The operator introduces the Insulet Corporation Third Quarter 2023 Earnings Call and reminds participants that the call is being recorded. Deborah Gordon, Vice President of Investor Relations, introduces the speakers and mentions that the call will also be available for replay on the company's website. She also discusses the cautionary statements and non-GAAP financial measures that will be used during the call.

Insulet had a strong third quarter with revenue exceeding expectations and significant growth in their Omnipod product line. The success was primarily driven by the Omnipod 5 automated insulin delivery system, which has had a positive impact on the lives of people with diabetes. The company raised their guidance for the full year and continues to see success with the Omnipod 5, which is the leading AID offering on the market.

The Omnipod 5 insulin pump is seeing strong adoption globally, with a successful rollout in the UK and Germany. In the US, it continues to be the top choice for new customers and is driving pump penetration across all age groups in both Type 1 and Type 2 markets. Insulet estimates that they are the leader in bringing customers from MDI to pump therapy. The number of healthcare practitioners prescribing Omnipod is also increasing, with over 17,000 prescribers in Q3.

Omnipod 5 has a broad appeal and is easy to prescribe, making it accessible to a wide range of patients. This is evident in the growing number of prescriptions written by healthcare professionals and the loyalty of Omnipod users. The company is confident in its ability to reach the millions of people with Type 2 diabetes who need insulin therapy. In Q3, 20% of new customer starts in the US were Type 2 patients, and the company is excited to bring Omnipod 5 to this market once the pivotal trial is completed. The company has reached its enrollment goal for the US Type 2 pivotal study, which will compare Omnipod 5 to participants' previous therapy.

The feedback for Omnipod 5 has been positive and the company believes it will have a big impact on Type 2 diabetes patients. They also address the debate surrounding GLP-1s and their impact on the market, stating that they do not believe they significantly affect their end markets. They have published data and updates on this topic, including evidence that semaglutide has similar effects on glycemic control as liraglutide and that adherence to the drug is important for its effectiveness. Additionally, semaglutide has been shown to promote weight loss independent of glycemic control.

The real-world evidence shows that semaglutide does not have a significant effect on the progression of type 2 diabetes and most patients will eventually need to incorporate insulin into their treatment. Insulet is well-positioned to serve this population and is continuing to develop a broad portfolio of insulin delivery options. They have completed a trial using Omnipod 5 with Dexcom's G6 and are making progress with the RADIANT study. Clinicians have noted the ease of transition to Omnipod 5 for MDI users.

Insulet is excited about the progress of their integration with Abbott's Libre 2 sensor and the studies being conducted using the system. They are focused on expanding the Omnipod 5 platform, moving into the type 2 market with Omnipod GO, and driving the future of AID with their advanced algorithm program. They have received FDA clearance for their iOS app and plan to begin a limited market release in 2024. They are also working on integrating with Dexcom's G7 sensor and plan to release Omnipod 5 plus G7 in 2024, confident that these innovations will maintain and extend their market-leading position.

Insulet Corporation has developed an innovation called Omnipod GO, which simplifies the initiation of basal insulin therapy for type 2 diabetes patients. The company has begun a commercial pilot for this product, targeting primary care physicians who are new to Omnipod. The pilot has shown positive feedback from PCPs, who prefer Pod therapy over pump therapy. Insulet is also working on a next-generation AID algorithm, with a feasibility trial currently underway in New Zealand. The goal is to enhance the algorithm and make it even easier to use. The company's unique capabilities, such as on-market algorithm effectiveness and gathering usage data from Omnipod 5 users, have allowed them to launch this study early in the product's life cycle. They expect that cloud connectivity and data sciences will accelerate their algorithm development efforts in the future.

Insulet has filed a suit against EOFlow for misappropriation of their trade secrets and has obtained a preliminary injunction against EOFlow. The court found strong evidence of misappropriation and Insulet is confident in their lead in the market. The company is experiencing rapid growth in the US type 1 market and accelerating adoption in international markets. They are also seeing growth in the type 2 market and are excited about upcoming developments that will unlock market growth. The company thanks their team for their hard work in driving their mission to simplify life for people with diabetes.

Lauren Budden has been appointed as the Interim CFO and Treasurer of Insulet and has been with the company for five years. She has played a significant role in the company's financial success and will continue to support its strategic priorities. In the third quarter, the company saw strong growth in new customers, particularly in the US and international markets where Omnipod 5 was launched. This led to a 25% increase in revenue, exceeding the high end of the guidance range. The growth was mainly driven by the annuity-based model and increased volume through the US pharmacy channel. Omnipod 5 and Omnipod DASH contributed to the growth, with Omnipod 5 alone resulting in a net tailwind of $10 million.

