- Dexcom’s worldwide 4Q17 sales hit a record $221 million, rising 29% YOY on a tough comparison (+31% in 4Q16) and smashing the previous record from 3Q17 ($185 million). US sales of $188 million grew a robust 25% YOY and an impressive 24% sequentially, driving 76% of 4Q17 growth – by far the strongest US quarter in 2017. International sales of $33 million rose 59% YOY in 4Q17 and were flat sequentially. Full-year global revenue of $719 million rose 25% YOY, including US sales of $596 million (+20% YOY) and OUS sales of $122 million (+61% YOY). The OUS business had a “breakout year” and drove a record 38% of 2017 growth.
- 2018 sales are expected to be $830-$850 million, a 16%-19% YOY rise over 2017. The business’ key indicators – sensor volumes, OUS revenues, and patient base growth – are expected to exceed 20% growth in 2018, again outpacing revenue growth.
- 4Q17 was Dexcom’s most profitable quarter ever – excluding a one-time (non-cash) tax charge of $18.2 million, Dexcom reported net income of $8.8 million in 4Q17. Gross margin remained a strong 69%, flat sequentially.
- Dexcom invested $5 million in Tandem’s successful $69 million public stock offering, purchasing 2.5 million shares at $2/share. This is a true vote of confidence for Tandem, who has done an impressive job in the past month executing on its pipeline and international plans.
- G6 remains under FDA review (no calibration required), with a global launch expected “this year” and a “goal” to launch by “mid-year.” A 10-day mandatory sensor shutoff is currently under discussion with the FDA. As first mentioned at ATTD, G6 will not require calibration, but will allow users to enter one if desired.
- Medicare discussions continue on remote monitoring (Share), with a “hope to resolve in the next six months.” This was the first update since Keystone 2017.
- The Verily gen one launch depends on the no-cal G6 regulatory discussions. It will complete development “this year,” more vague than the JPM update. In January, Mr. Sayer positioned a first-gen “limited launch” of the Verily product for “late 2018/early 2019,” timing that was not mentioned today.
Dexcom announced 4Q17 and full-year financial results today in a call led by CEO Kevin Sayer, CFO Quentin Blackford (very strong in his second call), and EVP Steve Pacelli. Read the financial and pipeline highlights below!
- Financial Highlights
- 1. Outstanding 4Q17: Record global sales of $221 million rise 29% YOY and 29% sequentially; US sales rise 25%, driving 76% of Q4 growth
- 2. 2017 sales of $719 million rise 25% YOY over 2016, in line with guidance; US propels 68% of 2017 growth, with record 32% from OUS business
- 3. 2018 Guidance: Sales of $830-$850 million (+16%-19% YOY); Sensor volume, OUS revenue, and patient base to exceed 20% growth in 2018
- 4. Most profitable quarter in Dexcom’s history: excluding one-time tax expense, net income was $8.8 million; gross margin of 69%
- 5. Dexcom participates in Tandem’s recent stock offering ($5M) – “We’re extraordinarily committed to all of our pump partners, including Tandem, Insulet, and Lilly.”
- 6. Dexcom and UHC Actively Enrolling in type 2 diabetes pilot, ~10,000 type 2s, goal to drive cost savings and define non-intensive business model
- Pipeline Highlights
- 1. G6 under FDA review (no calibration), global launch this year, with “goal” by mid-year; 10-day mandated shutoff is TBD; optional user calibration; 14-day-wear plans
- 2. Medicare discussions continue on remote monitoring (Share), “hope to resolve in the next six months”
- 3. Verily gen one depends on G6 no-cal timing; gen two “optimistic” for 2020 launch
- 4. Dexcom G5 app update adds alert schedules, responding to user feedback
- 5. Mentioned in passing, but no major updates: Insulet, Tandem, Lilly AID partners; Apple/Android smartwatches, Fitbit; Public API
1. Outstanding 4Q17: Record global sales of $221 million rise 29% YOY and 29% sequentially; US sales rise 25%, driving 76% of Q4 growth
Dexcom Quarterly Sales (1Q12-4Q17)
- Dexcom’s worldwide 4Q17 sales hit a record $221 million, rising 29% year-over-year (YOY) on a tough comparison to 31% growth in 4Q16. This was the second straight record sales quarter, smashing the previous $185 million record in 3Q17. In a clear sign of the business’ momentum, worldwide sales grew 20% sequentially from the record-high Q3, all driven by the US (note the red vs. blue line in the graph above). This was also Dexcom’s first time crossing $200 million in worldwide quarterly sales – a nice milestone and one we should see repeated in almost every quarter in 2018 (based on 2018 guidance). Sales came in slightly above the JPM pre-announcement ($218 million). Last month’s JPM presentation also confirmed that Dexcom met its patient base goal to exceed 270,000 patients worldwide by the end of 2017, up ~35% from ~200,000 at the start of 2017 (outpacing revenue) – this was not discussed today.
