Hey, everybody. Can you hear me? Yeah. Perfect. Thanks to the folks for joining. Yeah. Good to be here, Larry. Great to have you, Stephen. Welcome back. I'm Larry Biegelsen, the MedTech Analyst at Wells Fargo, and it's my pleasure to host this fireside chat with the management team from Beta Bionics. With us, we have Stephen Feider, the CFO. We'll just jump right into it. Stephen, thanks so much for being here. Great to be here. I appreciate it. It's been an awesome conference. Glad to hear. Let's start off with a big picture question. You launched the iLet pump about two years ago. Talk about where Beta Bionics is today and what do the next three to five years look like? Yeah. I guess I'll answer where we are today. First, maybe cover commercially how things are going and where we are. Then just a little about the financial position and lastly, just the stock. Commercially, and by the way, the company just in general is doing great. Confidence from myself, from the general management team is at an all-time high, and we're really feeling good about our product. How things are going commercially, you've seen the ramp and we continue to beat the expectations that are being set for us. There's a few reasons why that's happening. One is we launched a product that is differentiated. It was a disruptor to an existing insulin pump market because the algorithm, which is the unique characteristic of the product, is better and different. It's radically simple. I think in order for that to really resonate within the market, we needed some time. What that time really means, what I mean by time is we needed doctors to have the opportunity to prescribe it to patients, have patients experience the product, share their good experience with the doctor, with their community of people around them, and then prove that the clinical results are fantastic. Now that the product's been out there for as long as it has, that's been the case. The better and different element of our product is really resonating. That's number one. Number two, commercially, you have the pharmacy channel. We were the first tube to pump company that started, or we pioneered pharmacy reimbursement. What that does is it allows Beta Bionics to make more money in the medium and long term relative to the DME channel, but it also makes the product much easier for physicians to prescribe or any HCP to prescribe, and much easier for patients to purchase because the out-of-pocket is lower. As you see, the new patient starts ramp continue to go up and to the right. Part of the reason for that is because of the pharmacy adoption, and it's making it again easier for doctors to prescribe, easier for patients to get. That's number two. The last one, and this is not me marketing the product at all for type 2 diabetes whatsoever. We don't have an indication for that product, but we are seeing a type 2 adoption for the product that in the most recent quarter was in excess of 25%. Same store sales are stronger, keep going up and to the right, new store sales up and to the right. What I mean by that is new prescribers prescribing, and of the prescribers that do prescribe, they've prescribed more. Commercially, it's going great. Financially, I'm the CFO of the company, and this is my world here. I feel very, very good about the financial position of the company. We have plenty of cash to operate and to do all of the execution that we want to do to see the grand vision of how we ultimately win the entire market through. What I'm illustrating or communicating is that the company doesn't have any financing risk. All of the projects that we can talk about in the R&D pipeline, there's plenty of capital to invest and fulfill all those opportunities. Lastly, on the stock, I think that the management team here, and look, this is the first time that Sean and I and the management team at Beta Bionics have operated a public company like this in this capacity. What I feel really good about, and I continue to have confidence in going forward, is that we'll continue to operate under our guidance philosophy that we set expectations at levels that we have a high degree of confidence in. I think we've demonstrated that and keep giving us more quarters, and I think that's what you'll see. Great. That's a great overview. Let's talk about the 2025 outlook. You reported Q2 results a few weeks ago. On the call, you raised your full-year revenue guidance by more than the beat. It implies 27% - 40% year-over-year growth, I believe. You grew 45% in the first half of the year. Why is growth going to decelerate in the second half of the year? Just talk about what's assumed in the low and high end of the guidance, please. Sure. Two things for why, and look, you're right, I mean, of course, in your math. Two things that I'd comment on there. One is that the first half of the year in 2025 was a good first half of the year. So that it's a comparator that was a strong first half, 2025. The second is just, again, pointing to our guidance philosophy. We do want to set expectations at levels that we have confidence in. What is on the high end of the guidance range, or what are some of the upsides for the second half of the year? It's just pointing to the same kind of things that I mentioned earlier. Pharmacy uptake continues to exceed even our own internal expectations, and that makes it easier for patients