Snapshot

Cancer is one of the leading causes of death worldwide, and early detection is crucial for successful treatment. However, traditional screening methods are often invasive, uncomfortable, and expensive.

Exact Sciences Corporation is a leading, global, advanced cancer diagnostics company, developing some of the most impactful products in cancer screening as it works to bring new, innovative cancer tests to patients throughout the world. The company specializes in the development of non-invasive tests and are aiming to make earlier cancer detection a routine part of medical care. From screening to treatment guidance, their services help provide critical information needed to make more informed cancer care decisions.

Their flagship product, Cologuard, is a non-invasive stool DNA test for colorectal cancer that can detect the presence of cancerous or precancerous cells with a high degree of accuracy, making it a more accessible and effective option for patients. It also provides a range of precision oncology tests for breast and colon cancers, along with tumor profiling for patients, and covid-19 testing services.

With an expanding global network of ordering healthcare providers, Exact has provided cancer tests to more than 12 million people. Building on a solid history of consistent top-line revenue growth, the company is currently focused on accelerating its path to profitability through key prioritization efforts. In particular, it is concentrating on further expanding its market reach by partnering with healthcare providers and insurance companies to increase awareness and access to its products.

Additionally, the company is exploring new geographic markets, as it also continues to undertake critical research and development initiatives within colorectal cancer screening, multi-cancer early detection, and molecular residual disease.

Background

Founded by Stanley Lapidus and Anthony Shuber in Massachusetts in 1995, Exact Sciences struggled in its early years including following an initial offering on the NASDAQ in 2001. However, a significant turnaround in the company’s fortunes began with the announcement of a mutual collaboration and licensing agreement with the Mayo Clinic in 2009. In the same year, the company appointed its current CEO and chairman, Kevin Conroy.

By 2014, Exact received premarket approval from the FDA for the use and marketing of Cologuard, a breakthrough that heralded the beginning of a period of rapid growth and the start of its foray into the acquisitions market. In the years following, Exact acquired several companies including Sampleminded, Armune Bioscience, Biomatrica, Paradigm Diagnostics, and Viomics, adding a range of technical capabilities.

However, it was its $2.8 billion purchase of Genomic Health, a genetic cancer detection company based in California, which expanded Exact’s product portfolio markets outside the U.S. The deal led to the opening of Exact Sciences offices in the United Kingdom, France, Germany, Italy, and Japan, and the foundation of Exact Sciences International.

In 2020, Exact responded to the covid pandemic by refocusing a portion of its diagnostic capacity to testing for the disease, becoming one of the first companies in the U.S. to receive FDA approval to provide home testing kits.

While most recently in early 2021, Exact announced its acquisition of Ashion Analytics and plans to collaborate in research with TGen, the City Of Hope’s Genomics Institute, building on its purchase of an exclusive-use license of TGen’s proprietary liquid biopsy-based test technology, Tardis.

Leadership

Kevin Conroy became chief executive officer of Exact in 2009 and chairman in 2014, transforming the organization into one of the world’s premier cancer diagnostics companies with more than 6,500 employees. Conroy has led Exact through the entire journey of development, clinical trial, regulatory approval, and commercialization of Cologuard. This culminated with the test becoming the first medical device or diagnostic to receive simultaneous FDA approval and national Medicare coverage. Before joining the company, Conroy served as CEO and president of Third Wave Technologies, held leadership positions at GE Healthcare, and practiced intellectual property law in private practice. He also currently serves as a director of Adaptive Biotechnology Corporation and is on the board of the American Clinical Laboratory Association and Personalized Medicine Coalition.

Conroy is joined by chief science officer and former president of Minimal Residual Disease and Therapy Selection, Jorge Garces, who brings decades of experience in diagnostics including a focus on the development, clinical trials, and commercialization of liquid biopsy tests in the field of oncology. Prior to joining Exact, Garces served in several president, CEO, and CSO roles with Epigenomics AG, AltheaDx Inc, and Enigma Diagnostics, along with many other leadership positions at Hologic Inc., Third Wave Technologies, Genzyme Genetics, and Athena Diagnostics.