- US sales of $188 million grew a robust 25% YOY and an impressive 24% sequentially, driving 76% of 4Q17 growth. This was by far the strongest US quarter in 2017, with YOY growth accelerating notably from the 16%-20% YOY gains seen in 1Q17-3Q17. The US momentum was especially notable considering the Q4 US launch of FreeStyle Libre, which indeed seems to be raising category awareness as management (and we) predicted. Management did not comment on the patient base today, but did share at JPM last month that the US commercial patient base grew more in 4Q17 than at any point in Dexcom’s history. Though the Medicare contribution will not be broken out going forward, CFO Quentin Blackford confirmed that the hoped for ~$10 million in Q4 Medicare sales was not achieved; it was really the US commercial business that drove strength. CEO Kevin Sayer did comment that the Medicare pipeline “remains robust,” to which Mr. Blackford added that Medicare will be a “meaningful growth driver” in 2018. As of 3Q17, Dexcom had shipped systems to 4,000+ Medicare patients, with “close to 20,000” remaining in the pipeline.
- International sales of $33 million rose 59% YOY, but were flat sequentially – the first time in six quarters that OUS sales have not grown sequentially. This was the third straight quarter of >50% YOY growth in the OUS business, though it was a downtick from the 69%-83% YOY growth seen in 2Q17 and 3Q17. Germany continues to be a strong driver for Dexcom, and management confirmed 2017 ended with access to >50% of covered lives in Germany (as expected). The German sales force is now up to 20 reps. Guidance for 2018 expects OUS sales to outpace overall company growth, though even achieving 20% YOY OUS growth would do so. How much momentum will this business see in 2018? How much OUS competitive pressure is there with Abbott’s FreeStyle Libre and Medtronic’s Guardian Connect?
2. 2017 sales of $719 million rise 25% YOY over 2016, in line with guidance; US propels 68% of 2017 growth, with record 32% from OUS business
Dexcom Annual Sales (2012-2017)
- Full-year global revenue of $719 million rose 25% YOY from 2016. US sales of $596 million grew a more modest 20% in 2017, supplying 62% of Dexcom’s 2017 growth. OUS sales of $122 million, grew 61% YOY and drove a record 38% of Dexcom’s annual growth. As CEO Kevin Sayer said today, “We had a breakout year in international.” The global 2017 results came right near the mid-point of the guidance range ($710-$740 million), and slightly exceeded the JPM 2018 revenue pre-announcement ($715 million).
- As expected with the rising base of sales, Dexcom’s 2017 YOY growth of 25% is starting to taper – for comparison, it was 43% in 2016, 56% in 2015, 64% in 2014, and 69% in 2013. This is due to the large US sales base – nearly $600 million now – which grew 20% in 2017, Dexcom’s softest US growth ever. (US growth was still 43% YOY in 2016.) Obviously, there is still tremendous runway for CGM in intensive insulin users in the US and Europe – to say nothing of other geographies and non-intensive insulin users. Management did not give any market share estimates today, but at JPM last month, estimated ~6 million intensive insulin users in the US and Europe. With 270,000+ users, Dexcom is ~4% penetrated. Even in the T1D Exchange, Dr. Roy Beck shared data last fall suggesting that CGM still only has 24% penetration at the best US centers, with the 13-26 year-old age groups still at <20% penetration.
