Tandem Diabetes Care, Inc. (TNDM) Earnings Call Transcript & Summary

All right. Welcome. Thank you, everybody. It's Patrick on the medtech team, as many of you know. We -- disclaimers, you're probably not going to read them, but they're here if you so desire. Much more interestingly than disclaimers, we've got John and Leigh here, CEO and CFO of Tandem, respectively, for what should be a great conversation in a very dynamic market. John, I think you had a couple of...

Yes. I just wanted to mention that we may be saying some forward-looking statements. And so if you could just look at our safe harbor policy, which is on our website, that would be great. Thank you.

Yes. Love it?

Looking forward to being here, Patrick.

Yes, of course. I mean maybe want to dive right in the movie, but diving right in the movie. How is the feedback on the launch been? How are you feeling about things? Anything you'd want to call out type 1 feedback in particular and how things going at Mobi.

Great. It's actually going very, very well. We're very excited about the product. As you know, we have a portfolio approach. We believe the market is very segmented. And you need to have multiple products to address the different ways people want to control where -- or interact with the device. And we have t:slim in the market now for probably about 10 years or so and Mobi is just coming to market. Mobi is, it's about half the size of the t:slim. It has a bolus button on it. It's controlled by a mobile app. And the beauty of that is that you get a great deal of convenience and discretion. I mean you can be interacting with the mobile app, while sitting at lunch with friends, basically managing your diabetes and no knows you're doing that. So I guess the importance of the bolus button is that if for some reason, you going to lose your cellphone or lose the power, the system continues to work. The sensor talks to the pump and the pump has the algorithm on it. And so if it does come a point where you need to give yourself a bolus, you can. And it's preprogrammed, so it works very, very well. I would say that if you talk to people in the market, they're very surprised by how small it is when they first see it. It's very, very light, even when it has insulin in it. And so I think what's really happened here is that as we define wearability, I think the argument or the competitive argument before was it's tubeless, and that's not pace. It really is about wearability. And I think that with Mobi, you can practically put it anywhere if you would like on your body. It comes with an adhesive sleeve, so there's a [ past ] like experience, if you'd like to have that, but you can always disconnect, which is very, very important. One of the things that I really appreciate when people talk about it is they say they forget they had it not. And interesting, Leigh wore it for about 10 days, just as an engineering sort of with [indiscernible], and she said that to me several times, you just forget you have it on, which I think that's the ultimate compliment. So we had 2 sites to relatively extended large studies in our sort of premarket access. And Barbara Davis Center actually presented the data, they had collected data, they surveyed patients. And we just asked them, did you like it? And we had people who are MDI users. They were patch pump users. They were other tubed pump users and they were Tandem users. And we are very surprised with just how high the scores were. They were very satisfied and satisfied. The scores were in the mid- to high 80s, which is a very good score. And we asked people what was -- what about it? Did you really -- what appeals to you? And it was the fact that it was small, light and wearable. And then there was a group -- the thing that kind of surprised us was when you looked at the former patch users, when they commented on it, I think that the size and what was not as important because, of course, the device that they have had been using is small also, but it was the algorithm. It was the performance of the algorithm that they were very impressed with, and that was really what drove them to the pump. So we're excited with it. We're in the early stages. We'll just get started. As we talked about in the second quarter call, the second quarter call was -- it was the highest number of MDI starts we have seen in the last 6 quarters. And we largely driven by Mobi. And I think if you look at the data from Mobi, more than half of the Mobi starts were new to Tandem. And then more than half of those were MDI. So it's doing just what we want it to. We think it's growing the market, it's getting people who are using pumps and needles today onto a much better therapy. And as I said, we're very excited about the start.

I know it's always difficult to talk about the competitive environment. But it's been a bit of a pickup in competitive conversions towards you guys. I mean, is that something you would expect to continue going forward? Or is that more of a front-loaded new product that then the market returns back to sort of switching rates that were historically stable?