Customer

Exact’s flagship screening product, the Cologuard test, is a patient-friendly, non-invasive, stool-based DNA (sDNA) screening test that utilizes a multi-target approach to detect eleven DNA and hemoglobin biomarkers that are associated with colorectal cancer and pre-cancer.

Exact also provide more than 5,000 predefined genetic tests for nearly all clinically relevant genes, additional custom panels, and comprehensive germline, whole exome, and whole genome sequencing tests. In particular, the company’s hereditary cancer test, Riskguard, helps people understand their inherited risk of cancer, providing them with critical information to make better treatment decisions.

Precision oncology tests marketed under the Oncotype DX labeling deliver actionable insights to inform prognosis and cancer treatment after a diagnosis. Oncotype DX tests serve a range of purposes including identifying breast cancer patients who are most or least likely to benefit from chemotherapy, helping guide treatment decision-making for women with ductal carcinoma in situ, and enabling an individualized approach to treatment planning for patients with stage II and stage III colon cancer. While the OncoExTra test applies comprehensive tumor profiling and sequencing, to aid in therapy selection for patients with advanced, metastatic, refractory, relapsed, or recurrent cancer.

These tests ultimately enable patients to take a more active role in their cancer care and make it easy for providers to order tests, interpret results, and personalize medicine by applying real-world evidence and guideline recommendations.

In late March 2020, Exact also began providing COVID-19 testing. Partnering with various customers to administer testing, specimens are sent to Exact’s laboratory in Wisconsin, where they run the assay and provide test results to ordering providers. However, as the public health impacts of COVID-19 evolve, Exact has said it intends to periodically reassess offering covid testing as the pandemic abates, demand declines over time, and government funding for testing services is reduced.

Thematic

It is widely accepted that colorectal cancer is among the most preventable, yet least prevented cancers. It can take up to 10 to 15 years to progress from a pre-cancerous lesion to metastatic cancer and death. While patients who are diagnosed early in the progression of the disease are more likely to have a complete recovery and to be treated less expensively. Furthermore, as the second leading cause of cancer deaths in the U.S. and the leading cause among non-smokers, each year there are approximately 153,000 new cases of colorectal cancer and approximately 53,000 deaths across the country.

In 2014, the Cologuard test became the first and only FDA-approved sDNA test, while in 2019, the FDA expanded its indication to include average-risk individuals ages 45-49, making it indicated for adults 45 years of age and older. Furthermore, the American Cancer Society has specifically included the Cologuard test as a recommended colorectal cancer screening test for this population. To date, more than 55% of Americans within this group are not up-to-date with screening. As a result, with nearly 110 million Americans at a three-year screening interval and an average revenue per test of approximately $500, this represents a potential $18 billion market for Cologuard tests.

Exact’s core products, Cologuard and Oncotype DX are already generating significant revenue, however, the company has several incremental improvements to these products in its pipeline. Such as Cologuard 2.0, which boasts increased specificity and advanced adenoma sensitivity, aiming to reduce false positive rates. To that end, Exact has completed enrollment of a multi-center study, which is expected to support FDA approval of the enhanced test. While the recent launch of the OncoExTra therapy selection test brings with it next-generation sequencing and comprehensive tumor profiling to provide doctors and their patients with a complete molecular picture of a patient’s cancer to aid in therapy selection.

Exact is also investing in the development of minimal residual disease (MRD) testing, with studies underway for both colon and breast cancers. The company plans to offer both tumor-informed and tumor-naive MRD tests, which can help detect small amounts of tumor DNA that may remain in patients’ blood following initial cancer treatment. By monitoring MRD levels over time, doctors can identify when a patient’s cancer cells are starting to grow again and intervene with additional treatments before the cancer has a chance to progress.

Finally, looking further ahead, the company is developing a multi-cancer early detection test aimed at helping to detect many different types of cancer from a single blood draw. For which initial data was presented data at the European Society for Medical Oncology Congress in September 2022.

