Outstanding Move

Outstanding Move

This afternoon Dexcom announced they have acquired TypeZero. Per a company issued press release;

“DexCom, Inc. (NASDAQ:DXCM), the leader in continuous glucose monitoring for people with diabetes, announced today that it has acquired TypeZero Technologies, Inc. (“TypeZero”). TypeZero’s offering includes the inControl diabetes management system, designed to provide personalized diabetes management solutions including technology to automatically adjust and regulate insulin delivery.”

While there is a plethora of insulin dosing algorithms we have always viewed the TypeZero algorithm as one of the best, if not the best. Note that the coming Tandem closed loop system which will compete directly with the 670G uses this algorithm and the Dexcom G6 sensor. Additionally, as we mentioned this morning Dexcom is working with Novo Nordisk to develop a Tyler and while this system does not use the TypeZero algorithm that doesn’t mean it won’t in the future.

It should also be noted that Dexcom is also working with Sanofi and Lilly, both companies have either an insulin pump or Tyler or both under development. While the release did not disclose much in terms of other applications where the company can use the algorithm, but you can bet the ranch there are multiple areas coming.

Now for those who think Dexcom will go off the deep end and acquire Tandem or get into the insulin pump business we’ll repeat what our good friend Loop said this morning – SLOW YOUR ROLL. Dexcom is perfectly happy to be partnered with virtually every insulin pump company not named Medtronic. Relationships which will only get better as they now own the best insulin dosing algorithm on the planet.

The question isn’t what Medtronic will do but what will Abbott do. Will they pull the trigger and buy Bigfoot? Will they buy their own insulin dosing algorithm? Will they attempt to go head to head with Dexcom or will they remain content to be a CGM for patients with Type 2 diabetes?

The reality is Medtronic doesn’t need to do anything as they still own the insulin pump space and their CGM needs major work. As we keep saying anything the company does in CGM is gravy and not material to their success.

This move by Dexcom which we see as outstanding is just the latest development in the expanding CGM space. The Libre may be cheaper than the G6, but it has limited upside when you consider how many partners Dexcom has and not just with insulin pumps. And as we noted before being cheaper hasn’t hurt Dexcom much as their latest earnings report indicated.

Your move Miles.