No. I think that we think the market is going to continue to grow. And we, right now, as you probably know, there's 1.9 million people in the U.S. that have Type 1, about 30% to 45% penetrated. We think that can get up to 65%. In order to do that, we've got to get to MDI starts in excess of 100,000 annually. So and I think that this is an interesting year because last year, there was a great deal of new product activity, which we think creates turbulence where people are waiting, there's a pause. And this year, now there's 4 products in the market essentially that are all -- they've been in the market now for a while, and I think we're going to see kind of more stable growth. And I think that we believe that movie is going to drive continued MDI growth for us.

That type 1 penetration growth, I mean some -- at least in my conversations when people talk about type 1, they're like, oh, it's all in those taking care of these patients it doesn't seem like that's true. There's a big chunk of PCP still taking care of those patients. And I guess what I'm going with this is, do you feel like Mobi and a platform with a good algorithm with an attractive form factor can help convert some of those type 1s that have been looked after by PCP maybe a slightly better rate than some of the more complex pumps of the past?

Yes, absolutely. I mean our premise of ease-of-use drives the adoption. And I think that we actually do work with PCPs today. Our sales organization targets that people are -- the physicians based on their insulin usage. And there's -- there are many PCPs who use quite a bit of insulin, therefore, they are prescribing pumps for people with type 1. So we think absolutely is that this device is going to appeal to that community.

When we think about integration, any update on time lines of Libre 3 and outside of things and how the integration plans are looking?

Yes. So we've been working with Abbott now for a couple of years. We have FreeStyle Libre 2 Plus integrated onto the t:slim. We've indicated that next year, we're going to have a integrated on to t:slim -- sorry, the FreeStyle Libre 3 will be on t:slim and on Mobi. And we'll also have FreeStyle Libre 3 in the OUS markets on t:slim. So a big year for us. We think it's going to be a very exciting period for us because there are so many people who use the FreeStyle Libre 3 today. In fact, there's roughly 300,000 to 400,000 people in the U.S. who have type 1 that don't use a pump that use the FreeStyle Libre 3. So it's just a big market opportunity for us to get in there and start to help people understand the benefits of the therapy.

Most people who are going to be listening are probably specialists, but just in case the level set everybody. Might be worth going through the Tandem Choice program, just to give an idea of what that is and the normalization of payment starts and how that's been affecting things a little bit over time that would be quite helpful.

Sure. I'm happy to talk about that. The Tandem Choice program is an offering that we have for people who are already in warranty with Tandem pumps to give them the ability switch to the Mobi platform before their warranty expires because ordinarily, an insurance company will not pay for a new pump within warranty. And so we offer that to all of our in-warranty customers who have at least a year left in their warranty cycle. And the opportunity to begin switching just started in the end of the second quarter, and it will last through the end of the year. It does come with some very complex accounting treatment. And so what we've done is we've been reporting non-GAAP financials, which exclude the impact of that program. So when you look at our non-GAAP financials, what you are seeing are true sales, if you want to call it that, that's full price to Tandem, exclusive of any people that are switching. And once the program expires, then we'll go back to normal just GAAP financials. And so hopefully, we'll get that out of the way here pretty quickly.

I wonder if we could switch a little bit to type 2 because it's a very topical space, and there's a lot of focus on it in general. We can touch on the clinical side, but I was interested in some of the comments around penetration that you made recently around potential 25% penetration. How are you guys feeling about that? Maybe clarity for those new audience of which patients you're assuming sort of fall into that broadly? Is it just the intensive? Just where you see type 2 penetration ultimately?

