Millions Down the Drain

Millions Down the Drain

Thanks in large part to the craziness going on at the FDA investors are seeing millions wiped off the value of the companies they invest in. The most recent example today is Dexcom (NASDAQ:DXCM) whose shares are down nearly 21%. The reason for this dramatic fall has nothing to do with how Dexcom is doing and is directly related to what’s going on at the FDA.

Consider these facts; yesterday Dexcom announced third quarter earnings and stated

  1. Revenues grew sequentially quarter over quarter 19%
  2. The company added 3900 new customers
  3. Sensor sales increases 23%

Add in the fact the company has solid, experienced management and the best product on the market.

Under normal conditions one would expect shares of Dexcom to be flying upwards today instead of tumbling downwards. So why are shares falling, possibly forcing the company into raising additional capital? The company also noted yesterday the introduction of their new and improved systems has been delayed because- what else- the FDA wants more data before they can make a decision. This delay not only hurts patients preventing them from having better tools to manage their diabetes but is costing Dexcom millions in delayed milestone payments.

Dexcom unfortunately has joined a growing list of companies who are seeing their value wiped out because of the FDA. Amylin (NASDAQ:AMLN) and Alkermes (NASDAQ:ALKS) experienced a similar fate when the FDA delayed the approval of Bydureon.

The harsh reality here is the FDA is not just harming millions of patients with diabetes but has created a new, unexpected risk for any company developing drugs and devices. It will be interesting to see if Insulet (NASDAQ:PODD) also becomes another example of the collateral damage created by the FDA. Like Dexcom, Insulet also has new and improved versions of their products before the FDA and now must be wondering just what the FDA wants from them.

The bottom line is we have entered a new world where there are no rules and what rules there are can change without reason. This high level of uncertainty makes it next to impossible to move forward and as Diabetic Investor has been stating placing the drug and device business in a state of stagnation.  Without action by Congress innovation will grind to a halt, millions of patients will continue to suffer needlessly, millions of dollars of value will be flushed down the toilet and millions more will be spent to satisfy the ever changing requirements by an over-zealous FDA. When will Congress wake up and realize the damage being created by the FDA? Something needs to be done and needs to be done yesterday.