There are more than a few similarities between the idea of building an artificial pancreas and finding the Holy Grail – everybody agrees that it would be great if it were possible, but it’s definitely not easy, and more than a few people think it’s a vain pursuit. To that end, while there was once again a fair bit of attention at the 73rd annual ADA meeting last week and some encouraging incremental study data, the road to success is still a long and uncertain one.
Integrating The Diagnostics And Therapeutics Into A Single Autonomous Package
An artificial pancreas, also known as a “closed loop system” has been a theoretical goal of insulin therapy almost since the invention of the insulin pump. In fact, MiniMed frequently talked of its intention to develop a fully closed-loop system prior to its acquisition by Medtronic (NYSE:MDT), and that was about 12 years ago now.
There are plenty of valid reasons for med-tech companies to pursue such a device. Countless studies have demonstrated that diabetics do better with more intensive management – meaning more frequent glucose checks, more frequent insulin administration and so on.
That has led to two major advances in care over the past 30 years – the insulin pump and continuous glucose monitoring. Pumps allow diabetics to receive insulin on a near-constant basis (with adjustments at mealtimes), more directly mimicking the function of a normal pancreas than is possible with injections of Sanofi (NYSE:SNY)/Novo Nordisk (NYSE: NVO)/Lilly (NYSE: LLY) insulin products (including basal and fast-acting insulins). Insulin pump therapy is not yet the standard of care, due in part to cost, but both Medtronic and Johnson & Johnson (NYSE:JNJ) have established significant businesses here with durable “permanent” pumps, while Insulet (NSDQ:PODD) has emerged as one of the best growth stories in med-tech on the strength of its disposable pump systems.
Continuous monitoring has also proven to be a significant leap forward. Proper monitoring of blood glucose levels is vital – high glucose levels lead to the well-known long-term side-effects of diabetes (damage to the eyes, nerves, heart, kidneys, and so on), while low glucose levels (hypoglycemia) can be even more dangerous in the short term (leading to loss of consciousness, seizures, and even death). While traditional fingerstick monitoring was quite literally a pain, technology evolved towards systems that required less blood and then on to viable continuous monitoring systems – systems that require the patient to insert a small sensor (basically a modified needle) into the body, but then provide accurate glucose measurements for extended periods of time with no further intervention.
So, Just Duct Tape Them Together And Go, Right?
There are now multiple approved insulin pumps on the market (led by Medtronic, J&J, and Insulet) and multiple approved continuous glucose monitoring systems approved and on the market (from Medtronic, Abbott (NYSE:ABT), and Dexcom Inc. (NSDQ:DXCM). So what’s the hold up, right? Just slap them together, write some software, and – viola – a closed-loop system that works like an artificial pancreas.
It’s really not that simple.
For starters, the FDA has long been all but obsessed with safety, reliability, and predictability when it comes to products related to diabetes. Contenders in the monitoring and therapy (insulin pumps) spaces have had to conduct rigorous studies and the FDA is quite diligent when it comes to accuracy – particularly as it pertains to avoiding episodes of hypoglycemia.
What’s more, it’s not a simple exercise of “1 + 1 = 2”. Getting a continuous monitoring system to “talk” to a pump isn’t that hard, nor is it hard to write algorithms that can enable a pump to respond to changes in detected glucose levels, but there have to be failsafes in place and engineering (and then testing) those failsafes has taken some time. For any device to ultimately get approval, the FDA is going to need to see evidence that the systems are reliable, that they can be easily calibrated and re-calibrated, and that there are adequate protections in place to ensure that dangerous hypoglycemia events are preventable.
Early Data Has Been Encouraging
Medtronic is arguably the furthest along with an artificial pancreas and that shouldn’t be surprising given its the only company with wholly-owned pump and monitoring technology. At the recent ADA meeting, Medtronic presented information from the ASPIRE study, which tests a new “threshold suspend” feature for its pumps.
