DexCom, Inc. (DXCM) Earnings Call Transcript & Summary

Okay. Good morning. I think we're live here. My name is Jayson Bedford. I'm the med device analyst here at Raymond James. Thank you for sharing a portion of your day with us here at the 42nd Annual Raymond James Institutional Investors Conference. We're privileged to have with us today the management team from DexCom. Specifically, we have Jereme Sylvain, SVP Finance, Chief Accounting Officer, and Sean Christensen, Head of IR. So we're going to do a full fireside chat here, and I realize that you guys have covered a lot of topics over the last couple of weeks. But I'd like to cover 3 big topics: G7; awareness, specifically as it relates to the current business; and then maybe new market opportunities.

So let's start with G7. You mentioned on the last call that you've completed European trials. I guess the quick question is, when do you expect to file in Europe? And when will investors potentially see the data set supporting that potential approval?

Sure. And thanks for having us here, first and foremost. I think it's always good to talk. So thanks for the invite. As it pertains to G7 and the completed EU trials, we have completed those trials. We have the data, and we're going through crunching that right now and preparing the appropriate filings. We haven't really commented on when necessarily we will file other than, obviously, once the clinical trials are completed, there's obviously a lot of incentive to get those in front of the authorities. And then when will we see the data? The data will either come upon approval of filing. We may have an opportunity to release it earlier. We have not decided whether we will do that publicly. I think it's safe to say, we've set the bar pretty high with G6. I think the expectation is G7 will be at least that of G6, if not better. But absent providing that data ahead of time, we're going to wait and provide it at the right time. But you should expect to see us in Europe in a very reasonably short time frame.

Okay. And in terms of commercialization, will you slide right into existing reimbursement codes? Or will there be a delay between approval and launch?

Yes. And that's a -- there really shouldn't be a change in terms of reimbursement codes. So it really depends on the country. I think it's the first way to start that. But there are countries -- you think about reimbursement code, there's some governmental reimbursement that gets down to, we will reimburse you for the category. And as long as you're reimbursed in the category with predefined parameters, you can slide right into those existing parameters. There are some private pay contracts where you negotiate products specifically, not necessarily a category. And those will require some negotiation, which we are already in the negotiations on today. So I think we should slide in. I don't think there will be a significant time frame around reimbursement. I think the big question, we're just making sure we understand approval, manufacturing and sales readiness and tying those together. Obviously, we're planning around all of those. Approval is not a guaranteed date. So you have to be a little bit nimble about how you prepare to go to market. But I don't expect reimbursement codes to be an issue. That wouldn't be the least of our concerns.

Okay. Will you enter new European markets with G7 that you're not in with G6? Or is it largely existing markets?

So initially out of the gate, we are looking at existing markets. We will be going into new markets. Really, it's a determination of capacity, reimbursement, very similar to how we led with G6 into various markets. And so you will expect to see us eventually going into new markets. Clearly, as we launch the product, the goal is to really look at those where we have our largest reimbursement where there's certainly a competitive advantage to having it there. So we are focused on those first. We're not going to get into the specific market names, but we will be certainly targeting new EU markets over time with G7. It's all going to then be kind of our little Rubik's Cube of approvals/manufacturing capacity/commercial readiness, where we'll make sure we're modulating it into the markets in the appropriate manner to maximize the long-term benefits of that product launch.

Okay. You hinted that access is not a big concern. What is your biggest concern around the G7 rollout?

I don't know that we have a big concern around the G7 rollout. Clearly, we need to get manufacturing -- I'm sorry, regulatory approvals, and we'll ramp up manufacturing over time. But when you come back, when you think about what the G7 offers, the G7 offers a dramatic step forward, really from the G6 on all particular fronts. So it's certainly smaller, it's easier to insert. We have a faster warmup time. The software is all brand new. Connectivity has been improved. All of those different things are out there. So when you think about the product offering in market, we're very excited about it. We expect there to be a very well received product. So then it gets back to your typical, well, how do you expand? And you have to have regulatory approvals. You have to have the manufacturing capacity. And then as you go into these various markets, you have to have coverage. And so we continue to get into these markets ahead of time with our market access people and look for that particular coverage. But I don't necessarily know that we think G7 is ever going to be the challenge. And we think it's a fantastic product. It's really about continuing to block and tackle and getting the appropriate landscape to launch in.

