March Issue, Dexcom News and a Great Face for Radio
In this months issue Diabetic Investor takes a closer look at why insulin and Byetta pen usage is accelerating.
Also in the news today Dexcom (NASDAQ:DXCM) announced the pricing of $40 million aggregate principal amount of Convertible Senior Notes due in 2027 in private offering. According to the press release issued by the company, “The notes are convertible into shares of common stock based on an initial conversion rate of 128.2051 shares of common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $7.80 per share.” As Diabetic Investor has been reporting the company is in desperate need of cash while it struggles to increase sales of their STS continuous glucose monitoring system. The additional capital will also buy time for the company to find a strategic partner or buyer for the company.
Given the company’s troubles Diabetic Investor is not at all surprised by the latest move and at least temporarily this news has stopped the free fall in Dexcom’s share price. Even with this additional capital Diabetic Investor has serious doubts whether the company can remain independent over the long term. The market for CGM is still in its infancy and has taken much longer to develop than many had anticipated. Perhaps a deal for the company is being delayed as potential buyers wait until Abbott’s (NYSE:ABT) Navigator receives FDA approval. It could be that Johnson and Johnson (NYSE:JNJ) and Roche want to see how Abbott will market the Navigator before making a play for Dexcom. There is little risk in this strategy as it is unlikely Dexcom’s share price will be able to sustain much upward momentum.
Back to Navigator for moment, one has to wonder just what’s going on at the FDA. Back in January the company stated the system would receive approval in a month or two and yet here we are in March and still no approval. Based on our monitoring of the many message boards and blogs devoted to CGM, patients are getting tired of waiting and are now opting for either Dexcom’s STS or Medtronic’s (NYSE:MDT) system. It appears this lengthy approval process for Navigator has cast a shadow over the product and is creating doubts in perspective patients mind about the reliability of the product. This is in stark contrast to the how the research community feels as they see the Navigator as the best CGM system. With Dexcom’s problems, Medtronic’s methodical approach and the general state of the CGM market Diabetic Investor does not see the lengthy approval process for Navigator hurting the product once it does receive approval.
Although Abbott’s problems in getting Navigator approved are mostly self inflicted, their many blunders with Navigator could actually turn to their advantage. In the CGM market being last to market means very little as patients and physicians are more concerned with having a system that is accurate and reliable. Based on what we know about Navigator, the high regard many researchers have for this product and the fact that we see little loyalty with current CGM patients the Navigator isn’t in that much trouble. The real question is can Abbott effectively market the Navigator, based on their history in the blood glucose monitoring market Diabetic Investor remains skeptical.
Finally, tomorrow Diabetic Investor will be taping an interview which will be aired across the Forbes national radio network. We have attached a spreadsheet which tells subscribers when the interview will be aired and on which station.