At Last: Insulin Delivery Devices for the Bulk of the Diabetes Population

In the field of insulin delivery devices, there have been three financings in as many months, including that of Calibra Medical, Cequr and Tandem Diabetes. The push into insulin delivery speaks to a broader trend in device investing. Investors and entrepreneurs are focusing more and more on bridging the gap between existing high-end devices that treat only a small subset of patients and basic, low-cost, almost commoditized products aimed at larger patient populations. In diabetes both of these drivers are in full force. In fact, perhaps to an even greater extent than other diseases, diabetes lends itself to a consumer mentality because patients with diabetes have to take several steps every single day to manage their own care.

In some ways, companies developing advanced methods of delivering insulin are like the diabetics they hope to treat: they're out there but they've been keeping their intentions quiet, just as people struggling with diabetes often do. But diabetics keep their condition secret to avoid any perceived stigma or embarrassment that might go along with insulin injections necessary to manage the disease. Glucose delivery companies, however, have been maintaining a low profile because they're aware of what an amazingly competitive space this is becoming.

But their secrets are increasingly out. Calibra Medical Inc., for example, has been operating for several years under the name Seattle Medical Technologies, keeping a tight lid on the details of the development of its designs for an insulin delivery device. Recently, however, Calibra has been basking in a bit of a welcome spotlight. In January, the company announced that it received 510(k) approval for its Finesse insulin patch pen, a new alternative to syringes and insulin pumps for insulin-using patients with diabetes. The next month, Calibra was in the news again, having raised $9.3 million in the first closing of its Series C round with Canaan Partners, Three Arch Partners, Frazier Healthcare Partners and Intersouth Partners.

In raising funds, Calibra was far from a solo act. In fact, Calibra was the third device company focused on insulin delivery to raise money in as many months. That's a clear sign that a shift is occurring in the world of diabetes care as investors rally behind the space, which has always presented a huge market but even larger hurdles to the development of an effective product. Among those investments, CeQur SA, the developer of a low-cost insulin infuser, raised $29.6 million at the end of December 2009. [See Deal] And Tandem Diabetes Care Inc. has raised $52.3 million in its third funding round, which began in May 2009, [See Deal] with Domain Associates and TPG among its investors, according to regulatory documents filed in January.

The push into insulin delivery speaks to a broader trend in device investing. Investors and entrepreneurs are focusing more and more on bridging the gap between existing devices that treat only a small subset of patients and basic, low-cost, almost commoditized products aimed at larger patient populations. In many sectors, companies are beginning to look at providing relatively low-cost, but advantaged products for the large bulge of patients that fall into the middle of the continuum, in response to increasing pressure from payors, who don't want to pay for expensive high-end products that only benefit small groups of patients, and to be prepared for a wave of consumerism in medicine, because patients who are responsible for paying an ever increasing share of their health care bills are looking for better, but affordable solutions.

In diabetes both of these drivers are in full force. In fact, perhaps to an even greater extent than other diseases, diabetes lends itself to a consumer mentality because patients with diabetes have to take several steps every single day to manage their own care. Today, the bulk of patients that require insulin now resorts to the lowest-cost methods of insulin delivery, which are inconvenient, discourage compliance, and compromise outcomes. Very few patients opt for the very expensive, complex insulin pumps that are on the market.

Eleven million Americans and Europeans require regular injections of insulin, relying upon syringes or pens. At times, patients miss daily injections because it's just too difficult to comply with the regimen required. Pain is an issue, even with the relatively small needle pricks used, but inconvenience presents an even greater hurdle that impacts compliance, especially for mid-day injections. Patients miss those doses because of the hassle of carrying around supplies – syringes and vials of insulin, or insulin pens and needles. Finally, embarrassment causes them to miss insulin doses; no one wants to advertise that they have the disease by injecting themselves in public. Everyone knows this, but an article by [Loyola University] professor of sociology Mark Peyrot, PhD, and colleagues, which was published in the February 2010 issue of Diabetes Care, backs up these suppositions with a survey of 502 patients (a mix of insulin-using type 1 and type 2 patients) who mentioned pain, inconvenience, and discretion as the top three reasons for lack of compliance.