Okay. And I realize the product has not obviously been approved and launched yet. But just from a pricing standpoint, can you just walk through your view of anticipated pricing? Will it be priced at a premium to G6? And then what happens to pricing with G6?

Sure. So the way we've thought about G7, and as more and more of these markets are going this way, G7 -- our pricing today is really starting to negotiate on a per member per month. So we sit with either the government bodies or we sit with our commercial payers. We start with the concept of what is the cost per therapy, almost like a SaaS model. If you want to give it kind of a comparison to something that's pretty prevalent today. And so as we sit in front of folks, the plan is, is really to swap G7 out for G6. It's not to command a premium. It's simply in these markets over time just to swap it out. And really adhere to this best-of-breed for a negotiated upon monthly amount. And so you should see it taking place in that manner. And it should be pretty straightforward. G6 has a 90-day lifespan when you include the transmitter. As that transmitter goes, you can swap someone into a G7. Obviously, G7 is fully disposable. And so that's how we'll think about it from a price perspective. It is not necessarily to command a premium like you traditionally might see in typical medical device. We're really moving more down the SaaS model equivalent on the subscription-type model. We expect that to be the case in a lot of these jurisdictions. What that means for G6 is certainly G6 will be priced in a similar type subscription-type model. We'll be looking to move folks off of G6 to G7. And what happens with G6 capacity, is now that we have all this excess capacity over time as we build up those G7 lines, as we build out our Malaysia manufacturing facility, which should give us incredible capacity, those G6 lines are fully depreciated, reusable transmitters or reusable electronics. And so we have an opportunity to go into different markets with the G6 that are lower-reimbursed markets, maybe not top-tier technologically advanced markets, and use that particular capacity to go after those markets where reimbursement just doesn't rival that of where the more developed markets are. So a really good opportunity for us to really look at multi-tier product strategy over time. We still think G6 is an incredible product and can really benefit a lot of folks.

Okay. So just so I understand it, Jereme, in those countries where reimbursement is established, you'll swap out G7 for -- or you swap in G7 here. And then in those countries where reimbursement is less established that you may not have a big presence in, you can come in with more attractive pricing on G6. Is that a fair way to summarize what you're saying?

That's how we're thinking about it as we get out in front of this. That's exactly what we're looking at. Yes.

Okay. And can we assume that the pricing strategy in Europe will be similar to the U.S.?

It will be a little bit similar...

Similar in terms of U.S. will swap out -- swap into G7?

Yes. In the U.S., that's the plan, is G7 would swap in for G6, and we'll be under -- we'll be negotiating contracts in a very similar manner. The U.S. is a little bit different because it's a reimbursed market that generally goes through either the pharmacy or DME. So there hasn't really been a tiering product strategy that's in the U.S. at this point. And I'm not sure that there necessarily will be that. So in that case, what we're going to be doing is G7 will simply swap out for G6. So it's a little bit different than the OUS market where you have markets with lower reimbursement you could go into. But absolutely. The plan is, is to build up capacity, very similar to how we swapped G6 out for G5 with the one caveat. We know that, that transition over time took a little bit longer because of capacity. In this case, we're going to be building up capacity in a very significant way so that we can swap out G7 for G6 in a more expedited pattern.

Okay. Okay. So again, I don't want to belabor this, but you'll have G7 countries and G6 countries is a fair way to look at it?

I think that's a fair way to look at it. With -- I would also just simply say, we talked a little bit about additional products coming out over time. And without necessarily getting into the specifics, at our Investor Day, we really kind of keyed on that. We have talked about -- whether it's called G6 or something different, we are certainly looking at form factor and making sure that we modify product launches to meet folks in those particular countries. So form factor, you should absolutely expect to see a G7 form factor and a G6 form factor, whether it's called that or called something different, we're ultimately going to be launching that in due course.

Just in the U.S., the intention here again is revenue to DexCom per user stays similar to what it is today, depending on the channel.

