IPO Report: Tandem Diabetes Care (TNDM)

Francis Gaskins  |

Tandem Diabetes Care (TNDM)  is a medical device company with an innovative approach to the design, development and commercialization of products for people with insulin-dependent diabetes.

Nine other operating company IPOs scheduled for this week. The full IPO calendar can be found at IPOpremium.

TNDM scheduled on Naqsdaq a $100 million IPO with a market capitalization of $329 million, at a price range midpoint of $14 for Thursday, November 14, 2013.

Manager, Joint managers: BofA Merrill Lynch, Piper Jaffray.  Co-Managers: Deutsche Bank, Stifel.  S-1 filed November 4, 2013


TNDM is a medical device company with an innovative approach to the design, development and commercialization of products for people with insulin-dependent diabetes.

Product sales are just starting and for the nine months revenue was $18.9 million, with a 32% gross margin and a $39.5 million loss.


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The medical device industry is notoriously difficult to profitably enter, and there are very big competitors in the insulin pump business.

The rating on TNDM is neutral to negative.

Business – insulin pump
TNDM is a medical device company with an innovative approach to the design, development and commercialization of products for people with insulin-dependent diabetes.

TNDM designed and commercialized its flagship product, the t:slim Insulin Delivery System, or t:slim, based on TNDM’s proprietary technology platform and unique consumer-focused approach.

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TNDM’s technology platform features its patented Micro-Delivery Technology, a miniaturized pumping mechanism which draws insulin from a flexible bag within the pump’s cartridge rather than relying on a syringe and plunger mechanism.

It also features an easy-to-navigate software architecture, a vivid color touchscreen and a micro-USB connection that supports both a rechargeable battery and t:connect, its data management application.

TNDM’s innovative approach to product design and development is also consumer-focused and based on its extensive market research as TNDM believes the user is the primary decision maker when purchasing an insulin pump.

TNDM also applies the science of human factors to its design and development process, which seeks to optimize its devices to the intended users, allowing users to successfully operate the devices in their intended environment.

Leveraging its technology platform and consumer-focused approach, TNDM  develops products to address unmet needs of people in all segments of the large and growing insulin-dependent diabetes market.

Close Concerns, Inc., an independent consulting and publishing company that provides diabetes advisory services, or Close Concerns, estimates that there are approximately 1.5 million people with type 1 diabetes in the United States and 4.5 million people with type 2 diabetes in the United States who require daily administration of insulin. TNDM’s target market consists of these approximately 6.0 million people in the United States who are insulin-dependent.

The U.S. Food and Drug Administration, or FDA, cleared t:slim in November 2011, making it one of the first insulin pumps to be cleared under the FDA’s Infusion Pump Improvement Initiative. This initiative is intended to foster the development of safer, more effective infusion pumps and support the safe use of these devices.

Next generation insulin pump

TNDM developed t:slim to offer the specific features that people with insulin-dependent diabetes seek in a next-generation insulin pump.

TNDM designed it to have the look and feel of a modern consumer electronic device, such as a smartphone. It is the first and only insulin pump to feature a high resolution, color touchscreen. It is also the slimmest and smallest durable insulin pump currently on the market, and can easily and discreetly fit into a pocket, while still carrying a cartridge with 300 units of insulin.

The touchscreen and intuitive software architecture make it easy to use, learn and teach, and to update the software without requiring any hardware changes.

Intellectual property

As of September 30, 2013, TNDM’s patent portfolio consisted of approximately 17 issued U.S. patents and 53 pending U.S. patent applications.

Of these, TNDM’s issued U.S. patents expire between 2021 and 2031. U.S. Patent Nos. 8,287,495 and 8,298,184, as well as various pending U.S. patent applications, relate to the structure and operation of its pumping mechanism and are therefore particularly relevant to the functionality of t:slim.

TNDM are also seeking patent protection for its proprietary technology in Europe, Japan, China, Canada, Australia and other countries and regions throughout the world. In addition, TNDM has licensed 28 other U.S. patents and patent applications owned by Smiths Medical ASD, Inc., or Smiths Medical.

TNDM also has seven pending U.S. trademark applications and seven pending foreign trademark applications, as well as 13 trademark registrations, including four U.S. trademark registrations and nine foreign trademark registrations.


TNDM competes with a number of companies that manufacture insulin delivery devices, such as Medtronic MiniMed, a division of Medtronic, Inc., Animas Corporation, a division of Johnson & Johnson, Roche Diagnostics, a division of F. Hoffman-La Roche Ltd., and Insulet Corporation.

5% stockholders

Delphi Ventures and Affiliated Entities 27%

Domain Partners and Affiliated Entities 26%

TPG Biotechnology Partners III, L.P. 20%

HLM Venture Partners II, L.P. 11%
Kearny Venture Partners and Affiliated Entities 6%        

Use of proceeds

TNDM expects to net net $90.1 million from its IPO.  Proceeds are allocated as follows:

between $35 million and $40 million to expand and support its sales and marketing infrastructure, including hiring additional sales, marketing and clinical education personnel;

between $10 million and $12 million to fund research and development activities, including hiring technical personnel and purchasing product components and supplies; and

between $15 million and $20 million to expand and support its manufacturing capabilities, including hiring operational and quality control personnel.

TNDM expects that the balance will be used for working capital and other general corporate purposes, including costs and expenses associated with being a public company.


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