After ending fiscal 2023 on a high, the Diabetes unit at Medtronic (NYSE:MDT) continues to roll on into the company’s new fiscal year.
To finish fiscal 2023 (in April), Medtronic received FDA approval for its next-generation MiniMed 780G automated insulin delivery system. Shortly after, the company fully resolved a warning letter issue with the FDA.
Medtronic kicked off the first quarter of 2024 with its Diabetes unit helping to drive the company’s overall growth. Highlights included the U.S. launches for the MiniMed 780G automated insulin delivery system, which led to led to 6.8% revenue growth year-over-year for Medtronic Diabetes.
The quarter also brought news of a planned $738 million acquisition of insulin delivery technology developer EOFlow. Additionally, Medtronic shared progress on its next-generation CGM pipeline.
An update on that CGM, plus more optimistic views on the Diabetes business, comprised a large bulk of the company’s first-quarter earnings call, transcribed by SeekingAlpha.
“The turnaround in Diabetes is real and underway, and I am pleased with the progress the team is making,” CEO Geoff Martha said. “And we’re just at the beginning of this inflection point for the business.”
How Medtronic Diabetes drove growth in Q1 2024
Martha said continued “very strong” demand for MiniMed 780G and positive feedback demonstrate the platform’s differentiated value proposition — and showed up in the company’s results.
Adoption for 780G and increased CGM attachment rates helped non-U.S. developed markets grow by 18%. Meanwhile, Medtronic saw its prescriber base rapidly expand, with a 30% increase since late June. The company says it now stands at over 13,000 since the launch. More than half the company’s previous-generation 770G installed base upgraded or placed an order for 780G since the launch.
Martha said the company now sees the intensive insulin space moving from standalone CGM to smart dosing. That comes either through automated insulin delivery (AID) systems or smart multiple daily injections (MDI).
Que Dallara, Medtronic Diabetes EVP and president, said the company recorded the highest new patient growth it’s seen in three years. That’s coming from MDI and competitive switches, she said.
“We are well positioned for this trend,” Martha explained. “We continue to invest heavily in next-generation durable pumps, smart pens, patch pumps, sensors and algorithms with multiple programs under development.
“Importantly, we’re the only company assembling this complete ecosystem of differentiated technology for people living with diabetes.”
Martha added that the Diabetes business remains in an early stage of growth acceleration. Profits come from the unique prescriber increases and higher CGM attachment rates, he pointed out.
“We’re really pleased with the momentum we have in Diabetes,” Martha said. “And, we think this is durable and in line with the market trends of time and range and moving to automated insulin delivery. We’ve got a nice pipeline coming down the path as well.”
Update on next-gen offerings?
Martha has previously mentioned Medtronic’s next-generation Simplera CGM. Half the size of the Guardian 4, the disposable Simplera could theoretically be Medtronic’s counter to the existing CGMs on the market made by the likes of Abbott and Dexcom.
When asked about this CGM at the Goldman Sachs global healthcare conference, Martha confirmed that the company made its regulatory submissions recently. Medtronic applied for CE mark “months ago” and submitted for FDA approval within a month of that June conference. Martha offered no timeline for the approvals but expects Simplera to hit European markets sometime in the fall.
“It is half the size of our current sensor, and it takes two seconds to put on,” he said. “I actually went through our clinical trial, nondiabetic. But I wanted to see, and it’s very easy to use. We think that’s coming soon. And it’ll have an even bigger impact.”
Despite the advancements on the CGM front, Martha said, from an economic standpoint, Medtronic makes its money in the automated insulin delivery business with the consumables.
When asked on the first-quarter earnings call, Dallara said it remains under review with the FDA. She said it’s difficult to put a precise timeline on when the company can expect approval, “but that is progressing.” The company also completed enrollment for a clinical trial to integrate the CGM with 780G.
As for other offerings coming down the pipeline, including a patch pump from the EOFlow deal, Medtronic expects to close the acquisition at the end of this calendar year. However, Dallara can’t pinpoint specific timeframes for what’s next quite yet.
“It’s difficult to comment on our further programs,” Dallara said. “They’re progressing as we expect in our internal timelines. But, at this stage, it’s a bit too early to put details on specific timing.”
What about GLP-1s?
The GLP-1 drug class — including Ozempic and Wegovy — has cast a shadow of doubt over diabetes technology of late. This therapeutic class, a glucagon-like peptide 1, has proven to lead to improved blood sugar control and weight loss.
Analysts even recently trimmed some forecasts on sales to reflect increased pressure on diabetes technology as a whole with GLP-1 updates. The current trend impacted market responses to the likes of Insulet and Embecta in this most recent quarter. It even had an impact on Intuitive Surgical and its surgical robot for bariatric procedures.
“I’d say it’s an important class of drugs,” Martha said. “That said, our initial work indicates minimal impact to our business. The one area we’ve seen some modest impact is bariatric, but this is really a small impact and this is a relatively small part of our Surgery business.”
Martha even said that, longer-term, it could bring more bariatric patients through the funnel, despite the short-term impact.
“Longer term, we’ll see how it plays out,” Martha added. “There’s a bit of optimism there, though. No impact in type 1 diabetes, which is the vast majority of our Diabetes business. Overall, I just don’t see GLP-1s having a material impact on our business and medical device therapies at large. That’s what our work is showing us at this point.”