3. 2018 Guidance: Sales of $830-$850 million (+16%-19% YOY); Sensor volume, OUS revenue, and patient base to exceed 20% growth in 2018
Management reiterated the guidance shared at JPM last month: 2018 sales in the range of $830-$850 million, a 16%-19% YOY rise over 2017. The business’ key indicators – sensor volumes, OUS revenues, and patient base growth – are expected to exceed 20% growth for the year, again outpacing revenue growth. Assuming the patient base grows 20%-25% YOY in 2018 (our speculation), Dexcom would have over 325,000 patients by the end of 2018. This near-term outlook contemplates a number of 2018 variables, including the no-calibration G6 launch (see below) and continued Medicare and OUS expansion. Headwinds include the Animas departure and the impact of ongoing competition and potential pricing pressure. At JPM, Mr. Sayer emphasized the bigger access Dexcom has going into 2018, especially Medicare and Germany – in total, this is an incremental ~1 million patients.
- In line with prior years, 1Q18 sales are expected to decline sequentially and comprise “no more than 20%” of 2018 revenue – at the top end, that puts 1Q18 sales at ~$168 million, rising 18% YOY and down 24% sequentially from this record Q4. This resulted in many analyst questions – “Why the conservatism?” – but the guidance seems appropriate given the historical seasonality, the prevalence of high-deductible health plans, and competitive launches ramping for Abbott’s FreeStyle Libre and Medtronic’s Guardian Sensor 3.
- “Increased awareness has helped the business tremendously…We are reaching people (through DTC), along with increased awareness generated by our competitors. When patients go to see physicians, they’ve been made aware of CGM, and physicians definitely know the difference from us and competitor systems. The pipeline has been outstanding, but where we run into the same thing is, “How much is my out-of-pocket for this? In Q1, we have to make sure we manage expectations. Right now we are seeing very good demand and response in the US. In Q1, we’ll also have Medicare as a bigger piece, and they have a lower revenue per start, as do a lot of EU patients as we go in those markets. All those things factor in.” – Mr. Sayer
- The 2018 guidance also factors in potential headwinds from competition (FreeStyle Libre in the US) and pricing. In today’s call, Mr. Sayer said Dexcom has already had discussions with many US payers, who recognize Dexcom’s device “is different from ones we’re competing with” (i.e., FreeStyle Libre). Thus far, Dexcom has maintained the current pricing structure, though payers are certainly aware of Libre’s lower pricing, and Dexcom remains “willing to trade price for access and simplicity to get on the system.” Management added that “increased [CGM] awareness raises all boats” and has resulted in “more candid discussions” with payers about the category. At JPM, Mr. Sayer added that some private payers have approached Dexcom and asked to move to a similar monthly subscription model as Medicare (~$250/month). Dexcom has not negotiated pricing for the G6 sensor yet, though the longer 10-day wear could give it more flexibility – “We have some room on the pricing front,” said Mr. Sayer at JPM. Dexcom also has electronics configurations “that will be less expensive than the current ones,” including a follow-up to the initial G6 transmitter (prior to the Verily product). Though pricing is clearly a risk for Dexcom, the company seems quite prepared for where the market is heading.
- Dexcom aims to improve core cash-based operating income in 2018. Gross margins in the “mid-upper 60% range are expected” (~65%-68%), with core GAAP operating expenses increasing slower (10%) than revenue growth (16%-19%). This spending guidance excludes investment in the non-intensive diabetes programs.
- Outside the US, Dexcom continues to work on reimbursement in France and the UK, which management positioned as “potential wins.” The 1Q17 call last May hoped for UK and France updates in the “next 6-12 months,” so it’s possible we’ll hear more soon. These are clearly taking quite a long time to get through, but would provide OUS tailwind in 2018 if they do come through near-term. As noted at JPM, Dexcom also expects to launch in Japan in 1H18 and in Korea in 2H18. EVP Steve Pacelli noted that some international discussions are in “a transition phase” as Dexcom looks to bring G6 to market worldwide this year – presumably once it is approved certain geographies could accelerate.
