CEO Shacey Petrovic shares how Insulet is convincing people with diabetes to swap shots for `Pods

Great to be here, Tom.

There's so much medtech here.

Sure. I had always envisioned that I would go into research and development actually. I loved innovation, and I have a double major in biology and comparative literature, which is bizarre. You can tell I was a bit schizophrenic when I was a student. So that's where I thought I was headed, and I spent a summer doing research in a lab and then realized very quickly that it actually wasn't for me. It was too isolating. So my first job out of college was pharmaceutical sales, and it was a way to combine my love of science and some of my interest around business and commercial. I went from there. I actually really did not love the pharmaceutical industry and selling for them, but I quickly got into medtech. My next job was with an early-stage commercial company where I was employee number 100, Cytyc, actually based here in Massachusetts. That's really where I built my commercial career. Cytyc was eventually acquired by Hologic, so it begins. I stayed on and I spent 14 years there between the two of those companies.

I think so. I was researching the estrogen cycle of doves because it most closely resembled that of humans. So I was stuck in a lab with a thousand doves monitoring them, which just wasn't a good fit for me.

Well, I was really interested just in innovation. They were changing the world in terms of moving from conventional Pap test to liquid-based cytology, and I loved that it was at the precipice before all of that change was going to happen. So that's why I joined. I built my career in women's health. I spent almost 15 years between the two companies there. I did fall in love with the innovation that was happening in women's health, the impact that I could make, and my personal connection to the space. Actually, after Hologic, I went and ran a small women's healthcare company, a private company in Utah, that has since been acquired by LabCorp.

It really did feel like a natural progression. When I was in sales, I very quickly wanted to get into marketing. I wanted to get upstream in terms of the strategy, not just the execution. I actually think the execution is a great foundation for eventually being involved in the strategy because you're much more pragmatic and effective in developing strategy if you've been involved firsthand in the execution. So I moved from sales into marketing leadership, and that is in my mind the nerve center of any company because it really does connect with every function in the organization. I loved that. I moved from marketing into general management, and then I was recruited away for my first CEO job. What was attractive to me about that was the opportunity to build something, as opposed to lead a division within a large company, and the authorship that I could have over something like that. But I wasn't really aiming to be a CEO. I was eventually recruited to become one, but it wasn't something that I thought I wanted to do. And then of course I loved it, so it's been a great run.

That's right.

No, it was in process. So you knew the writing was on the wall. It was a bit uncertain, but it looked like it was going to happen. Pat, my predecessor CEO here at Insulet, is actually the former CEO of Cytyc. Because I had built a lot of my early career there, we knew each other pretty well. He called me and said, 'Shacey, I want you to come be my Chief Commercial Officer.' I said, 'Well Pat, I'm a CEO now, didn't you hear?' And he said, 'Look, Shacey, I don't want to do this forever. I came out of retirement. This could be your opportunity to eventually run a public company if it goes well. I need a successor, and the technology is remarkable. We can fix these problems together.' So he sent me a link to Omnipod, which is Insulet's product, and he had no idea that my father lives with type 1 diabetes, and that I really had grown up with the disease and its impact on families and people. So I was immediately taken for a variety of reasons with the technology and the opportunity, and that's really what convinced me to come over. I was living in Utah at the time, so I moved my family back to Boston. It was just an incredible opportunity. The market is enormous, the technology is differentiated, and at that time we were very small, really, with an opportunity to change the game quite a bit. That's where we've been focused over the last six years, and I don't regret the decision at all. It was probably one of the best decisions I've made in my career.

I think that's absolutely true, and there are a variety of reasons for that. It's an incredibly engaged community. Obviously, we serve both the type 1 and the type 2 community, but the type 1 community in particular is a group of incredibly engaged, incredibly empowered users that have really driven innovation in this space. They've driven regulatory policy changes, they've driven access changes, so they're powerful. What's so interesting is the intimacy that we have with our customers in this space. You think about typical medtech, and everything in my career prior to Insulet, you are selling and marketing to a number of physicians or to a number of hospitals or clinics in the thousands, maybe tens of thousands, depending on your space. For a variety of reasons, in the insulin pump and Omnipod market, we are providers. So we do the benefits investigation, we deliver benefits to the patient, we deliver the product directly to the patient, we train the patient, and then we initially support the patient for the first number of weeks or months to make sure that they get off successfully on the technology. It creates an incredible closeness to your end user, which is wonderful. It's part of our mission, it informs our culture, and it is one of the most fulfilling parts of my job.

