DXCM Stock Falls as FDA Warnings Raise Concern for 15-Day G7 Approval

Core Viewpoint - DexCom (DXCM) is under regulatory scrutiny from the FDA due to a warning letter that may impact the approval of its upcoming 15-day G7 continuous glucose monitor (CGM) [1][2][10] Regulatory Concerns - The FDA's warning letter highlighted multiple violations, including the failure to submit a premarket notification for significant modifications to its sensors, which poses increased risks for users [1][2] - Concerns were raised regarding Dexcom's testing procedures for glucose and acetaminophen concentrations in both G6 and G7 CGMs, as well as issues related to dissolved oxygen content values in G6 sensors [2] Market Impact - Following the warning letter, DXCM shares fell by 1.9% on March 25, with a year-to-date decline of 7.2%, compared to a 2% decline in the industry and a 2.1% decrease in the S&P 500 Index [3] - A potential delay in obtaining clearance for the G7 sensor could result in a loss of market share, especially against competitors like Abbott's Libre, which has a longer wearable life [4] Sales and Distribution - Although the warning letter does not mandate an immediate recall, it may cause delays in regulatory approvals, and the company has halted commercial distribution of G7 with faulty sensors, potentially impacting first-quarter sales [5][6] Company Response - Dexcom has reaffirmed its commitment to regulatory standards and is working with the FDA to resolve issues, although the FDA has deemed the company's response as inadequate [9] - Despite the regulatory challenges, Dexcom remains confident that the warning letter will not materially affect the approval or launch of the 15-day G7 CGM, expected in the second half of the year [10]