Financials

With the exception of a modest tempering throughout the covid pandemic, Exact has been on an impressive trajectory of revenue expansion for the last decade, largely achieving high double-digit and even triple-digit year-over-year growth each year. The company ended 2022 strongly with a record quarter that also resulted in a record full-year revenue that exceeded $2 billion for the first time. Total revenue of $2.1 million, made up of Screening revenue of $1.43 billion and Precision Oncology revenue of $601 million, represented a year-on-year increase of 18%.

Of particular note in its latest results, Exact said it has shifted its focus towards achieving positive adjusted EBITDA as a way to signal a path to eliminate cash burn in 2023. The company’s adjusted EBITDA profit in the fourth quarter at $5 million, was an improvement of $120 million. Furthermore, industry-leading gross margins are powering future positive results and a clear path to free cash flow.

Looking ahead, the company anticipates revenue of $2.27 to $2.32 billion during 2023. This assumes Screening revenue of $1.66 to $1.69 billion and Precision Oncology revenue of $600 to $620 million, along with COVID-19 testing revenue of $5 million. The target represents year-over-year growth of around 10%, also matching consensus expectations. Analysts are also expecting full-year earnings per share to record a loss of $2.22 for 2023, improving over 33% from a $3.35 loss in 2022.

Risks/Competition

With the U.S. market for colorectal cancer screening exceeding more than 110 million eligible individuals, it has attracted numerous competitors.

Exact’s Cologuard test faces competition from procedure-based detection technologies such as colonoscopy, flexible sigmoidoscopy, and “virtual” colonoscopy, as well as other common screening tests, such as the fecal occult blood test and the fecal immunochemical test. Newer screening technologies also include liquid biopsy tests.

Exact is also aware of at least three companies, Mainz Biomed, Prescient Metabiomics, and Geneoscopy, that are seeking to develop or have developed stool-based colorectal cancer tests in the U.S.

However, given all other colorectal cancer detection methods currently in use are constrained by some combination of poor sensitivity, poor adherence, or high cost, the Cologuard test, being the first and only sDNA-based non-invasive test on the market today, compares favorably to the alternatives.

Conclusion

After achieving solid traction with its initial core products, Exact appears to be at an inflection point for not only improving profitability, but backing it up with a growing pipeline of life-changing diagnostics.

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In order to not only preserve the safety of the public, but maintain the integrity of the pharmaceutical, biotechnology, and medical device industries, obtaining regulatory approvals is a critical step in the process of bringing a new drug or medical device to market. Securing these approvals can be a complex, expensive, and time-consuming process, as it involves conducting clinical trials to demonstrate the safety and efficacy of a new therapy, along with submitting extensive documentation to regulatory agencies for review. In addition to the benefits for patients, this oversight is critical for the companies developing products, as it allows them to effectively bring new creations to market and generate revenue, while ensuring the credibility and reputation of the company and its products in the market.

For thirty years, Medpace Holdings has been helping these companies bring vital new products to market with a range of services to navigate the complex processes. As a clinical contract research organization (CRO), Medpace conducts clinical trials on behalf of its clients, helping them to develop, test, and ultimately obtain regulatory approval for new drugs, medical devices, and treatments. Its services include clinical research, regulatory affairs consulting, new drug application submissions, and medical writing, along with data management and post-marketing clinical support services. These services are designed to help clients launch new treatments more quickly and efficiently, while ensuring that they meet the highest standards of safety and effectiveness.

Over the years, Medpace has systematically added specialized medical, regulatory, and operational experts to broaden its offerings and industry-leadership position. And with an already wide-reaching global presence across the world, the company continues to expand its capabilities, particularly in Europe and Asia, to enable it to win larger global studies and projects in new therapeutic areas.

Background

Dr. August Troendle, a noted medical doctor and scientist, began his career as a reviewer with the FDA. In 1992, Troendle saw an opportunity to offer a more innovative way to conduct clinical trials on behalf of biopharmaceutical sponsors. His vision for a company with expertise in specific therapeutic areas led to the founding of Medpace. The company capitalized on an unmet need in the life science sector with a model that combines the expertise of noted industry medical doctors with regulatory and operational professionals who provide therapeutic and regulatory expertise for the most difficult clinical studies.