Correct. Correct. There's no premium or detriment. I think the goal here is our strategy over time is to, ultimately, as we are able to build capacity and build awareness and adoption, ultimately drive price reductions through volume and channel. We've already kind of made that step through on pharmacy, where we've already kind of made that move. So to your point, we're swapping it out and so anything you see at this point isn't necessarily price. It's actually more channel mix. And so for those that aren't aware of what we're doing, there's 2 product channels here. There's a way to get product in the U.S. There is DME, which is durable medical equipment, and through the pharmacy. The pharmacy is generally the easier way, easier for primary care physicians to prescribe it, easier for patients to get access to it. We give a little bit of price as we go through that channel. And we're kind of in a migration right now. We started our business as a DME business. That migration is happening. And so we do expect that migration to continue to happen in 2021 and 2022 but it's not a pure price. It's not that in the pharmacy channel we're taking on significant price year-over-year. It's really that migration. And to your point, Jayson, swapping out G7 for G6 is really going to be in that same vein. It's not necessarily a price change. It's more of everything will be based around channel.

Okay. Manufacturing for G7, where will the device initially be manufactured?

Initially here in the U.S. So we will be -- we have capacity we're building here in the U.S., both here in San Diego and in Mesa. And so we'll continue to do that. Eventually, there'll be large lines located in Malaysia, although that won't be coming online until next year. But G7 initially here in the U.S. and we've already obviously purchased quite a bit of machinery for that, and we've got some lines up and running today, creating some of our clinical trial units.

And there's always risk. I hear you here. But in terms of manufacturing readiness or preparedness for CE Mark approval, is there any concern the manufacturing won't be ready for commercial launch?

We don't -- we're not -- we don't have any major concerns. You're right, everything is kind of this Rubik's Cube of when approval comes. And then when we have the lines up and running, do we need to move the G6s around? But I think the team has done an incredible job ordering in advance, having the lines up and running, running the validations to make sure that they work as intended, all really ahead of time. And so I think we're in a really good spot as we sit here today. That's not to say if we got approval tomorrow, we'd have to kind of think about how do we move over these G6 lines for G7 lines. But I think from a manufacturing capacity spot, we're in a really good situation. Of course, it depends on when approvals come and then how big those markets are we go to because it is this kind of phased approach we're thinking about as we build up capacity and migrate from G6 to G7. But I don't think that's our big concern at this point. Manufacturing, the team has done an incredible job.

And you still have a goal out there of $1 a day at some point. I assume that, that stems from the Malaysian facility. I guess the question on that is, is the assumption that the cost of a 14-day sensor is the same as a 10-day sensor, not on a per day basis, but just total cost for a sensor transmitter?

It is. Yes, and that is our goal. $1 a day on a 10-day sensor. And so you can do the math, $10 a sensor. And the cost for a sensor does not go up based on the length of that sensor. So in theory, you'd be able to get down to below $1 a day at these more longer-term sensor days. And you're right, it is based on Malaysia, not necessarily based just solely on Malaysia. It's based on all of these lines, these highly automated lines, getting up to full capacity and full yields. And so certainly, here in the U.S. as well as in Malaysia, we expect to be able to get down on cost. And so over time, when you launch, for example, a new product, your yields out of the gate are a little lower. Ultimately, it's a little bit challenging. But as you start to get to full capacity in these particular automated lines, that's where we'll be able to get there. So it's really about how many we're making and how many lines are turned on as opposed to necessarily where it's located. We expect to come down in cost both in the U.S. and Malaysia.

Sure. Let's transition a little bit to some of the various awareness initiatives that you've accelerated. I guess first, on the direct-to-consumer. You've talked about DTC having the biggest ROI. What can you tell us about the expected return profile on the spend or at least frame how you look at the return profile, maybe without getting into specifics too much?