The company has seen a recurring net volume benefit from new customers and conversions to Omnipod 5. However, this benefit is expected to normalize in the future. The company also saw stable attrition and utilization rates in the US and a significant increase in international Omnipod revenue. Drug Delivery revenue declined due to lower forecasts from partners. Gross margin increased significantly, partly due to lower costs associated with medical device corrections. Overall, gross margin exceeded expectations due to favorable manufacturing costs and higher revenue.

The company saw an increase in adjusted gross margin due to improved manufacturing efficiency and increased volume in the pharmacy channel. Operating expenses were in line with expectations, and the company ended the quarter with a strong financial position. The company has raised its revenue growth outlook for 2023, driven by strong adoption of the Omnipod 5 and recurring revenue from other Omnipod products. The fourth quarter of this year will have a tougher comparison due to the two-script benefit in the prior year.

The company is raising their guidance for International Omnipod, expecting 9% to 10% growth driven by ongoing Omnipod DASH adoption and launches in the UK and Germany. They also reaffirm their guidance for Drug Delivery, expecting a 45% to 50% decline. Gross margin expectations for 2023 are raised to 66% to 67%, with anticipated further improvement in 2024. For the fourth quarter of 2023, they expect total company growth of 22% to 25%, with strong growth in US Omnipod and a favorable foreign exchange impact for International Omnipod.

The company expects Q4 Drug Delivery revenue to be between $3 million and $5 million due to production and order timing. They anticipate sustained momentum and a strong year in 2024, with large dollar growth and a mid-20% growth rate for US Omnipod. International growth is expected from Omnipod DASH and recent Omnipod 5 launches in the UK and Germany. There may be some offset from countries without Omnipod 5. Overall, the company expects high single-digit growth for the year, accelerating in the second half. Drug Delivery is expected to decline, but less than in 2023. The company is well-positioned for long-term value creation and will take questions from investors.

An analyst congratulates the company on a strong quarter and asks about the expected impact of upcoming developments, including CGM integration, iOS launch, and international expansion. The company is excited about these catalysts and expects them to contribute to growth, but they have not given a specific number. The company believes all the developments will be important and expects them to have a meaningful contribution, but it is not expected to be significant due to their annuity model. The analyst also asks if new patient starts were a record worldwide, but the company does not provide an answer.

The speaker, Jim Hollingshead, discusses the strong performance of new customer starts in the second quarter, which was the second-highest quarter ever for the company. He also mentions the search for a new CFO and the characteristics they are looking for. The next question is about margins, which have been consistently improving each quarter and the speaker gives more information on the company's revenue outlook for 2024.

During a conference call, a question was asked about the company's margins for the upcoming year. Lauren Budden, a representative from the company, stated that they are committed to expanding margins and have already seen an increase in gross margins and operating margin guidance. The next question asked about changes in marketing strategy due to increased GLP adoption, to which the company responded that they have not changed their messaging and continue to learn about GLP-1s. The questioner also inquired about the growth of Type 2 users, to which the company stated that they have seen strong adoption in this area.

Jim Hollingshead and Lauren Budden from Insulet Corporation discuss the growth of type two Omnipod devices in the third quarter of this year compared to last year. They caution against assuming the growth is faster than overall Omnipod growth. Later, they talk about the launch of Omnipod 5 in Europe and express confidence in its success and potential for driving growth in international markets.

Jeff Johnson asks Jim Hollingshead for more details on the Sensor Integration side of the company's quarter report. Specifically, he asks about the timing for LMR integration in the U.S. and the launch of L2 and L3 sensors. Hollingshead responds that they are not providing specific timing for the Libre sensors, but they are confident in the integration based on positive customer experiences. He also explains that LMR is used to test hypotheses and they do not put a specific timeline on it, but they are confident in the G7 integration and will see how it performs once it is released.

In this paragraph, the CEO discusses the company's plans to bring their new G7 integration to market and their success in the type 2 diabetes market. They are confident in their ability to continue driving penetration in the type 1 market and are bullish on the potential for growth in the underpenetrated type 2 market. They believe their Pod therapy will be a valuable solution for the 30 million people with type 2 diabetes in the US who progress to needing intensive insulin therapy.

In the third quarter, Insulet saw a slight increase in the proportion of customers coming from competitive pumpers, with the ratio shifting from 75-25 to 80-20. However, the overall mix of sources for customers remained similar to the previous quarter, with type 1 and type 2 diabetes patients being the primary markets for intensive insulin therapy. The company expects this ratio to continue to shift as they gain more indications for use and drive adoption in the market.

