Business description of Tandem-Diabetes-Care-Inc from last 10-k form

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements included or incorporated by reference in this Annual Report, other than statements of historical fact, are forward-looking statements. You can identify forward-looking statements by the use of words such as “may,” “will,” “could,” “anticipate,” “expect,” “intend,” “believe,” “continue” or the negative of such terms, or other comparable terminology. Forward-looking statements also include the assumptions underlying or relating to such statements.

Our forward-looking statements are based on our management’s current assumptions and expectations about future events and trends, which affect or may affect our business, strategy, operations or financial performance. Although we believe that these forward-looking statements are based upon reasonable assumptions, they are subject to numerous known and unknown risks and uncertainties and are made in light of information currently available to us. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth below under the caption “Risk Factors” in Part I, Item 1A and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7, and elsewhere in this Annual Report. You should read this Annual Report with the understanding that our actual future results may be materially different and worse from what we expect.

Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.

Forward-looking statements speak only as of the date they were made, and, except to the extent required by law or the rules of the NASDAQ Stock Market, we undertake no obligation to update or review any forward-looking statement because of new information, future events or other factors. Readers are cautioned not to place undue reliance on forward-looking statements.

TRADEMARKS

As of December 31, 2014 our trademark portfolio contains eight pending U.S. trademark applications and six pending foreign trademark applications, as well as 14 trademark registrations, including four U.S. trademark registrations and 10 foreign trademark registrations.

PART I

Overview

We are a medical device company with an innovative approach to the design, development and commercialization of products for people with insulin-dependent diabetes. The foundation of our product portfolio is our proprietary technology platform and unique consumer-focused approach, which allows us to focus on both consumer and clinical needs to develop and commercialize products that address different segments of the insulin-dependent diabetes market. We began commercial sales of our flagship product, the t:slim Insulin Delivery System, or t:slim, in August 2012. In January 2015, we received clearance from the U.S. Food and Drug Administration, or FDA, to commercialize our next product, the t:flex Insulin Delivery System, or t:flex, for people with greater insulin needs. We intend to begin commercial sales of t:flex in the United States during the second quarter of 2015.

Our technology platform features our 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, our data management application. Our innovative approach to product design and development is also consumer-focused and based on our extensive market research as we believe the user is the primary decision maker when purchasing an insulin pump. This research consists of more than 7,000 responses obtained in interviews, focus groups and online surveys, to understand what people with diabetes, their caregivers and healthcare providers are seeking in order to improve diabetes therapy management. We also apply the science of human factors to our design and development process, which seeks to optimize our devices to the intended users, allowing users to successfully operate our devices in their intended environment. Leveraging our technology platform and consumer-focused approach, we develop products to address unmet needs of people in the large and growing insulin-dependent diabetes market.

We developed our products to offer the specific features that people with insulin-dependent diabetes seek in a next-generation insulin pump. We designed our products to have the look and feel of a modern consumer electronic device, such as a smartphone. t:slim, our first commercial product, was the first insulin pump to feature a high resolution, color touchscreen. Our products also incorporate colors, language, icons and feedback that consumers find intuitive to use. t:slim 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. t:flex was designed to provide the benefits of t:slim while offering a cartridge with 480 units of insulin, giving it the largest capacity currently approved in the United States and providing enhanced flexibility to people with greater insulin needs. The touchscreen and intuitive software architecture of our products make them easy to use, learn and teach, and are designed to allow for software updates without requiring any hardware changes. We offer a broad range of accessories allowing users to customize their pump to their individual lifestyle and sense of style.

According to the Centers for Disease Control and Prevention, or CDC, in 2014 approximately 25 million people in the United States had diagnosed diabetes. Close Concerns, Inc., an independent consulting and publishing company that provides diabetes advisory services, or Close Concerns, estimates that there are approximately 1.6 million people with type 1 diabetes in the United States and 1.7 million people with type 2 diabetes in the United States who require daily administration of rapid-acting insulin. All people with type 1 diabetes require daily rapid acting insulin, but only a subset of people with type 2 diabetes require daily rapid acting insulin, as a majority manage their therapy through improvements in diet and exercise, oral medications, or injectable therapies, such as long acting insulin. Our target market consists of the approximately 3.3 million people in the United States who require daily rapid acting insulin.

The 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. We commenced commercial sales of t:slim in the United States in the third quarter of 2012. The FDA cleared t:flex in January 2015.

For the years ended December 31, 2014, 2013 and 2012, our sales were $49.7 million, $29.0 million and $2.5 million, respectively. For the years ended December 31, 2014, 2013 and 2012, our net loss was $79.5 million, $63.1 million and $33.0 million, respectively. Our accumulated deficit as of December 31, 2014 was $248.7 million. Since the launch of t:slim, we have shipped approximately 18,300 pumps as of December 31, 2014. Based on customer surveys, the average age of our existing customers that have purchased t:slim is 31 years old, with relatively equal distribution between men and women.