Sure. Well, I think if you look at the progression of type 2, you ultimately get to the point where you need basal and bolus insulin, not unlike somebody who has type 1, your pancreas begins to lose its performance and you develop insulin resistance, and you need a lot of insulin on a daily basis. And so these people are definitely candidates for pump therapy. If you look at the size of the market in the U.S. today, it's about 2.3 million people who have insulin-intensive type 2, about 100,000 use a pump so it's less than 5% penetrated. We have been doing quite a bit of market research in the community. And we find that there's absolutely interest, people who are near-term pumpers, people who have -- they have -- they're employed. They've got good insurance. They've got a network of people who care about them, and they also care about their health. These are people who are absolutely candidates to use a pump. And as the pumps become smaller, more discrete and the therapeutic values are significantly beneficial to the type 2. So we think it's a market that's going to grow. And so we have done some research, as I mentioned. And we think that in the next 3 to 5 years, we could see that number grow from 5% to the mid-20s and potentially even further in time. So it's an exciting opportunity for us. And as you indicated, I think the 3 major companies that are in the pump space today, are all either completed or about to complete or in the process of doing studies to enable the algorithm to get approved for the indication of type 2.

Exactly on that point. I think you recently announced the last patients have made it through the trial. I mean even qualitatively, any sense for how things have gone, how the patient experience was, anything at all just even vaguely and qualitatively.

With the study that's just wrapping up, we're just weeks away from finishing it now. It's still -- the data is still blinded. But the -- we have had some feasibility studies. And on the feasibility studies, we saw actually even better improvements in time and range for these groups. And the people love the pumps they wanted to stay on them afterwards. So I think that, as I said, we do believe that there's an opportunity here for these types of technologies to really help the community. And I think that we're looking forward to getting the study completed. Our plans are to accumulate the data process it and get the filing into the FDA before the end of the year. And we would expect to see a product probably in the market in the first half of '25.

Type 2 is obviously there's a bunch of key differences between that and type 1 as a patient cohort. I mean maybe to drill into a few of those. The total insulin requirement is dramatically higher. What are your expectations among that intensive pool, for those who will be applicable to use a smaller reservoir from one side of your product platform to those who will need a larger one. Like that insulin requirement, obviously, the requirement comes down using a pump in the first place. But any view yet on like how much that limits who can use what platform?

Well, I think that's back to this issue of having a portfolio of products because t:slim has a 300-unit reservoir, Mobi has a 200-unit reservoir and Sigi, which is our full patch device, uses a prefilled insulin cartridge. And so we've been sensitive to this. And I think as we've developed the products, we've also optimized the filling and changing process of the cartridge. The device actually comes with -- the cartridge comes with a fixture that you can connect up simply to a vial of insulin and then just draw the insulin in it. It doesn't take very much time at all. It's very simple. So that's obviously an optimization from t:slim, it's going to be necessary for people who actually do use more insulin. And then certainly, when it comes to Sigi, changing out the prefilled cartridge is very simple. It doesn't take much time at all. And that's just another benefit of the technology. Yes.

To what extent -- not to stereotype, of behavior -- type 1 is often dealt with their conditions for many, many, many years. It's not really progressive per se. But a type 2, it's a very different setup from a patient standpoint. So to what degree is the importance here of the algorithm and the ability to take some of the burden off the patient's hands to manage time and range, HbA1c and things like that? And how much do you think the ability to remove things like carb counting in general matters for that patient pool?

I don't think that's something that matters to both type 1s and type 2s. I think certainly with the type 2 community, we think simplicity is a very important feature that needs to be designed into the user interface as well as the algorithm and the degree to which you can eliminate a cognitive burden of diabetes for that group only will improve the uptake is what we think. So I think that when we look at the user interface and also when we look at the algorithms, we are looking at ways to do that to substantially reduce the needed interaction with the system, but at the same time, providing equivalent or better results that we're seeing today with the existing algorithms.

With finance people, we all love spreadsheets, and we love nice thick lines between distinct groups so that you can model things. But is there an argument that within type 2, a lot of the patients who are categorized as basal. It's just because the doc feels that MDI are they really going to be that compliant. Actually, their HbA1c won't be -- I don't know, 8.5. It's not at 7 anyway. And actually in some ways, these patients would still be very applicable for pump therapy, even though technically, they're falling into the -- that basal pool. Do you have any sense at a, is that a valid line of reasoning; and b, do you feel like that's a meaningful proportion of that basal pool?

