DexCom Inc. Reports Operating Results (10-Q)
Dexcom Inc. is developing continuous glucose monitoring systems for people with diabetes. DexCom Inc. has a market cap of $186.9 million; its shares were traded at around $4.07 with and P/S ratio of 23.1. Highlight of Business Operations: From inception through March 31, 2009, we had generated $21.8 million of product and development grant (non-product) revenue, and we have incurred net losses in each year since our inception in May 1999 and had an accumulated deficit of $250.8 million at March 31, 2009. We expect our losses to continue as we continue our commercialization and research and development activities. We have financed our operations primarily through offerings of equity securities and convertible debt. In April 2005, we completed our initial public offering in which we sold 4,700,000 shares of common stock for net proceeds of $50.5 million. In March 2006, we entered into a Loan Agreement, which was subsequently amended in January 2008. As of March 31, 2009, we had an outstanding balance of $2.8 million under the Loan Agreement. In May 2006, we completed a follow-on public offering of 2,117,375 shares of our common stock for net proceeds of $47.0 million. In March 2007, we issued an aggregate principal amount of $60.0 million of 4.75% Convertible Senior Notes due in 2027. In February 2009, we completed a follow-on public offering of 15,994,000 shares of our common stock for net proceeds of approximately $45.6 million.
Product revenues increased $848,000 to $2.7 million for the first quarter of 2009 compared to $1.8 million for the first quarter of 2008 based primarily on increased sales volume and higher average per unit selling prices. Product cost of sales increased $410,000 to $3.5 million for the first quarter of 2009 compared to $3.1 million for the first quarter of 2008. The product gross margin loss of $850,000 for the first quarter of 2009 decreased $438,000 compared to $1.3 million for the same period in 2008, primarily due to increased revenue and better direct labor utilization.
Research and Development. Research and development expense decreased $1.6 million to $3.2 million for the first quarter of 2009, compared to $4.8 million for the first quarter of 2008. The decrease in research and development expense was primarily due to the joint development and collaboration agreements entered into with Animas and Edwards in 2008, and the corresponding reclassification of expenses to development cost of sales. Major elements of decreased research and development costs include $662,000 in lower salaries, $277,000 in lower facilities costs, and $197,000 in fewer supplies.
Selling, General and Administrative. Selling, general and administrative expense increased $1.5 million to $7.9 million for the first quarter of 2009, compared to $6.4 million for the first quarter of 2008. The increase was primarily due to higher marketing and sales costs. Major elements of increased selling, general, and administrative expenses include $408,000 in higher salaries, $241,000 in higher marketing consulting costs, and $185,000 in higher temporary employee costs.
Net Cash Used in Operating Activities. Net cash used in operating activities decreased $7.1 million to $9.4 million for the first quarter of 2009, compared to $16.4 million net cash used for the same period in 2008. The decrease in cash used in operations was primarily due to $6.5 million in changes in operating assets and liabilities and by $672,000 in lower net loss. Of the $6.5 million in changes in operating assets and liabilities, $5.6 million was due to reduced restricted cash requirements and $766,000 was due to less on hand inventory.
Net Cash Provided By Investing Activities. Net cash used in investing activities was $39.3 million for the first quarter of 2009, compared to $13.6 million provided by investing activities for the same period of 2008. The increase in cash used in investing activities was primarily due to $27.8 million increase in cash used to purchase available-for-sale marketable securities and by $25.2 million in lower proceeds from the maturities of short-term marketable securities for the first quarter of 2009 as compared to the same period in 2008. During the first quarter of 2009, we invested $1.0 million in equipment to support manufacturing improvements compared to $1.1 million during the same period in 2008.
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