Chairman role. So the guidance be I think everyone's expectations here, but you know as I just have to put everything into the model, is it fair to say I think you're still being a little bit conservative just given the growth rate in U.S. pumps you saw this quarter, despite a really tough comp, should we come away on the guidance that you're still set up for something you feel comfortable to hit, but you ultimately intend to show some upside at the end of the day?
- Leigh Vosseller:
- I think the way I would frame it as much like I discussed our guidance last year is that when we set the guidance range, we focus on what we think we have most within our control. So like last year, when we laid out the five growth drivers, we really said that we expected the majority of the growth to come from renewals. And the other elements of it would be upside opportunities because we just didn't have the kind of visibility into what they could bring to us, for instance, how many Animas patients would choose us or how successful what Basal-IQ be. I'm looking forward into 2019, it's the same philosophy. I think our number one that we can count on is the renewals, we're very confident and how that's been progressing in our ability to predicted. We think Basal-IQ has been very helpful in starting off the year, is still very strong enthusiasm product. But I think as we look to the back half of the year, we have less clarity and with the timing of Control-IQ and what that can bring to the table that's a little bit more cautious about how much to put into the plan.
- Alex Nowak:
- Okay. Understood. And then John or Kim, any update on conversations with United Healthcare. We saw recently they updated their policy to include pediatrics in the documents. So should we read into that, that maybe it's going to take some more time here before Tandem is reintroduced with United?
- John Sheridan:
- I would say so. I think it's probably going to be the experience with Basal-IQ and then Control-IQ that will probably give us the most opportunity to get back into that plan. But we have published data on Basal-IQ not yet on Control-IQ. I don't know whether they'll tip their hand and do Basal-IQ or have to wait to Control-IQ. So we just don't have any more clarity on it.
- Alex Nowak:
- Understood. Congrats on a great quarter.
- Operator:
- Thank you. Our next question comes from Matt Taylor of UBS. Your line is open.
- Matt Taylor:
- Hi, thanks for taking the question. I was hoping you could go into a little bit more depth and explaining the excitement around Control-IQ, we've seen some positive feedback out there in the market from people who have been using it. Obviously you're getting a lot of uptake from Basal also, so how are you going to measure success with Control-IQ both in terms of when we see the data, and then in terms of the uptake that we see through the year, and how much of that baked?
- Kim Blickenstaff:
- Well, I can just say that in anecdotal point of view, I mean, you've probably seen the blog reports. The people who are in this study today are just overwhelmed, is overwhelmingly positive. We just get tremendous positive feedback from people to the extent that they don't want to give it back. And it's an issue that we're going to have to deal with right now. I think that the - we thought that Basal-IQ was going to be a step in 2019. It was going to be incremental improvement, and that was going to allow us to compete effectively against Medtronic. But it's absolutely turned out to be leap. And the interesting thing is, when you talk to people who are using Control-IQ, they believe that it's going to be another leap. So I mean, I think we're optimistic that the - that product is going to really have significant uptake when it gets to the market.
- Matt Taylor:
- Thanks. And just specifically in the guide, have you assume any kind of a ramp when you do get Control-IQ or how much has been that guidance range for the year?
- Leigh Vosseller:
- As I said earlier, when I think about Control-IQ and we think about new product launches overall, we're a little bit more cautious just based on anticipation of when the timing comes and when we get approval and can actually launch it. But I would say that people already because of the updatability of our pump are necessarily holding back awaiting for that next product. And so I think there's more enthusiasm that could push more orders, but at the same time, I think just the hype we have around our product today is driving people to the table.
- Matt Taylor:
- Great. Thanks very much.
- Operator:
- Thank you. Our next question comes from Brooks O'Neil of Lake Street. Your line is open.
- Brooks O'Neil:
- Good afternoon. Congratulations, Kim and John. I'm excited for both of you.
- John Sheridan:
- Thank you very much, Brooks.
- Brooks O'Neil:
- So I was curious if you could just help us all understand just a little bit more about the ACE designation. I think I was listening carefully to your comments Kim about that and I'm not sure you had any specific comments about the opportunity to integrate with others CGMs. I am just curious if you see some possibilities there and if so if you want to talk about any of them?
