Insulet Corporation (PODD)
Q1 2008 Earnings Call
May 13, 2008 5:00 pm ET
Duane DeSisto - President and Chief Executive Officer
Carsten Boess - Chief Financial Officer
Paul K. Choi - Merrill Lynch
Michael Weinstein - J.P. Morgan Securities
Mimi Pham - JMP Securities
Bruce Cranna - Leerink Swann & Company
[Newt] - Canaccord Adams, Inc.
Benjamin Andrew - William Blair & Company
Philip Legendy -Thomas Weisel Partners
[Anred Nepal] - Winthrop
Previous Statements by PODD
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» Insulet Corporation, Q2 2008 Earnings Call Transcript
With me today is Carsten Boess, Insulet’s Chief Financial Officer. Thanks for joining us to discuss our results from the first quarter of ’08, another strong quarter for Insulet. We will be making forward-looking statements about various aspects of our business, so please refer to our 10-K for a full discussion of our risk factors.
I am very proud to say that we’ve hit a number of commercial milestones this quarter. We added approximately 1,200 new customers, another record quarter for new customer growth and we broke in through a major milestone for our installed customer base by surpassing the 5,000-customer mark.
Since the time that we were designing and developing the OmniPod system, we were always confident that the products customer friendly form factor would be immensely appealing to people with diabetes. We were sure that if we could deliver insulin pump therapy without the disadvantages of conventional pumps, we could overcome the obstacles preventing so many people from choosing the best possible treatment for Type 1 diabetes. The tough part, we knew, was going to be building the manufacturing capacity to meet the markets interest level in such an innovative product.
I’m proud to say that we’ve continued to make impressive advances on the production front and reached the manufacturing output of 95,000 Pods per month at the end of April and we’re on track to reduce our per unit production costs and break through positive gross margins sometime during Q3 and achieve positive quarterly gross margins for the full fourth quarter of this year.
Based on this type of progress, we were confident that the time had come in the first quarter to build out the sales, marketing and customer support infrastructure to match our new capacity levels.
One of our first initiatives in executing this strategy or 2008 was to significantly ramp up the expansion of our sales force. We’ve added 321 territory managers since the beginning of the year and now have a total of 49 reps. I am pleased to say that we now have nation wide sales coverage and we expect the new reps added in Q1 to be contributing to sales by the end of Q2.
We are also broadening the scope of our marketing activities to expand consumer awareness of the OmniPod. At the same time, we’ll continue reaching out aggressively to health care professionals. A key part of our consumer outreach strategy is to get people to try the OmniPod and see how easy it is to use, through our unique trial program using the OmniPod personal demonstration kit of PDK.
We recently introduced a non-inserting PDK which expands the reach of our trial program, as patients no longer need to go through a doctor to experience the product. Potential customers can order the non-inserting PDK directly through our website.
Since we’ve achieved national sales coverage, we’ve been able to increase our direct to consumer marketing. In January we began running direct to consumer magazine and Internet banner advertising featuring the length of the PDK order page. We’ve also been running ads on Delight, a television program targeting the diabetes community.
These activities have driven an increase in excess of 50% in traffic to our website. In addition a few weeks ago we dropped our first direct mailing marketing piece to people with Type 1 diabetes. We’ve also continued to engage in a variety of local marketing events that enable potential customers to learn about and experience the OmniPod system. We’re very encouraged by the early results from all of these marketing programs.
We continue to invest in demonstrating the clinical differentiation of the OmniPod system relative to other insulin delivery options. We’re focused on expanding the market for our product, including the use of OmniPod in the hospital setting and applications outside the diabetes market.
We believe there are a number of potential applications as a result of the OmniPod’s cost model in the control that it allows hospital staff. We are supporting the first clinical trials of the OmniPod in a hospital setting, which recently enrolled its first patient.
As an example of the strong and varied interest in OmniPod, it was specifically selected to be used in a preclinical study presented by Micromet, Inc. at the American Association of Cancer Research meeting in April exploring different routes of administration of its BiTE antibody for the treatment of cancer. The data demonstrated good bioavailability and predictable serum levels of BiTE antibodies delivered through the Omni Pod system and the study’s authors specifically noted OmniPod’s potential to improve the quality of life for patients receiving cancer treatment.
In addition, we expect to announce an agreement for our first non-diabetes drug delivery application later this year. While we always knew OmniPod would emerge as platform technology for innovation, other leaders in the diabetes space are recognizing this too.