Never a doubt

Before we get into the gist of the Dexcom results which they released this afternoon we would be remiss if we did not acknowledge the incredible contribution Terry Gregg has made not just to Dexcom but to the diabetes industry. There is no question that Terry has earned his spot on the Mount Rushmore of diabetes.

We often note that anyone can make a toy but it takes real talent to run a toy company and talent is something Terry has in abundance. Terry Gregg embodies something else we say often that it is possible to put the patient first and still make boatloads of money. In over 20 years covering this industry we know of no finer individual.

Terry your retirement is well deserved and as you used to say often it’s time to get to the blocking and tackling of what your former company has achieved. You have left Dexcom in good hands.

Looking at the second quarter results and listening to call there is no question Dexcom is exceeding expectations. Traditionally the second quarter is slow for all diabetes device companies but not this year. The G6 as we anticipated is being well received and driving sales for Dexcom who raised full year guidance for the year.The company did acknowledge due to this high demand they are running into some supply bottlenecks, which to us is the right problem to have.

Again as has become standard with nearly every call Dexcom has the analysts just can’t seem to get their head around the fact that CGM is becoming the standard for glucose measurement. A tool not just for intensively managed patients but for all patients regardless of which therapy regimen they are on. Yes, intensively managed patients are the low hanging fruit on the CGM tree but this is an awfully big tree.

The reality here is that CGM is moving faster into the mainstream than anyone anticipated. The improvements in sensor life, sensor insertion and no calibration are providing heavy tailwinds. As we predicted long ago CGM would move beyond the endo community and intro the primary care community as these enhancements came on line.

Now when it comes to the competition, i.e. the FreeStyle Libre from Abbott and lets be honest here the Libre is the only product which can come close to competing. Abbott will do what they always do when they have to compete, sell it cheaper. Something which Dexcom is prepared for.

We even believe that should Medtronic go nuclear Dexcom and Libre will be unaffected. No matter what Medtronic may be saying publicly the facts tell the real story. The fact is the Guardian Connect doesn’t stand a chance and Medtronic would be wise to get onto the next generation as quickly as possible. It would be foolish to throw any money into the Guardian Connect and it’s equally foolish to keep saying this is a competitive product.

It’s about time everyone start accepting some facts;

1. This market is huge and there is plenty of room for growth.

2. Dexcom and Abbott can peacefully coexist and make plenty of money.

3. Medtronic needs to acknowledge it’s time to go back to the drawing board.

4. The consistent drumbeat of CGM newbies will go on unabated.

5. The future is very bright for Dexcom.