Listening to the Dexcom (NASDAQ:DXCM) first quarter earnings call it’s becoming obvious that Dexcom is becoming the leader in continuous glucose monitoring. Diabetic Investor is not surprised by this as we predicted that Dexcom would assume the leadership position under the expert tutelage of the company’s CEO Terry Gregg. Using his vast knowledge and expertise in the diabetes device arena Mr. Gregg has set Dexcom on a solid path with an equally solid management team.
Today we learned this team will add another industry veteran as effective June 1, 2011 Kevin Sayer will become Dexcom’s President. According to a company issued press release; “DexCom also announced today that, effective June 1, 2011, Kevin Sayer will assume the role of President, reporting to Terrance H. Gregg, who will continue to serve as the company’s Chief Executive Officer. Mr. Gregg will continue to lead the day-to-day operations of DexCom, supported by Mr. Sayer, with Steven Pacelli, DexCom’s Chief Operating Officer and Jorge Valdes, DexCom’s Chief Technical Officer, reporting to Mr. Sayer. Mr. Sayer will continue to serve as a member of the Board of Directors, but has resigned as Chairman of the Audit Committee effective immediately.”
As Mr. Gregg noted during the call this is not the first time he and Mr. Sayer have worked together as like many current members of Dexcom’s management team, Mr. Sayer is a MiniMed alumnus. Frankly there are so many MiniMed alumni now working at Dexcom or associated with Dexcom there is no need to plan for a MiniMed reunion. Diabetic Investor believes this distinguished group of MiniMed alumni will experience déjà vu all over again as there is no question that it’s just a matter of time before Dexcom, like MiniMed, is acquired by a larger company. Let’s just hope for their sake that whoever acquires Dexcom that they don’t do to Dexcom what Medtronic (NYSE:MDT) has done to MiniMed.
On the business front as anticipated first quarter results were down when compared to the fourth quarter which is typical. Looking forward the company remains comfortable with previously announced guidance for the full year and Diabetic Investor believes they won’t have much of problem hitting their numbers. Given the changes made at Medtronic and that the Navigator continues to be a non-factor, patients and physicians are favoring the Dexcom system.
Looking ahead the partnerships with Animas and Insulet continue to move along although not as fast as many would like. Unfortunately Dexcom is suffering the same fate as others in the industry as the FDA continues to be the main hurdle. The company provided further evidence that America is becoming a second rate country as the Animas Vibe, which combines the Animas pump and the Dexcom CGM, will be launched in Europe before it becomes available here in the US sometime in 2012.
It also appears that Dexcom and Insulet (NASDAQ:PODD) have solved some of their differences and the companies will be submitting their combined system to the FDA sometime in 2012.
Although Mr. Gregg alluded to a late braking abstract that will be presented at the upcoming ADA conference that according to a noted endocrinologist will be a game changer and show the value of CGM usage and non-insulin using Type 2 patients, Diabetic Investor like Mr. Gregg agrees this is not the time to aggressively pursue the Type 2 market until the reimbursement environment changes for this patient segment. CGM will eventually see some adoption in this market segment but that time is still some time off in the future.
The same goes for their hospital based system, here too the hurdle isn’t the technology but the how the FDA views the technology. Once the FDA sorts through their issues Diabetic Investor suspects that just as they have become the standard for patients with diabetes Dexcom will assume a leadership position in the hospital market as well. Given the competitive landscape in this market, Dexcom will have some battles to fight however from what Diabetic Investor has seen the competition is still chasing Dexcom and not the other way around.
All in all Dexcom continues to perform well and their calls are a refreshing experience when compared to the disarray in the BGM and insulin pump world. There will certainly be hurdles ahead as no company is immune, even one as well managed as Dexcom, from missteps and the strange nature of the US regulatory environment. The bottom line is Dexcom is on a very good path which will lead this group of distinguished MiniMed alumni to even greater riches than they experienced in the past.