to get the product. That creates very high margin revenue for us in the medium and long term. That is a potential tailwind to new patient starts. Continued adoption of the product by the existing accounts as the message continues to get out there, and as our territories develop more and more maturity, which today we have 63 sales territories. There's nothing that makes me not confident in the back half of the year, but if I had to say what is assumed maybe at the downside of that range, there's, I suppose, two things you could look at. One is that there is a new entrant to the market. That company is called Sequel. They make a pump and will be launching, they'll be launching it here soon. That product is, just to give you a quick overview, it's another, what I would consider, tube pump. They wouldn't like that term, but it is. It uses an infusion set, meaning it uses an algorithm called the loop algorithm. What the loop algorithm is, is it's the most hands-on engaged algorithm that really exists in the market. If you know about our product, which is a radical simplification of diabetes management, it's the low-touch solution. It's totally antithetical. Their solution is totally antithetical to ours. While I'm respectful, of course, of that product, and I actually know a lot of people personally that use it, and I think it's a really interesting algorithm, I don't see it as competitive to ours. However, they will be competing for the same endocrinologist attention that we are competing for, and that may cause some just headwind to the overall execution in the back half of the year. Again, embedded in the guidance. The second point I'll just make is that Omnipod is the market leader in insulin pumping, and tubeless in the pharmacy channel remains a tough competitor. That's helpful. Before talking about pharmacy, I wanted to ask about the market. It looks like you, I'm sure, maintain a market model like we do. It looked like new starts were pretty strong in the second quarter in the U.S. It looks like you took a couple of share points sequentially. Talk about what you're seeing in the broader insulin pump market. Yeah, I agree with your math, but I think we were talking about, we took somewhere around 10.5% - 11% new patient starts in the second quarter. I guess what I'm seeing is that I think you have Insulet and Beta Bionics. Maybe I'll talk about the market broadly. I think we're finding that every analyst model that was built for insulin pumps, in terms of what new patient starts expectations were for the first half of 2025, if you add up all the numbers from all the insulin pump companies, the actual number of new patient starts blew those numbers out of the water. I think what's causing that is there is an uptick in type 1 adoption of insulin pumping that maybe isn't growing at an unprecedented level, but it is growing pretty fast and faster than what people are expecting. The most notable model-busting reality that's happening is that type 2 adoption is growing at an unprecedented level. Again, I'm not marketing our product at all for type 2, but just the data shows that, and it's getting prescribed off-label today where many of our patients are type 2, and then Omnipod is winning a ton of type 2. I think in terms of the market, that's what's happening kind of broadly to it, or not globally, that's what's happening broadly. I think the companies that are positioned to win those growing markets or that growing market are well positioned. That's helpful. One standout from the Q2 call was your pharmacy mix. You raised the guidance from 22%, 20%, I'm sorry, at the start of the year to 25% - 28% now. What's driving the acceleration of the pharmacy channel, and what's your long-term goal? Yeah. Do you mind if, before I answer that, I just remind anybody listening about how the pharmacy channel's advantage for us? Of course, please go ahead. Pharmacy channel, what Larry's referring to is in traditionally durable pumps get reimbursed through the DME channel, which is medical reimbursement. What that does for me is that it has the insulin pump company generate a large upfront amount of revenue to sell the pump, in our case, around $3,500 of revenue. Then they sell these monthly supplies associated with the product for about $70 a month. You contrast that to the pharmacy model, which is more of a subscription-like model. We as a company, we then Beta Bionics generate roughly $0 of revenue when we sell the pump. We give it away for free, and then $450 a month every month that we sell the monthly supply kit. The patient pays a very low out-of-pocket cost in the pharmacy every month and nearly zero out-of-pocket for the pump. Their advantage relative to the DME where they have a large upfront out-of-pocket. We win in the short, in the medium, and long term as a company. The patient pays less, and the payer likes it for reasons I could get into if you'd like. That is what the strategy is, and that is why we're trying to shift every patient we possibly can to that channel. Why have we had success, and why has our guidance been increasing, and why do we continue to beat on the expectations that we're setting? The real reason is that we're signing, we're winning PBM contracts, and we're winning underlying health plan contracts at rates that are faster than what I guess the market's expecting. That is really the process