Sure. Yes, we're really proud of this effort. Our marketing team has done an incredible job, and for those out there that had saw us, we had a Super Bowl ad with Nick Jonas, and the response has been incredible. The way we generally measure DTC is we look at leads, and we look at when we air, either -- whether it's airtime on various forms of media, whether it's web-based, and we're tracking those leads as they ultimately come in and the conversion rates associated with those. And in doing so, we look at then the average lifetime value of customer to the cost to attain. And that's how we measure it. And so clearly, during this process, we've seen that the ROI has significantly exceeded our hurdle rate. And it's important for us to continue to measure that, Jayson, just because we want to make sure as we spend these funds, we're allocating them to the right place and getting the appropriate return. But what we see is that we would get multiples of our ROI. It is certainly at one of these things where the average value of the customer that comes in compared to the cost to attain is significantly higher. And so it's something we'll continue to do. It is an interesting journey for us. When you think about direct-to-consumer advertising, historically, it wasn't a place where we were be able to play. And as we start to get more and more outside of our core endocrinologist, type 1 markets, and we move into type 2 intensive, and eventually type 2 through some of these programmatic approaches. But as you really think about the type 2 intensive patient, they're seeing their primary care physician. And so advertising and feet on the street and samples all kind of come together. And so for those that don't know us, we historically hadn't done samples, we had a smaller sales force size relative to our peers and we didn't really do a lot of direct consumer advertising. And what we've done this year in 2021 is we've doubled the size of our sales force. We've increased our spend related to samples, so that we can get into these primary care physician offices and drop off samples. And we've started ramping up our direct-to-consumer advertising, which is not just for the awareness of the actual patient, it's also for the primary care physician who may or may not have a very good familiarity with DexCom and CGM and what it ultimately can do. And so all of those have taken place this year. So we've really doubled down on that investment. And over time, we expect to see it yield results. So I realize I kind of covered the whole DTC because it all comes together, Jayson. But hopefully, that answers your question.

It does. I do have a couple of follow-on. I guess, just -- it's been, I don't know, about a month since the hometown Tampa Bay Bucs won the Super Bowl. Has there been a lasting impact on the ad?

There has. I think what we've seen is there's been a lot of inbound inquiries. I'd also say that kind of the -- we've been seeing it via other channels as well. So for partners of DexCom, things along those lines, the awareness has raised awareness there, which has ultimately pushed folks through. And when we saw the web leads, the web leads increased by 300% to 400% as a result of it, and they continue to go through now. It's going to take time to see ultimately that those follow through to prescription to ultimately prescribe. But I think when you see that sort of awareness out there, it's incredibly rewarding. We'll be able to get back to you a little bit more in terms of, hey, what was the return on this and was this something you'd do again, as we ultimately see the flow-through because it does take a little bit of time. And as you know, a lot of the adjudication to the pharmacy as it takes place, you get that data in arrears. But the leading indicators of leads and high quality leads, this is not just someone pinging the website, this is somebody with information, looking to get a benefits investigation, those have been incredible, and we continue to see an elevated level of awareness on our website.

Okay. You mentioned the sales force increase, the DTC. Just wondering, why did you do it now versus when you launched G7?

Yes. It's a good question. It was a combination of a few things. One, we realized that as G6 was starting to get reimbursement in the type 2 intensive market throughout the course of 2020, and I think that was a big start of it is, we started to realize that the folks we were calling on were a lot more primary care physicians than endocrinologists. And historically, as an organization, endocrinologists represented a majority of our calling points as that's where most, obviously, the diabetics are serviced. And quickly, we're realizing that in order to have an appropriate coverage model, which we think G6 is an incredible product and one that can service the type 2 intensive market, we realized very quickly that in order for us to really have the depth and the call points that are necessary to drive adoption, we needed to have more call points. We needed to call in the primary care physician. We also did this in conjunction with getting out of Medicare. Now we got out of Medicare Direct so that we could sample. And so not only do we have sampling capabilities available to us, which we think is important because we've got to get these in the primary care physicians offices so they can see how it works. Certainly, patients can ultimately see if it's the right fit for them. But you can't have samples without being able to get in front of the physician and being able to say, here, here's there, here's how it works. That's where that matched up, which then obviously then matched up with our direct-to-consumer advertising. It's really, we wanted to do all 3 at the same time because they all really tied together. I think to your other point, ahead of G7, I think it's important to establish relationships. It takes a little while to hire, train, bring folks up to speed, establish the relationships. And the last thing we wanted to do was to be behind the curve there when the launch of G7 came out. So this is our way of ensuring we get ahead of it, getting the relationships established, reestablish our coverage model, our territory coverage model, well in advance of what we think is a very exciting time in a real growth market.

