00:00Shares of Dexcom moving higher this morning by more than six percent. Elliot has taken a stake in the diabetes
00:06and glucose monitor maker. Dexcom also holding its investor day yesterday unveiling new glucose monitoring tech and expanding its push
00:14beyond traditional diabetes care.
00:16Pleased to say joining us now is the Dexcom CEO Jake Leach. Jake thanks for joining us. Great to have
00:22you. And on the Elliot news. So they describe themselves now as one of your largest investors.
00:27What does day to day collaboration currently look like with Elliot? Yeah it's a pleasure to be here. Yeah we
00:34Elliot is one of our largest shareholders and we've had some very constructive discussions with them over the past couple
00:41months around governance board structure committee structure.
00:46And so moving forward we are currently recruiting for two new directors for our board that have experience in both
00:55med tech and high volume operations.
00:58We think having some folks that have been there if you look at what Dexcom is trying to do we're
01:03massively scaling our operations to meet this tremendous market need out there for better control of diabetes and metabolic health.
01:12And that's what our continuous glucose monitors do it. It makes sense. So many more people are interested in fitness.
01:18Everybody's wearing a whoop or an aura and blood sugar is a huge part of that the stock though.
01:27I look over the last five years it's off twenty five percent. Why doesn't the market appreciate the product or
01:35or the revenue growth story.
01:38Well I think you know Dexcom for many years was you know growing at you know north of twenty percent
01:44top line revenue and as we've continued to grow revenues I think there's been this question of what does the
01:51growth actually look like what does that algorithm look like.
01:54And our investor day yesterday we laid out our long term plans that show durable double digit revenue growth for
02:01the next five years and all the catalysts that drive that we also talked about some unique opportunities for us
02:09to increase margins and get to world class gross margin.
02:13So we're really excited about the opportunity both to serve a much larger population that needs this technology as well
02:22as working with our investors really excited about the future.
02:26But are you saying that there's disappointment that you're not growing as fast as you used to be and you're
02:30not going to grow that fast anymore.
02:32No I think it was just there's questions about the long term growth algorithm and so as we work through
02:38the specifics of our product portfolio the new technologies and also the really significant health care access that's coming for
02:46CGM.
02:47You know over time you know over time we've been the company that's putting out all of the clinical data
02:52that's really used to expand access to this technology and get people the CGMs that they need.
02:58And so as we are on the cusp of almost doubling the addressable market here in the U.S. as
03:02Medicare coverage for the non-insulin using population which is the largest population of diabetes as that comes forward here
03:09we expect that coverage to take effect next year.
03:13That's a really big catalyst for our growth going forward so I think our investor day was all about making
03:18sure that the investment community understands the long-term plans for Dexcom and where we're going.
03:24Is this Jake to some degree a move that you have to do just considering the threat of GLP ones
03:32to the diabetes related business that those who have type 2 now have a better solution in order to try
03:39to escape that trap for those that can due to higher weight.
03:43So does your addressable market shrink there and therefore you have to change you have to pivot and get to
03:49a wider population.
03:51Well at this point in time we're actually some of our largest growth areas are in type 2 diabetes when
03:58it comes to new customers that are coming on to the technology.
04:01So what we actually see is in those that use GLP ones we actually see higher utilization of CGM than
04:08the group of people with type 2 diabetes that aren't using GLP ones and there's a really important reason for
04:14that.
04:14When you think about how GLP ones work it's about working on that digestive system and kind of reducing food
04:23intake is one of the key mechanisms of that therapy.
04:26When you look at CGM it's all about helping people understand how different foods impact them and the quality of
04:33their diet.
04:34So the combination of the amount of food and the quality of the food is really important to drive improvements
04:42in metabolic health.
04:44And ultimately we have a growing number of people in the United States who have pre-diabetes.
04:49The CDC just updated their numbers to over 115 million adults in the United States living with pre-diabetes.
04:56That's over 40 percent of our adult population.
04:59And so what we see is a significant opportunity for Dexcom and for CGM to have an impact there by
05:06helping educate people about how food and their diet and their activities and their lifestyle is impacting their long-term
05:13health trajectory.
05:14Yeah, I'm pre-diabetes and I'm constantly trying to figure out what I can do so that I don't get
05:21to post-diabetes.
05:24I wonder about the products that you have.
05:28The G7 sensor has higher failure rates, I'm told, than the G5 or the G6.
05:35Are you working on that and what's coming next?
05:39Yeah, that isn't accurate.
05:41We're at all-time lows in terms of any kind of performance issues with sensors.
05:46And so we're really proud of the products that we're making and the quality of those products.
05:52And so the G7 product as well as Stello are doing very well in the market.
05:57And actually over the last couple of quarters have been taking share.
06:00So we're very excited about the future.
06:03Is it not the case, Jake, that FDA clearance data shows the G7 sensor had meaningfully worse sensor survival in
06:11adult pivotal data?
06:14No, actually the pivotal trial data for survival of the G7 sensor, both the 10-day version of it, as
06:22well as the brand new 15-day sensor, is significantly better.
06:28So we are very happy with the performance of our sensors.
06:32And they're meeting expectations out there in the market.
06:35And we're seeing feedback from users around this new 15-day product that both the performance and the survival is
06:42basically two things that they're pointing out as benefits.
06:46Jake, I would just love to know, because I understand why these types of monitors would be useful with someone
06:52who has pre-diabetes, for example, or is concerned about that thing.
06:55What is the pitch for someone perfectly healthy?
06:57Because to be honest, I get a lot of these targeted ads for glucose monitoring devices on Instagram.
07:03It feels really trendy.
07:05And for me, I'm like, why do I need something like that?
07:07Why do I need that extra data?
07:09What is the use case to expand into a healthy market that isn't just like a novelty, trendy thing to
07:16do right now?
07:17Yeah, I think the way that we've looked at it is we've really focused initially on the most acute diabetes
07:25conditions, insulin-managed diabetes type 1.
07:28And then we've slowly moved down that acuity curve as we've made the products easier to use, more accurate, more
07:33reliable, and really started to lean into our capabilities in software to build out an experience for users that is
07:41meaningful.
07:42And one of the things that we see, particularly in our Stelo product, which is an over-the-counter CGM
07:48that's available on Amazon and at Stelo.com without a prescription, it was the first product like that.
07:56And what we see is there's a whole spectrum of people that are using this product, from people that have
08:01diabetes, that don't have insurance coverage yet for the product, they're buying Stelo.
08:05We're also seeing people with pre-diabetes and also those health and wellness longevity-focused.
08:11I think we all have opportunities to learn more about how our lifestyle is impacting our glucose control.
08:18And even for myself, I've learned many things over the years wearing CGMs about my diet and about my activity
08:24levels that could impact my glucose.
08:27And so one of the things we're always trying to do is minimize the number of large excursions of your
08:32glucose because of the impacts it has on long-term health.
08:35And so we think over time, as we continue to develop the technology and continue to develop the experience around
08:41it, that we're going to have folks that are having even more meaningful experiences with it.
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