that it takes in order to grow that adoption. First, you need, again, PBMs, which today we have all three of the largest PBMs in the country are under contract, as well as Prime. Then all the underlying health plans are the next step associated with that. The best representation of what underlying health plan coverage we have is the percentage of new patient starts that were reimbursed through the pharmacy channel for us in the most recent quarter, which was a high 20% percentage. It is just that relentless execution of both PBM contracts and underlying health plan contracts, and then building a mechanism that actually allows us to channel the demand to the right channel. What is the long-term goal? Yeah, look, I'm going to just say like the ideal target goal, acknowledging, by the way, that even though [pod] is only reimbursed in pharmacy, they're not actually close to 100% covered. My goal is that all of our products, all like when we have the Mint product, which we can talk about if you'd like, as well as the iLet product, that those are pharmacy reimbursed products. Got it. Okay, you talked about type 2, upwards of 25% of your new starts in the second quarter. What is the plan for label? Because it sounds like you're not committed to doing a pivotal trial, but there may be alternative pathways for regulatory approval. Where are you in the process, and is that a fair characterization? Yeah, we absolutely intend to get a label for the product. However, I don't believe that it's necessary for doctors. I don't believe doctors today or HCPs are looking at a product like iLet and holding out to prescribe it until the day that there's a label for it in type 2. We absolutely will pursue the type 2 label, or we are pursuing it. I just don't want to comment on, because I haven't, and because it's our policy to not comment on interactions with the agency, I don't want to comment on exactly what our tack is there or what our timeline is. Okay. Yeah. That does not entail a pivotal trial. Is that fair? No comment. Okay. All right. Got it. Competition, I just want to ask one more on Sequel. I mean, you mentioned that they're launching soon. It looks like they have launched. Yeah, I think it's, you're right. There is some launch. There is a launch. I think it's maybe considered a limited launch at this point, but those are my words, not theirs. It's not like a full launch yet. The way you kind of differentiated your product from theirs makes perfect sense. You also talked about kind of endocrinologists like [Mindshare and just time], right? Because the scripts are showing up. People are trialing the product. We see that in the IQVIA data. Is that, what, any more color on what you're seeing right now? From Sequel specifically? With endocrinologists and now, if that is already the downside, you talked about the high end and the low end of the guidance, what it assumed. What are you seeing today in the market? Anything noteworthy? We're not feeling much headwind from people that are considered maybe potential iLet customers that are now all of a sudden wanting to switch to Sequel. It's not really a demographic that would probably consider the iLet. By the way, I don't think that's a very large% of the market that wants a high-touch, highly interactive, hands-on-the-knobs product. Acknowledging, again, I'm respectful of what they have. I'm not seeing or expecting any real headwind, again, in terms of the actual share-taking or market share-taking for the iLet. However, I will acknowledge that Sequel tried to hire a bunch of our sales reps. They didn't successfully hire any of them, but they did try. That's like semi-disruptive. They probably try again to hire more of them as they continue to expand from 50 - 100 territories. They hired presumably smart people who are competing for time with the same endocrinologists and high-prescribing primary care doctors, and that chews up airtime. Right, yeah. Got it. It's real. Got it. Okay. It's a well-funded company that is a fifth pump. Understood. Got it. Okay, competitive bidding. Comments were due, I think, last week. That's right. I assume you submitted comments. I haven't had a chance to. I don't know if they've posted publicly or not. Yeah, we did submit comments. I think ours have been posted. I didn't actually go in there and look at, like, oh yeah, there's our comment, but I think it's in there. Okay. I haven't had a chance to see it. No problem. There's probably others who haven't read them. Sure, I can summarize what we said, yeah, if you'd like. All right, what did we say? We said that we didn't think that the proposed rental model that was being proposed for insulin pumps was administratively not possible, but administratively appropriate. Like it wasn't, the rental model isn't actually workable. The reason for that is there's a few, but one notable is that the idea that somebody kind of gets a pump and then just decides that like tomorrow they want a different pump is not really how insulin pumps actually work. You don't really hot swap insulin pumps. There's training that's typically associated with each device that somebody would switch to. When you actually have an insulin pump that you want someone else to use, it goes back to the manufacturer, and there's a form of sterilization that happens on the product. Trying to administrate a rental model on an insulin