While the CRO industry has grown primarily through mergers and acquisitions, Medpace has expanded through disciplined organic growth. Starting with a small group of industry physicians, the company has grown to over 4,800 associates across 41 countries, establishing laboratories and operations across the globe.

In 2016, Medpace completed its IPO, listing on the Nasdaq, and raising close to $174 million in the process. Since then it has gone on to deliver solid top-line and earnings growth each year as it expands its market share across more and more therapeutic areas.

Leadership

Dr. Troendle has been the chief executive officer and chairman of the board of directors of Medpace since he founded the company in 1992. He was also the company president until last year. Before founding Medpace, he held senior roles at Sandoz (Novartis), where he was responsible for the clinical development of lipid-altering agents. While prior to that, he worked as a medical review officer at the FDA. Troendle also has extensive experience serving as a director for a diverse group of public and private companies, including Coherus BioSciences, Xenon Pharmaceuticals, LIB Therapeutics, CinCor Pharma, and CinRx Pharma.

Dr. Troendle is joined by now-president, Jesse Geiger, who started with the company in 2007 and has held several executive roles including corporate controller, CFO, and COO before succeeding Troendle as president. Prior to joining Medpace, he worked in senior roles for SENCORP and as director of capital markets for Cincinnati Bell after starting his career with Arthur Andersen. Like Troendle, Geiger has served as a director for several private companies, including LIB Therapeutics and CinRx Pharma.

Customer

Before a new drug can be commercialized, it must often undergo extensive pre-clinical and clinical testing and regulatory review to verify safety and efficacy. Medpace provides a comprehensive range of product development services for Phase I-IV clinical trials, which are separated into these distinct phases to thoroughly evaluate the product. The company generates its revenues by providing a full suite of services supporting the entire clinical development process across all major therapeutic areas, with particular strength in Oncology, Metabolic Disease, Cardiology, Central Nervous System, and Antiviral and Anti-infective areas.

Serving a well-diversified customer base that includes small- and mid-sized biopharmaceuticals, along with large pharmaceutical companies, Medpace’s global platform provides its customers with broad access to diverse markets and patient populations as well as local regulatory expertise and market knowledge.

In addition to the company’s medical department which consists of therapeutic leads who provide strategic direction for study design and planning, train operational staff, work with primary investigators, provide medical monitoring and meet with regulatory agencies, a team of clinical trial managers leads all aspects of study execution. Other dedicated teams also cover feasibility research, trial start-up activities, patient recruitment, and clinical and risk-based monitoring. While regulatory affairs, data science, pharmacovigilance, and medical writing teams provide strategic, operational, and tactical guidance, along with study protocols, reports, and integrated submission documents. A comprehensive range of core, central, and bioanalytical laboratory services also provide everything from imaging to cardiovascular functions, standard and esoteric testing, along with sample analysis and screening services in a Good Laboratory Practice compliant setting.

Medpace also operates clinics that conduct studies in normal healthy volunteers, special populations, and patient populations over a spectrum of diseases. While a quality assurance team also provides services including regulatory training, internal audits, as well as third-party audits of critical vendors on behalf of customers.

Thematic

To become one of the world’s leading clinical contract research organizations, Medpace’s strategy has focused on differentiating from competitors via a disciplined operating model that provides full-service Phase I-IV clinical development services, coupled with unrivaled therapeutic expertise. This combination results in the timely and cost-effective delivery of clinical development services for customers, making the company an end-to-end partner of choice for getting new products to market as efficiently as possible.

Medpace is unique in its scientifically-driven approach to clinical research, as it provides the advantage of early and ongoing insight and guidance from experts and key opinion leaders throughout trial design and execution. All project teams are led by medical, regulatory, and operational experts who are engaged throughout every study, providing guidance, and averting potential roadblocks by staying close to projects.

Furthermore, the built-in collaboration and efficiencies of working with a single vendor facilitate a streamlined strategy for executing even the most complex studies. Core clinical trial and administrative functions deliver an efficient and streamlined execution, while fully-integrated laboratory services, as well as a clinical pharmacology unit, provide a complete end-to-end offering.