Use of threshold suspend, which basically responds to evidence of hypoglycemia from a continuous monitoring device, showed a 32% reduction in nighttime hypoglycemic events and a 38% reduction in “area under the curve” which refers to the combined duration and severity of hypoglycemia. In short, it looks like this on-board feature does help reduce the risk of hypoglycemia, and it is already available in Europe with the Veo pump (the U.S. version, the 530G, is still awaiting FDA approval).
Johnson & Johnson has also been making progress with its own approach. The Hypoglycemia-Hyperglycemia Minimizer Systems (HHM) uses a JNJ (Animas) pump and a DexCom continuous sensor and has been shown to work in small (20-patient) feasibility studies. JNJ is behind Medtronic here, though, as it still needs to do a third study similar to ASPIRE where patients will take the device home for use.
Last and not least, it may be the case that other options prove viable for a closed loop system as well. Boston University and Massachusetts General Hospital have come together on the Bionic Pancreas project, which combines two t:slim insulin pumps from Tandem Diabetes Care (one with insulin, one with glucagon), a DexCom G4 continuous monitoring system, and an iPhone to run the control algorithms. The system can adjust itself every five minutes and is adaptive, meaning that it responds to changes in sleep, stress, exercise, and so on). I think it’s also quite clever to include the glucagon component, as this adds to the safety of the system (as glucagon is the normal way of treating hypoglycemia in a clinical setting).
This hasn’t been shown to be a perfect system – there is a delay in responding to rapid-acting insulin (so blood glucose will go too high after eating), the glucagon component isn’t perfect (since a stable liquid glucagon isn’t available yet), and I think the FDA may have issues with a system that uses components from three different manufacturers that weren’t designed to be used together. Nevertheless, I think those are all fixable challenges and the reports from people in the pilot study have been very encouraging and highlight the need for some sort of closed-loop system – patients using the Bionic Pancreas didn’t have to count carbs, try to figure out the changes in their insulin sensitivity, or worry about hypoglycemia, and they seemed to feel a lot better (as laid out by my friend and study participant Kelly Close in a newsletter).
Where Do We Go From Here?
It has taken about three years (and counting) for Medtronic to get FDA approval of the 530G/Veo pump, and that’s a relative primitive version of the long-term artificial pancreas/closed loop system vision. With that in mind, anybody who expects a commercial system with autonomous 24-hour capabilities on the market before 2017 probably has stars in their eyes. But progress is being made, and this will happen someday.
I have to say that Medtronic looks like the early leader, not only because they’re furthest along (with the ASPIRE study), but also because they have all of the components in-house. I may be overly conservative here, but I really do think that the FDA is going to have questions/concerns about systems that incorporate components from multiple independent companies, and I think that will complicate the approval process.
What also seems evident, though, is that DexCom is sitting pretty, as it is the only viable “independent” glucose monitoring company out there. Without DexCom, JNJ and Tandem lack the monitoring component (and Abbott has the monitoring component, but not the in-house pump system). This leads me to wonder whether DexCom gets an M&A offer it can’t refuse at some point, though the company’s extensive partnership agreements could be an impediment to a buyer who wants to make the technology exclusive. By the same token, though, I would dismiss the possibility that Insulet’s disposable pump concept could be integrated into a closed-loop system as well, making this a name worth following too.
The Bottom Line
Unfortunately, there aren’t a lot of investable conclusions from this latest round of updates on artificial pancreas projects. Even a successful closed-loop system is not going to make a huge difference to financials at Medtronic or Johnson & Johnson, particularly given the likely cost of a system and the reimbursement/cost control issues we’ve already seen lately in diabetes.
Elsewhere, DexCom and Insulet would certainly have much greater financial upside to being a vital part of a closed loop system, but both have enjoyed good runs in the market and neither are cheap (Insulet is less expensive than DexCom, which appears appropriate given their positioning).
As it is, then, investing in diabetes is still a tricky proposition. While the road to an artificial pancreas looks as good as it ever has, there aren’t many investment options today, and those that are available offer either relatively little direct exposure, high valuation, or extensive risks.