Dexcom CEO tells investors not to fear new competition from Abbott's Freestyle Libre

By Jonah Comstock
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Now that the Abbott Freestyle Libre has received FDA clearance, Abbott and Dexcom will be forced into tight competition in the US market. On Dexcom’s third quarter call, CEO Kevin Sayer spent some time assuaging investor fears about that friction.

“Late in the third quarter, the FDA approved Abbott's FreeStyle Libre flash glucose monitoring system,” Sayer said on the call. “We always believed the FDA would approve this system. And while we understand why it has been labeled as [a continuous glucose monitor], it is not real-time CGM. The benefits of real-time CGM are clear: reliable accuracy, actionable alerts and alarms, and connectivity. … Please remember, we have been competing against Libre outside the US for three years and our growth there has accelerated for the fifth consecutive quarter.”

Abbott’s system continuously monitors glucose data but it can’t display that data on a continuous basis. Instead, users can check the data whenever they want using a neaf-field communication scanner. Sayer believes that features Dexcom can deliver — in particular, predictive alerts for hypoglycemia — will make it the device of choice among consumers and, perhaps more relevant to the bottom line, payers.

“Our focus on driving reimbursement based on a differentiated value proposition for real-time continuous glucose monitoring is resonating with payers around the world,” he said. “Many international payers have recognized that flash-based systems are not equivalent to real-time CGM and have created different reimbursement categories for each. Early signs in the US suggest that payers feel the same way. We also know that many of our new international patients have transitioned from Libre to Dexcom because of these important differences. Ultimately, this is a very, very large and very under-penetrated market.”

On Abbott’s Q3, CEO Miles White didn’t address any competitors by name, but he did talk about the competitive marketplace, citing Libre’s ease of use and low price point as reasons the device will overperform.

“I think our value proposition is quite strong,” he said. “The product is priced at a very economic and affordable level. The intention there is as much and [as] broad access as possible and as rapidly as possible. And I think that value proposition is stunning compared to competitive offerings and I think that's going to be making it strong. We are in discussions with payers … about that value proposition and I believe that will all go very well.”

Dexcom is also planning to roll out a number of highly anticipated new products in 2018, including its next generation sensor.

“[We’re planning] more innovation next year than any year in our history,” Sayer said. “We haven't had anything new to push in the United States for quite a while other than connectivity, but that applicator looks the same way it did in 2006. It works lovely, but it's kind of scary and if you read the blogs and the patients' comments, it’s ‘Man, I got my new Dexcom, but I don't know if I want to push that plunger.’ That problem's gone when we launch G6. It’s pushing a button.”

In addition to the G6, which will either require no fingerstick calibration or just one calibration at launch, depending on the company’s ultimate FDA strategy, Dexcom is planning to complete development in the first half of 2018 on the first generation of the non-intensive, type 2-oriented offering it’s working on with Verily. Sayer said the timing of that commercial launch will also be dependent on the FDA.

Dexcom reported strong financials on the call, growing revenues 24 percent over Q3 last year and international revenues 83 percent, for a total revenue of $184.6 million and a gross profit of $127 million.