pump isn't exactly that feasible. There are a few other reasons why, but that was our first point. Pay as you go, we understand, we get why there's real desire for that and not locking people into four-year warranties. What you've designed here or what you've constructed here isn't really going to work, and probably we would try to support it, but it's unlikely we would. The second thing is that this is already the most constrained. Medicare fee-for-service, DME Medicare fee-for-service is already the tightest or the worst financially performing area or component of our business. The revenue there is the least profitable. I don't have much tolerance to go lower on price there. If the idea is to make insulin pumps more available to patients and by cramming down price in that section, which is about 10% of our business, we don't have much tolerance for it, and I don't think probably the other manufacturer does either. They may be doing the exact opposite. You said you wouldn't support it if it goes this pathway. We may not. I am not saying for sure, but I don't think a cram down of price within that channel is something that we're, a low cram down in price is not something that we have much tolerance to go significantly lower on. A rental model, depending on the administrative characteristics of it, if it's too burdensome for us, it won't be worth it. We will look at it financially and make an assessment, but it doesn't really look that good on paper for us. I thought, not to get too much in the weeds, I thought the DME provider takes on the risk. They're getting reimbursed, like making the money in 13 months today. Sure. If the new plan, they wouldn't recoup the money for 60 months. I didn't think it was the manufacturer that takes the risk. It is in that we have to actually be the ones that would administrate the rental, like the swapping of one pump to another. The DME is not going to take the pumps back and repurpose them, reconfigure them, wipe them clean, do a form of sterilization, and then send them to a new patient. They'll administrate the money, sure, but the actual physical goods and operating the medical device company, they're not going to do that for us. Got it. That's a very cost-intensive process. Got it. What do you think happens? Have you had a chance to look at the other companies from the DME association, A&A Home Health, Tandem's comments, any idea where this goes? I'm purely speculative. I don't think it goes through. Part of that is because, look, I actually don't know, of course, but my speculation is that it doesn't. The reason is actually, Travis' note, I thought did an okay job of this, your competitor. He summarized all the, every, like across not just pumps, but like the whole, you know, everything that was covered in that proposal and all the public comments. There wasn't like one positive thing about it. Every single one of the comments or the public comments was negative, and for like a lot of different, like carrying forward with a bunch of different reasons. To me, that's kind of a bad sentiment for something that would end up getting pushed through. That would be my speculation. Okay. All right. That's helpful. Yeah. All right. Pipeline. You brought Mint with you? Pipeline, yeah. Folks that are listening wouldn't be able to see this, but maybe I'll just explain Mint if you wanted to. I don't know. What was your pipeline question? I didn't even let you finish. I was going to ask you how it's different from Omnipod or the other patch pumps in development, like Sigi, and yeah, you know. I'd be happy to tell you. The key design decision that was made here, or the key characteristic of how we chose this design, was that we didn't want the user's experience to be in any way, or to be in its totality, disadvantaged relative to the incumbent, to the Omnipod experience. That was kind of how it was designed. By the way, if you're listening to this and you're not in the room, there is, I think, a really good presentation that we did at ADA this past year in June, an investor day where our CTO and Sean, our CEO, did a nice job of walking through the actual application of it. I'll revisit it here. What the user's experience would be if you're wearing, if you're a Mint user, is you're wearing the Mint. You take the Mint off when it's after its usage of three days or whenever the insulin is gone. You would then take, you would rip the disposable component back and throw it away. Now this particular disposable is done. You would take the durable component, set it aside, take a new Mint disposable out of the package, which looks like this. Then you would take, and I'm not going to open that one, but you then would take the disposable out of the package. You would put the insulin into the disposable. You then would take the same durable component that you just took off the old one, put it on the new one, apply it to your arm or wherever you put it on your body, apply the adhesive, remove this little orange stopping mechanism, and then push the button and inject the cannula or inject the needle, and that's it. The process there is relatively straightforward. Notably about this experience that I think is important to highlight is that the durable component associated with the product, because remember, it's two parts. There's a durable and there's a disposable. The durable component doesn't