Dexcom's stock rose 7 percent Monday on news that the FDA granted 510(k) approval for their STS Continuous Glucose Monitoring System.


The Dexcom STS Continuous Glucose Monitoring System device, about the
size of a ballpoint pen cap, is injected into a diabetic's body, on the
arm or the stomach, where it stays near the surface of the skin and is
held in place by adhesive tape, similar to existing insulin pumps. The
sensors are then read by a monitor that helps set the appropriate level
of insulin to be injected. The system can be used to treat both Type I
and Type II diabetes.

Touted by some as a disruptive technology, none of Dexcom's competitors - the likes of Johnson & Johnson, Roche, Bayer, Medtronic, and Abbott (who reportedly has a similar device in development) - have a product more advanced than established pin-prick test strips. The intended use for STS is as a supplement to traditional disposable tests. But stock market analysts are already talking up "off label" use where many patients will give up pin-pricks for good and use the injectable continuous monitoring solution.


Patients will undergo a one-hour training session to learn how to use
the injection and monitoring system, according to [Dexom CEO, Andrew] Rasdal. They can then
begin using the pump, monitor and insulin-injection systems in diabetes
care centers and at home. He said patients would then buy new sensors
directly from Dexcom. "While I've been pleased by the FDA approval, we
urge realistic expectations," he said. "This is still a
first-generation product."

As you might imagine, there is a lot of buyout talk.


"The way these things work, in these fields dominated by oligopolies,
most of the big companies are already surveying the landscape and
typically make some sort of equity investment or buy it outright," she
says. "I would fully expect that if there's real potential in the idea
that this is disruptive technology, one of the big guys would come in
and just swallow it up."

Any small medical device company, start up or otherwise, has a fine line to walk if they're going to grow their business without being crushed. Offering a wireless sensor based system will offer patients clear clinical benefits, but the introduction of new technology will also prove fertile ground for the competitive weapon of choice for market leaders with older technology: FUD - fear, uncertainty, and doubt. Now that the R&D is (mostly) out the door, it will take world-class
sales and marketing execution to tell the right story in the right way
and overcome FUD.

You can read previous posts on Dexcom here and here.