Yes. I mean let me think about that for a moment. I think that as the disease progresses, I think that certainly the people who have insulin-intensive type 2, our needs, they need both basal and bolus insulin. I think that the -- certainly, basal insulin at the progression is going to be towards the people who act at the insulin intensive therapy. So I know I'm not answering your question. But I actually -- maybe you can answer it or ask it again.

Yes. Basically, just how many of the basal patients kind of would been MDIs, just the doctor doesn't have confidence that they're necessarily even going to be that compliant. And then on that line where they could still use a pump because there's been a basal patient who's being kept at 7 very nicely and one is not on MDI, it's just taken weekly, but it's actually at 8. You know what I mean?

Yes. So I think that the real benefit of 3 companies coming to market with clinical data is that that's really what the physicians need today. They need to be able to see the benefits of this therapy and get more confident that is actually going to help them. And I think that -- so there's this -- I think that there's a market development opportunity that we have and we need to proceed forward with -- and so I think that's how you need to educate the PCPs for the most part on the benefits of the therapy and that by using this technology, you can substantially improve their experiences, which is why I think that once they're aware of that, they'd be more likely to put somebody on a pump when maybe today, they just keep them on basal.

Maybe for those in the audience who are less familiar, if you could give them a background to the importance of Control-IQ, both strategically for you guys, but then also separately to that, the FDA has seen Control-IQ many times now they're very comfortable with it. And that's very clear. How does the type 2 filing work in a scenario where the regulators are already very comfortable that the algorithm is working very well.

Yes. Well, it's been on the market now for 4 years. It's -- we believe it's the best algorithm on the market. It's the only algorithm in the market that has automated correction boluses. And what you get from that is you get -- as soon as you begin to use it, you get immediate and sustained improvement in your diabetes management. And as Patrick has indicated, it's been under review by the FDA successfully 3 times now. And the algorithm that was reviewed this most recent time and approved is the one -- is the exact same algorithm that we intend to use for the type 2 community. And it's the one that has been used in the studies, of course. And so because of that, I think that the FDA, when they -- the only thing they really are going to need to see in this review is going to be the clinical data. And so that would -- and so we believe that after they see the clinical data, it's going to be a rather rapid review process, and we would anticipate that the -- as we indicated, we'd expect to have the product in the market in the first half of next year.

Is there a strategic benefit, whether it's marketing or genuine evidence generation, from your trial being randomized with the control arm relative to the single-arm trials that we've seen thus well?

I would say that, first of all, our competitors have done safety studies, which is it doesn't have a control arm. The study that we did has is a randomized control trial with a control arm. Therefore, it's the gold standard of clinical studies. And so I think it's meaningful to the physicians we're actually going to be looking at this data that we have done it that way. I would also say that there's the possibility that it gives us the opportunity to actually get claims. And maybe we don't get claims from the study, but we continue to pursue that. And with the control arm, it's clear the benefits of the technology and claims are something that I think would only improve the chances of us getting more of the market share, I think, for the type 2 community.

Maybe to sort of get people up to speed, could you give a sense from the reimbursement of the sales force standpoint, what's in place and what you're doing to prepare for that type 2 launch?

Yes. Right now, we're working on the commercial strategy. We're looking at size of the sales force, of course, looking at market access, clinical data and clinical marketing. So we're in the midst of planning all of that, being ready for the release specifically next year. I mean, Leigh, you may want to just mention some of the reimbursement things that are available today and how it actually works in the system.

Yes, absolutely. So today, generally speaking, type 2s are covered for pump therapy. In the commercial world, it's a little bit easier to get someone on the product, much more like a type 1 patient. It's really on the government side where there are is a higher burden in order to, I would say, prove that a pump is medically necessary. It's been a challenge in the industry for years. And so there is a coalition, the Diabetes Technology Access Coalition, that is on behalf of the whole industry going to CMS, the lobby for making changes to some of those requirements. And a national coverage determination request was submitted, I think, roughly a year ago now, and we know that it's on the docket for review. We just don't know right now where it is on the docket. But I would say I'm going to take an optimistic view that some of the changes can be made that can be favorable and beneficial to get type 2s on the product considering the same coalition sponsored. Some changes that were made in the CGM industry. So we're looking forward to seeing that and that will be very helpful with the type 2 indication to be able to market and then make it simpler for a physician to prescribe it for a patient.