The new reps that you're adding, are they focused primarily on primary care physicians? Or are you integrating them into the current team also calling on endos? How is that mapping?

Yes. And so it's a territory realignment. And so to your point, you might have had a territory coverage model that had endocrinologists and primary care physicians, but you might only be able to call on a small portion of the PCPs because of the limited capability -- or the limited resources, I should say. What we did is re-territory-wise, if you will, the sales force. And so that means each rep is still calling on endocrinologists and PCPs in the space. However, we can go much deeper on the PCP population where we couldn't do that in the past. And so what was really important is even as we redrew those territories to make sure that we have a team approach because we don't want familiarity to go out the door with someone that you've been comfortable with over time. And so we still have a teaming approach. But what we do is we have this new territory model that ensures we can go deeper into the primary care physician office, while still maintaining our relationships with the endocrinologists.

Okay. Just out of curiosity, what percent of your prescriber base right now are PCPs versus endos?

It's still skewed more toward endos. I don't know that we've given a specific number. It's still skewed more towards endos, but I would say that PCPs have increased significantly with the advent of type 2 intensive coverage. So if you recall last year, UnitedHealthcare, Aetna, they both provided coverage on type 2. There's been other wins in the type 2 intensive space. Obviously, Medicare covers type 2 intensives. And as that coverage has continued to increase, a good chunk of your type 2 intensives still see PCPs at this point. And so it has become a much larger portion of our prescribing base, albeit we're still heavily an endo-based prescriber pattern.

Understood. Just I guess on type 2, is reimbursement and access pretty much the same now in insulin-dependent type 2 versus type 1, meaning access is not really constrained by -- in the type 2 market, insulin-dependent type 2?

Yes, it's getting better, but we're not quite there yet. So type 1, you'd say 98%, 99% coverage, U.S. commercial, certainly, Medicare. In the type 2 intensive space, a good chunk of your large U.S. commercial carriers are covering, but not all. And there still is a differentiation, say, for example, in Medicaid, where Medicaid generally will go towards type 1s, and that's the first approval. Medicaid does not necessarily cover -- in all states. Every state is a little bit different. But the Medicaid coverage in type 2 intensive isn't quite as strong. So we're still making progress. There are some good covers there. It continues to gain steam, and we think it will eventually migrate to that of type 1. But as of today, it's good coverage. It's not quite there at type 1 yet.

Okay. Can we assume that at least over the next couple of years in the U.S. that more of your growth will stem from the insulin-dependent type 2 market versus type 1? Or is it pretty balanced?

Due to law of big numbers, you'd expect it's a little more skewed to the type 2 intensive. There's still a ton of room in both. And so we expect it to come from both. So it's not going to be skewed 1 way or the other in a meaningful way. The difference is, obviously, the type 1 market is a little bit more penetrated than the type 2 intensive. And so if you're thinking we get to 60% -- we have our long-range plan, 60% of intensive insulin folks are on CGM therapy. Clearly, there's more room to go in the type 2 intensive than there is in the type 1. And so just that natural point of inflection is where you'd expect it to slightly gravitate that way. But it's not by a significant margin.

Okay. Okay. That's helpful. In terms of new market opportunities, UnitedHealth, with their level 2 program seems to have had great success with G6. You've talked about every one of your key partners expanding their efforts. Do you expect other large payers to adopt similar programs? And I guess the follow-on question on that is, why wouldn't they?

Well, I think you're asking the right question. I -- we think that you can clearly see United is really made at the investment level, too. And we certainly think it's an incredible program. When you think about it, we're part of Level2, DexCom, and when you look at the offering that they can provide by lowering costs for self-insured employers, for a population where expenses are growing dramatically, it seems to make sense and it seems to be a differentiator in terms of a market advantage for United. So why others wouldn't? I think over time, I think you'll see it happen. I do think that United has been on the forefront in terms of analytics and really providing the actuarial research to determine the benefits associated with moving towards the CGM. I think others will see it and really realize, wow, this is an incredible opportunity. You can see it in other -- some of our partners as well, where you see the cost coming out of the system. You see these coaching apps for diabetes, whether it's Livongo, Teladoc now or others, where folks are using these apps in conjunction with the CGM to help take costs out of self-insured programs. So the one thing that United has is they not only are the app, they're also the payer. And so they have both of it. And so it seems like a natural synergy for some of these other payers to follow suit because not only can they deliver the experience, they can also reap the benefits and/or the savings. We'll see. I think we obviously have historically partnered with everybody intentionally because we think there's multiple different ways you can ultimately curve it. But what we do know is that CGM is at the center of these.