Over its 30-year history, purposeful, organic growth has provided consistency in leadership, deep institutional experience, and incomparable efficiencies versus competitors. Over that time the company has systematically added specialized medical, regulatory, and operational experts, and refined and enhanced custom-built technologies and processes.

Now, with resources around the globe, Medpace can effectively navigate local languages, cultures, and processes to avoid delays and missteps, delivering seamless execution amid the complex landscape of global clinical development. From feasibility to patient recruitment, to study start-up, Medpace’s medical and operational specialists have country-specific expertise to deliver faster enrollment and obtain access to country-specific patient populations, while its regulatory experts can plan and coordinate each aspect of regulatory strategy and engagement.

Financials

In addition to maintaining a solid record of revenue growth year after year, Medpace has also improved its earnings to shareholders for the last eight years in a row. That trend has continued in 2022, with the revenue for its latest third quarter reaching $383.7 million, representing a year-over-year increase of almost 30%. While taking revenue for the nine months of 2022 to $1.07 billion.

Impressively, the company reported that net new business awards entering backlog increased 15.4% from the prior year to $470.9 million, up from $408 million in new business in the same reporting period last year. As a result, the company’s ending backlog as of September 30th was approximately $2.2 billion, an increase of 20.9% on 2021, for which Medpace projects that approximately $1.2 billion will convert to revenue in the next 12 months.

Looking ahead, following the strong quarterly results, the company increased its full-year revenue expectations to approximately $1.45 million, up 27% from 2021. While revenue for 2023 is forecasted in the range of $1.68 billion to $1.74 billion, with both estimates in-line with current consensus expectations. Furthermore, full-year earnings per share for 2022 are forecasted to improve by almost 48% to $7.32 per share, up from $4.95 in 2021.

Risks/Competition

Medpace competes primarily against other full-service CROs as well as services provided by in-house research and development departments of biopharmaceutical companies. Its major CRO competitors include Laboratory Corporation of America, ICON, Syneos Health, PAREXEL International, IQVIA, and numerous specialty and regional CROs. The industry remains fragmented, with several hundred smaller, narrowly focused service providers and only a small number of full-service companies with global capabilities.

Medpace believes it competes effectively, particularly due to its full-service operating model, deep therapeutic expertise, global presence, reliability, and speed-to-market. Furthermore, there are significant barriers to others becoming global providers that can offer a broad range of services and products. These include the cost and experience necessary to develop strong therapeutic areas, expertise and infrastructure to manage large global programs, and to prepare regulatory submissions in numerous jurisdictions.

In the company’s latest earnings report, CEO August Troendle noted the company has some concerns about the possible impact of a major financial downturn in 2023. Specifically, a prolonged period of depressed funding flows would eventually lead to a rapid escalation in project delays. However, the CEO also added that if such a negative outcome does not eventuate, the company’s current guidance would likely beat expectations.

Conclusion

Despite a cautious outlook still presenting a continuation of solid growth ahead, Medpace offers a compelling mix of a strong operating model, market leadership positioning, and seamless execution history that has brought it to where it is today.

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Diabetes is a chronic, life-threatening disease for which there is no known cure. It is caused by the body’s inability to produce or effectively utilize the hormone insulin, which prevents the body from adequately regulating blood glucose levels. For some diabetes patients, an intensive and constant regimen of multiple injections every single day is required to manage this life-changing disease.

However, for over two decades, Insulet Corporation has been on a mission to improve the lives of people with diabetes with its continuous insulin delivery system. Insulet develops, manufactures, and sells the OmniPod System, a self-adhesive disposable device that is worn on the body for up to three days at a time, along with its wireless companion, a handheld personal diabetes manager.

Designed to fit within the normal daily routines of users, the OmniPod System provides for virtually pain-free automated cannula insertion, and eliminates the need for multiple daily injection therapy, or the use of pump and tubing. Furthermore, because it is waterproof up to 25 feet, there is no need to remove it when showering, swimming, or performing many other activities.

In addition to the diabetes market space, Insulet has partnered with pharmaceutical and biotechnology companies to tailor OmniPod technology for the delivery of subcutaneous drugs across other therapeutic areas. In particular, the company generates significant revenue from its Neulasta Onpro kit, a delivery system to help reduce the risk of infection after intense chemotherapy.