What should we take from the fact that in type 2, there's been some, obviously, modest, but definitely some off-label prescription-ready essentially, like how does that factor into above prices around how the curve of adoption looks and what the underlying demand is?

I mean I think it suggests that there are people out there that are interested in. I'd say these may be equivalent to early adopters. But as we said, we've done quite a bit of market research. And we think that it is -- there's a great opportunity to grow this market. There are people out there that are very interested in it. They care about their health, and they want to improve it. And I think that this is the best way to go about doing it. So it's a market development app. We have to develop the market. And I think that now that we're all on the verge of getting the indication I think this is going to happen.

I'd managed to go for the entire conference thus far without using the phrase GLP. But I feel like I might as well bring it up. We have a strong view on it in type 2. But again, for some people who might be more on the therapeutic side and look less at the pump side, latest thoughts on implications for that type 2 pool and how that interplays for you guys?

Yes. I mean, there are some concerns that GLP-1s are going to reduce the level of insulin needs that people have as they lose body mass. And as a result, we're going to see a smaller TAM with the type 2 community. I can tell you that when we've done several studies now, when we published results from one we did last year. And not unlike the pivotal study, we've had about half of our participants using GLP-1s. And the requirements was you need to be on the current modern versions of GLP-1s for over 6 months, and you need to use basal-bolus insulin from MDI. And so when we look at the diabetes management of that population, it was poor. They had A1Cs in the high single digits, low teens, which is very poor control that has real significant consequences later in life as well as just how you feel in that day. So when we put them on Control-IQ, what we saw, we saw substantial reductions in A1Cs. We saw them drop down to close to 7. And so the feeling we have is that if you're a insulin-intensive type 2, you're using a great deal of insulin. And the GLP-1s don't necessarily help improve the control, it really isn't until you use these algorithms that you see the control improve, and therefore it's complementary. We think there's a very important reason to have GLP-1s in the market, but they work in complement with the algorithms. And I think that's something consistent with our competitors, I think, feel the same way and [ have ] said that.

I'd love to pivot on the product side and talk a little bit about Sigi actually. Latest thoughts, timelines, quite a differentiated product. And to your point, you'll have all the way from t:slim to Sigi, it's a sort of a continuum of different form factors. How do you see Sigi fitting in? How do you expect the adoption curve eventually to look like in timelines?

Yes. We think there's definitely a group of people in the MDI community today that otherwise would not use a pump unless it's a patch pump. So we think there's a need for it. And therefore, we've been developing one internally. We met AMF Medical, it's a Swiss company. We looked at their technology. We studied it carefully. We actually did quite a bit of market analysis that basically comparing it to our internal program as well as competitive products in the marketplace. And this thing scored very, very high. To the extent that we acquired the business and we basically discontinued what we were doing internally. And the way this device works, it's a patch. It's got a very low profile. It's got great ergonomics it has -- it's a rechargeable patch as opposed to a disposable patch. So it has a 2- to 4-year life, for instance. There's a rechargeable element, but there is a cap that you take off to insert the insulin cartridge. And then there's also an infusion plate that has the cannula on it. So this device, we think that rechargeability is very important. We're not going to be throwing away PCBs, batteries and just other devices on every 3-day basis. And I think you're all quite aware of the sensitivity to environmental issues. And so that scored very, very high as well as the prefilled insulin cartridge. So the 2 of those together, we really think differentiates the product. And when you look at them together, they are definitely different. And I think that it's a true competitor for the existing patch device on the market today, and we think it's going to do quite well. But as I said, there are people who would not come to pump therapy without it, and we think it's an important element of our portfolio.