And is it your expectation that you're going to see more of these programs from big payers come up over the next year or 2?

In some form or fashion, whether they are doing it themselves or whether they're partnering with an app or whether they're partnering with a provider, our expectation is, yes, over time, you start to see these programmatic approaches. We're taking it -- if you think about the way we thought about it is we've thought about providers in terms of Intermountain Healthcare, really providing the coverage model. That's one path. Thought about payers, United and some of the other payers out there. Certainly, the patients. All of these are ultimately going to come in and play in this space. Who ultimately wins? Great question. But at the end of the day, we do know that costs come out of the system when folks are aware of what their glucose levels are and ultimately allows them to change their habits. And so we expect whether it's directly with the payers or providers supporting them or patients demanding it, there's going to be quite a bit of, we believe, demand for CGM in this space.

Okay. Jumping to new market opportunities. There was a flurry of interest in hospital use during the height of COVID. I'm just wondering, do you have an active trial in this setting that would lead to FDA approval?

Yes. So we don't have an active trial. There's various other -- there's various studies going on for efficiency in the hospital that are taking place. It's not your typical pivotal trials for FDA approval, but it's ultimately out there capturing data to measure efficiency. We also started that hospital registry you may have seen us put out there, which is our way of collecting data during these COVID stays in the hospital. That data is going to help provide a good data point ultimately for eventually getting in front of the FDA and understanding what needs to be done to get approval. So that's one of the -- I don't want to say it's a great thing. It's obviously -- COVID-19 has afflicted all of us, and it's terrible. We're very happy to help during this period in providing CGMs and really trying to find a way to reduce the exposure and the amount of PPE that was used, especially early on in the pandemic. But the one, I'd say, at least interesting thing that's come out of it is, is people love it. It's a timesaver. It's a safety measure. It's all of that. And one of the things that was important during this is was us capturing that data because that data then helps us determine what the FDA would ultimately require. And we are capturing that data as we speak through that registry. So I think that's certainly a good thing. I don't know that we have a pending clinical trial right now. And I think there's some workflow changes that we're going to have to probably do to make it a real more -- a real viable long-term product, which is how do we integrate it with the workflow in the hospital as opposed to have it as a personal use product that just happens to sit in the hospital environment. But I think getting that data is going to be an incredible accelerant for us getting in front of the FDA and demonstrating a valid product.

So there's -- if I'm hearing you right, there's a potential that this registry data could be used for an FDA clearance?

Either -- well, I don't know if it will be used for an FDA clearance, but it will certainly pave the way in our discussions with the FDA of what is required. What that looks like is going to be that partnership. But when you have data and you can sit in front of the FDA, it makes the conversations much, much easier.

Okay. And I apologize if I missed this, Jereme. When will you have enough data from this registry? Or is that a discussion with the FDA ongoing?

It's more of the latter, right? As the data comes off, we're capturing it, looking at it, better understanding it, trying to understand the accuracy relative to any sort of drug interference or otherwise. As that data continues to come off, that's really the conversation with the FDA. How much do we need? What do you need to see? But those are the conversations that are going on today with the FDA. So our team is in contact with them, letting them know what we're doing. And I think that helps us kind of frame, which, quite frankly, would be an absolutely new approval for a product in this space that would likely have been a much longer time frame absent having this kind of temporary approval.

Right. Where do we stand with gestational?

Still working on getting contraindication pulled off. Certainly, the CE Mark in EMEA was recently approved. So we certainly are making progress there. Still working on the U.S. the contraindication on gestation. It was because we didn't run necessarily a trial on G6. So we'll do that and then ultimately, we'll get into that market eventually.