4. Most profitable quarter in Dexcom’s history: excluding one-time tax expense, net income was $8.8 million; gross margin of 69%
Excluding a one-time (non-cash) tax charge of $18.2 million, Dexcom reported net income of $8.8 million in 4Q17 – its most profitable quarter ever, and an improvement from the $2 million net loss in 3Q17 and the $7.4 million net loss in 4Q16. The non-cash tax expense came from the reversal of a non-cash tax benefit related to Dexcom’s senior convertible notes recorded in 2Q and 3Q17. New CFO Quentin Blackford highlighted the business’ leverage in Q4 – operating expenses of $142 million grew 15% YOY in 4Q17, nearly half the rate of revenue growth. For 2017 overall, operating expense growth of 20% was more in line with the 25% revenue growth.
- Gross margin was a strong 69% in 4Q17, up from 68% in 4Q16 and flat sequentially from 3Q17. Management attributed the margin increase to the strong US performance and a product mix favoring sensor sales in 4Q17. Can Dexcom sustain this margin and level of pricing in the years ahead? How much cost can it take out of the product to relieve potential pricing pressure?
5. Dexcom participates in Tandem’s recent stock offering ($5M) – “We’re extraordinarily committed to all of our pump partners, including Tandem, Insulet, and Lilly.”
An analyst astutely noted that Dexcom actually participated in Tandem’s successful $69 million fundraise (completed two weeks ago). Indeed, an SEC filing from last week confirms that Dexcom purchased 2.5 million shares in the offering (34.5 million total shares were offered), and given the price of $2/share, implies Dexcom invested $5 million. Noted EVP Steve Pacelli in Q&A: “No, this should not be viewed by the street as the first step to an acquisition. We’re extraordinarily committed to all of our pump partners, including Tandem, Lilly, and Insulet. At the end of the day, we discussed with Tandem, how participation might influence their offering. We agreed if they raised a sufficient amount of capital, we would participate. When it became clear they would raise more than enough to get to a place with a couple really significant new product launches, it became a no-brainer.”
6. Dexcom and UHC Actively Enrolling in type 2 diabetes pilot, ~10,000 type 2s, goal to drive cost savings and define non-intensive business model
The type 2 diabetes program with UnitedHealthcare was mentioned a couple times today, which is now “actively enrolling” in a ~10,000-participant pilot testing CGM, connected devices (e.g., Fitbit), and coaching. This major initiative was first announced in November, received a lot of air time at JPM and CES, and is clearly moving ahead quite quickly. Dexcom expects to invest “somewhere between $10-$20 million” on the non-intensive CGM work in 2018, a major strategic play. A point of emphasis continues to be medication costs in type 2 diabetes, something Dexcom CGM + coaching might help payers with. Management cautioned that it’s too early to talk about business models, as they will evolve out of this initial 10,000 patients. That said, assuming Dexcom CGM can drive medication reductions and/or optimization, we’d imagine shared savings are a possibility.
- “We’ve said before that 2018 is an investment year for us…we’re exploring with our partners at UHC what this (non-intensive CGM) looks like. Our goal is to drive cost savings and improved outcomes using a variety of technologies, most importantly CGM. Participants will wear sensors, including activity tracking data from Fitbit, track diet, exercise, and receive real-time coaching. There are a combination of inputs, and we aim to develop a program with a business model that works. The idea is to invest in patients a little bit and save a bigger chunk of money on the back end. Current drug regimens in type 2s are extraordinarily costly to the system. As the key sensing component, we think we’re adding a lot of value.”
- The slides on the UHC pilot at JPM showed a Dexcom G5 and Fitbit tracker, paired with software that educates and teaches skills – e.g., post-meal walking, diet and nutrition, medication optimization, and sleep. Combined with algorithms and predictive models, HCPs will get data on the “ideal” drug therapy, based on a particular patient. A following slide showed a highly compelling before-after CGM example from one of Dexcom’s type 2 studies: the user went from 28% to 79% in range (3x!), and from an average glucose of 212 mg/dl to 150 mg/dl! A third slide showed a nice mix of decision support that mixes patterns (e.g., “You’ve had a spike the last three days at 1pm”) and medication optimization (e.g., “Medication is best taken before bedtime”).