Would you say that you guys are long term fairly agnostic between the 3 form factors and you just want to kind of cover all bases?

Well, we think there's going to be meaningful demand for all 3. Now there's gross margin benefits with Mobi. And there will also be with the Sigi pump. And so if the entire community wants to go to those, that's beneficial to us. But we think that there's still going to be meaningful demand for t:slim.

On the topic of gross margins. Mobi is one point. I mean, it might be worth explaining to people the COGS benefit and the other that we had done a bit of work on was the 7-day infusion set. And love to hear from you guys about expectations for how that might affect gross margins and also the patient experience in relation to the 7 days.

Yes.

Sure. I'll start with the gross margin piece. So where we sit today in the low 50s with gross margin, we have aspirations of being at 65% gross margins. And I would point to Mobi as being the single most important driver to getting us there. It can get us more than halfway to that point. It's a multiyear expansion opportunity. It starts with the pump, which today is a slight headwind as we're building at lower volumes. But as we exit this year, we expect it to start to become accretive to gross margin, not even at its maximum potential, but at least lower cost than t:slim. When it's at full scale, the manufacturing costs will be 10% to 15% lower than the X2 and the cartridge for the Mobi will be 20% lower cost than the X2. So again, as more and more people in the installed base become Mobi users, we'll start to see the benefit from the cartridge in future years. And so we look forward to that becoming a bigger piece of the business and what the patients are selecting. You mentioned the extended wear infusion set technology, another opportunity. In fact, every new product that we launch in the future has a design principle where it should have at least as good as or better gross margins than the products that we offer today. And so the extended wear infusion set technology is a great example of that, Sigi on down the road. And so those are probably the largest drivers to the gross margin opportunity. I'll add though that our pricing strategies are also expected to be beneficial. We've had really good success in the DME channel alone, getting price increases. Some of those have recently been put into place and have multiyear increases already built into them for the future. And we're also looking at the pharmacy as an opportunity for some price improvement as well as improving access for customers on the road. And so I would say those are the top gross margin initiatives.

You brought a pharmacy, so...

Sure. Happy to talk about it.

It's -- I sometimes feel like channel mix dynamics get probably too much oxygen, but nonetheless. How are you feeling about that? What do you feel latest thoughts on what the business model for the durable pumps, in particular, looks like in the pharmacy? Is it the same capital equipment sales system or one of your patient is going from more of the use over time, sort of absorbed costs metric and system that way. How do you think this model eventually evolves for the durable pumps for the pharmacy?

Sure. I'll start quickly with the -- what the strategy is and how we're approaching it. So we're starting with a DME -- sorry, X2s in the DME channel today and expect it to stay there. Mobi started in the DME channel. But what we're doing is we're exploring the pharmacy opportunity with Mobi as almost what I would call a test case or a pilot into the pharmacy channel, from which we're going to gain a lot of learnings with the goal to launch Sigi directly into the pharmacy channel. And one of the biggest learnings is one you just highlighted what is that business model. What's different about pharmacy is it gives us the opportunity to explore alternative business models versus what we see in DME today. And so stay tuned on what that looks like ultimately, there's a chance you could see multiple variations of that business model as we're piloting the pharmacy channel. And when I say that, that means it could be something that from the outsider looking in, structured much like DME with heavier economics on the pump and then less or so on the supplies going forward. All the way to the other extreme where it could be almost all on the supplies and every variation in the middle of shifting economics between the 2. And so that's some of the learnings we're going to get as we're having these conversations with payers. I think -- most importantly, there's no set model today. And a lot of people equated pharmacy with subscription model, and that's not necessarily the case. So as we start to talk more about the contract when they're coming, we'll give more color on what that looks like for us. But I just want to add that it's expected to be a very measured migration in pharmacy. And so you shouldn't expect to wake up overnight and the next day Tandem has full coverage, and it's completely disrupting our existing business model. It's something that we're going to be selective about and it will be then over time. And again, ideally, we'll be -- we won't accept a contract that's not at least as good or better than what we see in the DME channel today.