The company is pleased with the number of people converting to Omnipod 5 from tubed pumps, and they have been the market leader in bringing customers from MDI onto AID Pod therapy. They do not see any challenges in converting people from tubed pumps due to the strong appeal of Omnipod 5 and DASH. In Europe, the mix of new customers and upgrades varies by hospital and physician preference.

The speaker discusses the potential impact of Omnipod 5 in different markets, highlighting the differences in contracting and market behavior in Europe. They mention the strong demand for Omnipod 5 in European markets and the success seen in the UK. In response to a question about Omnipod GO, the speaker explains that it is still in the pilot stage and has not been factored into the company's 2024 guidance.

The company is pleased with the pilot program for Omnipod GO and is learning a lot from it, including the fact that primary care physicians are interested in the broader product portfolio. They are using the pilot to figure out the mechanics of approaching type 2 patients in the primary care channel. The $10 million increase in revenue this quarter was due to the double script phenomenon, but conversions are now a small component of that. No guidance has been provided for next year's revenue.

The company expects the double script phenomenon to continue as part of their normal growth rate on new customer starts. They are confident in their competitive position against new entrants in the market and believe their Omnipod 5 with G6 sensor is the best offering. They see promotional activity from competitors, but it has not yet impacted their results. They believe competition is good for business and are excited about their growth catalysts in 2024. They are also the leader in patch pumps and do not see a viable competitor in that space.

The speaker discusses the SECURE trial for Omnipod 5 and how it has completed the goal for recruitment, derisking the trial operationally. The trial is still ongoing and is expected to be a huge unlock for the company in the Type 2 space. The company is already the market leader in Type 2 with Omnipod DASH and has been promoting it for Type 2 use this year.

Insulet Corporation has seen positive results in their quarter-over-quarter growth, driven by their efforts to promote Pod therapy for Type 2 diabetes patients. Although they cannot yet promote Omnipod 5 for this use, they have found that it has high appeal and is being prescribed off-label. This, along with the success of Omnipod DASH in the Type 2 market, is expected to lead to significant growth once the SECURE trial is completed and the indication for use is obtained. Insulet is also piloting Omnipod GO in the primary care physician channel to reach more Type 2 patients. When it comes to expanding their prescriber base, Insulet believes they can leverage their current team, but may need to expand in the future.

The company is considering expanding its reach through a commercial pilot and leveraging direct-to-physician advertising. They also plan to add more sales representatives in the future. When asked about the timeline for FDA approval for their O5 type 2 opportunity, the company stated that they will file for clearance in 2024 and are currently conducting a 13-week protocol study. They expect to file next year and will release data on the study in the meantime.

During the Q&A portion of the earnings call, a question was asked about the expanding prescriber base for Insulet's Omnipod system. Jim Hollingshead, President and CEO of Insulet, responded by stating that they have seen growth in new prescribers and are continuing to focus on expanding their reach. He also mentioned that they have published data from their type 2 feasibility trial, which showed that patients on GLP-1s had better outcomes on Omnipod 5 compared to those not on GLP-1s. Hollingshead expects that about half of the current enrollees in the trial are already on either an SGLT2 or GLP-1, and they anticipate being able to report on subsets of the trial during 2024. In terms of the integration of G7 Omnipod with iOS, Hollingshead did not provide a specific timeline but stated that it is a high priority for the company.

Danielle Antalffy is congratulating the company on a strong quarter and asking about their strategy for targeting primary care physicians, who have a larger share of the Type 2 diabetes market. She wants to know what the company is doing to ensure these physicians are properly educated about their products and will continue to prescribe them once they receive FDA approval for the Omnipod 5 for Type 2 diabetes.

The speaker is discussing the company's strategy for reaching primary care physicians and promoting their products to them. They mention a commercial pilot program and their direct-to-patient advertising as ways to reach this important channel. They also emphasize the need to service type 2 patients and find them where they are, often in the primary care channel.

The speaker discusses the potential for the company to enter the basal market and estimates that there are 3-4 million patients in the US on basal-only therapy. They believe that even a small penetration in this market would be significant for their growth. The target patient population is large and there is room for different offerings, including the potential for once-a-week insulin. The speaker also mentions the benefits of their product, Omnipod GO, which includes the absence of needles.

Insulet has seen significant success with their Omnipod family of products, particularly in the type 1 diabetes market. They have also recently launched Omnipod 5 in the UK and Germany and are focused on expanding internationally. The company is also making strides in the type 2 diabetes market. Insulet credits their success to their dedicated employees and their mission to help simplify the lives of those with diabetes. They are determined to reach and help millions of people worldwide.

The operator is ending the conference and thanking the participants for their involvement. They wish everyone a great day and instructs them to disconnect from the call.

This summary was generated with AI and may contain some inaccuracies.