Tandem Diabetes Care, Inc.

Good day and thank you for standing by and welcome to the Q1 Tandem Diabetes Care 2021 earnings call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 1 on your telephone. If you require any further assistance, please press star then zero. I would now like to introduce your host for this conference call, Susan Morrison.

Thank you. Good afternoon, everyone, and thanks for joining Tandem's first quarter earnings call for 2021. Today's discussion will include forward-looking statements. These statements reflect management's expectations about future events, product development timelines, and financial performance and operating plans, and speak only as of today's date. There are risks and uncertainties that could cause actual results to differ materially from those anticipated or projected in our forward-looking statements. A list of factors that could cause actual results to be materially different from those expressed or implied by any of these forward-looking statements is highlighted in our press release issued earlier today and under the risk factors portion and elsewhere in our most recent annual report on Form 10-K, quarterly report on Form 10-Q, and in our other SEC filings. We assume no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or other factors. In addition, today's discussion will include references to adjusted EBITDA, which is a non-GAAP financial measure. Adjusted EBITDA is a key measure used by us to evaluate operating performance, generate future operating plans, and make strategic decisions for the allocation of capital. Please refer to our press release issued earlier today for further information. Our call today will be hosted by John Sheridan, our President and Chief Executive Officer and Lee Vossler, our Executive Vice President and Chief Financial Officer. Following their prepared remarks, we'll open up the call for questions. Thank you in advance for only asking one question and one follow-up before getting back into the queue. I'll now turn the call over to John.

