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DexCom Tackles Continuous Monitoring Market for Diabetes

An emerging market in diabetes care , continuous glucose monitoring systems , has begun to transform the way diabetics manage their glucose levels.

Unlike the traditional finger stick method, monitors measure glucose for longer periods of time, giving what manufacturers claim an accurate and more complete reading than a single test.

As it stands today, physicians recommend the devices to complement, rather than replace, readings obtained from standard finger stick methods. But some see potential in the future to stand alone.

Aiming to capture a slice of the $6 billion diabetes market, San Diego medical device company DexCom Inc. has developed the only seven-day glucose monitor for adults on the market.

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Medtronic Inc. makes a similar three-day product, called the Real-Time monitor, sold alone or with a manually adjustable insulin pump, and Abbott Laboratories has a five-day waterproof system approved for use in Europe.

“They may be bigger, but we’re better,” said Terrance Gregg, who took over as president and chief executive officer of DexCom in June following the resignation of Andy Rasdal, who stepped down after more than five years of service.


Growth Rate

Gregg pointed to DexCom’s growth rate: The publicly traded company is on track to have three products on the market in three years, an enviable accomplishment even for the fastest-moving medical device companies.

Gregg served as president and chief operating officer of MiniMed Inc., a medical technology company focused on insulin pumps and continuous glucose sensors, from 1996 until its acquisition by Medtronic in August 2001. He continued to serve as a senior adviser to Medtronic’s diabetes business until September 2004.

He said although Medtronic owns the “lion’s share” of the market, DexCom is poised to take a meaty bite.

The company has yet to earn a profit. Its latest quarterly revenues show a net loss of $11.3 million on revenues of $863,000 compared to an $11.2 million net loss and revenues of $479,000 a year ago. In 2006, DexCom reported a net loss of $46.6 million on revenues of $2.2 million.

Dr. Steven Edelman, a professor of medicine at UC San Diego and founder of the nonprofit educational and motivational organization Taking Control of Your Diabetes, has been using and prescribing DexCom’s device since it was released in April 2006.

“It’s an incredible difference,” he said. “Now, I find myself pricking my finger once every 12 hours.”

Edelman, a DexCom shareholder and former medical investigator for the company, was diagnosed with type 1 diabetes when he was 15 years old.

He said he wears the device 24 hours a day and clips it onto his pajamas at night.

“For me, it’s a way of life,” he said. “I can never go back.”


Trend Tracking

DexCom first introduced a diabetes device capable of tracking glucose trends over a period of three days. Following FDA approval in May, a second-generation device was touted to be a more accurate measuring system capable of charting a user’s glucose levels for up to seven days.

DexCom’s STS-seven device includes three pieces: a reusable transmitter and receiver and a disposable sensor. The reusable devices cost $450 and each replaceable sensor costs $60.

Users insert the sensor through the skin, place the transmitter against their stomach and keep track of their levels using a cell phone-sized receiver. The device transmits measurements to the receiver every five minutes.

Its use allows adults with diabetes to detect trends and track glucose patterns, including hypoglycemia and hyperglycemia, and to facilitate short- and long-term therapy adjustments. If their levels fall dangerously low or high, an alarm sounds to alert them.

“I always like to use the analogy of if you could only see three or four frames of a movie you would not be able to determine the plot,” Gregg said. “That’s the same thing with diabetes; we enable you to see the whole movie, not just the plot.”

But DexCom will have to woo diabetics accustomed to their usual methods. And, so far, insurance coverage has been inconsistent.

“Two patients out of the same payer can have identical pre-existing conditions,” Gregg said. “One patient will get reimbursed immediately and the second patient will have to go through an appeal process in order to get their sensor and equipment reimbursed.”

Although some insurers pay, many refuse payment on the condition they need further evidence that it lives up to its promises for better health.

Brian Wong, vice president and senior medical technology analyst for Broadpoint Capital, formerly First Albany Capital, in Chicago said reimbursements will play a key role in DexCom’s pursuits.

“It’s a very attractive acquisition candidate for companies that don’t necessarily have a glucose monitor in development,” Wong said. “I just think that market conditions are such right now that an acquisition won’t take place until after reimbursement for this device is in place.”


Moving Forward

In the meantime, DexCom has moved forward in talks with insulin pump manufacturers to develop a product using DexCom’s technology. The merging of insulin pumps and continuous glucose monitors has spelled new changes for the market.

A 2006 project funded by the Juvenile Diabetes Research Foundation aims to make an artificial pancreas capable of measuring glucose and infusing insulin automatically. The goal is to create a pancreas that will maintain normal glucose levels by automatically providing the right amount of insulin at the right time, just as the pancreas does in individuals without diabetes. Researchers have referred to the investigational device as the “Holy Grail” of diabetes.

“It seems we can take CGMs, pair them with insulin pumps and create a mechanical version of what people with diabetes lose,” said Aaron Kowalski, a type 1 diabetic and research director with the Juvenile Diabetes Research Foundation.

Kowalski said the device’s appeal stems not only from achieving glucose control, but also alleviating the mental struggles that can come along with everyday disease management.

Discovering the so-called “Holy Grail” of diabetes has given companies like San Diego DexCom a reason to flourish.

Next year, Gregg said he expects the company to introduce a third-generation device, which would allow the user to list foods consumed previously to determine how their bodies reacted.

Gregg said the capability could lead to behavior modification, instead of simply tracking trends.

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