1. G6 under FDA review (no calibration), global launch this year, with “goal” by mid-year; 10-day mandated shutoff is TBD; optional user calibration; 14-day-wear plans
Following updates at JPM and at ATTD, G6 timing remains the same – the 10-day-wear, no-required-calibration system remains under FDA review (“productive”), with a global launch expected this year. Mr. Sayer positioned “mid-year” as a goal, in line with JPM comments and still reflecting an ~9-month review from the 3Q17 submission. The biggest new news today concerned a 10-day required shut-off, which remains a point of discussion with the FDA. This would make G6 similar to FreeStyle Libre, where a sensor cannot be restarted after 10 days of wear. Mr. Sayer did not comment one way or the other, but we’d be surprised not to see a mandated shutoff in G6, given the factory calibration. Dexcom has shared in the past many 24/7 users wear ~3 sensors per month, meaning mandated 10-day wear (no restarts) would actually keep the same number of sensor changes. Of course, restarting sensors is a tremendous benefit for those struggling with out-of-pocket costs, so this will be key to consider as Dexcom and FDA move ahead.
- As shared in Dexcom’s ATTD symposium, Mr. Sayer confirmed today that G6 will be a no-calibration-required system, but will accept calibrations if a user would like to enter one – e.g., in unexpected cases of sensor error/drift. Mr. Sayer added today that this is “very important” for Dexcom’s automated insulin delivery partners, a sentiment we’d agree with. (It will be interesting to see if Bigfoot’s Loop system with Abbott’s FreeStyle Libre also allows users to enter a calibration if they wish.) At ATTD, Dexcom’s Jake Leach also mentioned a two-hour warmup for G6, which had not previously been confirmed for the no-cal version. If Dexcom can get this feature approved, it will be a notable advantage over FreeStyle Libre’s 12-hour warmup.
- “I got an email from the parents of a patient that was in the G6 study. The child won’t go back to G5; the child wants G6 and wondered if there is any way to get it back. We think there will be a big uptick with G6 – it’s very exciting. This product is new everything – sensors, membrane, manufacturing, applicator, algorithm, and calibration scheme…The beauty of a three-month transmitter is it expires and there is a natural shift over to G6 for patients…The response in the community is going to be superb. We’re really bullish about this.” See our ATTD 2018 report from two weeks ago for a complete recap of G6; we’ve re-pasted some slides below.
- Payer discussions for G6 have not started in a big way, though Dexcom will “get in front of every payer” since G6 is “such a step up… we want to increase access and make it available to more patients. We’re going to make this [launch] as big as possible; I want to get in front of all of [the payers],” said Mr. Sayer. We’ll be interested to hear more specifics on these talks as the year goes on – will Dexcom finally push more into the pharmacy with G6? How much cheaper on a per-month basis could G6 be, relative to G5?
- Dexcom has plans to take G6 from 10 days to 14-day wear, separate from the first-gen Verily sensor. No timing was shared, but this is great to hear and sounded like a near-term focus after G6 is approved – and for good reason, since it would drive a 40% extension in sensor life and presumably give more pricing flexibility. Ever since DTM 2016, management has positioned G6 as capable of 14-day wear. The first-gen, 14-day-wear Verily sensor (see below) will also use G6. However, it remains very unclear how the G6 and Verily gen one products will co-exist – will all Dexcom users eventually migrate over to the Verily gen one product, or will Dexcom jointly maintain G6 with 14-day wear and separately commercialize the Verily gen one product? Given the form factor improvement with Verily gen one – and inclusion of the very accurate G6 sensor – we’d assume Dexcom will move over to the Verily product over time.