- John Sheridan:
- Sure, Brooks. This is John, when we talked about our regulatory strategy for Control-IQ and formerly we basically referred to it as an iPump and interoperable pump. The FDA change that the name to ACE which is alternate control enabled insulin pump. And it's essentially the same thing though, it's intended to be used interchangeably automated insulin delivery system. So that the benefit is that we are going to be able to implement the ACE pump into a system interchangeably without any regulatory requirements. In the short term, it's not going to benefit us that much. But I think where we do see the value is when we come forward with the t
- Brooks O'Neil:
- That's helpful. Then I'm just curious obviously, you guys are in the marketplace, you have perhaps better years to the ground than anyone. I continue to sense that there are real issues with Medtronic sensor in particular, perhaps the entire 670G system. What do you guys hear and what do you think is going on out there? Thank you very much.
- John Sheridan:
- I guess we'll say that is, this past week in Berlin, I think one of the big differences from past conferences was that physicians who actually have used the 670G were able to present real world data on how it's actually performing in Medtronics. And I would say that one of the issues that was apparent was that the - that the time in closed loop was a - it was a smaller number than you would expect. I think that it was typically in the 60% to 70% range in closed loop. And I assume that's largely based on the sensor. There's probably other things that are contributing to it. But I think there is a number of papers that presented data on the 670G where that was an issue.
- Brooks O'Neil:
- That's very helpful. Thanks again, and congratulations on all the progress.
- Operator:
- Thank you. Our next question comes from Kyle Bauser of Dougherty & Company. Your line is open.
- Kyle Bauser:
- Hi, good afternoon. Congrats on the quarter. My questions are on Control-IQ, for the primary endpoint in the clinical trial, can you remind me if the goal for percent of time in range and how high you think that could reasonably go in the next couple of years?
- John Sheridan:
- There isn't a specific goal for that. And it's basically just we're going to measure time and range. I can tell you that when you look at the clinical data that's been generated by [indiscernible] and TypeZero in the past. It's typically been in the mid high 70s time and range which is defined between 70 and 180. So I think we would expect to see similar more to that - similar performance for that as we bring the device to market.
- Kyle Bauser:
- Great, thanks. And then we heard from your largest competitor last week that they'll be developing a personalized closed loop system. And they mentioned algorithms today, in their opinion, behave the exact same way for every single patient. But correct me if I'm wrong Control-IQ will be highly personalized and adaptable. You probably don't comment too much on these competing devices, much less one that's in its concept phase. But can you perhaps speak to TypeZero's Control-IQ algorithm and how that may or may not have a level of personalization already built into it?
- John Sheridan:
- Yeah, you know you have to put in your own data on influence of its sensitivity factors and things like that. But it manages your diabetes within a range. I wouldn't say it's necessarily personalized. It's definitely something that we're considering. And I think in the next generation algorithm, we will be looking at personalization as well as is trying to make the algorithm easier to work with. For instance, potentially reducing the need for a meal policies or making the boluses small, medium or large as something like that. But right now, it's I wouldn't say it's personalized. I will say though, that when you look at the Medtronic pipeline, I think the next generation device that got beyond 670 is equivalent to what our device is going to be when we bring it to market here this year. So what I also say, bringing the number of products that they have on that list to market in the time frame, they've defined is very aggressive.
- Kyle Bauser:
- It's great. Thank you.
- Operator:
- Thank you. Our next question comes from Doug Schenkel of Cowen. Your line is open.
- Ryan Blicker:
- Hi, Ryan Blicker for Doug. Thanks for taking my questions. Congrats John and congrats Kim as well. And good luck with everything.
- John Sheridan:
- Thank you.
- Kim Blickenstaff:
- Thank you.
- Ryan Blicker:
- One on gross margin. You're targeting 52% for the year, can you talk about how we should think about the international business within guidance, presumably it's lower than the corporate average like you talked about which implies some really impressive progress on an underlying basis? Can you talk us through that math and what's driving the really strong results?