Do you think sometimes people just assume because of the success of one payer in that channel that is -- that channel is necessarily better, probably poor of choice of words, than DMEs. But actually sometimes for some patients the DME can be a better solution than pharmacy, is that something that resonates?

You're absolutely correct. So we have some really good contracts in the DME channel. We have some with no prior authorization where a patient can get a pump in a matter of days, not even weeks but days. We have some that have 0 out-of-pocket costs for the patient. So that's not a plan that we were trying to switch a pharmacy because it already works very well. What pharmacy also offers to us, which I didn't articulate before was the access for the patient. It's really the ability to influence the out-of-pocket cost. That's one of the biggest objections to people moving to pump therapy, especially if they favor the durable pump, is that they usually have an $800 to $1,000 out-of-pocket for their co-pay. In the pharmacy channel, we have the ability through managing the rebates, getting on a particular tier and influencing what the out-of-pocket looks like, or even offering co-pay assistance to help bring that cost down. So it's not a barrier to patients moving to pump therapy. But like I said, we do have many patients that don't have near that level of out-of-pocket. But what we want to do is be able to open access for everyone.

Cynical question. I apologize being half-British, I'm going to channel that energy. But what if in Mobi, you end up making a product that's too durable and that, therefore, the payers then just turn around and you don't have that replacement cycle because actually, it can last for every 8 years. Do you see what I mean? And like, have you considered that sort of thought process?

Yes. That feeds into thinking about alternate business models, where shifting more economics to the supplies can be the way to go to not be so reliant, I would say, on the need to sell a pump every x number of years. And so that, again, gives us opportunities to think about our current business today and how we can think about future opportunities to drive more revenue, better margins and less reliance maybe on that individual sale.

I will say that t:slim is also very reliable. And we faced the same issue there today. And the program that we've developed to address that is we provide free software updates to people who are in warranty, and these have been meaningful updates. The Control-IQ which was introduced in 2020 and anybody who had an in-warranty pump at that point in time, got Control-IQ for free. The same thing with the G7 implementation that just occurred, and the Libre 2 -- so all of these software updates are free of charge, if you're in warranty, and therefore, we are looking to incent that conversion after 4 years to the new system.

Well, you need to be incentivized as well to put new innovation in the hardware, otherwise, if you don't get paid for it like...

Right. That's right.

Makes complete sense. Diabetes is a dynamic space. There's a lot of questions that always come up. The standard end of conference question, but things that come up that you're surprised to the degree that the market focuses on or alternatively things that you spend a tremendous amount of time on internally that don't get a lot of external airtime that there's a disconnect there. For either or both of you, how do you feel like there's the difference between where the focus is internally and externally?

Yes. I mean I think that when it comes to the share price, I mean, there has been volatility for Tandem over the last 18 months. I would say that as an organization, we recognize it doesn't define us. We keep our heads down and it's all about execution and achieving the milestones. And as we do that, we expect to see more stability. And I think growth in the market cap of the business is at the same time. So I think that it's a very dynamic market for sure. When it comes to -- we also have focused a great deal on our digital infrastructure. We have invested in a product we call Tandem Source. It's a data management platform that's really directed to help physicians manage their patient population, give them data in formats they want. And we help -- actually the tool itself is -- makes their office practices more efficient. And it's a one-stop shop for patients as well. They can come in to Source, they can get training materials. They can update the software. They can purchase supplies. It's -- we want to make it very much like a consumer-oriented product. And this is something that we're wrapping around our product and technology ecosystem. I think it doesn't get the visibility because it's not necessarily generating revenue at this point in time. It could ultimately in the future. But I think for now, it does create a great deal of stickiness, and that's really what we're interested in doing.

Almost perfect timing, John, Leigh, thank you so much for the time.

Thanks, Patrick.

Thank you.