The OmniPod System’s overall ease of use, flexibility, and substantially lower training burden has made it a very attractive option for people with insulin-dependent diabetes since 2005. Now, Insulet’s products are available across the U.S., along with sixteen countries across the globe as the company continues to focus on international expansion, whilst further developing its OmniPod range.

Background

The idea for Insulet’s main product was conceived on a plane ride. John Brooks, a now diabetes industry legend, had a background in the medical device field in the mid-1990s and whose son was diagnosed with diabetes at the age of three, was seated next to Duane Mason, with whom he had worked at Pfizer. While there were insulin pumps at the time, they were expensive, so Brooks saw an opportunity for a cheaper one that allowed kids who use them to move more freely.

As a result, Insulet was formed in 2000, and by 2003, the company received its first 501k clearance from the U.S. FDA for the OmniPod System. A commercial version was cleared two years later, and sales quickly spread across the U.S. and into international markets following further regulatory approvals. While the advent of smartphones has resulted in complementary software functionality to further enhance the OmniPod system.

Leadership

Newly appointed president and chief executive officer, Dr. Jim Hollingshead, took on the position in June, having previously served on the board of directors since 2019. A pioneer in cloud-connected medical devices focused on the treatment of sleep-related breathing disorders, Hollingshead was the president of the Sleep and Respiratory Care business at ResMed, leading its transformation from a traditional medical hardware technology business to a SaaS-based digital solutions and services business. Under his leadership, ResMed’s Sleep business dramatically expanded the scope and adoption of digital solutions in the treatment of sleep apnea around the globe, while pioneering the use of real-world data and advanced analytics for the improvement of patient care.

Also joining Insulet in 2019, current executive vice president and chief operating officer, Charles Alpuche, has over three decades overseeing domestic and international plant operations with PepsiCo.

Customer

Diabetes is often frustrating and difficult for people to manage. Blood glucose levels can be affected by a myriad of factors including meals, exercise, stress, and illnesses, among many other things that also impact insulin absorption. For those with insulin-dependent diabetes, constant monitoring and many corrections, which include doses of additional insulin or carbohydrates, are needed throughout the day to maintain blood glucose levels within normal ranges and prevent long-term health complications. Achieving this with the current standard of care which includes multiple daily injections of insulin can be very difficult. From the time spent managing fluctuations in blood glucose levels to the fear associated with complications like hypoglycemia can be incredibly stressful for individuals with diabetes and their families.

Insulet’s OmniPod System is a continuous insulin delivery system that provides all the benefits of pump therapy, eliminating the need for individual injections, yet with unprecedented freedom, comfort, convenience, and ease. Users can adjust their insulin delivery with the press of a button and the system can even adapt to snacks or unexpected changes in daily routine.

The product features two discreet and easy-to-use devices that remove the need for the external tubing required with conventional pumps. The small, lightweight, self-adhesive disposable tubeless device that the user fills with insulin can be worn directly on the body in multiple locations, including the abdomen, hip, back of the upper arm, upper thigh, or lower back. The Pod delivers precise, personalized doses of insulin into the body through a small flexible tube, whilst the Personal Diabetes Manager (PDM), a wireless, handheld device, programs the Pod with the user’s personalized insulin-delivery instructions, and wirelessly monitors the Pod’s operation.

In 2019, OmniPod DASH was fully launched in the U.S., along with international markets in the years after. DASH features a secure Bluetooth-enabled Pod and PDM with a color touchscreen user interface supported by smartphone connectivity, nightly automatic data uploads providing users and their clinicians with cloud access to data, and enhancements for pushing software updates wirelessly to users.

Building on the DASH platform, Insulet’s latest addition, OmniPod 5, received U.S. FDA clearance in January, bringing with it the ability to integrate the Pod with a third-party continuous glucose monitor. This integration makes it possible to predict glucose levels into the future and automatically adjusts insulin dosing intended to reduce the occurrence of blood glucose highs and lows.

