Dexcom talks non-fingerstick CGM, Verily deal

Two weeks ago, an FDA panel voted in favor of allowing Dexcom’s ($DXCM) G5 continuous glucose monitor to be used without confirmatory fingersticks. In its Q2 earnings call this week, the diabetes management specialist detailed what’s on the horizon for the G5, its in-development G6 monitor and its partnership with Verily.

Following the FDA’s vote, the San Diego-based devicemaker is working with the agency to determine what, exactly a non-adjunctive CGM will look like, CEO Kevin Sayer said on the call. If approved, the G5 would be an alternative to fingerstick glucose testing to inform diabetes treatment decisions. While nothing has been finalized yet, they are working on performance standards, including the level of training and education required for the non-adjunctive device. Dexcom is also planning a post-market study of the G5 on the FDA’s recommendation.

Dexcom tied up with Alphabet’s ($GOOG) life sciences arm Verily in February this year, and Sayer said on the call that the partnership “remains on track.” As previously detailed, the duo expects to commercialize their first product, a miniaturized CGM, in 2018. And a disposable “bandage-like” glucose monitor could hit the market “as early as 2020,” Sayer said.

“We believe the products we develop in our Verily partnership will drive entry into the non-insulin using Type 2 market, but it will also expand CGM use in the Type 1 market,” Sayer said. Earlier on the call, he noted that Dexcom had added 2% of the U.S. Type 1 diabetic population to its CGM customer base in the first half of 2016 alone. Including numbers from the second half of 2015, Dexcom’s penetration into the U.S. Type 1 market has grown by 4%, he said.

While Sayer declined to provide timelines on its collaborations with Animas, Tandem ($TNDM) and Insulet ($PODD), which are developing “more advanced systems” using Dexcom’s G5 and G6 sensors, he did note that they are making “excellent progress.” Animas and Tandem already offer integrated insulin pump systems using Dexcom’s G4 sensor. Beyond pumps, Dexcom is “exploring” opportunities with interconnected diabetes management platforms, including smart insulin pens, Sayer said.

In Q2, Dexcom reeled in revenues of $137 million, up 47% from $93 million the same quarter a year prior, and up 18% from the previous quarter. Its net loss stood at $20 million, but Steven Pacelli, EVP of strategy and corporate development, noted that expenditure increased due to international expansion, fleshing out its data analytics, building a new manufacturing plant and, of course, the Verily collaboration. The company ended the quarter with $116 million in cash and marketable securities, $10 million more than in the previous quarter.

- here's the earnings transcript

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