have any batteries in it. It has all the expensive components in it: the motor, the chip, the radio, the Bluetooth speaker, all the expensive components. They're in here, but there's no battery. What happens, and the reason for that is because we don't want any patients to be recharging this durable component because that would be a miserable experience. That would mean you would have to have a charger around or maybe have another one so that you could take off your current durable input. What happens is the durable powers on when it gets connected to the disposable. What's in the disposable component of the Mint is two batteries, the cartridge or the reservoir where the insulin is being stored, the needle, the adhesive, and that's about it. By the way, contrast that to an Omnipod experience, which I won't do too much of a demonstration, but there's your, you know, you're taking off the Omnipod, you're throwing that away. When you actually are putting a new Omnipod in after, then you fill the Omnipod with insulin, you go into your phone, you unpair the old one, you pair the new one, you then put the Omnipod on your arm or wherever you put it on your body. The Pod then primes, and you go back to your phone to tell it that you want to inject the cannula, you push a button, and it injects. It inserts a needle and a Teflon cannula, and that's the insertion mechanism. It's actually a pretty elegant, very elegant experience, but what we believe is that ours is not disadvantaged in any way in that regard. All the actual characteristics of the dimensions of the products are exactly the same. It's a 200 unit capacity. It has the same battery life. It has the same size, the same weight, the same waterproofing. Again, not disadvantaged in any regard in that. We have an advantage, and we believe is that the algorithm, which is currently the iLet algorithm, that algorithm we get to use on the Mint product. The actual clearance for the Mint product, once we have it, is just an ACE pump clearance, and then we use that with our existing IAGC algorithm. That's the product. That's helpful. What do you need to get done between now and launch, which is year end 2027? Yeah, there's two large projects, and I won't comment on specifically like what's going on with each of them or their relative status, but there's two projects that are running in parallel that are both well underway. One is get the clearance, get the ACE pump clearance, which by the way, there's no clinical trial required for that clearance. The second is develop the manufacturing capability to have an unconstrained commercial launch, unconstrained defined as enough supply to support demand right at launch. Got it. Yeah. We're manufacturing these in Irvine, and that's where we manufacture this box, which has five of the Mints in there. Anyways. Okay, that's helpful. Let's talk about the P&L and financial outlook. My favorite. Okay. 2026, what are some of the headwinds and tailwinds? Not my favorite. I'm not going to comment yet on 2026 guidance. Obviously, I won't comment on numbers, but yes, you asked headwinds and tailwinds. Look, I think the product resonating and more HCPs with more experience on the product, and we're seeing the clinical results using our tools that we have to make the clinical outcomes highly transparent. All that will develop more and more confidence in the product. We expect us to continue to see an uptick in demand for the iLet from patients because HCPs become more comfortable and the word continues to spread. You'll also see an uptick in pharmacy adoption. I will set an expectation formally there to quantify what percentage of new patient starts we expect to go through that channel. We have an install base, by the way, in the pharmacy channel that's already very powerful, that's generating very high margin revenue, that will continue to grow through the rest of the year. We'll see more and more patients going through that channel next year. Those are some of the large tailwinds. Headwinds I kind of already alluded to. I think the notable one is that if you're thinking about a solution that every patient would want, I think one patient's either want a tube or a tubeless pump. The fact that right now there's only one tubeless pump that's 100% reimbursed through pharmacy is a tough competitor. Until we have that product, that's just something that will continue to be hard to compete with at some level. That's helpful. Gross margin this year, it's 52% - 55%. What's the, how are you thinking about the long-term trajectory of the gross margin? There's three, I won't give you a percentage, no surprise, but there's three major tailwinds that we have to our gross margin upside. One is that we can build our devices, our iLet device and the disposable components very cost-effectively. As we increase the volume of the product, meaning more demand, increased production volume, the cost per unit continues to go down. That's one advantage, that we actually are still at a relatively small scale. We'll see just advantages from fixed manufacturing overhead getting spread over more units. That's number one. Number two is $450 a month in pharmacy relative to DME of $150 a month. Amortized over four years is a big advantage. The most powerful lever on profitability is like always price. In our case, more and more of our business is going to the high-priced