- Leigh Vosseller:
- Sure. So just overall in terms of the strong results, it really comes from how much the pump sales are as a percent of revenue. So the pump having the highest gross margin as well as then just the increasing volume providing leverage and our manufacturing costs. When it comes to international this year, there was very little pressure on the gross margin. So that was pretty much what you would expect from the domestic business. But as we look to next year, the 52% on a full-year basis. And two major pressures are there. One is the international, was it going to be a much more significant piece of the business, as well as that non-cash stock based compensation. And the latter part of 2018 that was running about 2% of sales, and I expected to be somewhere to 2% even 3% of sales next year. But otherwise, we expect to see the same continued performance on improvement in gross margins just from scale and efficiencies from our new manufacturing facility.
- Ryan Blicker:
- Got it. That's very helpful. And then maybe just going back to international revenue for 2019, how are you guys thinking about the Animas opportunity within your guidance? Are there any specific countries that are really popping out or is it hard for you guys to see that data at this point given it's mostly through distributors?
- Leigh Vosseller:
- Right, so really a big portion of the guidance for next year is based on the Animas opportunity through the conversations that we've have had with the distributors that are already in place, which we've announced the various countries that were in, that where we expect to see the majority of the growth. It's the back part of the year, where we are considering launching into other countries that really, the most part will come from the Animas opportunity.
- Ryan Blicker:
- Got it. Thank you.
- Operator:
- Thank you. Our next question comes from J.P. McKim - Piper Jaffray. Your line is open.
- Kevin Farshchi:
- Hi, everyone. This is Kevin on for J.P. today. Congratulations on the solid quarter and robust outlook. Thanks for the question. So my first one is clearly there's an inflection point playing out over the last six months. Just wanted to frame up what's really behind that specifically in the quarter. How many of the 16,000 shipments took advantage of the special 999 offer? And I'm thinking about that, is there a risk to some of those sales being pulled forward as a result, and or was the uptake in line with what you expected for that deal?
- Leigh Vosseller:
- Sure. And so that program that we offered, it's very small percent of our business. What we've experienced with upgrade programs is that patients really aren't interested in paying out of pocket in warranty. We don't expect it to affect the warranty renewal cycles, because it is only for in warranty patients. And so then when their warranties expired, they can go ahead and renew on a regular sale basis. But the inflection points back to that in the last part of the year, I would say really points a lot to the Basal-IQ launch. And as John said earlier, we expected it to be a small step for the business, but it really ended up being a large leap. And I think as more and more people became acquainted with the system and heard about the performance, that's what really helps to drive us in the back half of the year.
- John Sheridan:
- I say, it also helps that we took the debt away, we took that whole financial issue away. That was one of the major selling issues that our competition had last year and frankly, physicians who our investors believe it. And I think when they saw that debt go away and then start seeing the stock price go up, they came very interested in the company. And the products spoke for themselves in terms of ease of use for the G6, no fingerstick and high auto mode type. So I think that's what sort of the cadence of the year just felt like every step was a positive one.
- Kim Blickenstaff:
- Other thing that happened is I was talking to the sales force last week at our national sales meeting and what they're pointing out is that the physicians would put several patients on Basal-IQ, it would wait a few months and then they would come back in and they were really surprised in a very positive way about their performance. And as a result of seeing that they actually put on more of the patient base on to the Basal-IQ. So I think there's this geometric process that's going on in these healthcare practices that are - that's going to help us, it's going to continue to help us overtime.
- John Sheridan:
- Yeah, and there was results of the unexpected finding that if you prevent hypoglycemia, you minimize rebound hyperglycemia and that was a well understood by anybody that we were working with, not even our investigators. And I think physicians are sort of stunned to see that that's the case. And if you think about it, you use too much insulin and you go low, you're going to ingest glucose in some form and that's totally unregulated ingestion and you go skyrocketing and high and then you're on this curve of lack of control. So it's performing far better for that reason because I don't think that medical community really understood that aspect of what was going on.
