Beta Bionics, Inc. Q1 FY2025 earnings call

• Q1 2025 results exceeded expectations with strong net sales growth and new patient starts. - Pharmacy channel saw faster-than-expected adoption, with over 20% of new patient starts reimbursed through pharmacy. - Product launches like Libre 3 Plus Integration, Color iLet, and Bionic Circle contributed to Q1 performance. - Operating expenses increased due to expansion of field sales team and public company costs. - Ended Q1 2025 with $295.5 million in cash, cash equivalents, and investments. - Innovation pipeline includes progress on patch pump towards 2027 commercialization, bi-hormonal pump bridging study, and updates on digital innovation and type 2 label expansion.

In the first quarter of 2025, Beta Bionics delivered net sales of $17.6 million, which grew 36% year-over-year. New patient starts in Q1 were 3,853, up 48% year-over-year. Low 20s percentage of new patient starts were reimbursed through the pharmacy channel, exceeding previous guidance. Gross margin in the quarter was 50.9%, down from 55.7% in Q1 2024, primarily due to the substantial increase in pharmacy mix as a percentage of new patient starts.

• Increased net sales guidance for 2025 to $82 million to $87 million from prior $80 million to $85 million. - Raised pharmacy reimbursement guidance to 22% to 25% of new patient starts from greater than 20%. - Gross margin guidance raised to 50% to 53% for 2025 despite larger-than-expected pharmacy mix increase, due to scale leverage and growing pharmacy installed base.

Q: Good afternoon. Thanks for taking my question. Would love to start on the pharmacy side because that number was pretty eye-popping as far as what we saw here in Q1. Just between the new access that you received, new sales force you received or you've gotten recently, just maybe talk a little bit about -- just thinking about the sales force, I'm not sure that was that big of a contributor. But just what we're seeing on the underlying side in terms of the dynamics of the pharmacy channel on your business and the decision to increase the outlook there specifically here in Q1?

A: Yeah, Matt, thanks for the question. I think that what we're seeing there is we're just having greater success with in effect, what we're selling to the plans themselves. As we shared in prepared remarks, step one is get the contract to the PBM, but the traditionally more difficult step is to convince the underlying plans to adopt your -- the plan that you've laid out or the contract you've laid up with the PBM. And frankly, we're just seeing that happen faster than we expected. And I think that's a testament to signing those contracts in a way that makes it advantaged for the plans to want to do this. And that happened pretty aggressively in the first quarter, primarily based on the Prime contract specifically. But that obviously gives us -- increased confidence going into the back half of the year.

Q: Hey, good morning. Thanks for taking my questions. Stephen, maybe just wanted to start on the guidance. Can you help frame to what extent your new guidance assumes a raise in new starts for the year relative to your prior expectations? Any color on the magnitude of that would be helpful. And then I have one follow-up.

A: Yeah, got you. Okay. So yes, we increased our revenue guidance by $2 million at the bottom end, high end of the range. But we also dramatically increased our pharmacy guidance, which means that in 2025, we increased our new patient starts expectations by above what we -- what our revenue guidance implies because we have to sell more new patient starts in order to make up for that revenue delta that has now created in the short run -- from pharmacy. So I guess maybe just to confirm your point, Mike, yeah, we called -- we increased our revenue guidance, but the actual implied increase in new patient starts guidance is higher than what again -- what we're communicating in terms of revenue. In terms of competitive pressure, I don't know, Sean, do you want to comment on that part?

Q: Hi, good afternoon. Thanks for taking my questions. I've got 2. Maybe to start, Sean or Stephen, you both, I think, echoing what Matt said, tackled that pharmacy mix impact well. So I appreciate that color. I think the one question I have still is, why are you confident in this now explicit 22% to 25% range? What kind of visibility do you have on that mix? And how much control do you have over whether a pharmacy -- a script goes through DME or through pharmacy? And then I've got one follow-up on the sales force.

