Glucose monitor maker DexCom jumps on Medicare ruling

March 24--Shares of DexCom gained more than 8 percent Friday after Medicare issued a favorable ruling for reimbursing use of continuous glucose monitors, made by the San Diego-based company.

DexCom closed at $82.62, up $6.54, or 8.6 percent. One of the largest biomedical companies in San Diego, DexCom is currrently valued at about $7 billion.

"People covered by Medicare who have either Type 1 or Type 2 diabetes and intensively manage their insulin will now be able to obtain reimbursement," DexCom said in a statement.

DexCom's G5 Mobile CGM system provides glucose measurements every 5 minutes, and is the only CGM reimbursed by Medicare, said Kevin Sayer, DexCom's president and CEO.

Since the G5 system produces most of DexCom's revenue, Medicare's statement of reimbursement is a big boost for the company, Sayer said.

About 200,000 patients use the DexCom system as of January, according to DexCom. Most of them are in the United States.

Continuous glucose monitoring enables diabetics to act quickly to stop dangerous surges or drops in blood glucose levels. The traditional method is to do blood sticks in the finger or other parts of the body. But that only gives a result good for that point in time.

One of the biggest dangers to Type 1 diabetics is that over time they may cease experiencing symptoms of hypoglycemia, so they become unaware of the condition unless they remember to test. This unawareness can allow blood glucose levels to fall enough to cause brain damage and death.

With measurements constantly taken, diabetics get much more information to plan their insulin dosing regimen and adjust as needed, Sayer said. And the system notifies them if levels are dangerously high or low.

The readings can be transmitted by Bluetooth to a receiver or compatible IOS smartphone or device. In addition, up to 5 people can remotely monitor the glucose readings on IOS devices by using a DexCom app.

Moreover, the G5 system is approved for children down to the age of 2 years for treatment decisions, without the need for a confirmatory blood stick, Sayer said.

The U.S. Food and Drug Administration granted that approval in December. It is an extension of the device's original approval in August 2015.

DexCom is continuing to work on improving the system's performance, Sayer said. The system now needs to be calibrated with a blood stick measurement twice a day. The near-term goal is to reduce the calibration to once a day and eventually dispense with it altogether.

DexCom employs about 2,000 people, around 1,800 of them in San Diego, Sayer said.

"We do everything here," Sayer said. "We manufacture here, we have our call centers here to handle patients, and we have our engineers and R&D and administrative functions here."

DexCom is opening a second manufacturing factory in Mesa, Arizona, expected to open next year, Sayer said. But all the research will remain in San Diego.

"Our research is so specialized and important that we would never outsource," Sayer said. "We have a team here in San Diego unlike everyone else's with respect to call centers. We deal with patients but we also bill their insurance companies. So having the skill to handle the insurance processing of these orders was something important to our growth as we started up."

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