- Kevin Farshchi:
- Yeah, for sure. Thank you, that's extremely helpful answer. I just have one last one on Control-IQ upcoming. I think that's another key investor question. We assume it's going to be better than 670G on time and range and you mentioned kind of the higher range that you expect. I know obviously you're not going to say what the time and range is from the trial, but my question is framing up how physicians are choosing Tandem today even from a directional perspective, is it time and range or the ease of use that those physicians and customers care about Tandem? If your ease of use is better, why is that?
- John Sheridan:
- I think if you look at research that's done on the technology adoption, there's two really important factors. The first is that the technology has to work and provide the outcomes that you anticipate. So that being, you need to get the time and range when you have a new device. And I think that the reality is that we expect that to happen with Control-IQ and I think the same thing is the case with 670G. I mean I think when it works properly, it does get pretty good time and range. I mean the other factor that people often ignore though is it has to be easy to use. It can't cause any friction in the process. It has basically - that should be very easy to use and simple and that's I think the real advantage that we've got both the Basal-IQ and I think the same thing will exist with Control-IQ. The other aspect of that is it has easy to train. I mean I think that we've proven already that Basal-IQ is very simple to train and again I don't think that Control-IQ is going to be much more difficult. And what that does is not only does it make it easier for the person who's using the pump, it also makes it easier for their healthcare provider which is a big important thing. I think improving the efficiency of healthcare providers is a big deal. I think of our pump helps them become more efficient that their patients will be happy and so will they.
- Kevin Farshchi:
- Perfect. Thanks for the questions.
- Operator:
- Thank you. Our next question comes from the line of Steven Lichtman of Oppenheimer. Your line is open.
- Steven Lichtman:
- Thank you, and congratulations, and good luck Kim and John. Leigh, as you pointed out, we saw a really big jump in renewals this quarter. Anything you can point to specifically why that spike in 4Q, just seasonality or did Basal-IQ really begin to catalyze that?
- Leigh Vosseller:
- Sure. So I think it starts with just the typical seasonality. It's a little early for us to tell how much of it may have been most motivated by Basal-IQ but my gut says that that's a factor as well. And so also if you look back four years ago, the number of opportunities keep increasing and so we would expect to see increasing renewals as we move forward just for that reason alone.
- Steven Lichtman:
- Got it. And then secondly, just on the international opportunity ahead. Are you willing to share what new countries you see as the next opportunities for you guys? And if not, any other broad comments you can provide on what you see in terms of additional expansion beyond the country that you're currently in?
- John Sheridan:
- Probably not going to mention any of the countries, but I will say that last week at ATTD, Brian Hansen and his team had some great meetings with most of our OUS distributors. They went very well in those meetings. He was able to talk about performance in 2018, help them understand what's going on in 2019 and really expand out with them. The other thing that Brian and his team have been doing is they've been working closely with Dexcom. And with Dexcom they've been you know we're targeting the important locations that Dexcom is at and where there's reimbursement and former Animas business as well. So I think the combination of working with Dexcom also is important in those countries.
- Steven Lichtman:
- Got it. Thanks, guys.
- Operator:
- Thank you. Our next question comes from Jeff Johnson of Baird. Your question, please.
- Jeff Johnson:
- Thank you. Good afternoon, guys. John and Kim, congratulations on the new roles as well. John, I was wondering if you could help break out, you made some comments early in the call that the Animas opportunity in the U.S. the rest of it, the other 15,000 probably going to be more weighted towards September, but in the OUS markets going to be earlier this year. Just some color, if you could help flush out kind of the timing differential there and how we should think about the opportunity flow through the Tandem, specifically from both those opportunities?
- John Sheridan:
- I think in the OUS, the opportunity, I think what's happening is, the distributors are driving the demand there. I mean, they have till September, there's as a significant incentive on their part to make that happen. So I think OUS people are driving it. Inside the states, I think it's that there are people, it's insurance based first of all, and so people are, they like their pump and they're going to stick with it and they're going to probably stick with it as long as they can. And I think they're going to push that. So we do anticipate that near the end of this year that we'll see a higher demand for Animas customers, but I think it's primarily driven by insurance.
- Jeff Johnson:
- All right, fair enough. And then Leigh, on the U.S. side, outside of the renewals, the other 11,000 pump sales in the fourth quarter or so. Could you just help us split kind of MDI versus competitive share gains and those 11,000 and any color you can provide on how many of those might have come from Animas versus other pump?
