SFC Fluidics raises $2 million to develop and commercialize small patch pump, with FDA submission target for early 2016 – May 15, 2014

Executive Highlights

  • Last week, SFC Fluidics announced that it recently closed a $2 million investment that will help it develop and commercialize a new patch pump. An FDA submission is expected in early 2016 and launch could occur by the end of 2016.
  • The circular patch pump has a small on-body footprint, a 350-unit reservoir, basal/bolus delivery via a wireless Bluetooth-enabled controller, and dosing in 1/100 of a unit using microfluidics technology.
  • SFC will initially target the type 2 diabetes market with its patch pump using a simplified handheld. A dedicated product for type 1 diabetes would follow.

Last week, Arkansas-based SFC Fluidics announced that it recently closed a $2 million, Series B investment round that will help it develop and commercialize a new patch pump. The project has been in development for over 1.5 years, and SFC plans to initiate clinical studies of the pump in 2015 (up to 50 patients). The company expects an FDA submission to occur in early 2016 with a potential launch by the end of 2016. The circular patch pump looks very small, with an on-body footprint at less than two inches in diameter (~0.6 inches high). Like Insulet’s OmniPod, SFC’s patch pump will be battery powered, disposable, filled via a syringe, and last up to three days. Unlike the OmniPod, the patch pump will use microfluidics technology (enabling the size reduction and dosing in 1/100 of a unit), have an on-patch button for bolusing, and a sizeable 350-unit reservoir (vs. 200 units with the OmniPod). The pump will have customizable basal and bolus dosing via a wireless Bluetooth-enabled controller. SFC is designing its own proprietary cannula insertion mechanism – this is of course a key feature of the OmniPod’s ease of use and appeal, but also one with lots of technical complexity.

Notably, SFC plans to initially enter the type 2 diabetes market with a simplified, easy-to-use handheld user interface; as we understand it, a more complicated type 1 handheld would be a separate subsequent product (though the same pump). Certainly, this strategy makes a lot of sense – a pump’s required technical complexity is lower in the type 2 market, as is the competition among established players. There is so much to be done to improve insulin delivery in type 2 diabetes, and we look forward to seeing what impact SFC can have. That said, the pump’s small size, Bluetooth connectivity, and potential for CGM integration (pending a partner) would also make it intriguing from an artificial pancreas perspective.

There is of course plenty for SFC to prove in the coming years, though we are always fans of new insulin delivery options for patients, particularly those with type 2 diabetes.

  • It’s too early for pricing details, but SFC is shooting for a patch pump price target that will get the broadest adoption possible – we assume at least comparable to Insulet’s OmniPod.
  • SFC’s unnamed “strategic partner,” which led the Series B round, has a track record in the production of FDA-cleared medical devices. The partnership will provide SFC with access to FDA-compliant design and manufacturing for its devices.
  • On January 1, 2013, SFC Fluidics announced the appointment of Dr. Barry Ginsberg as its Consulting Medical Director. The addition of Dr. Ginsberg should prove incredibly valuable as SFC looks to commercialize its patch pump – as a reminder, Dr. Ginsberg worked at BD Diabetes for 17 years, most recently as VP of its Worldwide Medical Affairs Division. He is currently the CEO of Diabetes Technology Consultants, on the board of directors of Biodel, and a consulting medical director for Agamatrix.
  • There’s no question that the patch pump field will get increasingly competitive in the coming years, especially as more companies/products seek to penetrate the underdeveloped type 2 market. Patch pumps can be challenging for new companies to commercialize, as the manufacturing barriers to entry are generally quite high. In addition, making the pay-as-you-go business model work requires substantial scale, something Insulet has only just recently achieved. However, the unmet need in type 2 diabetes is huge, and we believe there is lots of upside to show meaningful improvements in clinical outcomes.
    • Insulet has had very strong success with the OmniPod in type 1 diabetes and now holds ~15% market share in the US (over 60,000 patients). Approximately 3-5% of the company’s installed base has type 2 diabetes. Looking forward, Insulet has a robust pipeline, including a type 2 diabetes-focused OmniPod for use with Lilly’s U500 insulin (FDA submission expected in late 2014). See our 1Q14 report for more details.
    • Valeritas announced at JP Morgan 2014 that it intends to go public in the second half of 2014. The company saw 13,777 prescriptions written for the V-Go in 4Q13, representing growth of 19% month-over-month and 877% year-over-year.
    • CeQur’s PaQ insulin delivery device for type 2 diabetes is slated for a focused launch in the EU in 2015.
    • Cellnovo just announced three senior management additions to support a wider EU launch and the beginning of US operations.
    • BD CEO Vincent Forlenza mentioned at January’s 2014 JP Morgan Healthcare Conference that BD has “no interest” moving into the higher-end pump market (i.e., traditional pumps from Medtronic and Animas), though it is looking to develop smaller, patch pumps that target MDI users. In the company’s most recent F2Q14 call, the insulin infusion market was characterized as “a high priority for its Diabetes Care business.”
    • J&J has not shared an update on the Finesse (acquired from Calibra) in some time, but we hope to hear more in the company Device business review on May 22. As of the last update, additional studies were expected to start in 2013.
    • Medtronic’s last analyst day in 2012 called for the company’s much-delayed patch pump to launch in FY15-FY16 (May 2014-April 2016).

Figure 1: SFC’s Patch Pump


--by Adam Brown and Kelly Close