DexCom Inc Stock

DexCom, Inc. operates as a medical device company.

The company primarily focuses on the design, development, and commercialization of continuous glucose monitoring (CGM) systems for the management of diabetes by patients, caregivers, and clinicians around the world. The company received approval from the Food and Drug Administration, or FDA, and commercialized the company’s first product in 2006. The company launched its latest generation systems, the Dexcom G6 integrated Continuous Glucose Monitoring System, or G6, in 2018 and more recently received marketing clearance from the FDA on the Dexcom G7, or G7, in December 2022.

Products

Dexcom G6

In March 2018, the company obtained marketing authorization from the FDA for the G6 via the de novo process. The G6 was the first type of CGM system permitted by the FDA to be used as part of an integrated system with other compatible medical devices and electronic interfaces, which may include automated insulin delivery systems, insulin pumps, blood glucose meters or other electronic devices used for diabetes management. G6 and substantially equivalent devices of this generic type that may later receive marketing authorization are referred to as integrated continuous glucose monitoring systems, or iCGMs, and have been classified as Class II devices by the FDA. Along with this classification, the FDA established criteria, called special controls, which outline requirements for assuring CGM accuracy, reliability and clinical relevance, and which also describe the type of studies and data required to demonstrate acceptable CGM performance. The G6 is designed to allow the company’s transmitter to run an algorithm to generate a glucose value and to communicate directly to a patient’s compatible mobile device, including iPhone, iPod touch, iPad, and certain Android mobile devices. A patient’s glucose data can also be displayed on wearable devices, like the Apple Watch and Wear OS by Google devices. The G6 transmitter has a labeled useful life of three months. Data from the G6 can be integrated with Dexcom CLARITY, the company’s cloud-based reporting software, for personalized, easy-to-understand analysis of trends that may improve diabetes management. In the United States, the G6 is covered by Medicare and Medicaid in the majority of states and by commercial insurers, subject to satisfaction of certain eligibility and coverage criteria for individuals with both Type 1 and Type 2 diabetes.

In June 2018, the company received Conformite Europeenne Marking, or CE Mark, approval for the G6, which allows the company to market the system in the European Union and the countries in Asia and Latin America that recognize the CE Mark, as well as New Zealand, though certain countries may require compliance with certain local administrative requirements and/or additional marketing authorizations (for example, the inclusion of medical devices on the Australian Register of Therapeutic Goods in Australia).

In October 2019, the company also received marketing authorization from the FDA for the Dexcom G6 Pro, or G6 Pro, which allows healthcare professionals to purchase the G6 for use with their patients. The G6 Pro has many of same features as the G6 and is intended for healthcare professionals to use with their patients ages two years and up. The G6 Pro may be used in a blinded or unblinded mode for up to 10 days.

For the G6, the sensor is inserted by the user and is intended to be used continuously for up to 10 days, after which it may be replaced with a new disposable sensor. The company’s transmitter is reusable until it reaches the end of its use life, labeled as three months. The company’s receiver is also reusable. As the company continues to establish an installed base of customers using its products, the company expects to generate an increasing portion of the company’s revenues through recurring sales of its disposable sensors.

Since the G6 is classified by the FDA as a Class II device, it is subject to special controls and modifications of, or revisions to, the device may be made under the 510(k) process.

Dexcom G7

In March 2022, the company obtained CE Mark approval for G7. In December 2022, the company obtained marketing authorization from the FDA for the G7 via the 510(k) review process. Like the G6, the G7 is an iCGM, is classified as a Class II device by the FDA, and is subject to special controls. The glucose value algorithm, ability to communicate with approved display and mobile devices, and compatibility with CLARITY are all substantially equivalent in technical performance and capability to the G6. In the United States, the G7 is covered by Medicare and Medicaid in the majority of states and by commercial insurers, subject to satisfaction of certain eligibility and coverage criteria for individuals with both Type 1 and Type 2 diabetes.

Dexcom G7 is cleared in the United States for all people with diabetes ages two years and older, giving more people than ever access to a powerfully simple diabetes management solution. With an overall Mean Absolute Relative Difference, or MARD, of 8.2%, as well as 94.1% of values within 20% of their comparator, Dexcom G7 is the most accurate CGM cleared by the FDA and is clinically proven to lower A1C (a blood test that provides information about average levels of blood glucose, over the prior three months), reduce hyper- and hypoglycemia, and increase time in range.

Other than the foregoing, the G7 is generally consistent with the company’s prior generation CGM systems in its technical capabilities and its indications. Since the G7 is classified by the FDA as a Class II device, it is subject to special controls and modifications of, or revisions to, the device may be made under the 510(k) process.

Dexcom Stelo

The company is pursuing regulatory approvals for Dexcom Stelo, the company’s first product designed specifically for people with type 2 diabetes who do not use insulin and are not at risk for hypoglycemia. Stelo was submitted for FDA review in the fourth quarter of 2023.