Okay. And you've talked about new markets going from a relatively small revenue contribution today to north of 600 through the LRP. Is that largely driven by G7? Or is it more of a G6-driven product?

It's a little bit of both. So certainly, by 2025, we assumed G7 would be out there. We think G6 works today, and it works in the type 2 environment, and you can certainly see it with our programs with United. We do believe though that G7 does help, right? I mean as you have G6, which is a reusable product, you reuse the transmitter. We fashioned it in a way that it can be disposable based on designing costs out of the product. G7 truly is a disposable product. So I think G7 will help in that sort of -- it's not a G6 or G7 question. I think it's really a market adoption question to which G7 lowers those barriers to adoption. And so that's the way we've generally thought about it. Of course, in 2025, G7 will be up and running in mass production. So clearly, it's a major contributor. But I don't think we're letting the launch of G7 hold us back from all of our big aspirations in this market.

Okay. I'm curious, you've talked about connected devices quite a bit in the past. Just wondering when you look over the -- look out over the next few years, how do you see the adoption of connected pens?

We're very excited about it. We've been partnering with Lilly and Novo for some time. A lot of our patients that come on to our CGM now are MDI. They're not on pumps. You rewind back in the day, and a lot of folks that were on CGM were on pumps. And what you're finding is more and more folks are migrating. And in the event that you are using a pen and you want to use the connection of a CGM to help dose and to help measure and keep track of ultimately how your glucose levels modulate over time, we think that, that ecosystem can be very, very valuable. And for folks that don't want to be on a pump or systems in which pumps just simply are not economically feasible, especially as you get out to Europe and other OUS countries where reimbursement for pumps is a little harder to come by, the adoption of pens in these markets, especially with the simple addition of a connected pen with Bluetooth capability, which relatively lower cost to produce, we think it can yield some incredible outcomes, at the same time, while driving lower costs in these systems. So very excited. Clearly, the pumps have done incredibly well. You can certainly see Tandem and Insulet, they're doing incredibly well on the pump side and really looking to connect certainly with Omnipod 5 in the future. But there certainly is a future for these pens. And we're looking forward to it. And we think it helps the patient regardless. Think connectivity and really understanding what your glucose levels are in all situations really helps the capability of the patient to manage their type 1 diabetes or type 2 intensive diabetes.

Okay. You mentioned last week, there's -- I think the quote was, there's no question that we're going to be measuring other analytes on this platform over time. So the question is how difficult is this to do? Do you view this as additional revenue stream? And then kind of what's the timeline on these efforts? You can blame Quentin for throwing it out there.

Yes. Yes, we'll blame Quentin for it. No, but I think it's -- if you think about the platform and the platform is really a sensing platform with a back-end to manage it, right? And then having the expertise of understanding how essentially glucose oxide ultimately then drives or anything in your interstitial fluid, right? And I think that's where you have this kind of infrastructure behind it. So we've got the infrastructure to measure and to sense what's going on in the body. So I think the big question then becomes, what do you sense -- what is the interaction? And what does it ultimately solve? And I think that's where -- we know there's other analytes. We've got folks in there, and I won't get into specifics, but they're already making things that can sense things. I'll keep it vague. I realize that's incredibly big. But could it be additional revenue? Potentially. I think the big question we ask is what is the market issue we're trying to solve? And we know that glucose is a huge untapped market. And so we, first and foremost, focus on glucose and its application up and down the chain. And we'll continue to focus on that. As you think about other analytes, whether you want to call it, ketones, lactate, you can look at those. I think the big question we still have yet to solve is what is the market you're trying to solve for? How big is that market? And is that where you focus? And I think to the extent we find that market, Jayson, and we realize, okay, this is a market, then you're right, it would be incremental revenue over time. It really is not based in our -- we don't have anything really contributing from that in our new markets with LRP that we can call upside.

Okay. Gentlemen, thank you for the time. I think we're bumping up against our allotted time here. This has been great. I think we covered a lot. And so we certainly appreciate your participation here today. So thanks, Jereme. Thanks, Sean.

Thanks, Jayson. Appreciate it.

Thanks, Jayson.