Posted by Bill F. on March 04, 1999 at 06:42:00:
I believe good things are coming from Minimed, as I have freely stated before. Below is a recent interview with him. By the way, I agree with an earlier post that Minimed should have put an alarm in the initial model, I am curious why they did not and intend to write the company, both as an investor and parent, to solicit their response. All said, I am encouraged by their efforts:
MARCH 3, 1999
SUMMARY: Mann states the company has a new series of products based on their glucose sensor technology. Mann believes there were a number of factors that contributed to the spike in the company's stock.
Mark: Even Miss America wears one. That has Minimed pumped up. We're talking about internal insulin pumps. Now the company has something to be excited about, new continuous glucose sensor has received recommendation from a FDA panel. First of its kind including a sensor, ill planted into the tissue of the patient's abdomen for three days. The sensor then checks glucose every five minutes and sends data to a pager-like monitor. The stock has pulled back a bit. Shares tacked on about a point yesterday though, closed at 88, which is in the upper part of range. Joining us now from Manhattan to tell us more is Alfred Mann, chairman and CEO at Minimed. Mr. Mann, thanks for being with us.
Thank you. Good morning, Mark.
Bill: First of all, this technology, sounds to me like this is just the first step in a long road. It seems pretty obvious this technology can be expanded in its use in the duration of its use and things like that. I assume you figure this is the first step as well?
Yes, indeed, it is. We have a whole series of products based upon this and some related technologies.
Bill: Now, let's start with this, the glucose monitoring.
Okay.
Mark: It is not intended to replace the finger-sticking routine that diabetics have to go through, is it?
Well, this particular device is really intended for professionals to use to track glucose trends and peaks and valleys to help patients better control their glucose levels.
Mark: Is this for all diabetics or is this a product that would likely be used only for unusual or out-of-the-ordinary cases?
Well, it could be used for many diabetics. I wouldn't say all of them, but certainly type I diabetics and those with type II diabetes that are using insulin would probably be good candidates for this technology and maybe some of the others.
Mark: Now, seems to me, and I'm certainly no medical professional, not even a medical amateur, but if you can monitor glucose levels in a subcutaneous device you ought to be able to monitor a lot of different things.
Well, you really could. This technology that we've developed actually could be expanded into other sensing areas, although our company is really committed primarily to diabetes management at this point, at least for this technology.
Mark: If there were expanded uses though would you retain. You would, I assume, retain some kind of patent rights so that someone would wind up paying your royalties if they use this technology to monitor, I don't know, level s of some regular drug that one had to take, right?
That's true, although, you know, there are all sorts of technologies being used today for point of care, measurement. I'm not sure that anyone would want to particularly want to pursue this. It's always possible.
Phil: Phil Orlando. Your rate of earnings growth this year is expected to be up north of 50%. You've got an excellent long-term earnings growth rate in the 40% to 45% neighborhood. I'm curious given your good products and your good track record why the stock dropped from 120 to $80 over the last couple months. And, as a related part of that question, will this new product be sufficiently exciting that we can see the stock get back into a growth track?
Well, first of all, there were a number of factors that I think contributed to that spike in our stock. First, people were anticipating very good results and, of course, we did have exceptionally good results for last year. Our primary product growth rose by over 50% year to year. And while we don't really expect it to continue at that rate, surprisingly, it's exceeding that rate so far this year. Then, if one looks at this glucose sensor, it could be an extraordinarily large product opportunity for us. We expect, although this particular system is intended for professionals who would be relatively modest market, next year we'll be introducing a patient version of this device that could have an extraordinarily large potential. And we're building a factory now to produce when it's in full capacity, three million sensors per month that will create an enormous revenue or growth for us over the next several years so that we think that this is a major factor in the bump to our stock. And it could probably continue to accelerate the stock, although we don't really like to talk about stock prices per se. And then perhaps another factor, there were rumors on the street about some offers to acquire our company by a couple of organizations. First, as you know, Medtronic purchased 30 million worth of our stock, 500,000 shares back in the fourth quarter of last year. They've made a nice profit on that already. And then there was a rumor that Becton Dickinson was mounting a war chest to try to see if they could acquire us. Those things probably all contributed to that spike in our stock, our stock price. And it has sort of settled down to perhaps more reality since then.
Mark: Are you in talks to sell your company?
No. People talk to us all the time, but, frankly, when one looks at our strategic plan I think it's probably premature.
Mark: Let me ask you this about...I want to go back to the steam of leveraging the technology, but this time I want to ask about the insulin pump technology. Are you pursuing leveraging that technology?
Well, absolutely.
Mark: Because, obviously, if you can deliver insulin you can deliver any long-term medication.
Well, actually we offer both implantable and external pumps. And these are particularly useful in delivery of proteins and peptides and so many of the new drugs coming to market are biotech drugs, which are most generally proteins and peptides. And these, particularly the large molecules, are well-suited for the kind of technology that we offer and a number of pharma companies have been approaching us, talking to us about various possible applications. We have about a dozen different programs in various stages of evaluation and some of these are likely to be very large opportunities for us.
Mark: Now, in terms of the FDA, forgive my ignorance, if, for example, I wanted to deliver, you name it, a different drug with that insulin pump, that would require a separate FDA approval?
Well, for the external pump generally all that is required is approval of the drug. For the implantable pump, so far, at least, the FDA has required a combination application for the pump plus the drug. And it's not clear what will happen in the future when the pump, I mean, the implantable pump is actually approved and if the drug is approved it may or may not require a separate application. But if it would, it would probably be a supplemental application, which would not be such an enormous challenge.
Mark: Okay. Thank you, Mr. Mann. Appreciate it.
Thank you.