Dexcom Share

The Dexcom Share remote monitoring system, offered for use with any current Dexcom system, uses an app on the patient’s compatible iPhone, iPod touch, iPad or Android mobile device to securely and wirelessly transmit glucose information to the cloud and then to apps on the mobile devices of up to five designated recipients, or ‘followers,’ who can remotely monitor a patient’s glucose information and receive alert notifications anywhere they have a wireless connection. A patient’s glucose data can also be displayed on a patient’s or follower’s wearable device, such as the Apple Watch and Wear OS by Google devices, when used in conjunction with the patient’s or follower’s compatible iPhone or Android mobile device.

Dexcom Real-Time API

In July 2021, the company received FDA marketing clearance for an iCGM system incorporating the company’s Real-Time Application Programming Interfaces (API), which is an added software component that expands connectivity and interoperability of the Dexcom CGM digital ecosystem, enabling communication of iCGM data to client software intended to receive data through the cloud. Dexcom Real-Time API enables authorized third-party software developers to integrate real-time CGM data into their digital health apps and devices for specific and permitted use cases, including non-medical device application, medical device data analysis, iCGM secondary display alarm, active patient monitoring, and treatment decisions. Real-Time API is not permitted for use in environments not cleared for the Dexcom CGM System (e.g., hospital inpatient care), and is not intended to be used by automated insulin delivery systems.

Dexcom ONE

In July 2021, the company obtained CE Mark approval for its Dexcom ONE CGM system, or Dexcom ONE, which the company has launched in several countries in Europe. Dexcom ONE consists of three main components: a sensor, a transmitter, and a display device consisting of either the Dexcom ONE app for users with a compatible mobile device, or a Dexcom ONE receiver. Dexcom ONE carries many of the same features as the G6, and is indicated for persons, including pregnant women, ages 2 years and older. Like the company’s other CGM systems, Dexcom ONE is designed to replace finger stick blood glucose testing for diabetes treatment decisions.

In November 2023, the company obtained CE Mark approval for Dexcom ONE+. This updated version of the company’s Dexcom ONE system builds upon the software experience of Dexcom ONE with certain additional features, while allowing customers to adopt the all-in-one wearable technology of the company’s G7 CGM system.

Data and Insulin Delivery Collaborations

The company has entered into multiple collaboration agreements that leverage its technology platform to integrate the company’s CGM products with insulin delivery systems. The general purpose of these development and commercial relationships is to integrate the company’s technology into the insulin pump or pen product offerings of the respective partner, enabling the partner’s insulin delivery device to receive and display glucose readings from the company’s transmitter, and in some cases, use the glucose readings for semi-automated insulin delivery. The company has existing insulin delivery partnerships, and the company is also working with other companies that are pursuing varying strategies surrounding semi-automated insulin delivery and data analytics to improve outcomes and ease-of-use in diabetes management.

The company has also entered into collaborations with several organizations that are using, or are developing, programs for the treatment of Type 2 diabetes that utilize the company’s CGM systems. These collaborations align with the strategy to seek broader access to the company’s CGM systems for people with Type 2 diabetes, including those who are not treated with intensive insulin therapy.

Verily Collaboration

The company’s Restated Collaboration Agreement with Verily Life Science LLC (an Alphabet Company) and Verily Ireland Limited (collectively, Verily) provides the company with an exclusive license to use intellectual property of Verily resulting from the collaboration, and certain Verily patents, in the development, manufacture and commercialization of blood-based or interstitial glucose monitoring products more generally (subject to certain exclusions, which are outside the CGM field as it is commonly understood). It also provides the company with non-exclusive license rights under Verily’s other intellectual property rights to develop, manufacture, and commercialize those kinds of glucose monitoring products and certain CGM product companion software functionalities.

The Dexcom Approach

The company’s target market consists primarily of people with Type 1 and Type 2 diabetes who utilize insulin therapy, as well as certain non-insulin using people with diabetes that struggle with hypoglycemia. The company’s CGM systems are beginning to have a positive impact on the broader Type 2 population that does not utilize insulin or have hypoglycemia risk, a group that the company estimates to be greater than 25 million people in the United States alone. The company is extending its commercial efforts for this population through several channels, including through strategic partnerships. In the future, the company plans to expand its product offering to people who are pregnant and cleared/approved indications to address people with pre-diabetes, people who are obese, and people in the hospital setting. Although the majority of the company’s revenue has been generated in the United States, the company has expanded its operations to include additional markets in North America, Africa, the Asia Pacific, Europe, Latin America, and the Middle East.

Strategy

The company is developing and commercializing products that integrate the company’s CGM technologies into the insulin delivery systems or data platforms of the company’s respective partners. In addition, the company continues to pursue development partnerships with other insulin delivery companies, including automated insulin delivery systems, as well as other players in the disease management sector.

The company is focusing on the following business strategies:

Establishing and maintaining the company’s technology platform as the leading approach to CGM and leveraging the company’s development expertise to rapidly bring products to market, including for expanded indications.

Supporting use of the company’s ambulatory products through a direct sales and marketing effort, as well as key distribution arrangements.

Supporting innovation through technology integration partnerships.

Seeking broad coverage policies and reimbursement for the company’s products from private third-party payors and national health systems.

