Tandem Diabetes CEO: Using an Insulin Pump Like an iPhone | Mad Money | CNBC

Last night I went over a whole list of stocks that I wish I'd recommended more strongly over the past year. Obvious winners that I should have been much more aggressive about pushing to you. But none of those winners comes close to the gains in a no longer that small medical device company called Tandem Diabetes, TNDM, which rocketed from $3 in change a year ago to $69 today. You heard me, that is a gain of 1,000% over just 12 months. How's your index fund do versus that? This company makes high quality, high tech insulin pumps with related software and apps that help people with diabetes predict their blood sugar levels. I've been asked about Tandem stock twice during the Lightning Round during this period. Both times I shied away from endorsing it. The stock had run so much and I was very wary of chasing it. But Tandem just keeps delivering good numbers for shareholders. They got a key authorization from the FDA last month and then reported a blowout quarter earlier this week with a big revenue beat and a surprise profit. Even better, management gave you a much stronger than expected forecast for 2019. While I'm hesitant to recommend a stock that's run so much, I told you that this is a very intriguing story that deserves a much deeper look. So let's go straight to the source with Kim Blickenstaff. He's the longtime CEO of Tandem Diabetes, by the way, who's stepping down as CEO to become executive chairman at remarkable tenure. Mr. B, congratulations and welcome to The Money.

Thank you very much.

You're in the flesh, I've seen you in the flesh for you, yeah. Well, no, because this kind of return is the kind of return I always tell people you can get if you own stocks. That's right. It's something sometimes my friend David Faber said to me, Jim, maybe we're dinosaurs by picking individual stocks. You pick Tandem Diabetes, you can retire. So congratulations. But can you tell people what you do and how you're really the only game in town?

Yeah, we make the Tandem X2 insulin pump. It's the only touchscreen insulin pump in the marketplace, and we can remotely update that software just like the iPhone. So it's very much sort of the Apple model. And we're now down to two competitors in the marketplace, ourselves and Medtronic. So it's a duopoly. When we entered, there were actually four or five players, so now it's a duopoly.

Let me ask this. There was a J&J player that is discontinued, correct?

That is correct. Animas. Animas, they... Medtronic, actually I think by their own admission would tell you that they have some issues that help make it so that you've got that market right now.

Yes, we're doing very well against Medtronic, getting those patients. There's some independent data to say we're actually doing better than them.

And you also are not a competitor to a friend of our show, Dexcom, but you work with them.

We're a partner. They enable us to have automated insulin delivery, and we're very much converging in the marketplace. As we brought out our Basal-IQ algorithm this year with the G6, which eliminates finger sticks completely for the first time in history, and our Basal-IQ actually performs as well as the Medtronic 670G, which is supposedly a more sophisticated algorithm. So all that data has come out in the marketplace. We're big fans of Abbott Labs and Libre, which is a very inexpensive one.

What's your relationship with them?

There isn't one. You know, come on, Miles White's fabulous. I don't know, I've known him for a long time. But they don't have CGM yet. They're doing this intermittent flash, which is a great replacement for finger sticks. So you're getting more compliance, people testing more frequently. And it's probably a blend of a type 2 and a type 1 product. So I view it as sort of like training wheels for getting on to a fully automated system.

Is there a way that you can integrate it with the Apple Watch, not just the phone?

Sure, we can display on anything in the future. Because to me, the greatest thing would be the watch. I love the phone, but I could bring this out and measure, or I could go like this, it'd be less awkward. People wouldn't know what I'm doing. Because you want to be discreet. We had someone talk about epilepsy the other day, and no one likes to be discreet about anything, even one that is as common unfortunately as this. 16,000 pumps and there's 1.5 million people.

That's right. That's right. 16,000 now, maybe 1.5 million people. No, 1.6 million people use pumps, right? But I'm saying that this is your market.

Well, it is, yes. And you can expand it because only about 27 to 30% of type 1s are using pumps because they've been so difficult. They're very cumbersome to use and, like you said, they're embarrassing. So we try to go the Apple route, consumer, make it not embarrassing, make it very simple because it's an intuitive interface. And ultimately, where we want to go is our sport product, which is much smaller, no screen, and the automated algorithm is running your system. So you really don't have to do anything, you just watch your control on a watch or phone.

Well, I'm fascinated by this. First of all, Kim, I've got to tell you, the stock, you've kind of come out of nowhere. But that's not really true. You've been in this business for ages. How did this just happen? How did this set of circumstances happen that you, this little company, can dominate the fastest growing illness in America?

I went to church a lot. No, whatever it is, you know, we all have to do it. We had a series of misfortunes in 2016. If you remember, UnitedHealth terminated coverage of us. I know. And then the 670G got approval a year and a half early. So we traditionally have a sales ramp like this. We had budgeted 40 to 50% sales growth in 16. We did this because the market was frozen and Medtronic could market the data. The clinical data was very compelling, but the user experience was not well known. So during the course of 2017, as that became known, we got our integration with the G5 and we used our Tandem Device Updater for the first time. That was an industry first. We saw Animas exit, and then we saw our numbers return to that. And then the FDA all designation, all these designations have sped our innovation. We were able to finance our way out of this. We had great fourth quarter results, we did an offering. We had great second and third quarter results, we did another offering, paid off our debt, and we're a debt-free company. And we all did it in 8 months. Then we created market valuation that I would never have predicted. My prediction was we would be $12 a share last December. That was my prediction.

Well, you know, I've been... Well, you were certainly conservative at the time.

You know, I would love to see you merge with Apple, but that's not up to you, right?

No, it's not up to me. You know, but you got to just say for the last two years, we've been essentially dead. And so it'll be interesting to see how our success and penetration of the market is going to bring different ideas in the world of wireless remote healthcare, which is where we're going.

You're a straight shooter. I want to congratulate you for making your investors more money than any other company I can recall has been on the show in years and years. That's Kim Blickenstaff. He's the executive chairman. Today's his first day of being executive chairman of Tandem Diabetes. Thank you to our viewers for bringing this to our attention. TNDM, stock, Cramer. Booyah! Jim Cramer here from The Money. Thanks for watching CNBC on YouTube. Click here to subscribe and get the jump on my exclusives with CEOs, plus market news, investing advice, and a whole lot more.