This afternoon Dexcom (NASDAQ:DXCM) released their first quarter results and as is typical for a company in a brand new product category, the real news isn’t in the numbers but what’s behind the numbers. Company President and CEO Terry Gregg did an excellent job of explaining the impact of Anthem’s decision to reimburse for the Dexcom system. While this is a positive event there are still many items still to be completed, not the least of which being getting a contract and pricing agreed too. Diabetic Investor suspects other payors will follow Anthem’s lead and begin offering reimbursement under well defined circumstances. Broad based reimbursement, as there is with conventional blood glucose monitors, is still a long ways away.
More importantly Mr. Gregg announced they should have a partner for their hospital based systems within 90 days. Diabetic Investor has learned the leading contenders are Edwards LifeSciences (NYSE:EW) and Masimo (NASDAQ:MASI).
The news is also good on combining the Dexcom system with the Animas 2020 insulin pump and the OmniPod. Based on comments made this afternoon expect to the Dexcom/Animas combo first.
While the company stated it was too early to tell what impact the Navigator from Abbott (NYSE:ABT) has had since entering the market, the real answer is it has had absolutely no impact and is unlikely to have any impact. As Diabetic Investor reported when the Navigator finally received approval, the technology is well behind Dexcom’s and Abbott made the foolish decision to price the system higher than the Dexcom 7 Day system. Only Abbott can bring a product to market that is substandard technology and then ask patients to pay more.
The fact is Dexcom is clearly emerging as the leader in CGM technology. While Medtronic (NYSE:MDT) is using their CGM to sell more pumps, Dexcom continues to invest in bring out new and more technologically advanced systems. While Medtronic may have more resources, Dexcom has momentum on their side. Given the conversation Diabetic Investor has had with users of both systems, two trends are emerging. First, neither system works 100% of the time and sensor or system failures are still too common. Second, it’s amazing what motivated patients will put up with to get this data. Diabetic Investor believes once the first issue is solved the second will be mute. Still we do not see CGM being widely adopted outside the insulin pump and multiple daily injection market.
All in all the future looks very bright for Dexcom as Mr. Gregg’s experience and leadership is clearly paying great dividends. Diabetic Investor maintains our belief that it’s only a matter of time before Dexcom follows the well traveled path set by both MiniMed and Therasense.