Providing cloud-based data repository platform that enables people with diabetes to aggregate and analyze data from numerous diabetes devices and share the data with their healthcare providers and other individuals involved in their diabetes management and care.

Pursuing expansion of use of the company’s products to other patient care settings and patient demographics, including use for people with Type 2 diabetes who are not on intensive insulin therapy, population health, patient monitoring, including in the hospital setting, and people who are pregnant.

Providing a high level of customer support, service and education.

Pursuing the highest safety and quality levels for the company’s products.

Commercial Operations

The company has built a direct sales organization in North America and certain international markets to call on health care professionals, such as endocrinologists, physicians and diabetes educators, who can educate patients about continuous glucose monitoring. Focusing efforts on these participants is important given the instrumental role they each play in the decision-making process for diabetes therapy, and to ensure that health care professionals and patients are knowledgeable about the company’s products and their functionality. The company focuses on delivering this important information to participants to drive adoption of the company’s current CGM systems. In addition, the company’s direct sales efforts include the use of e-commerce resources in certain international markets where the company have not built a sales force.

To complement the company’s direct sales efforts, the company has entered into distribution arrangements in North America and several international markets that allow distributors to sell the company’s products. The company expects to continue investing in its field sales force and the company’s direct, highly specialized and focused sales organization and its domestic and international distribution agreements are sufficient for the company to support its sales efforts for at least the next twelve months.

The company uses a variety of marketing tools to drive adoption, ensure continued use and establish brand loyalty for the company’s CGM systems by:

Creating awareness of the benefits of continuous glucose monitoring and the advantages of the company’s technology with endocrinologists, physicians, diabetes educators and people with diabetes;

Providing strong and simple educational and training programs to healthcare providers and people with diabetes to ensure easy, safe and effective use of the company’s systems; and

Maintaining a readily accessible telephone and web-based technical and customer support infrastructure, which includes clinicians, diabetes educators and reimbursement specialists, to help referring physicians, diabetes educators and people with diabetes as necessary.

Direct-to-consumer (DTC) marketing is one of the company’s key initiatives to increase awareness of the company’s CGM systems and drive new leads for people with diabetes to the company’s website. In jurisdictions where DTC marketing is permitted, the company focuses on reaching people with Type 1 and people with Type 2 diabetes who use insulin. The company advertises on television, in print, digital and video media, CRM, offer sponsorships, host or participate in diabetes related events, conduct public relations and maintain a brand ambassador program.

The company typically experiences seasonality, with lower sales in the first quarter of each year (year ended December 2023) compared to the immediately preceding fourth quarter. This seasonal sales pattern relates to the U.S. annual insurance deductible resets and unfunded flexible spending accounts.

Competition

In selling the company’s current CGM systems, the company competes directly with the Diabetes Care division of Abbott Laboratories; Medtronic plc’s Diabetes Group; Roche Diabetes Care, a division of Roche Diagnostics; privately-held LifeScan, Inc.; and Ascensia Diabetes Care.

Intellectual Property

‘Dexcom’, ‘Dexcom Clarity’, and ‘Dexcom One’, and other trademarks are the company’s property.

The company’s patent portfolio includes numerous issued and pending patent applications in the U.S. and other parts of the world, which in the aggregate, to be of material importance in the operation of the company’s business. The U.S. patents and most foreign patents are generally effective for 20 years from the date the earliest application was filed. In some cases, the patent term may be extended. The company’s issued patents as of December 31, 2023 are set to expire over a range of years, from 2024 with respect to some of the company’s earlier patents, to 2042, subject to any extensions. The company also has various registered U.S. trademarks, registered European Community trademarks, and many other trademark registrations and pending trademark applications around other parts of the world.

Government Regulation

The medical devices that the company manufactures are subject to regulation by numerous regulatory bodies, including the FDA and comparable international regulatory agencies. These agencies require manufacturers of medical devices to comply with applicable laws and regulations governing the development, testing, manufacturing, labeling, marketing and distribution of medical devices.

At the U.S. federal level, the company’s products are medical devices subject to extensive and ongoing regulation by the FDA. In addition, the delivery of the company’s devices in the U.S. market is subject to regulation by various U.S. Department of Health and Human Services divisions, including CMS, the DHHS Office of the Inspector General, or OIG, the Department of Veterans Affairs, and comparable state agencies responsible for reimbursement and regulation of payment for health care items and services.

The company and its contract manufacturers, specification developers, and some suppliers of components or device accessories, are also required to manufacture the company’s products in compliance with current Good Manufacturing Practice requirements set forth in the QSR.

The company is a covered entity under Health Insurance Portability and Accountability Act of 1996 (HIPAA) because the company is a health care provider that engages in certain electronic standard transactions.

Pursuant to the Patient Protection and Affordable Care Act that was signed into law in March 2010, the federal government enacted the Physician Payment Sunshine Act. As a manufacturer of the U.S. FDA-regulated devices reimbursable by federal healthcare programs, the company is subject to this law, which requires the company to track and annually report certain direct or indirect payments and other transfers of value the company makes to certain U.S.-licensed health care practitioners and the U.S. teaching hospitals.

History

DexCom, Inc. was founded in 1999. The company was incorporated in 1999.