A: Yeah. We have pretty good visibility. So we signed I think I'll just remind you kind of the framework of how this works for us for you to ultimately get coverage turned on for a patient to be able to be reimbursed through the pharmacy channel. First, you have to sign PBM contracts and then there's some selling that gets done at the plan level and all those decisions get made at a future date. So there's really like three stages to turning on pharmacy coverage. And because we are in discussions like -- with PBMs, with plans involving both of those elements of the process, we actually do have like some pretty good visibility. Now that said, there can be slight deviations from quarter-to-quarter because our sample size is relatively small. But with the reason that we see we're forecasting some upward momentum in the pharmacy adoption through the rest of the year is because we're aware of some information for like when we expect certain plans to turn on the iLet as a pharmacy benefit. And so I would say our visibility is actually reasonably strong.

Q: Hey, thanks a lot for taking the question. Congrats on the quarter. I guess the first question I had is now that you're at kind of 63 territories, the awareness of iLet is getting out there. Any change in kind of what you're seeing within your doctors and prescribers in the uptake of iLet. How they're using it and also like seeing penetration move like within your own doctors and also kind of adding new prescribers. Just kind of curious how the awareness of the product is kind of playing out? And then I had a follow-up.

A: Yeah. Great question, Travis. I think what we're seeing evolve is that when you first launch a product, you're necessarily going to get niched in some level, right? Nobody ever launched a product in this industry and somebody just looked at it and said, yeah, I'm going to use that on absolutely everybody. It hasn't happened one time that I'm aware of, and I've been in the industry a while. So they're going to find that area where they need to try it out. And I think iLet was no different, right? And we know that at some level, we get used on some of the harder patients. And patients have previously been unable to be successful on other therapies. But what we've been able to do, and we've alluded to this several times now is share that success of the average A1c drop from X to Y. I think on the last call, we shared what we considered our fully closed-loop experience and the shocking reductions in GMI that we saw on that. And when we can share that on a clinic-by-clinic basis or a doctor-by-doctor basis and say, doctor, this is your experience with the iLet, say, holy smokes, it's really working well. And there's no real reason that if it's working well on my harder patients, it really shouldn't work at least as well on my easier ones. And so I think there's an understanding of that going on. But at the same time, as we increase our sales force size, we increase the accounts that we're calling on, we're going to see that also start the other direction in those new accounts, right? So we say, okay, well, now it's my first time using the iLet. I understand it's out there, but I haven't tried it before, and then they try it on some of the harder patients. And then we have to get that physician or account to move down the spectrum or what have you and get iLet to be more broadly accepted. But I think we're clearly seeing that at some level. And again, the clinical data that we're able to share does indicate it. And as we mentioned, we are -- we're excited to share that real-world evidence data more broadly at our Analyst Day in June at ADA. And I will remind everybody that the majority of people in the United States, roughly 80% have an A1c over 7%, so not meeting A1c goal. And historically, these are the people that we've considered to be the harder patients. So frankly, being niche to an 80% group is something that we're very happy to start with. And if we progress into the entire population, well that's just even better.

Q: Thank you very much. Congratulations on a terrific first quarter. I just have a couple to finish up here. First is you guys are the only ones integrated with Abbott Libre 3. I'm just curious if you'd comment on whether you see any meaningful impact on new patient starts that's tied to the Abbott Libre 3 device.

A: It's a great question, Brooks. Now I'll take a page from Stephen's playbook and say I'll probably frustrate you with my answer. Given that we are partnered with multiple CGM players, I think it's our policy to not discuss the relative weighting of our CGM adoptions between those players. Said another way, we're going to let the CGM guys battle it out, and we're going to be very happy to support all of them. With that being said, we're extremely thankful to Abbott for partnering with us on the Libre 3, certainly one great sensor as is the Dexcom, and it certainly matters to our business as does the Dexcom sensor. So if that was a middle-of-the-road answer, then I got it right.

Q: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

A: Well, thanks, everybody, today. We really appreciate your time on our Q1 2025 earnings call. And we hope we put up some good numbers this quarter, and we look forward to keeping that going headed forward. So thank you.