Thematic

Several publications over the past decade have found that compared to multiple daily injection (MDI) therapy, the use of the OmniPod System by individuals with both type 1 and type 2 diabetes across all age groups is associated with good glycemic control and reduced frequency and severity of hypoglycemic episodes. This data has provided healthcare providers with critical support for the use of the platform in diabetes treatment.

Consequently, Insulet’s research and development efforts are primarily focused on making improvements to the system, including adding features and functionality that will deliver clinical outcomes, economic value, convenience, and simplicity to users. Whilst product roll-out efforts continue to focus on expanding clearance across indications and age groups, as well as international jurisdictions.

The full market release of OmniPod 5 occurred in August making the product available through retail pharmacies and also expanded for use by individuals aged two to five. It is expected that OmniPod 5 will hit the first international markets in 2023 and continue to roll out more broadly in 2024. The company recently received CE Mark approval under the European Medical Device Regulation, and it is now further building international teams and infrastructure to advance these regulatory, reimbursement, and market development efforts. Insulet recently opened an office in Dubai to serve as a regional infrastructure in the Middle East, whilst a new manufacturing plant in Malaysia, and consolidation of production operations in China are strengthening the company’s global manufacturing capabilities, and aiming to drive higher gross margins over time.

In addition to the company’s focus on OmniPod 5, Insulet is also working on several innovation programs. These are designed to drive the simplicity of user interaction with its systems, improve outcomes through algorithm advancements, generate insights and value from a growing dataset and analytics, along with expanding the possibilities of user choice of sensor and smartphone integrations.

Recognizing a growing value in leveraging data analytics, Insulet has also partnered with Glooko Inc to connect OmniPod user data with Glooko’s comprehensive diabetes data management system. Glooko provides a cloud-based application for clinicians and users accessible through a kiosk, home computer, or a mobile application that provides users and their healthcare providers access to insulin delivery trends, blood glucose levels, and other integrated data.

Financials

Over the last decade, Insulet has maintained an impressive record of revenue growth almost every year. That record looks set to continue as the company posted another positive September quarter, delivering revenue of $340.8 million, up almost 24%, and taking sales for the last twelve months to $1.24 billion. The growth was primarily due to higher volumes driven by a growing customer base, coupled with a favorable sale mix through the pharmacy channel, where Pods have a higher average selling price. This increase was also driven by conversions to OmniPod 5 as users generally fill both their starter kits and their first month of refills simultaneously.

Looking ahead to the full year 2022, Insulet expects strong U.S. OmniPod revenue to continue driven by new customer starts and conversions to OmniPod 5. While International revenue should remain relatively level, as currency pressures offset continued volume growth.

Consensus estimates have the company closing out the full year with expected revenue of $1.27 billion representing year-over-year growth of over 15%, while 2023 is forecasted to add a further 15% to $1.46 billion. Full-year earnings per share estimates for the year are forecasted to grow modestly by almost 10% to $0.82 per share, up from $0.75 in 2021. However, as the traction of OmniPod 5 accelerates, estimates have EPS growth at 34% and 57% year-on-year for 2023 and 2024, respectively.

Risks/Competition

Given MDI therapy is currently the most prevalent method of insulin delivery, Insulet primarily competes with companies that provide products and supplies in this space. It also competes with companies in the insulin pump market, which include Medtronic MiniMed and Tandem Diabetes Care Inc. Medtronic historically has held the majority share of the tubed insulin pump market. However, the competitive landscape in the industry continues to undergo significant change. In addition to the established insulin pump competitors, companies are continuously working to develop and market new insulin pumps and smart pens.

Insulet’s non-insulin drug delivery product line also competes with drug delivery device companies such as West Pharmaceutical Services.

As with any medical device company, Insulet is subject to rigorous regulatory compliance. Unless an exemption applies, each medical device the company seeks to commercially distribute in the U.S. will require either prior 510k clearance or pre-market approval from the FDA. Consequently, Insulet may be required to undertake costly and time-intensive clinical trials or processes for future modifications to its products.

Conclusion

Building on a consistent run of solid growth, Insulet continues to offer a compelling story for ongoing success via international expansion, coupled with a new iteration of its already highly differentiated product.

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