- At JPM, EVP Steve Pacelli speculated that Dexcom might have two main product platforms over time – mainly differentiated by software – but leveraging the same core sensor technology for intensive vs. non-intensive diabetes. While Dexcom has shared this bifurcated pipeline idea in the past, this was the first we can recall hearing that the focus would be on software differentiation between the pipeline – this makes a lot of sense for the business and hardware manufacturing simplicity. Mr. Pacelli added that Dexcom may be getting to the point of diminishing marginal returns for sensor accuracy – while there are plans to drive some additional accuracy improvements over G6, Dexcom will need to increasingly focus on building a software, data, decision support, and analytics ecosystem around its sensors.
2. Medicare discussions continue on remote monitoring (Share), “hope to resolve in the next six months”
In the first update since Keystone 2017, Mr. Sayer confirmed that Dexcom-Medicare discussions are ongoing regarding G5 smartphone connectivity/remote monitoring. “We hope to resolve [this] in the next six months,” said Mr. Sayer. He added in Q&A that he’s “not sure” if this is slowing G5 Medicare adoption, but Dexcom would certainly love the opportunity to market connectivity in the senior population. Getting this worked out would be a tremendous safety win for patients. It would also give Dexcom’s G5 a major leg up on Abbott’s Medicare-reimbursed FreeStyle Libre, which does not currently have remote monitoring or smartphone communication (the new FreeStyle LibreLink app is available in 12 EU countries, but no FDA timing has been shared).
- As a reminder, to ensure CMS reimbursement compliance, Dexcom had to turn off app communication for Medicare G5 transmitters (i.e., no remote monitoring). Per the Medicare coverage criteria, even if patients use the G5 receiver, they are not allowed to use their smartphone to share or view CGM data – doing so makes the system ineligible for reimbursement. This remains a source of enormous frustration for many users. At Keystone last July, Mr. Sayer said the team was working aggressively to remedy the situation: “We have literally plans A, B, C, and D in development if they won’t let us use the phone, because we believe remote monitoring is so important. In a year, we won’t be talking about this issue.”
3. Verily gen one depends on G6 no-cal timing; gen two “optimistic” for 2020 launch
The Verily gen one sensor launch continues to depend on the no-cal G6 regulatory discussions. The gen one product will complete development “this year,” more vague than updates in 3Q17 and at JPM. In January, Mr. Sayer positioned a first-gen “limited launch” of the Verily product for “late 2018/early 2019,” timing that was not mentioned today. (Assuming G6 is approved by mid-year, and the Verily gen one FDA submission follows quickly, this timing seems possible.) The 3Q17 call also shared that development on Verily gen one would complete in “1H18,” while today’s call gave a broader “this year” timeline. It’s possible that FDA discussions in the past month have provided more granularity on the path ahead for G6, or perhaps that the Verily gen one system needs more work (14-day wear, fully disposable, factory calibrated, Bluetooth to smartphone). Mr. Sayer did mention that “everybody is very busy with the first Verily system” as the team works to finalize design, validate, and verify the system. As noted above, it remains unclear how the Verily gen one product will merge with the existing user base – will all users migrate over?
- In line with JPM, the bandage-like gen two system with Verily is expected to launch in 2020. This product will bring the significant cost reduction and notably smaller size. The 3Q17 call shared that the Dexcom/Verily R&D teams were “accelerating” efforts on the smaller, second-gen, bandage-like sensor, but today’s update made it sound like gen one is still a big focus.
4. Dexcom G5 app update adds alert schedules, responding to user feedback
Dexcom recently updated the G5 iPhone and Android apps to add an alert schedule and more alert flexibility, responding to user feedback. While the mute override feature received mostly positive feedback, approximately 20% of users were frustrated by the inability to mute the very low alarm. The updated G5 app now lets users schedule and customize a second set of alerts – e.g., for work hours, for sleep hours, etc. A new “Always Sound” setting makes it easier to choose if CGM alerts sound when the phone is silenced or on Do Not Disturb. Finally, a new alert status icon helps a user know whether regular or scheduled alerts are set to make sound or are set to silent. The updated apps have fairly mixed reviews – the iPhone version has 2.7/5 stars (426 ratings), while the Android version has 3.2/5 stars (263 ratings). In looking at the histogram of reviews, there is a bimodal distribution – many five-star reviews and many one-star reviews. Again, this is a reminder of the burden of maintaining class III medical device apps, alongside sky-high user expectations for products to work perfectly across a growing spectrum of phones and operating systems. We are glad to see Dexcom continuing to improve the app, and its compatibility on iPhone, Android, and wearables is ahead of both Medtronic and Abbott.
