Diabetes : a game-changing technology
The discovery of purified animal-sourced insulin, followed by those of synthetic human analogue insulin and more recently insulin pumps, have all been major steps in the treatment of Type 1 diabetes. We believe Continuous Glucose Monitoring (CGM)1 is the next game-changer in the fight against this disease, potentially paving the way for the release of what would be the ‘holy grail’ for these patients: an artificial pancreas, writes Jérôme Berton, Healthcare Equity Analyst at Lombard Odier.
According to the International Diabetes Federation (IDF), today in the world, diabetes affects 415 million people aged between 20 and 79. This figure is expected to rise by 55% to 642 million people in 2040 and expand in every region of the world. Diabetes also has a substantial economic impact on countries and national health systems since for the majority of countries the disease represents 5-20% of their total health expenditures. In North America and Europe, diabetes costed USD 348 billion and USD 156 billion respectively in 2015 (including indirect costs). In other words, North America and Europe spent 14% and 9% of their total healthcare budgets on diabetes respectively.
Diabetes is a chronic, incurable and expanding disease with life-threatening complications, wherein the body does not make enough, or cannot properly use insulin2.
3 main types of diabetes
- Type 1 (5-10% of the diabetes population): This is an auto-immune disease in which the body’s own immune system attacks the insulin-secreting beta cells in the pancreas, to the point that the pancreas stops producing insulin. Type 1 is usually diagnosed amongst children and young adults. Patients need insulin every day. Without insulin, a person with Type 1 diabetes will die. The reason is unclear why the number of people with Type 1 diabetes is increasing but it may be due to changes in environmental risk factors and/or viral infections.
- Type 2 (90% of the diabetes population): This is the most common type and it usually occurs in adults but it is becoming increasingly present in children and teenagers. With Type 2, the body becomes resistant to insulin, rendering it ineffective. Over time, insulin levels become insufficient, the pancreas may become inefficient, and 15-20% of Type 2 patients require insulin injections. The cornerstone of the treatment is a healthy diet, increased physical activity, followed by oral drugs, and in some cases insulin injections. Exact causes are still unknown, but the most important risk factors are excess body weight, physical inactivity and poor nutrition.
Gestational (5% of the diabetes population): Hyperglycaemia3 is detected during pregnancy. Mothers’ gestational diabetes normally disappears after birth. However, these mothers are at higher risk of developing Type 2 later in life, as are their babies, especially in their teens or early adulthood.
Uncontrolled diabetes can lead to life-threatening complications, which highlights the strong medical need due to:
- Long-term complications: In case of hyperglycaemia, can result in shorter life expectancy (13-15 years less than a non-diabetic person), kidney failure, blindness, heart attack, nerve damage, and lower-limb amputation.
- Short-term complications: Severe hypoglycaemia can result in coma and death.
There is a strong medical need in diabetes as it is estimated that 50% of the patients are not well controlled due to an excess of blood glucose. Clinical trials have demonstrated that improving blood glucose control lowers the complications by up to 50%.
With that, we believe CGM is the next game-changer in fighting this disease. CGM is made of 1) a sensor attached to the body through a subcutaneous needle that needs to be changed every 7 days, 2) a transmitter, an electronic device that is attached to the sensor, to be changed every 3 months, that sends the data to 3) a receiver, a device – possibly an iPhone, used to read the data and to send alarms in case of hypoglycaemia/hyperglycaemia events. This is a huge advancement for patients, who otherwise must undergo 1,500 to 3,500 finger stick procedures per year.
CGMs helps patient to monitor their blood glucose without the need for finger sticks. This is a currently common procedure that involves patients having to use a small needle to prick their finger and collect blood on a lancet; it is then measured with a blood glucose meter. CGMs also provide a historical and dynamic picture of the evolution of the blood glucose, unlike traditional finger sticks with their static picture that risks missing hyperglycaemia and nocturnal hypoglycaemia events. Importantly, CGMs also sends alerts to the patients’ receiver in case of hypoglycaemia and hyperglycaemia. This is critical in the case of nocturnal hypoglycaemia as it wakes the patient or the parents of a child patient. CGMs’ utilisation results in fewer hospital emergency admissions and fewer deaths. Moreover, this technology also has the potential to decrease the level of stress inherent in Type 1 diabetes.
Currently, the CGM market is underpenetrated as only 10% of Type 1 diabetes patients use this technology in the US, and even fewer in Europe, but it is growing at a significant 40% annual rate, with a handful of players involved. Looking forward, we expect CGMs to increasingly trend towards better accuracy, lower outlier measures, longer utilisation, miniaturisation and connectivity. At some point, we believe CGMs could also help Type 2 diabetes patients to better control their disease, an untapped population that represents the vast majority of diabetes sufferers.
Although years away still, we believe the industry is approaching the ‘holy grail’ for Type 1 diabetes, i.e. an artificial pancreas – a closed-loop system able to automatically regulate the blood glucose, with no need for the patient to inform the pump of each meal or exercise; CGMs will play a significant role in this process.
We are convinced the CGM approach has the potential to transform the lives of many diabetes patients – adults and children – and their loved ones, helping them to better control this incurable and increasingly prevalent life-threatening disease.
