DexCom Inc. (DXCM)
Bank of America Merrill Lynch 2013 Health Care Conference Call
May 16, 2013 1:00 PM ET
Kevin Sayer - President and Chief Operating Officer
Steven Pacelli - Executive Vice President, Strategy and Corporate Development
Robert Hopkins - Bank of America Merrill Lynch
Robert Hopkins - Bank of America Merrill Lynch
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Our Safe-Harbor Statement, DexCom is focused on diabetes, and particularly glucose monitoring and measuring glucose. Diabetes, as many of you know is in fact a global epidemic. I started in the diabetes industry in actually 1994, a year before this, when there were 135 million people diagnosed with diabetes of all kinds. As you go through the next few years, 50% increase in eight years from 1995 to 2003, doubled from 2003 to 2012, and as we look in 2030, 552 million people will be affected with this disease.
Steven Pacelli, who's with me, recently went to China to meet with potential partners, and the number that we heard from the Chinese was a 100 million people today affected in their country with diabetes. The U.S. epidemic is awful. One in three children born will develop diabetes at some point in time.
Everybody knows somebody, who's affected by diabetes. What's been interesting in my tenure at DexCom, I've been here two years, I have older children and grandbabies now, but as I've been talking about this with my own children, I'm getting all sorts of information from my sons. For example, my older son's father-in-law is experiencing kidney failure as a result of Type II diabetes. My second son is an attorney here in Vegas, and after he heard the message, he is out hitting [my sales call] (ph) for the year, he has actually referred four people who bought CGM kits, including the managing partner of his law office.
These consequences are horrible; amputations, blindness, kidney failure; one-in-ten healthcare dollars is going to be spent on the treatment of diabetes, and we have the tool that should be the first thing used in taking care of people with diabetes, and we can do three things that are very fundamental to treating this disease in today's environment.
Number one, this is one therapy that can reduce costs. Strictly, in the Type I population, when you think of somebody with Type I diabetes, one hypoglycemic event, where your hospitalized, costs the system between $15,000 and $20,000. A year of CGM is a lot less expensive than that hospitalization. We can also reduce costs by measuring the effectiveness of other therapies. We'll talk more about that later.
We can benefit all patients. CGM is often looked at by people as a Type I diabetes product only. That will not be the case over time. Again, uses of diagnostic or intermittently by people with Type II diabetes regardless of the medication they take, CGM can benefit them. And finally, it saves lives.
So, we talked a bit about diabetes in general, let's talk about the problem that our device addresses, our solution, and then what we plan for the future. The problem is simple. To treat diabetes, you've got to know where you're going. You just can't make wild guesses and expect you're going to get there at some point in time.
And the challenge in diabetes management is very much portrayed in this slide here. People who have diabetes try and stay within a target range, which is below 110 milligrams per deciliter in the fasting range. If they take too much insulin and they go too low, they experience hypoglycemia, which has very, very dramatic short-term effects with respect to lack of cognitive awareness, possibly death.
Consequently, to keep from having those acute events happen all the time, patients run very high. They let their blood sugars be much higher than the target range, because they don't have to deal with the short-term things, and that high blood sugar level or hyperglycemia is what leads to heart attacks, amputations, kidney failure, and all the other things.
Particularly, as we see our patient base and we'll get into this a little bit later, we are seeing our patient base age along with the rest of the population, and these consequences are very real. Diabetes is extremely expensive. The costs of poor control are huge. $174 billion in total costs to the system is related to diabetes, 2.3 times higher to take care of a patient with diabetes than to take care of a patient without diabetes.
Fingersticks just aren't enough information. Everybody's seen a blood glucose meter and we all know what they are. They are a single point in time measure. They are also kind of painful. You stick your finger a whole bunch of times after several days and then you will experience, and we all test all of these things ourselves in house, one day I stuck my own fingers 60 times to prove a point to somebody about the inaccuracy of fingersticks.
And I'll give you a perfect example. I am wearing a sensor today. I've got a couple of receivers with me. I ate a chocolate muffin before I came in to see if I could get myself to spike all (indiscernible).. It's just not going to take affect quickly enough. But if I am doing a finger stick without washing my hands, that meter could read a number off the charts, a 200 number, when there is absolutely nothing wrong with me.