5. Mentioned in passing, but no major updates: Insulet, Tandem, Lilly AID partners; Apple/Android smartwatches, Fitbit; Public API
The following Dexcom R&D partners were succinctly mentioned at various points during the call, though there were no updates on product details or timing. We include quotes and links to recent coverage/timing updates below.
- Insulet and Tandem: “We are heavily invested in these collaborations.” Both companies’ ATTD presentations were mentioned, with EVP Steve Pacelli commenting on “strong improvements in time-in-range and highly differentiated systems once they are commercially available.” See Tandem’s PLGS pivotal study results here, Dr. Boris Kovatchev praising the Tandem/TypeZero/DexcomG6 Control-IQ system, and Insulet’s two Omnipod Horizon studies (meal and exercise). Tandem expects a summer 2018 launch of PLGS (FDA submission this quarter, 1Q18), while a pivotal study of the TypeZero Control IQ system will start this May and conclude by end of year (according to Dr. Kovatchev); Tandem has guided for a 1H19 launch, though we’ll hear more on Thursday. Insulet’s 4Q17 call shared that Horizon is still in its third IDE trial (five-day hotel study down to ages two years old!), with data determining the next move: a pre-pivotal study or another study before moving ahead. A Horizon pivotal in 2019 seems most likely to us, and JPM remarks called for a launch with Dexcom G6 “probably 2020 timeframe.”
- Lilly: “Both pumps and smart pens are moving forward.” Both of these programs are expected to launch in ~2019-2020 (based on Lilly’s November announcement), though a great deal will have to go well to make major progress on all these programs and launch that soon. Lilly has smalls trials underway for hybrid closed loop with its own pump and Dexcom CGM (expected completion: April 2018) and the smart pen program (June 2018 completion). It’s notable how fast this has moved – as of Dexcom’s 3Q17 call, Lilly had not even shared its Connected Diabetes Care plans publicly! Since then, we’ve covered a slew of updates: the debut announcement in WSJ in November, the start of the hybrid closed loop study with Dexcom (December), the Rimidi partnership to develop provider-focused tools for the smart pen platform (December), the Livongo partnership for real-world research (January), and the Tidepool Big Data partnership (this month – our coverage is coming soon).
- Dexcom continues to “make strides” on wearables (Apple Watch, Fitbit, and Android Wear), but no specific updates were offered. The ATTD symposium did confirm – based on a question we asked – that the direct transmitter-to-Apple-Watch app is NOT under FDA review, contrary to what the New York Times reported last December. This was not too surprising to us, as Dexcom has been vague in recent months about the timing here. Moving to the Watch as a standalone primary display device (Class III) is a big deal and will require a lot of development effort. We continue to hear from parents that this will be a very welcome improvement – the Series 3 Apple Watch + Dexcom CGM app would eliminate the need to carry a phone at all times, but still allow parents to remotely monitor their kids.
- Dexcom Clarity was not mentioned today, though we heard at ATTD that (i) the Clarity mobile app is expected to launch outside the US in 2018; (ii) an EHR-integrated Clarity experience is now live at Children’s Hospital LA, with plans to expand to additional sites; and (iii) insulin, meal, and exercise data will be incorporated into Dexcom Clarity (first concept designs were shown at ATTD, but launch timing was not shared). Dexcom’s Dr. Nate Heintzman also shared an update on Dexcom’s public API, which now has more than 500 registered third-party developers that have created over 400 prototype apps. Dexcom’s data partners have launched ten apps that use the API, including One Drop, Glooko, Tidepool, Nutrino, Rimidi, and others listed here.
--by Adam Brown and Kelly Close