DexCom ups 2015 guidance but doesn't aim for profit; plans next-gen launches this year, in 2017

Nick Jonas--Courtesy of Dexcom

DexCom ($DXCM) made a big splash last quarter when it launched a marketing campaign featuring teen pop idol Nick Jonas, who has Type 1 diabetes. The move to address its significant pediatric market helped the connected continuous glucose monitor company to new revenue heights--up 59% to $93.2 million in the second quarter as compared to a year ago.

Wall Street signaled its approval--with multiple analysts raising price targets for DexCom and the share price gaining 8% in after-hours trading on Aug. 6. Its shares have run hot in 2015; they are up almost 70% for the year thus far.

The business remains focused on revenue growth and rolling out new products--with little attention to achieving profitability anytime soon. Although, it hovers right on the brink; the company reported a net loss of $16.3 million in the first half, which is $0.21 per share. At June 30, DexCom had $97.5 million in cash.

DexCom's second quarter revenue outstripped the Street expectation, which was only for $84.9 million. It also upped its 2015 revenue guidance to $350 million to $375 million from $340 million to $360 million. That means it will have to generate at least $200 million in the second half to hit the middle or the top of that range.

The company expects to receive FDA approval and to launch its latest CGM, the Gen 5 mobile system, later this year. It's will start pre-pivotal testing for its 6th generation product later this year, with a pivotal study planned for shortly after and a launch planned for early 2017. That product is expected to enable 10-day extended wear and to reduce the requirement for calibration via a fingerstick blood glucose test.

Currently, most CGMs require twice-daily fingerstick calibration. DexCom expects to reduce this to once-daily with the Gen 6 system and, eventually, to eliminate the fingerstick calibration completely as the CGM sensors become more reliable and consistent.

The company underscored research presented at the American Diabetes Association conference in June that suggests CGM use with manual insulin use is similarly effective to an artificial pancreas system.

"This data showed that across all diabetes technologies, use of CGM generates the greatest impact on A1C reduction, with only a minimal difference in outcomes for those who use CGM and multiple daily injections compared with those who use CGM with an insulin pump," said DexCom President, CEO and COO Kevin Sayer.

But he did applaud research being done by Bigfoot Biomedical to develop an automated insulin delivery system, as well as that done on a dual-chambered bionic pancreas.On moving toward an artificial pancreas, Sayer concluded, "We would support our partners with future technologies only if they develop products that go beyond mere display of CGM and offer some measure of insulin control based upon CGM data. We believe some exciting progress has been made on that front."

DexCom plans to increase its marketing spending by 25% over last year to help boost all this revenue growth. That's not only for adding sales reps, but for educating doctors and patients about its products. The company is also working to gain reimbursement for its products as a pharmacy benefit, so its products can be sold via chain retailers like Walgreens and CVS.

The company didn't quantify the impact of the Nick Jonas deal on sales. But Sayer did note, "Our website had more visitors the day we posted the Jonas video than any other day in our history."

- here are the release and transcript

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