On its third quarter earnings call last week, Dexcom recapped a busy Q3 — of note, one that included the acquisition of TypeZero Technologies for $11.3 million in August as well as two new FDA clearances in October and November. One of these clearances was for a new mobile app interface for the Dexcom G6 while the other was the Dexcom Pro Q CGM, a new disposable glucose monitoring device intended for diagnostic use, even of people without diabetes.
TypeZero Technologies has been particularly known for its expertise in insulin delivery advisory algorithms. Dexcom announced the acquisition in late August, but didn't disclose the price. However, the company's 10Q filing with the SEC mentions a "net cash outflow of $11.3 million related to an acquisition," which is presumably the price paid for TypeZero.
"We are thrilled to welcome TypeZero Technologies to the Dexcom family, following our acquisition of the company in August," Dexcom EVP of Strategy and Corporate Development Steve Pacelli said on the call. "The team and the company's technology align well with our strategy. Specifically, the inControl closed-loop algorithm provides Dexcom with ... another critical component in an automated delivery system. We look forward to first bringing it to market with our San Diego neighbors, Tandem Diabetes. In addition, TypeZero will advance our decision support roadmap, which supports both our core intensive business and other non-intensive programs. The TypeZero acquisition was catalyzed in part by the FDA's iCGM classification for G6, which we believe will help bring a greater number of insulin delivery solutions integrated with Dexcom's CGM platform to market over the next couple of years."
Pacelli also mentioned the two recent FDA clearances during the call. One clearance was fairly straightforward: it allows for a version of Dexcom's new G6 sensor that's compatible with an Android app and doesn't require a dedicated receiver. The other is more interesting — a professional, disposable version of Dexcom's CGM that doesn't transmit data in real time, but instead stores it to be read later by a healthcare professional.
"Beyond our core insulin business, we continue to explore new market opportunities that will expand Dexcom's long-term growth profile," Pacelli said. "For example, many of you saw the recent 510(k) clearances we received for devices supporting our development efforts outside of our intensive business. The first clearance relates to a software application based on our core G6 sensor and algorithms and had certain features that are tailored to people with diabetes in the non-intensive population. And the second is a fully-disposable glucose recording device indicated for all people two-years and older, not exclusively people with diabetes. We believe this product is the first step in making CGM a valuable diagnostic tool across all of healthcare."
Of course, in addition to these new items, Dexcom's main order of business on the call was to report postive earnings numbers stemming from the launch of the G6 in June. The company saw worldwide revenue of $266.7 million over the quarter, compared to $184.6 million for in Q3 2017, a 44 percent growth. Revenue continues to grow considerably more quickly than expenses.
"To give you some perspective, our US commercial new patient pipeline has more than doubled as compared to this time last year, and our Medicare business continues to build nicely. Our [outside-the-US] business grew faster this quarter than in any period over the last five years," CEO Kevin Sayer said. "... The G6 system is already available in 14 countries and we will continue to roll that globally in 2019. As part of our plans, we recently announced that CMS has approved G6 and we intend to bring this great technology to our Medicare-eligible customers in early 2019."