STIFEL 2026 HEALTHCARE CONFERENCE - BETA BIONICS INC

Explicit Guidance:

• Q4 2026 Gross Margin: Range of 58.3% to 62.7% (implied from calendar year 2026 guidance).
• Calendar Year 2026 Gross Margin: Range of 58.5% to 62.5%.
• 2027 Manufacturing Capacity: Minimum 1.5 million units; projected to reach >1.9 million annualized capacity by end of 2027, with directional potential toward 2.5 million.
• 2027 Customer Allocation: Strategic target to allocate 2/3 of new Mint starts to new customers and 1/3 to Islet-to-Mint upgrades (based on capacity availability).
• Reimbursement Coverage: Launch coverage expected at ≥40% of eligible patients (via pharmacy benefit), increasing to ≥50% by the end of the first year.
• Long-term Gross Margin Trajectory: Mint's gross margin projected to reach parity with or exceed the incumbent patch pump leader within three years of launch; near-term (2027) blended gross margin expected in the low 50s.
• Operating Expense (OpEx): Expectation of OpEx leverage (de-levering as percent of sales) beginning in 2027 as sales force growth stabilizes.

Business-Segment Outlook:

• 3D Intelligence (Launch): Withdrawal of original submission due to simulator validation feedback; resubmission completed. Timeline shifted from end-2026 to mid-2027, with a possibility of Q4 2026 launch.
• 3D Impact: Expected to recover "dormant" accounts (physicians who previously prescribed Islet but stopped due to hypoglycemia fears) by introducing a "conservative mode" that provides user control without algorithmic transparency; viewed as addressing the #2 commercial objection.
• Mint Launch (Full): Confirmed for Q1 2027; will launch without 3D Intelligence initially, with 3D rolled out via firmware over-the-air update to existing Islet and Mint users.
• Sales Force Strategy: No massive hiring in 2027; marginal growth expected. Retention strategy involves normalizing turnover to remove underperformers.
• Commercial Infrastructure: Company will retain control of demand allocation via its own pharmacy to prioritize new customer starts over legacy Islet upgrades during the initial launch phase.

Market and Competitive Outlook:

• Market Positioning: Strategic intent to become the market leader in insulin pumping rapidly; internal planning does not target mid-single-digit growth but rather scale to challenge the incumbent's volume.
• Competitive Differentiation (Mint):
  • Vs. Incumbent Patch Pump: Wins primarily on algorithm superiority; form factor and user experience are equal or better.
  • Vs. New Entrants: Differentiates via smaller size (weight/dimensions) and recharging architecture (recharge-free disposable components powering the controller, no external charger needed).
• Reimbursement Trends: Anticipates easier path to 70–80% coverage for "second movers" (Mint) compared to the incumbent, leveraging established infrastructure for patch pumps.
• Demand: Confidence that Mint production volume for 2027 will be sold out; demand is not expected to be capped by interest but by manufacturing capacity.

Macro / Industry Outlook:

• Regulatory Environment: FDA questions on 3D Intelligence were specific to simulation validation, not the algorithm itself. Manufacturing line automation changes (adding robots) do not require new regulatory submissions for 510(k) products as long as product specs and quality standards remain unchanged.
• Clinical Development: Fully closed-loop system trials (Type 1 and Type 2) initiated in the current quarter; primary efficacy outcome (13-week HbA1c) expected for ~400 patients, with timelines consistent with industry standards.

Strategic Initiatives:

• Mint Manufacturing Automation: Parallel investment in adding robots to the Irvine manufacturing line (moving from "crawling" manual stage to "walking" automated stage) to scale beyond 1.5 million units. This addresses labor turnover risks and increases reliability.
• Supply Chain: Utilization of single-source suppliers with second-sourcing strategies; component reliability considered high.
• Product Roadmap: 3D Intelligence will be integrated as a firmware update for all Beta Bionics products (Islet and Mint) post-clearance.

Risks and Headwinds to Outlook:

• Regulatory Uncertainty: 3D Intelligence launch timing remains subject to FDA review timeline (statutory 90-day window for re-review); while resubmission occurred, clearance is "more likely" in H1 2027 than late 2026.
• Manufacturing Scaling: Risk of not exceeding 1.5 million unit capacity if automation implementation fails; reliance on rapid addition of robotics to replace manual stations.
• Channel Conflict: Potential "hard conversations" with existing Islet patients during the allocation phase as the company prioritizes new customer starts.
• Gross Margin Dilution: 2027 gross margins expected to drop to low 50s due to the lower margin profile of Mint compared to Islet in the short term, before gradually improving over three years.
• Management Credibility: Recent delay in 3D Intelligence launch is perceived by some investors as a stumble in FDA engagement and execution, creating negative sentiment.

Management Tone on the Future:

• Confidence: Highly confident in selling all 2027 Mint units produced; views the company as "coming for the market leading product."
• Optimism on 3D: Strong belief that 3D Intelligence is "underappreciated" and will have a "massive impact" on sales by unlocking dormant accounts; dismisses current lack of data as a temporary information gap.
• Growth Ambition: Explicitly rejects mid-single-digit growth expectations, aiming for rapid scale to match or exceed incumbent volume.
• Operational Control: Confident in the ability to manage demand allocation via the proprietary pharmacy model.

Miscellaneous:

• Mint Hardware Lifecycle: The Mint controller (where intelligence resides) lasts ~2 years with no batteries/charger; the disposable component contains the battery and is replaced every 3 days.
• Islet vs. Mint Transition: 3D Intelligence is designed to provide "conservative mode" control (e.g., "Mad Max" vs. "Sloth" modes) without requiring users to understand or toggle algorithm settings.