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FDA Nod for Dexcom G4 Platinum

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DexCom (DXCM - Free Report) , a provider of continuous glucose monitoring systems, recently announced that the U.S. Food and Drug Administration (FDA) has cleared its new continuous glucose monitoring system, the DexCom G4 Platinum. The company has started taking orders and will start shipments in the coming weeks.

DexCom received the CE Mark for its G4 system in June 2012 and already markets the product in the European Union as well as certain Latin American and Asian nations, where the CE Mark is recognized.

Clinical data validates the improved performance of G4 Platinum over the company’s Seven Plus with a 19% increase in overall accuracy for glucose monitoring. Trials also indicate a 30% improvement in accuracy when blood glucose level is below 70mg/dl (for hypoglycemia relevance range).

The inbuilt features of the G4 Platinum make it the most innovative system for continuous glucose monitoring in the market. The increased accuracy for hypoglycemic range and ease of use will enhance the standard of care for diabetic patients.

Given the burgeoning diabetes population in the U.S., the G4 Platinum presents considerable market opportunity. The commercialization of G4 in the U.S. could just be the catalyst that the company needs to gain share in the market it serves.

Increased awareness and acceptance of the need for continuous glucose monitoring and international expansion should help drive sales of DexCom’s products. The company expects to introduce its products in India by year end. It also plans to expand its footprint in China and Japan next year.

In addition to upgrading and enhancing the functions of existing products, DexCom has also been active on the collaboration front, through which it is looking to leverage its technology with its collaborator’s product offerings.

Competition in the glucose monitoring market is fierce. DexCom competes with Roche Diabetes Care, a division of Roche (RHHBY - Free Report) and LifeScan under Johnson & Johnson (JNJ - Free Report) for its Seven Plus offering. Additionally, Medtronic (MDT - Free Report) and Abbott (ABT - Free Report) have gained FDA approval for continuous glucose monitoring systems.

We believe that the company’s move to buy healthcare IT company SweetSpot Diabetes may allow it to compete more effectively through better data management systems.

Despite increasing revenues, DexCom remains a loss making entity and its efforts are made more difficult by a stringent regulatory environment. We currently have a long-term Neutral recommendation on the stock, supported by a short-term Zacks #3 Rank (Hold).

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