Consider the venture capitalist with insulin-dependent type 2 diabetes who goes out to an important business lunch. He has to carry with him a glucose meter, syringes and bottles of insulin. He orders the pasta, and has to find someplace where it's possible to use a syringe to draw insulin out of a bottle, discreetly lift his shirt, and inject himself. Faced with public scrutiny or inconvenience, many patients just skip the injection.But Calibra Medical has introduced a tiny disposable device that holds three days worth of insulin. It sticks on the body with adhesive, and patients can shower with it on. The device can be activated through clothing – in fact, literature from the company shows that the low-profile device is barely visible through a clingy sweater. To administer insulin, the patient simply pushes a button. Going back to the business lunch, the VC reaches down to his belly, presses on his shirt to activate the Finesse, and no one's the wiser.

Calibra CEO Jeffrey Purvin notes that in addition to features that encourage compliance, Finesse also improves upon the dosing accuracy of syringes, delivering a fixed and reproducible amount of insulin with every press of the button. With syringes, "You draw insulin up from a vial, squirt a little, and inject yourself. Sometimes you draw up a little more, sometimes a little less; it is not consistent," he says.

Calibra has built certain safeguards into the device to make sure that patients are aware when the insulin reservoir is empty and also are alerted when the cannula becomes occluded, blocking the delivery of insulin. The company has achieved this level of sophistication in a device that is entirely mechanical and made of plastic components. Purvin says, "I am confident that our device has the greatest likelihood of having the lowest costs of goods." Finesse contains three days worth of bolus insulin, so as an alternative to needle or pen injections three times daily, the patient will only need to insert a new disposable device once every three days.

The company has received regulatory approval, but it hasn't yet launched the device. Purvin wouldn't give details on pricing, but he says the device will operate within the same pricing and reimbursement frameworks as insulin pens, although Finesse offers functionality and convenience above and beyond that of pens. Finesse will be a pharmacy benefit product, as are insulin pens, but early discussions with insurance companies hint that Finesse will have the advantage of being regarded as "unique and non-substitutable," according to Purvin.

Insulin pumps on the market now would, on the surface, seem like the ultimate answer to the problems of patient compliance, and also of increasing the accuracy of insulin delivery to keep glucose levels in tight control. But not only are the devices expensive, costing several thousand dollars in addition to ongoing expenditures for infusion sets and other consumables, they're complicated to use. Eligible patients are required to undergo hours of training on the intricacies of pump use. Large numbers of patients can't safely handle the complexity of the devices – if patients don't know what they're doing, it is theoretically possible for them to kill themselves with too much insulin. Nor can physician practices afford to spend the large amounts of time, most of it not reimbursed, to train and support patients on insulin pumps. James Peterson, CEO of Cequr, says he was recently at the Joslin Diabetes Center, where he met a patient who was wearing an insulin pump in the elevator. "I asked her how she liked it, and she said, 'Fine. I have just come from my second five-hour training session.'"

Peterson sees the timing as right for developers of simpler insulin infusion devices for all the reasons above and at least one more. There is a growing body of literature indicating that patients with type 2 diabetes (the type of disease that represents 90 to 95% of all diagnosed cases of diabetes) can benefit from insulin early in the course of their disease. Evidence is mounting that the administration of insulin protects beta cells, making the insulin-patch device category even more compelling than it is now for the largest population of patients with diabetes.

Conversion to the new product categories can happen at a pretty healthy clip, Peterson points out, because each year in the US 350,000 patients with type 2 diabetes go on multiple daily injections of insulin and have to make the decision of how best to do it. Peterson says, "Every one of those patients that an insulin infuser wins is worth about $2,500 a year. You can see how the market gets very big very quickly." – Mary Stuart