Exec Chat: Dexcom’s CEO On Meeting New CGM Markets While Scoping Consumer Opportunities
In this first of a series of Exec Chats with leaders at major diabetes companies presenting at ADA’s Scientific Sessions 2023, CEO Kevin Sayer discusses Dexcom’s ambitious R&D map to expand into metabolic health and develop innovative new products for diabetes and consumer markets.
DexCom, Inc. kicked off the American Diabetes Association (ADA) on a bullish note.
The San Diego-based leader in continuous glucose monitoring raised its 2025 revenue targets by $600m to a range of $4.6bn-$5.1bn at its 23 June Investor Day meeting.
CEO Kevin Sayer and his team were excited about CGM’s future total addressable market and expansion prospects, driven in large part by the Centers for Medicare and Medicaid Services’ historic expansion of CGM coverage, effective in April, which removes the prior requirement of multiple daily insulin injections to be eligible for reimbursement. Coverage now extends to a much broader population including people with non-insulin-treated diabetes and those with a history of problematic hypoglycemia. (Also see "Minute Insight: CMS Expands Medicare Coverage For CGM" - Medtech Insight, 17 Apr, 2023.)
Currently, only about 25% of people with type 2 diabetes, who are taking multiple insulin shots a day, use a CGM. BTIG analyst Marie Thibault said the CMS decision increases access for about 1.5 million people who take basal (daily) insulin in the US covered by Medicare, and could expand to 3-4 million people more as US commercial payors follow suit.
“That is a market Dexcom has not participated in before,” Sayer told Medtech Insight at the ADA conference, noting that on top of Medicare, about 60% of commercial insurers now also cover the basal insulin-only population. The CMS expansion, he said, adds about 7 million people total between the two groups, which Dexcom plans to address by stepping up marketing efforts for its newest-generation CGM, the G-7, in the second half of this year and in 2024.
The G7, which received regulatory clearance in the US and Europe, was off to a solid start in the US in the first quarter with more users than in any other quarter in Dexcom’s history, management said during its first-quarter earnings call. (Also see "Dexcom Doubles Down On Jonas Branding To Hail G7 Launch" - Medtech Insight, 9 Feb, 2023.)
In addition, Dexcom announced plans for a new 15-day sensor designed specifically for people who don’t use insulin, which is about 70% of Americans living with diabetes, in the second half of 2024. The company also has a next-generation vision for the G-series, such as a smaller footprint, more reusable materials, and integration into the Apple Watch. Further, the company announced a partnership with pharmaceutical giant Roche Diabetes Care to bring its Dexcom ONE CGM to Argentina.
The Dexcom One first launched in 2022 for people with type 1 or type 2 diabetes outside of the US.
In our sitdown with Sayer on 25 June, which has been lightly edited below for content and length, the CEO discusses Dexcom’s R&D roadmap, outlook for the future, and where AI may have a role.
That’s a much bigger population than we ever served. We have to figure out how to create an experience that will engage those people to use the product and better their health. I think our first release will be simple, but I promise you people are going to come back and say, make it more simple. That’s a continual learning that we have. We want this to be an educational tool, but we don’t want this to be a punishing tool like, ‘You ate too much today.’ People aren't getting engaged with that. People don't want to be coached. They want to learn. We're trying to create an experience that has that balance between providing them useful actionable information versus coaching them too much, versus not providing anything at all. It’s going to be an experience that people want to engage with. It’s going to be positioned in a distribution channel where they can get it, and we haven't disclosed any of those things yet. But we’re working on those plans. Someday, I would like to see a menu of features that you can have, click the ones you want. That type of software platform would be spectacular.
We know people don't like changing their sensors, so if we can go longer, we will, as long as we perform well. Those are three very tangible things that one would expect to see over the next 12 to 18 months. I also talked about the markets we will continue to go to. That is in addition to the intensive insulin and automated insulin delivery markets – we're not going to leave that. We’ll continue to be aggressive there. We need to develop solutions for pregnancy.
We also continue to do work in the hospital – that is going slow. It’s a very different environment than a consumer product. It’s hard to execute a clinical study with somebody lying in an ICU bed. (Also see "Dexcom Works With FDA To Bring CGM To Hospitals After Pandemic" - Medtech Insight, 2 Mar, 2022.) We’re still pursuing it, because I can't tell you the comments I get from physicians who use this in the hospital – they say it’s spectacular. (Also see "New Frontier: COVID-19 Crisis Opens Door For Dexcom, Abbott To Bring CGMs Into Hospitals For First Time" - Medtech Insight, 14 Apr, 2020.)
We had to get G7 done to get ready for the next hardware configuration. From G6 to G7, everything is different. We built a bunch of automated equipment for G6 that we will be phasing out over the next few years, because the G7 manufacturing lines are completely different. Our next platforms will incorporate the way we build G7 into everything we build in the future. We’ll just swap out manufacturing stations. We've built ourselves a very flexible, highly automated manufacturing process going forward, so we can build new hardware configurations. It will have a smaller footprint, more reusable materials and more powerful electronics. We are working on sensors that would measure things outside of glucose and we have active programs there. The question we always ask ourselves is, ‘Is what we’re measuring a real business opportunity?’ We’re looking at things like ketone sensing or lactic acid sensing.
For example, if we had insulin usage as a variable along with glucose, so we knew how much insulin was on board, our predictions would be stronger. If you went so far as to have activity data with respect to what comes from your watch in there, now you got three variables. Where this gets interesting to me though, is how does the FDA approve that? What do you file to say we can predict 87.2% of the time you're going to go hypoglycemic based on the variables that we have? Do they let us do something that works 87.2% of the time, or do they say it needs to work 100% of the time? And who is going to be liable for the 13% that it misses?
I think there's an incredible opportunity for us within our business practice and business models. If we can take that sensor data and predict [for example] sensor failure in advance, that makes our business much more efficient. Even the G7 hardware in and of itself makes things like that better. Every G7 has a unique serial number that's transmitted to us by the transmitter when you put it on. That sensor has a unique identifier – there’s all sorts of things we can learn over time. We’re not there. This is all Kevin's future vision.
Then my fifth son asked ChatGPT to write an episode for the Sopranos where me and Tony [Soprano] sat down to discuss a deal. And it wrote a script and said, ‘Kevin left the restaurant not quite sure what exactly he'd agreed to.' So how do you make this a tool into our business when all the business arrangements with other companies has to be figured out, because if you give all your data to ChatGPT, it’s now in the public universe. Our users don’t want all their data in the public universe. We’re a custodian of their data and we take that very seriously, but if we can learn something from their data, then we should. I think you can use ChatGPT to give you some initial ideas how to do something, but I think you have to finish it. I don’t think there is enough in ChatGPT to write a marketing plan. (Also see "‘This Is The Way Of The Future’: Digital Health Experts Share Thoughts, Experiences With Generative AI" - Medtech Insight, 18 May, 2023.)
I’ve asked what’s good about Dexcom and it wrote me a beautiful essay about how great Dexcom was.