I think that's right, Tom. In fact, this week we had our national sales meeting, and I was reflecting on just what I heard from our team during the awards night, which was last night actually. In our field, every territory has at least one clinician, so a certified diabetes educator or a nurse who has partnered with a more traditional medtech salesperson, but they work very much in tandem as a team. That means both of them have a strong connection to the patient, the end user of the device. The way they talked about what drove them, every person got up and talked about the number of lives that they changed this last year. It wasn't about their revenue or the number of Omnipods that they sold. It was about the number of lives that they had changed in the last year. That is our culture here at Insulet. It's very powerful, and it makes it a terrific place to work.

Sure. Insulet is a company whose mission is to improve the lives of people living with diabetes, and we do that through Omnipod, which is our really differentiated technology. It is a disposable, waterproof pod that you wear anywhere on your body that you would give yourself an injection, and it delivers three days of non-stop insulin for people who require it. It's controlled by a handheld controller that looks just like, in fact it is, a locked-down cell phone. You program your dose of insulin, you can enter your food, and it will deliver the appropriate amount of insulin on a daily basis. Every three days, you dispose of that pod and put on a new one. It is very differentiated from what other choices a person living with diabetes has. Somebody who requires insulin on a daily basis can either inject themselves four to five times a day. Compared to multiple daily injections, one pod replaces up to 15 injections over three days. Or you can wear a tubed insulin pump, which is a small piece of capital equipment that is connected to your abdomen via three to four feet of tubing, and then you control the insulin delivery based on that little pager-like device that you're wearing on your hip. Those are the choices that you have besides Omnipod. It's been very differentiated and really helping us to bring pump therapy, continuously infused insulin, to more people because the pod is simple, easy to use, and discreet.

Actually, Tom, it's a great observation. A person living with diabetes makes 300 decisions a day. I think it's a great observation too about why we have such intimacy with our customers, because somebody who lives with and relies on our technology is interacting with it very frequently. No other disease state do you dose yourself with a potentially lethal drug every day. We're expecting people to do that successfully, and to do that successfully, the technology has to be pretty easy to use, pretty user-friendly. On the outside, they look healthy, and they're expected to hold jobs, raise kids, have families, but yet they're managing this as well. It's like another full-time job.

I think it's a really interesting challenge. Our technology sits at the intersection of medtech and consumer tech in many ways. People who are adopting insulin delivery technology like the pod or the pump shop for insulin pumps or Omnipod the way they shop for a cell phone, because they're going to be living with this technology for a long time and want to be successful with it. So they will try out technologies, they'll go to clinics and learn more about all of the technologies. When we think about the market as a whole, in the United States, there are approximately five to six million people in the US that could benefit from our technology who live with insulin-dependent diabetes, both type 1 and insulin-dependent type 2. You ask yourself, why? Here we sit, insulin pumps were developed in the 80s, they were first launched in the 80s, and still today, somebody living with type 1 diabetes, only about a third of people living with type 1 use pump or pod therapy. So it has not been broadly adopted even though it delivers better outcomes. Two-thirds are still giving themselves injections. When I arrived, I said, 'Is that right?' I knew my experience with my father. It did take me a long time to convince him to wear an insulin pump, years in fact. It took a life-threatening situation in order for me to get him on to a pump. It's because the disease, you're making 300 decisions a day. If you have a little bit of control, you don't want to give that up. You don't want to introduce variables into your day. So there is a lot of inertia around technology use and patient attitudes, and even physician prescriptions. We have to focus really in three areas. We have to make the technology as simple to use as possible, and we really focus on reducing burden. We don't want to add burden to a patient, we really want to make their lives easier. The second thing is we have to focus on easy access. These technologies, for a variety of reasons, are too expensive and too difficult to access. So we have focused a lot on bringing broad, affordable access to our users. The third thing is awareness. Even for well-established pump players that have been in the market since the 80s, very few people could call them out by name. Very few people living with type 1 diabetes are aware of the choices that exist. So those are the three areas we've been focused on: how do we make the technology as simple as possible, how do we bring broad affordable access to users, and how do we make everybody aware that these choices exist for them. That's been successful for us and has been driving our growth over the last few years.

We've been very focused on what we call the multiple daily injection user. In fact, I would argue that we convert more of those users than other pump players where it's more of a share game, where durable tube pumps are trading share among one another. 80% of our new users come from multiple daily injections, and the vast majority of them, more than 60%, tell us that they would not have adopted pump or pod therapy if not for Omnipod, because of all the things we talked about: the complexity of the technology, the cost of the technology. Omnipod has solved for being simple, being affordable, and being discreet. Those things are what's helping us to bring continuous subcutaneous insulin infusion to more people who are just injecting themselves on a daily basis.

