groty

Insulet Corporation Not Yet an Attractive Short Opportunity

Insulet's pre-IPO funding came in part from Sam Islay (personally) and through his fund, Orbimed. It's noteworthy that neither Sam nor Orbimed sold any stock in the IPO, nor did they sell after the restrictions placed on insiders from selling within 180 days after the IPO expired. Sam and/or Orbimed actually started increasing their stakes when the stock slid into single digits last fall.

Pequot was also a major pre-IPO investor. However, Pequot did sell some of its stock in the IPO. While I agree 100% with your funding concerns, either Orbimed or Pequot could rescue PODD with follow on investments if the captial markets are closed to PODD when the funding is needed. Of course, that will depend on PODD continuing to track to projections and the competitive landscape. A private Israeli company, Medingo, is very close to coming to market with a diabetes "patch" device that will compete with PODD, so you have to watch closely how its product is received in the marketplace.

I've been following PODD since the S-1 filing, listening to probably 75% of all the earnings and investor related conference calls and reviewing all the 10Qs, etc. So far, they've pretty much executed how they told investors to expect they would, with a couple of blips

They've really got a very attractive business model if they can scale it to profitability before the competive environment materially changes. Each patient requires approximately 10 pods per month, so you're looking at an annuity like recurring revenue stream paid by third party payers like insurers and HMOs. But until PODD reaches profitability, you have to worry about a big breakthrough in diabetes pharmceuticals, and/or superior delivery devices coming to market. I doubt Medtronic is sitting idly by waiting for PODD to render its pumps obsolete. And there's also the question you bring up about funding.

For those reasons, I continue to montior PODD's progress, but I haven't made an investment yet.