Positive MiniMed Trial Results Could Boost Medtronic’s Diabetes Sales
Medtronic (NYSE: MDT) recently announced the results of the OpT2mise trial, which showed that its MiniMed insulin pumps achieve better results than multiple daily injections in controlling glucose levels for people suffering from type 2 diabetes and requiring insulin treatment. Insulin pump therapy is already popular with people suffering from type 1 diabetes and the results of the OpT2mise trial are likely to attract insulin-requiring type 2 diabetes patients into using this therapy as well. [1] According to the company’s estimates, there are about 344 million adults in the world suffering from type 2 diabetes and 20 million of them require insulin for treatment. [2]
See our full analysis for Medtronic Inc.
Medtronic sells insulin pumps through its Diabetes division, which contributes about about 9% of the company’s value, according to our estimates. Sales in the division grew 13% year over year to $460 million last quarter, driven by solid uptake of its MiniMed 530G system (with Enlite CGM sensor). MiniMed is possibly the only system in the market, which has a built-in automatic control mechanism to start/stop insulin delivery in the blood based on pre-determined insulin levels. We estimate that the positive trial results coupled with the superior product offering from Medtronic could drive sales significantly in the near term as the company expands internationally focusing on the type-2 diabetes market.
OpT2mise Trial Results
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The Medtronic sponsored randomized and controlled OpT2mise trial was conducted in participation with 331 adult patients, 30-75 years of age, from around the world. The trial results revealed that patients using insulin pumps achieved an average A1C (average blood glucose) reduction of 1.1% as opposed to an average reduction of 0.4% for patients using multiple daily injections. This is important because even small reductions in A1C helps patients in significantly reducing the possibility of complications such as eye disease, kidney disease, nerve damage and heart attacks. [3] [4] Moreover, the patients using insulin pumps did not encounter any severe hypoglycemic (low blood sugar) or hyperglycemic (high blood sugar) episodes in the course of their therapy, which can cause confusion, disorientation and even death, in the worst cases.
In addition, the trial results stated that those using insulin pumps lowered their daily insulin dose by more than 20% while the patients using injections registered no change in their insulin requirements with time. Another positive outcome of the trial was that there was no major difference in weight gain between the two groups of patients, reflecting that those using the insulin pump did not have any additional side effect with respect to those taking multiple injections on a daily basis.
Our price estimate for Medtronic’s stock is currently around $60, implying a discount of about 5% to the market price.
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Notes:- Diabetes.org, American Diabetes Association [↩]
- Medtronic Press Release, WSJ, July 2 2014 [↩]
- UK Prospective Diabetes Study (UKPDS) Group, National Center for Biotechnology Information, August 1999 [↩]
- 10-year follow-up of intensive glucose control in type 2 diabetes, National Center for Biotechnology Information, Oct 2008 [↩]