Sure. The question is what happened last January, because in fact, we manufacture a good portion of our product in China with a contract manufacturer. In some ways, that was a blessing in disguise because we were able to very quickly learn and then very quickly transport those learnings from China to our US operations. We manufacture product both in China and in the US. We organized over three principles: we wanted to keep our team safe, we wanted to preserve the well-being of our communities, and we wanted to get pods to our customers who were relying on us. Everything we did to manage our business was with those three principles in mind. We very quickly implemented all of the safety and operational protocols that we had in China around temperature checks, nurse screening, and home testing. We very quickly pulled all of that together in the US. Our operations did not miss a beat. We shut down in China at the very beginning, but we very quickly put tactics in place to get back up and running safely. In the US, we didn't miss a beat. Our operations continued without any issue, and we've been operating all during this pandemic. So that's operations, we were able to continue to keep continuity of our supply chain and continuity of our operations. Then the next question was, how are we going to support bringing users on to technology? Patients aren't going into the physician's office. Many physician clinics were closed, some had started to adopt telehealth, but it was pretty spotty in the beginning. So we very rapidly rolled out virtual training tools and virtual support tools for our clinics to be able to continue to bring new users onto Omnipod. Those were some great learnings for us because we learned very quickly that we were making assumptions that were probably false. We assumed we had to have a clinic or a clinician directly train a user, that that was the best way to do it. In fact, we learned that's not true. Patients can very comfortably get up and running on the technology in the comfort of their own home. That was a great learning for us. Both users that live with type 2 and users that live with type 1 very effectively trained at home, and in some cases, it was a much better experience both for the trainer and for the new customer. For example, we were able to train an entire family in one sitting, where you wouldn't really have that opportunity if they have to travel to a clinic to get trained. The trainer was able to see more information interacting with somebody at home than they might get in the clinic. All of those things were very helpful and demonstrated just how well embraced and well reviewed our virtual training tools were.

Yeah, we train very young kids in some cases, and older, less tech-savvy people. To make sure that they're comfortable in their environment so that they can ask the questions that come to mind and train others in the family, it's very helpful. The other area that we've been focused on is preserving the well-being of our communities. We've been very involved in volunteer efforts, providing PPE throughout the whole year to our first responders in the Metro Northwest area. It's been wonderful to see our team give back to the community and not just focus on our tasks, but also supporting everybody in this area.

Telehealth was certainly helpful for us. We don't actually submit for reimbursement for healthcare, but we saw that in the endo office. Last year in 2020, visits were down pretty significantly in the first half of the year, a 70% reduction in patient visits to the endo office. Some of that was then offset by telehealth. Telehealth made up for another 20% of that, where we were able to have physician-patient interactions. That's helpful that our clinicians can continue to serve patients and identify users that might benefit from Omnipod.

This has been a big part of our strategy. We have been driving, and frankly, we've been disrupting the old treatment paradigms and care models with Omnipod. Traditionally, a tubed insulin pump and Omnipod up until two years ago were reimbursed through the durable medical equipment channel. We saw an opportunity to bring Omnipod through the pharmacy as opposed to the durable medical equipment channel to make it more broadly available and also to eliminate the upfront cost. In the durable medical equipment channel, for insulin pump therapy, typically a payer or a user is charged a few thousand up front for the insulin pump, and then they are locked into a four-year contract. This is why payers put a bunch of hurdles in place for adoption of the technology, because they want to make sure that the user is motivated so that they get the outcomes benefit and that the user is going to stick with it for the four-year contract that they're paying up front for. We thought, well, this isn't a very consumer-friendly model, and it's one of the hurdles to getting more people to adopt pump or pod technology. So we started to explore the pharmacy channel. What we did in the pharmacy channel was we eliminated all upfront cost. We said that a user or a payer only needs to pay for the pods presumably as the user is using them and getting the outcomes benefits from them. That eliminated a lot of the upfront barriers that payers put in place for users to adopt the technology. We didn't lock anybody into any type of time frame. You can frankly try the technology for free, and we just know that we've got great loyalty rates and great retention rates. If somebody tries it, they're going to want to use it. That's what we rely on to keep our customers and to win our customers, and it's enabled us to bring our technology to a lot more people who otherwise wouldn't have access to it.

Yes, our pods are disposable. It's perfectly suited for the pharmacy channel because it is where people living with diabetes are going to get their continuous glucose monitors, their blood glucose strips, their insulin. This is very similar in concept, a disposable, recurring revenue model that's very well suited to the pharmacy channel.

