Tandem Diabetes Care, which develops an insulin device to treat diabetics, has filed for an IPO. The lead underwriters include BofA Merrill Lynch (BAC) and Piper Jaffray. The company plans to list on the NASDAQ under the symbol of “TNDM.”
Tandem’s flagship product is called t:slim, which actually looks like a smartphone. At the core is a miniaturized pumping mechanism that draws insulin from a flexible bag within the pump’s cartridge rather than relying on a syringe and plunger mechanism. The device can easily fit in a pocket, and features a high-resolution, color touchscreen.
Traditional pumps are generally bulky and often cause embarrassment with customers. The systems are also tough to operate, which can lead to mistakes.
Back in late 2011, the Food and Drug Administration approved t:slim. Sales began in Q3 of 2012, and so far, the results are encouraging. For the first half of 2013, sales came to $11 million, although losses are still heavy at $26.5 million.
However, the market potential is huge: About 6 million people in the US are insulin-dependent and require daily treatments. The overall market size is about $1.2 billion.
Yet Tandem proves that there is lots of opportunity to innovate the medical device industry, which has lagged greatly. This means essentially acting like a Silicon-Valley startup. In fact, this is how Tandem describes the approach in its S-1:
“We believe this approach is fundamentally different from the approach applied to the traditional medical device development process, which often does not involve seeking out specific consumer feedback in advance or applying the science of human factors to optimize the use of a product.”
So far, it seems like the company has a spot-on strategy to get an edge on its rivals.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.