product. The gross margin on the monthly supply kits in pharmacy is actually higher than like what Pod is getting today. That is, and more of our business is going there. That's tailwind on the gross margin for the upside. The last thing is that, you know, in the multi-year outlook, this product is this Mint product that I just gave you a demonstration on. That product is designed to be manufactured. At any level of scale, it will have a higher gross margin than Pod. That's at a similar price point. We have confidence with that one that all three of those are. You haven't disclosed any kind of long-term kind of peak gross margin? We have not. Insulet, you know, it was about 70%, have you said, is that a good benchmark? We haven't stayed at. I'm trying to think if there's a better, another way to ask it. I know you are. That's okay. Okay. You said you talk about the number of territories you have today and what you need to be a critical mass. I think you've said 100 - 120 reps to be a critical mass. Yeah. Competition, I think, is significantly higher. Yeah, I think the right number of territories in the U.S., looking at the deciling data of how many HCPs there are that prescribe rapid-acting insulin and CGMs and the like, I think the right number is roughly 120. I reserve the right to change my mind on that one. Today we have 63. Competition has somewhere between 120 - 150, with the exception of Sequel, which said they're going to 100. You may look at that or you may hear me and you're like, why is this guy telling me that he's got, we're going to have fewer sales reps today? Like why? You have a product that's so differentiated, why you're not going faster? You have plenty of cash, just south of $300 million in cash. My take on it is that there is a stark difference between a high-performing sales rep and an average one. Then there's another stark difference between an average one and a low-performing. In order for you to ensure that you're able to convince and recruit the highest caliber talent, a calculated and deliberate sales territory expansion strategy is the right strategy. You want your best people in your commercial functions recruiting. In order to do that, you need to give them time to not recruit. We tend to do most of our expansions around the start of the year. You'll see that again in 2026, is that we'll do another expansion in early 2026. It'll be another calculated and deliberate one because we don't want to overburden the team with a recruiting effort that they're just being capable of, and then we would be hiring average people. You've said free cash flow positive before $1 billion in revenue or at $1 billion in sales? I haven't stated a number. I think the lore and the reality, which is not the lore, the reality is that a lot of these other diabetes med tech companies, it's taken $1 billion of revenue to start generating free cash flow. I guess I know why that is. I've seen the P&Ls, but our company is just way better positioned to generate free cash at a much earlier stage. You heard me say too that I don't feel like there's financing risk in the business. It doesn't mean we'll never raise cash again. There are certainly a bunch of reasons why you would, including the float for the stock. I just have, it's not going to take us nearly that long or nearly revenue at that level to do it. We have some big advantages I alluded to earlier in the gross margin. The other one is just, you're just going to have to kind of trust me. Operating, there's a stark difference between operating a company efficiently in OpEx and then operating one that isn't. I think Sean and I have demonstrated an ability to operate companies efficiently, and you'll continue to see that. Okay, less than two minutes left. You know, we went through a lot. Yeah. We covered a lot. What didn't we cover? What's underappreciated by investors about Beta Bionics? Don't say management. That would be pathetic. I do that. You have the permission to slap me. I think that there's a framework that I'm going to tell you that I think ultimately wins that we've dreamed up that we are going to fulfill that wins the whole market. We're not just trying to be a product that's unique for, like, not that it is for, like, a portion of it, but here's how we win the whole market and why we're going to get there first. If you make a product that is a fully closed-loop algorithm that users don't have to engage with if they don't want to, that gets everybody or nearly everybody at ADA goal and gets rid of a lot of the hypo risk associated with the product, people want that. I believe that people will want, everybody will want that. If you make a tube pump or a patch pump, and one that's at parity with the patch pump competitor, the current one, and an elegant form factor tube pump, that's the second component. Third component is you integrate with every CGM that people would really want to use, like actually want to use that has real users. We've demonstrated our ability to be number one in that category. Then you allow everybody to buy their product in the pharmacy, whether they're on a tube pump or a patch pump. If you do all four of those things, everybody will use your product. That's what our vision is for Beta Bionics, and I'm confident we're going to get there first. Okay, great. Thank you very much for being here. Yeah, thanks. Thanks.