Dexcom’s G7 Glucose Monitor Delayed Until Late 2022; the share price falls by 5.6%

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By the numbers

2nd quarter revenue: $696.2 million

17% year-over-year growth on a reported basis

U.S. revenue: $511 million

11% year-over-year growth

International turnover: $185.2 million

39% year-over-year growth

Shares of Dexcom fell on Friday morning after news that approval of the much-awaited G7 continuous glucose monitoring system will be delayed until the end of 2022.

CEO Kevin Sayer said on a Thursday aftermarket earnings call that the company was updating software for its new CGM after questions were raised in the Food and Drug Administration review. Sayer said the company now expects an FDA decision and limited release “later this year,” delaying a larger release of the product until 2023.

The software revisions are related to the management of alerts and alarms in the system for the US mobile app, according to Sayer.

“We decided that the best option at this time was to revise the software and categorize it differently, and we also added a few other features to it based on our discussions with [the FDA,]”, said the CEO. “We are in the process of revising the software for this and need to run it through the validation and verification process and resubmit it [the application.]”

Sayer added that in the future, the company will likely make more incremental changes to new versions of CGMs.

Dexcom stock fell more than 5.6% to $82.07 on Friday.

During an April earnings call, Sayer told investors there were no “showstoppers” in the FDA’s review and there would be a meaningful G7 launch in 2022.

Also in April, JPMorgan analysts wrote that the G7 would likely be the medtech industry’s biggest release of the year, noting its smaller size, ease of use, and better mobile app interface. . Dexcom touted the G7’s ability to power up in 30 minutes, compared to around an hour for other CGM brands.

Dexcom has pushed back the G7’s European exit throughout the second half of 2021 and into early 2022 due to regulatory delays. The product finally received CE marking in March.

Delay of planned diabetes tech product eclipsed company’s second quarter results. Dexcom grew revenue 17% last quarter compared to 2021, and Sayer said the quarter saw a record number of new user starts.

JPMorgan wrote in a Thursday note that overall sales were slightly below Wall Street expectations, but analysts pointed to the company’s strong international sales and the arrival of new patients.

Dexcom slightly reduced the top of its 2022 revenue forecast, while increasing the bottom. It now forecasts a revenue range of $2.86 billion to $2.91 billion, down from a range of $2.82 billion to $2.94 billion.

William Blair analysts wrote in a Friday note that while the G7 is delayed, the company is already in talks “with payors regarding reimbursement for the G7, suggesting that reimbursement could come soon after approval, which should allow [Dexcom] for a faster and wider launch, with more patients having access.

Dexcom’s delay comes as rival Abbott Laboratories prepares for the US launch of its latest CGM product, the FreeStyle Libre 3.

Abbott CEO Robert Ford said on a July 20 earnings call that the U.S. launch process was underway, but would be gradual. Ford told investors the company is working to secure contracts with suppliers and insurers, build inventory and familiarize doctors with the new product.

FreeStyle Libre total sales grown up by nearly 19% in the second quarter to reach $1.1 billion. Ford said the company expects to maintain a 30% to 40% sales growth rate in the United States, even without Libre 3 still in the market.

Eleanor C. William