Marvelous Microcaps

Modular Medical, Inc. (MODD)


At Perritt Capital Management, we take focused positions in companies where we have a high conviction in their success; companies that are out of the mainstream of small cap investing. To highlight our process, we are pleased to present the newest installment in our ongoing series “Marvelous Microcaps – Big Ideas on Small Companies.”  This series profiles companies that we believe have a niche in their existing markets or are launching a product that could disrupt their marketplace.


Modular Medical, Inc. (MODD) is a developmental stage medical device company operating in the insulin pump space serving patients with diabetes. Modular’s efforts have been in designing and prototyping a cheaper, easy to learn and use portable insulin pump that delivers better results than the more expensive, cumbersome, and restrictive entrants that are currently in the market. The company was founded by Paul DiPerna, an industry veteran with over 30 years of experience including having founded Tandem Diabetes, where he developed one of the popular insulin pumps available in the market today.

Their product consists of a small pod that contains a pump, a cartridge that contains a battery and three days’ worth of insulin, and a connected patch that delivers the insulin to the patient. This device can be attached safely to the patient where it will deliver a consistent flow of insulin for three days, at which time the cartridge will be switched out for another. The pump itself is designed to last for 90 days. The company has eight family patents underway to help sustain their competitive advantage if they meet FDA approval and are able to go to market. They have currently submitted their final application for FDA approval and expect to enter a six-month review period shortly. After that review period, should everything go well they will be able to launch commercially at the end of this year.


We like Modular Medical because we believe they are bringing a product to market that is sufficiently differentiated from the existing competition. The addressable market for their product in the U.S. is $3 billion dollars, with approximately 3.1 million people requiring daily insulin injections and only 20% currently using a pump. The lack of pump adoption is due to several factors including inadequate and difficult reimbursements rendering them too expensive for patients, as well as the complexity of using the devices themselves. Modular’s new insulin pump is designed to be lighter, more mobile, and easier for both the doctors to teach and patients to use. This competitive advantage over the existing competition should open up additional market opportunities for them with patients that are currently not using pumps at all. Per the company’s market research, 45% of patients would use a pump if they could, which indicates a large, untapped market. They have additional market opportunities overseas as well.

The company has a key manufacturing and design relationship with Philips-Medi size ensuring they will be able to meet demand should they be able to go to market. They also have a relationship with Glooko, an industry leader in handling uploads and downloads onto their device. We believe that these relationships are beneficial in that they will be able to go to market without building out a software platform or a manufacturing base. This should allow for faster growth, and faster returns for shareholders if and when they are able to go to market. The only internal buildout necessary will be in their sales force.

The company is targeting revenues of $688 for a three-month treatment protocol, or $2,752 annually per patient. That means that every 3,634 patients that they get to use their product equates to $10 million in revenue. If there are currently 620,000 patients using an insulin pump (20% of a patient population of 3.1 million), Modular needs to convert less than 1% to reach $10 million. They are targeting gross margins for a treatment protocol of 70% plus. As long as they effectively manage their corporate costs, they should be able to achieve profitability. It is quite easy looking at these broad strokes to envision the market potential for their product should they get FDA approval.

We believe based on the strength of their industry relationships and the deep knowledge base of the management team that it is likely they get approval, however that process represents the single biggest risk to the investment and we caution readers to treat that risk with gravity as an adverse decision could set the company back years or even drive it out of business. We compensate for this risk by keeping the position at a modest weight in the portfolio to both obtain upside exposure and limit downside risk. Modular Medical represents one of our more speculative investments, we are extremely excited about what the future may bring for them while being aware of and positioning around the risks involved.

Data here is obtained from what are considered reliable sources.  We consider the data used to be relevant and reliable.

Fund holdings and sector allocations are subject to change at any time and should not be considered a recommendation to buy or sell any security. Please click PRCGX and PREOX for a list of the top ten holdings.

Before you invest in the Perritt MicroCap Opportunities Fund or Perritt Ultra MicroCap Fund, please refer to the prospectus for important information about the investment company, including investment objectives, risks, charges, and expenses. You may also obtain a hard copy of the  prospectus by calling 800-331-8936. The prospectus should be read carefully before you invest.

Mutual fund investing involves risk. Principal loss is possible. The Funds invest in smaller companies, which involve additional risks, such as limited liquidity and greater volatility. The Funds invest in microcap companies which tend to perform poorly during times of economic stress. The Ultra MicroCap Fund may invest in early-stage companies which tend to be more volatile and more speculative than investments in more established companies. 

Past Performance does not guarantee future results.

The Perritt Funds are distributed by Quasar Distributors, LLC.

First published March 2024.

Invest With Us