Sure. Omnipod 5 is our automated insulin delivery system, what we call AID for short. An AID is a continuous glucose monitor communicating directly to an insulin pump or pod with an algorithm, and that's what Omnipod 5 is. It is incredibly differentiated. We are in partnership for this first generation with Dexcom, so the Dexcom and the pod speak directly to each other. There's a sophisticated algorithm that is on the pod, and that algorithm takes a CGM reading every five minutes. Based on that reading, it looks out an hour in the future and predicts where your blood glucose is going, and then it gives you a micro dose of insulin every five minutes to keep you in range. This is incredible because we talked about the 300 decisions that somebody living with diabetes has to make every day. What this does is dramatically reduce those number of decisions and the cognitive burden of diabetes. There will still be a few situations where a user has to, for example, when they eat, they'll still have to announce a meal and dose for the carbohydrates, but the rest of it is highly automated. What it is showing in pre-pivotal data is an incredible improvement in time in range, incredible control in terms of hypoglycemia, and users rated the usability of the system up there with an iPhone, so really easy to use and really terrific control. We could not be more excited. This has been one of the most anticipated innovations in all of the diabetes pipeline, not just Insulet's pipeline. One of the really exciting things we're delivering with this is phone control. You'll be able to control the system by a secure app on your mobile phone, so we get to eliminate the remote controller of the system. A user will simply put on a pod, put on a Dexcom sensor, download an app, and be able to be off to the races managing their diabetes.

That's right. It's really exciting, really easy to use, and a lot of benefits for us being able to go directly to the phone securely and communicate with these devices.

Abbott is next. We have great partnerships with both Dexcom and Abbott, and have announced that we will be integrating with their future technologies. Dexcom has a very exciting pipeline, we will integrate with those technologies. Abbott's Libre obviously has been exploding in growth, and we have a partnership with Abbott that is in development as well. Our next generation system will integrate with both Abbott and Dexcom. A lot of exciting things around platforms. The first system that we'll launch in just a few months will be controlled via an app on your Android phone, and future generations will be iOS. I'm very excited about that.

If you look at what Dexcom and Abbott have done in the marketplace, it's pretty extraordinary. Both are very sophisticated, very difficult to manufacture technologies. We feel like we've got great partnerships with them. There are some really interesting technologies on the horizon. There might be 40 early-stage CGMs in development, so we'll see how the market plays out. But we could not be more delighted with our partnerships with Abbott and Dexcom.

I think you're right that the intimacy with our customers is what drives our innovation. We've got incredible capabilities around human factors, user interface research, where we engage Omnipod users, multiple daily injection users, tube pump users to really help us inform technologies. That intimacy with our end user is part of our whole innovation from concept development through to delivering the technology. When we think about where we're focused, we're focused on simplicity. We know that the cognitive burden of this disease is incredible, and our advantage is in the simplicity of our pod. But we see opportunity to drive more and more simplicity for people living with diabetes across every aspect of how they interface with our technology and also across our innovative access models. We're focused on outcomes. This step up with Omnipod 5 and the algorithm and the integration with CGM enables us to make a massive impact on outcomes. We will take people who are in the 60% time in range and move them into the 70-75% time in range. It is a massive improvement in outcomes, but we see this as just the beginning. We can continue to advance our algorithm and data science to deliver better outcomes over the long term. We see empowerment. It's really interesting when you think about where we are with data. With Omnipod 5, we now get all of the CGM data coming in, we get how the user is interfacing with the system, we get the insulin delivery data, and then how that's impacting the CGM. That is an incredible amount of data for us to deliver insights back to the user. Insights like, every time you work out on Tuesday, you go low, you may want to consider adjusting your setting. That insight allows us to empower our users. As you think about now we're on the phone, if the user consents, we may have access to their calendar, to their OpenTable reservations, to all sorts of pieces of data that could give us insights to help empower our users. We might say, where you ate dinner on Thursday night, you should have bolused bigger to get a better outcome. Those are the types of things that are really exciting in terms of where this could go to generate insights for our users, for clinicians, and for payers. Over the horizon, a lot of really exciting stuff. We are particularly differentiated in the type 2 space. We haven't talked a lot about that, but we have significant advantages there. When we think about our innovation pipeline, diabetes, and in particular type 2 diabetes, is a global epidemic. It is growing in crazy proportion across the globe. We have technologies and innovations that are going to really help address what is one of the most significant world health problems across the globe.

About 10% of people who live with type 2 diabetes, it's a progressive disease. People will fail lifestyle modification, they'll fail medical management, and eventually progress into insulin therapy. That's really where Omnipod comes in. Its simplicity and its access model through the pharmacy are particularly important for people living with type 2 diabetes.

Oh, it's been great, Tom. Thanks for having me.