This afternoon Dexcom (NASDAQ:DXCM) reported their 206 second quarter results and provided an update on their 7 day sensor. Revenues came in at $479,000 for the quarter. It should be noted that product became available on March 28th, 2006. According to the company they have sold nearly 900 systems however no information was provided on sensor usage rates nor did the company breakdown revenues for starter kits and replacement sensors.
The company has filed a PMA for their 7 day sensor which includes several improvements over their current sensor. Notable improvements:
1. 1. Calibration with any glucose monitor, plus no cable required to connect the monitor to the device.
2. 2. Waterproof
3. 3. Smaller needle size
4. 4. More robust shut off
Patient software is on the way as the company expects to file sometime in the next two weeks. A potential release date has not been set as the company does not know how the FDA will handle this filing.
In the pipeline the company has begun studies in a hospital setting and is developing a specially designed unit for use in the intensive care unit.
Also nothing new with the Abbott (NYSE:ABT) litigation other than Abbott has added three patents to their claim.
Neither was there any new information about possible reimbursement for the product.
While analysts will do their best to spin this information that fact remains we just don’t have enough data yet. Based on Diabetic Investor’s interviews with patients on the device we believe this is a valuable device. However, we do not believe patients will use the device on a daily basis. We continue to believe the FDA will approve the 7-day sensor and are encouraged by the many improvements made to the device. The real story for Dexcom comes down to three critical factors:
1. 1. Navigator – Although not yet approved by the FDA, it will be interesting to see how Abbott launches the product upon approval.
2. 2. Sensor Usage- Just as the blood glucose monitor market is all about strip sales, sensor usage is the key to success in the continuous monitoring market. Hopefully in the coming quarters the company will provide more clarity in their revenue numbers so we can get a handle on this critical area.
3. 3. Reimbursement- Given the high cost of the device for any CGM system to be commercially successful reimbursement is a must. While progress is being made in this area Diabetic Investor believes it will be sometime before reimbursement becomes a reality.
Based on what we heard today Dexcom has performed well when you consider this is a first generation device in an entirely new category. On a long term basis Diabetic Investor believes the company will eventually be acquired with Johnson and Johnson (NYSE:JNJ) the most likely suitor.