Thanks, Susan, and welcome everyone to today's call. 2021 is off to an incredible start with record first quarter sales and meaningful operational progress throughout our business. I am proud of our performance and Tandem's ability to continue delivering record-breaking results while improving the lives of people with diabetes. Credit for these accomplishments goes to our more than 1,500 employees, as well as our valued partners and suppliers. Thank you, everyone, for continuing to provide our customers with a positively different experience with Tandem, even while operating under constraints of the COVID-19 pandemic. Looking back, we are in the strongest position in our company's history, with world-class products and services, operational excellence, a differentiated product pipeline, and robust balance sheet. The number of people using the T-SLIM X2 has nearly quadrupled over the past three years, and we are now more than 20 countries around the world. Tandem has moved from being a comeback story to being a leader in diabetes technology. We have a line of sight to achieving our longer-term goals, and as we demonstrated once again in the first quarter, we are focused on executing. In today's prepared remarks, we're going to concentrate on the highlights and updates from the quarter, so there is ample Q&A time to expand on the topics that are most important to you. Starting with our top drivers of pump adoption in Q1, we were particularly happy to see the increasing international demand for our T-Central X2 pump and continued high interest in our Control IQ technology. The strength of our performance outside the United States is a reflection of our offering a best-in-class product in a large and under-penetrated market. As a reminder, there are approximately 4 million people living with type 1 diabetes in the countries that we are in internationally, and yet pump penetration on average is less than 20%. It's a huge opportunity, and even so, with our commercial efforts still scaling and meaningful COVID-19 restrictions in place, we outperformed our internal expectations for Q1. It was particularly encouraging that this international demand was not the result of any one country's activities but rather positive adoption trends across essentially all geographies. Outside the United States, people are choosing the T-SLIM X2 for the same reasons we hear domestically, which center around its ease of use and flexibility. Interestingly, these were two primary areas of focus in our flagship T-SLIM strategy, as it's designed to appeal to large segments of both current pump users as well as people using multiple daily injections. Ease of use can increase a person's confidence in managing their therapy while reducing the burden of diabetes in their daily lives. Flexibility is important since the needs and preferences of people living with diabetes can vary greatly day to day. Infusion sets provide flexibility, and as a result, durable pumps remain the dominant industry form factor both domestically and internationally. Our Q1 international sales also reflect the early benefit of our expanding Control IQ launch which began in the second half of last year and will continue to scale across additional geographies throughout 2021. In the larger countries we serve, we are at various stages of control IQ availability. We launched in Canada in the first quarter and plan to launch in Germany and France later this year. There are two statistics in our control IQ use which really highlight the scale of the impact that we are making with our technology. First, following its initial launch in the first quarter of last year, more than 150,000 people have our Control IQ technology worldwide. Second is that we now have more than 20 million days of real-world Control IQ use already logged in our cloud infrastructure. Experience matters with automated insulin delivery and the real-world use of Control IQ sets a high bar. When analyzed through our T-Connect system, we are able to use this data to further study the algorithm's clinical benefits offer valuable insights to health care providers, enhance our future product offerings, and demonstrate health economic outcomes to payers. Most importantly, feedback from our customers and health care providers continues to be awesome. In fact, real-world data was published in the Diabetes Technology and Therapeutics Journal in March, demonstrating that users of Control IQ technology achieved and to some extent exceeded the results obtained in the randomized controlled trials after one year of use. In addition, the data showed glycemic improvements in a broad range of people, nearly 8,000 of whom had type 1 diabetes and 400 of whom had type 2 diabetes. Type 2 diabetes continues to be a strong area of interest for us as we analyze people's needs and preferences that make up the different segments of this market. We are working towards a type 2 indication for Control IQ, and we are encouraged to see the DTT publication that the average time and range for type 2 users with CGM integrated pump experience increased from just under 70% to 78%. The data from the DTT publication, along with other real-world glycemic trend and quality-of-life data, will be presented next month at the ATTD and the ADA conferences. I think the poster at the ADA on the qualitative study of experiences with Control IQ titled, I Feel Human, I Feel Normal, best captures our customers' experience. Tandem has been catapulted to the forefront of diabetes research in recent years, and it's a position that we are committed to retaining. This is why we are particularly thrilled to announce that during the quarter, Dr. Jordan Pinsker has joined us as medical director. Dr. Pinsker is amongst the most prominent artificial pancreas researchers worldwide and is highly regarded at Tandem and respected throughout the diabetes industry. He joins us from Samsung Diabetes Research Institute in Santa Barbara, where he was a lead investigator in numerous clinical trials on automated insulin delivery systems for Tandem as well as other leading manufacturers. He was also the lead author on a number of recent publications, including those highlighting patient-reported outcomes and the success of our virtual training programs for individuals starting control IQ technology. In addition, Dr. Pinsker brings extensive knowledge in patient care, diabetes epidemiology, and physician practice efficiencies to Tandem's executive team, and as importantly, shares our passion for improving the lives of people with diabetes. Dr. Pinsker will lead our clinical strategy as we look to advance our automated insulin delivery offerings, expand our product portfolio to support different segments of the diabetes market, including people who are living with type 2. Turning to our other product development efforts, We are continuing to make good progress across all of our R&D pillars that focus on the expansion of our hardware offerings, automated insulin delivery, digital health and systems and integrations, and other advancements. We provided an overview of our R&D activities on the last call, and so today will just be a highlight of a couple updates of note. First is that a new study using control IQ technology in kids as young as two years old recently commenced enrollment. Results from another pilot study in this younger age group were published in December. The initial period for this new study will likely run throughout the year and will include a large number of participants to help further support a lower age indication. While health care providers can and do sometimes prescribe our control IQ technology to younger kids today, we are not able to market to them about the benefits of our technology. So the lower age indication could increase adoption of our products in this segment of the market. Next update is that in March we received an FDA response to our mobile bolus submission that we filed in the fourth quarter of last year. It's a meaningful milestone as we have understood that the agency has needed to prioritize COVID-19 related filings and we're encouraged to begin the normal questions and response process of this review. For competitive reasons, we don't comment to any level of detail on our interactions with the FDA. but I will say that I was very pleased to see the agency's response to our cybersecurity work. Between COVID-19 and the fact that there's not a credit commercial app available that controls the delivery of insulin, it's tough to predict clearance timing. Based on where we are in the process, we're no longer planning for a Q2 clearance, but we will be working to bring this highly sought-after feature to market as quickly as possible. Strategically, we've always recognized the importance of filing our mobile bolus feature first, so any learnings could be transferred to our entire product pipeline. We are seeing the direct benefit of this approach now as we've gained some additional perspective that will be useful for the T-SPORT filing. It's directly relevant because our T-SPORT pump is designed for use with the same foundational iOS and Android apps that our customers will use to access the mobile bolus feature for T-SLIMx2. We're making great progress on advancing the development of T-SPORT. and the user interface refinements that we elected to make at the end of last year are resulting in a more robust customer experience. Our development timeline for T-SPORT is on track. However, the filing date will push out a few weeks as we incorporate additional information from these insights gained from our mobile bolus response. By addressing these items up front, we believe our T-SPORT regulatory filing will be more complete and ultimately result in a faster path to clearance and commercial availability. Internally, our operations team is preparing manufacturing for T-Sport's commercial launch next year. We are particularly excited to launch a new pump form factor option as it expands our family of offerings while addressing a different segment of the diabetes market than we serve today, many of whom use multiple daily injection and otherwise would not consider pump therapy. Also slated between now and the end of 2022 are enhanced features for our control IQ technology expanded digital health offerings like TandemSource, and the launch of our new sensor integrations with Dexcom and Abbott. Commercially, operationally, and strategically, we are working to enhance our business while providing new solutions and a revolutionary customer experience to people living with diabetes worldwide. Overall, we're coming out of the first quarter performance with great confidence about our ability to achieve our key goals we've set for 2021 and beyond. And with that, I'll now turn the call over to Lee.