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FDA OKs Insulet's Smaller OmniPod - Analyst Blog

Posted
12/17/2012 6:01:00 PM
By: Zacks.com
Referenced Stocks:CSII;JNJ;MDT;PDM;PODD

Insulet Corporation ( PODD ), a leading tubeless insulin pump maker, has won 510(k) Food and Drug Administration (FDA) approval for its next-generation OmniPod Insulin Management System. Management is currently preparing to launch the product in the U.S. sometime in late first quarter of 2013.

The OmniPod Insulin Management System is a revolutionary, discreet and easy-to-use insulin infusion system that features two easy-to-use components with no tubing and a fully-automated cannula insertion. The latest pump is more than one-third smaller in size and one-quarter lighter in weight than the original version introduced in 2005. It also incorporates an updated Personal Diabetes Manager (PDM).

The FDA approval is likely to boost the company's core Omnipod business in the U.S. Insulet is already generating strong results, on the back of higher Omnipod sales, with revenues increasing 23% in the last reported third quarter of 2012. 

The company had been incurring incremental costs related to the development and regulatory approval of the next generation OmniPod insulin pump. Following the launch of this technically advanced and user-friendly pump, we are optimistic that it will generate revenue opportunity from the second quarter of 2013.

However, the device is likely to face strong competition from larger players developing similar insulin delivery devices such as Medtronic MiniMed, a division of Medtronic Inc. ( MDT ) and Animas Corporation, a division of Johnson & Johnson ( JNJ ).

The company is heavily investing in training healthcare professionals as well as patients regarding the new product, which is likely to be a drag on the bottom line. Since its inception, Insulet has incurred significant net loss and as of December 2011, it had an accumulated deficit of $441.0 million.

Massachusetts-based Insulet is an innovative medical device company dedicated to improving the lives of people with diabetes. Through the OmniPod System, Insulet seeks to expand the use of continuous subcutaneous insulin infusion (CSII) therapy among people with insulin-dependent diabetes.

We have a long-term Neutral recommendation on Insulet. The stock currently retains a short-term Zacks #3 Rank (Hold rating).



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