- Leigh Vosseller:
- Sure. I mean, it's been very consistent. We haven't seen much of a change there, which is exciting, because you might think that with the Animus opportunity, you would start to see more weight towards Animas. But we're still seeing about 50% coming from MDI and then the other half is the majority Medtronic and the smaller piece Animas.
- Jeff Johnson:
- All right, fair enough. Thanks, guys. Appreciate it.
- Leigh Vosseller:
- Thank you.
- Operator:
- Thank you. Your next question comes from Ravi Misra of Berenberg Capital Management. Your line is open.
- Ravi Misra:
- Hi, good evening. Thank you for taking the questions. Best of luck Kim and congratulations John on the new position. My first question was just a little bit on the patient dynamics, if I can circle back on that a little bit. Can you talk about the kind of the approval process on the pediatric for sport a little bit and can just tease out a little bit what your comments in the prepared section more about how you would kind of bring that to market? And what's kind of patient bolus or new patient addition you think that could represent?
- John Sheridan:
- Well, I think that of course, the current DCLP3 study that is nearing completion is basically going to be indicated for patients 14 years and older. And so there is a big opportunity, I think to use a device on younger pediatric children. When our original strategy was to basically work on a study in France that's currently going on, that's not going to be complete until the November timeframe. And so we've found this opportunity late last year to initiate a new study which is the DCLP5 study, which is going to be four sites with 100 pediatric children and it's going to enable us to get the age indication down to six. So I mean the opportunity here is to move fast and to hopefully have the data available sometime this summer. What I was saying in the prepared remarks was that if, in fact we have - we are able to move fast, enroll and complete the study in a timeframe that makes that data available close to when the DCLP3 study is available, we would probably wait and submit the two together. If on the other hand, the pediatrics takes a longer time than we want. We definitely want to get the DCLP3 data in as quick as it can. So we get approve for Control-IQ at least for that population and then we would submit the pediatric data later.
- Kim Blickenstaff:
- I just want to make one comment. We've heard continually that the pediatric population is most at risk for lack of control. It causes great anxious and worried for the parents. It's time consuming, especially when children are at school. And John you just heard some comments in about…?
- John Sheridan:
- Yeah.
- Kim Blickenstaff:
- That's right. I mean was very interesting. We actually we have over 100 kids now enrolled in the French study. And one of the things that Eric Renard is the PI told me this past week was that in France, there's a process where parents basically are really - they really have to support the children. And they do things that I mean, they will stay awake all night for instance, and they do things that are very demanding on them. And as a result of these pumps, the demands have significantly improved and the children and the parents for instance have able to sleep all the way through the night. So it's had a very, very positive effect on their lives in a very short period of time. And he was communicating to me how meaningful that was for them in a very positive way.
- Ravi Misra:
- Great, thank you. And then just one question Leigh on the balance sheet, if I may. Day's inventory kind of declined pretty significantly. I'm assuming that just has to do with the some of the supply constraints and you're getting product out into the field as fast you can?
- Leigh Vosseller:
- That's correct. And any given year, we typically exit with lower inventory levels just because of the key for seasonality. But you're absolutely right because of that shortage of raw materials for the pump, we did see lower inventory levels than we have seen in the past. But as John indicated, we look to have that brought up in the near term.
- Ravi Misra:
- Great. Thank you.
- Operator:
- Thank you. At this time, I'd like to turn the call back over to Kim Blickenstaff for any closing remarks. Kim?
- Kim Blickenstaff:
- Thanks, Latif, you seem to be our lucky charm. Thanks again to everybody for joining us today. In March, we're going to be welcoming a number of bus tours here to our facilities in San Diego. And then we will be attending the Cowen Healthcare Conference in Boston on March 12, we have the Barclays Healthcare Conference in Miami on March 14 and the Oppenheimer Healthcare Conference in New York on March 19, so it's a very busy month for us. Thanks so much again, everyone for joining us today. And we look forward to keeping you updated as a company continues to progress.
- Operator:
- Thank you, Kim. Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may disconnect your lines at this time.
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