This Could Be the Biggest Breakthrough Ever for the 1.25 Million People With Type 1 Diabetes

By Markets

Image source: Getty Images.

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Often referred to as the "silent killer," diabetes in the U.S. is soaring.As of 2012, 29 million people had diabetes, up from 26 million in 2010. The majority were type 2 diabetics, which means their disease, which is caused by the body's inability to use insulin properly to convert sugar into energy, develops over time. Type 2 diabetics and prediabetics are often encouraged to change their eating and exercise habits to slow the progression of their disease.

Type 1 diabetes is no laughing matter

A much smaller percentage of the population -- 1.25 million children and adults -- have what's known as type 1 diabetes. Those with type 1 diabetes have little to no insulin production from their pancreas, and as the Mayo Clinic notes, it's often caused by genetics or perhaps exposure to specific viruses. Type 1 diabetics also, according to a recent study in Australia between 1997-2003 and 2004-2010, have a life expectancy that's 12.2 years less than the general population.

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The overwhelming number of type 2 diabetes cases compared with type 1 often seems to overshadow the seriousness of type 1 diabetes, as well as the struggles and inconveniences type 1 diabetics face in constantly monitoring their blood sugar levels. Per Reuters, more than a third of type 1 diabetics are utilizing an insulin pump to help regulate their blood sugar.

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Life as a type 1 diabetic isn't easy. However, that could be about to change thanks to what could be described as the biggest breakthrough ever gaining clearance well ahead of schedule from the U.S. Food and Drug Administration.

The biggest breakthrough ever for type 1 diabetics

As announced by medical device powerhouse Medtronic (NYSE: MDT) on Wednesday, the FDA has approved the company's "artificial pancreas" device known as the MiniMed 670G six months ahead of schedule. The device is the world's first closed loop system to be approved by a regulatory agency which is no small feat considering that European regulators almost always beat U.S. regulators to approval.

MiniMed 670G. Image source: Medtronic.

The device, which was approved for those aged 14 and up, measures a patient's blood glucose levels every five minutes and administers insulin on an as-needed basis. The device uses a sensor with a protruding needle that's slipped under the skin and measures insulin levels, while a smartphone-sized insulin pump worn on the abdomen delivers the insulin via tubes that lead to a catheter.

Is it perfect? Not exactly. Users will still have to instruct the device to deliver extra insulin during meal time, and will have to make adjustments when exercising, which can affect insulin levels. Additionally, patients must recalibrate the device every 12 hours, change out the glucose sensor on a weekly basis, and refill their insulin reservoir every three days. But, compared to the frequent number of times type 1 diabetics are required to check their blood sugar levels daily, this is a major improvement.

In particular, the study that led to the MiniMed 670G being approved tested the device on more than 10-dozen patients. Following the conclusion of the study, the average HbA1c blood sugar level of the patients had fallen from a baseline of 7.4% to 6.9%, with nearly 3 in 5 patients (58%) achieving an HbA1c below 7%.

Finer points for consumers and investors to keep in mind

It's worth pointing out that even with the surprisingly early approval, the MiniMed 670G won't be available until spring of 2017, which is subsequently when it's likely to gain approval in Europe.

Also absent was any pricing expectations from Medtronic concerning this revolutionary closed loop system. Jefferies' covering analyst Raj Denhoy is estimating a cost of between $5,000 and $8,000 for the device, with the disposable sensors costing an additional "few thousand dollars" a year. I don't foresee Medtronic having issues getting insurance covering for its game-changing device, but the added expense associated with the MiniMed 670G could price some consumers out of purchasing the device.

Image source: Getty Images.

Medtronic is also likely to maintain its pricing power for the immediate future with its MiniMed 670G since competitors DexCom (NASDAQ: DXCM), which is known for its glucose monitoring devices, and Johnson & Johnson, are still years away from potentially bringing a closed loop system to market. It's possible DexCom could actually lose what market share it's gained because of Medtronic's major advancement in personalized type 1 diabetes care.

Just how big could the MiniMed 670G be? JDRF estimates that annual type 1 diabetes costs tally about $14 billion. While it's tough to estimate how well the MiniMed 670G could fare without exact pricing and insurer coverage information, an assumption of $1 billion-plus in annual sales as its peak seems achievable.

But most importantly, type 1 diabetics are just months away from gaining access to a device that could greatly improve their quality of care and reduce their chances of a hypoglycemic event.

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Sean Williamshas no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen nameTMFUltraLong, and check him out on Twitter, where he goes by the handle@TMFUltraLong.

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