We believe we have an opportunity to rapidly increase sales by developing and commercializing new products that utilize our technology platform and consumer-focused approach, such as t:flex, by continuing to provide strong customer support, and by further expanding our sales and marketing infrastructure. We expanded our sales, clinical and marketing organization from approximately 100 people as of December 31, 2013 to approximately 160 people as of December 31, 2014. We believe this expansion will allow us to engage with more potential customers, their caregivers and healthcare providers on a more frequent basis to promote our products. In addition, by leveraging our sales and marketing infrastructure to demonstrate our product benefits, and the shortcomings of existing insulin therapies, we believe more people will choose t:slim or t:flex for their insulin pump therapy needs, allowing us to further penetrate and expand the market. As of December 31, 2014, approximately half of our customers reported that they had converted from multiple daily injection to t:slim for their insulin therapy. We also believe we are positioned to address consumers’ needs in different segments of the large and growing insulin-dependent diabetes market with our products, and products in development. In particular, we see opportunities in the following areas:

Our headquarters and our manufacturing facility are located in San Diego, California and we employed 437 full-time employees as of December 31, 2014.

The Market

Diabetes is a chronic, life-threatening disease for which there is no known cure. The disease is caused when the pancreas does not produce enough insulin or the body cannot effectively use the insulin it produces. Insulin is a life-sustaining hormone that allows cells in the body to absorb glucose from blood and convert it to energy. As a result, a person with diabetes cannot utilize the glucose properly and it continues to accumulate in the blood. If not closely monitored and properly treated, diabetes can lead to serious medical complications, including damage to various tissues and organs, seizures, coma and death.

The International Diabetes Federation, or IDF, estimates that in 2014 approximately 387 million people had diabetes worldwide and that by 2035, this will increase to 592 million people worldwide. According to the Centers for Disease Control, or CDC, in 2014 nearly 25 million people in the United States had diagnosed diabetes.

There are two primary types of diabetes:

Our target market consists of approximately 3.3 million people in the United States who require daily administration of insulin, which includes approximately 1.6 million people with type 1 diabetes and the approximately 1.7 million people with type 2 diabetes who require daily rapid acting insulin. Throughout this Annual Report, we refer to people with type 1 diabetes and people with type 2 diabetes who require daily rapid acting insulin as people with insulin-dependent diabetes.

People with insulin-dependent diabetes require intensive insulin therapy to manage their blood glucose levels within a healthy range, which is typically between 70-120 milligrams per deciliter, or mg/dL. Blood glucose levels can be affected by many factors, such as type or quantity of food eaten, illness, stress and exercise. Hypoglycemia, or low blood glucose levels, can cause a variety of long-term effects or complications, including damage to various tissues and organs, seizures, coma or death. Hyperglycemia, or high blood glucose levels, can also cause a variety of long-term effects or complications, including cardiovascular disease and damage to various tissues and organs. It can also cause the emergency condition ketoacidosis, which can result in vomiting, shortness of breath, coma or death.

There are two primary therapies practiced by people with insulin-dependent diabetes, insulin injections and insulin pumps, each of which is designed to supplement or replace the insulin-producing function of the pancreas. Insulin injections are often referred to as multiple daily injection, or MDI, and involve the use of syringes or insulin pens to inject insulin into the person’s body. Insulin pumps are used to perform what is often referred to as continuous subcutaneous insulin infusion, or insulin pump therapy, and typically use a programmable device and an infusion set to administer insulin into the person’s body.

MDI therapy involves the administration of a rapid-acting insulin before meals, or bolus insulin, to bring blood glucose levels down into the healthy range. MDI therapy may also require a separate injection of a long-acting insulin, or basal insulin, to control glucose levels between meals; this type of insulin is typically taken once or twice per day. By comparison, insulin pump therapy uses only rapid-acting insulin to fulfill both mealtime (bolus) and background (basal) requirements. Insulin pump therapy allows a person to customize their bolus and basal insulin doses to meet their insulin needs throughout the day, and is intended to more closely resemble the physiologic function of a healthy pancreas.

According to the American Association of Diabetes Educators, insulin pump therapy is considered the “gold standard” of care for people with insulin-dependent diabetes. It has been shown to provide people with insulin-dependent diabetes with numerous advantages relative to MDI therapy. The following chart illustrates some of the key advantages and disadvantages of using MDI therapy versus insulin pump therapy:

Comparison of MDI Therapy vs. Insulin Pump Therapy