1 Device that continuously measures blood glucose.
2 Hormone produced by beta cells in the pancreas to regulate blood glucose levels.
3 Excess of glucose in the bloodstream
Source of all market data: International Diabetes Federation
IMPORTANT INFORMATION – GENERAL MARKETING
This is a marketing communication issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter "Lombard Odier"). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This marketing communication is provided for information purposes only. It does not constitute an offer or a recommendation to subscribe, to purchase, sell or hold any security or financial instrument. It contains the opinions of Lombard Odier, as at the date of issue. These opinions and the information herein contained do not take into account an individual’s specific circumstances, objectives, or needs. No representation is made that any investment or strategy is suitable or appropriate to individual circumstances or that any investment or strategy constitutes a personal recommendation to any investor. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. Lombard Odier does not provide tax advice. Therefore you must verify the above and all other information provided in the marketing communication or otherwise review it with your external tax advisors.
Some investment products and services, including custody may be subject to legal restrictions or may not be available worldwide on an unrestricted basis.
Investments are subject to a variety of risks. Before entering into any transaction, an investor should consult his/her investment advisor and, where necessary, obtain independent professional advice in respect of risks, as well as any legal, regulatory, credit, tax, and accounting consequences. The information and analysis contained herein are based on sources considered to be reliable. However, Lombard Odier does not guarantee the timeliness, accuracy, or completeness of the information contained in this document, nor does it accept any liability for any loss or damage resulting from its use. All information and opinions as well as the prices, market valuations and calculations indicated herein may change without notice.
Past performance is no guarantee of current or future returns, and the investor may receive back less than he invested. The value of any investment in a currency other than the base currency of a portfolio is subject to foreign exchange rate risk. These rates may fluctuate and adversely affect the value of the investment when it is realized and converted back into the investor’s base currency. The liquidity of an investment is subject to supply and demand. Some products may not have a well-established secondary market or in extreme market conditions may be difficult to value, resulting in price volatility and making it difficult to obtain a price to dispose of the asset.
European Union Members: This marketing communication has been approved for issue by Lombard Odier (Europe) S.A., a credit institution authorised and regulated by the Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg and by each of its branches operating in the following territories: Belgium: Lombard Odier (Europe) S.A. Luxembourg • Belgium branch, a credit institution regulated in Belgium by the Banque nationale de Belgique (BNB) and the Financial Services and Markets Authority (FSMA); France: Lombard Odier (Europe) S.A.• Succursale en France, a credit institution and regulated in France by the Autorité de contrôle prudentiel et de résolution (ACPR) and by the Autorité des marchés financiers (AMF) in respect of its investment services activities. Italy: Lombard Odier (Europe) S.A. • Italian Branch, credit institution governed in Italy by the Italian stock market regulator (Commissione Nazionale per la Società e la Borsa , or CONSOB) and the Bank of Italy; Netherlands: Lombard Odier (Europe) S.A. • Netherlands Branch, a credit institution regulated in the Netherlands by De Nederlandsche Bank (DNB) and by Autoriteit Financiële Markten (AFM); Spain: Lombard Odier (Europe) S.A. • Sucursal en España, a credit institution regulated in Spain by the Banco de España and the Comisión Nacional del Mercado de Valores (CNMV); and United Kingdom: Lombard Odier (Europe) S.A. • UK Branch, a credit institution regulated in the UK by the Prudential Regulation Authority (PRA) and subject to limited regulation by the Financial Conduct Authority (‘FCA’) and the Prudential Regulation Authority (‘PRA’). Details of the extent of our authorisation and regulation by the PRA and regulation by the FCA are available from us on request. UK regulation for the protection of retail clients in the UK and the compensation available under the UK Financial Services Compensation Scheme does not apply in respect of any investment or services provided by an overseas person.
In addition, this marketing communication has also been approved for issue by the following entities domiciled within the European Union: Gibraltar: Lombard Odier & Cie (Gibraltar) Limited, a firm which is regulated and authorised by the Financial Services Commission, Gibraltar (FSC) to conduct banking and investment services business; Spain: Lombard Odier Gestión (España) S.G.I.I.C., S.A.U., an investment management Company authorised and regulated by the Comisión Nacional del Mercado de Valores (CNMV).
Switzerland: This marketing communication has been approved for issue by Bank Lombard Odier & Co Ltd, a bank and securities dealer authorised and regulated by the Swiss Financial Market Supervisory Authority (FINMA).
United States: Neither this document nor any copy thereof may be sent, taken into, or distributed in the United States or given to any US person.
United Kingdom: UK regulation for the protection of retail clients in the UK and the compensation available under the UK Financial Services Compensation Scheme does not apply in respect of any investment or services provided by an overseas person. This material has been approved for issue in the UK by Lombard Odier (Europe) S.A. UK branch, Queensberry House, 3 Old Burlington Street, London W1S 3AB. The bank is authorized and regulated by the CSSF in Luxembourg and its branch in the UK by the Prudential Regulation Authority and the Financial Conduct Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS. Registered in Luxembourg No. B169907. Lombard Odier (Europe) S.A. UK branch does not provide tax advice.
This marketing communication may not be reproduced (in whole or in part), transmitted, modified, or used for any public or commercial purpose without the prior written permission of Lombard Odier.
© 2016 Bank Lombard Odier & Co Ltd – all rights reserved.