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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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33-0857544
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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6340 Sequence Drive
San Diego, California
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92121
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(Address of Principal Executive Offices)
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(Zip Code)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $0.001 Par Value Per Share
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The NASDAQ Stock Market LLC
(Nasdaq Global Select Market)
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Preferred Stock Purchase Rights
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The NASDAQ Stock Market LLC
(Nasdaq Global Select Market)
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Class
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Outstanding at February 14, 2014
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Common stock, $0.001 par value per share
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72,810,396 shares
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Page
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PART I
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ITEM 1.
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Business
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ITEM 1A.
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Risk Factors
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ITEM 1B.
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Unresolved Staff Comments
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ITEM 2.
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Properties
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ITEM 3.
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Legal Proceedings
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ITEM 4.
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Mine Safety Disclosures
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PART II
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ITEM 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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ITEM 6.
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Selected Financial Data
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ITEM 7.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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ITEM 7A.
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Quantitative and Qualitative Disclosures about Market Risk
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ITEM 8.
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Consolidated Financial Statements and Supplementary Data
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ITEM 9.
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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ITEM 9A.
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Controls and Procedures
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ITEM 9B.
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Other Information
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PART III
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ITEM 10.
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Directors, Executive Officers and Corporate Governance
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ITEM 11.
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Executive Compensation
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ITEM 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters
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ITEM 13.
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Certain Relationships and Related Transactions, and Director Independence
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ITEM 14.
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Principal Accounting Fees and Services
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PART IV
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ITEM 15.
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Exhibits, Financial Statement Schedules
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ITEM 1.
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BUSINESS
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an improved sensor wire design that allows more scalable manufacturing;
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a smaller, sleeker receiver that is capable of displaying data in color;
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a new transmitter design that offers improved communication range with the receiver that allows for improved data capture;
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additional user interface and algorithm enhancements that are intended to make the user experience more customizable and to make its glucose monitoring function more accurate especially in the hypoglycemic range; and
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the ability to market and sell to an expanded customer population due to the approval by the FDA of, and our obtaining a CE Mark for, a Pediatric Indication,
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Limited Information.
Even if people with diabetes test several times each day, each measurement represents a single blood glucose value at a single point in time. Given the many factors that can affect blood glucose levels, excursions above and below the normal range often occur between these discrete measurement points in time. Because people with diabetes only have single-point data, they do not gain sufficient information to indicate the direction or rate of change in their blood glucose levels. Without the ability to determine whether their blood glucose level is rising, falling or holding constant, and the rate at which their blood glucose level is changing, the individual’s ability to effectively manage and maintain blood glucose levels within normal ranges is severely limited. Further, people with diabetes cannot test themselves during sleep, when the risk of hypoglycemia is significantly increased. In addition, existing technology generally limits individuals’ ability to store their glucose data in servers or systems independent of the blood glucose meter.
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Inconvenience.
The process of measuring blood glucose levels with single-point finger stick devices can cause significant disruption in the daily activities of people with diabetes and their families. People with diabetes using single-
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Difficulty of Use.
To obtain a sample with single-point finger stick devices, people with diabetes generally prick one of their fingertips or, occasionally, a forearm with a lancet. They then squeeze the area to produce the blood sample and another prick may be required if a sufficient volume of blood is not obtained the first time. The blood sample is then placed on a disposable test strip that is inserted into a blood glucose meter. This task can be difficult for individuals with decreased tactile sensation and visual acuity, which are common complications of diabetes.
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Pain.
Although the fingertips are rich in blood flow and provide a good site to obtain a blood sample, they are also densely populated with highly sensitive nerve endings. This makes the lancing and subsequent manipulation of the finger to draw blood painful. The pain and discomfort are compounded by the fact that fingers offer limited surface area, so tests are often performed on areas that are sore from prior tests. People with diabetes may also suffer pain when the finger prick site is disturbed during regular activities.
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Improved Outcomes.
Data published in a peer-reviewed article based on our approval support trial for our first system demonstrated that patients using the system showed statistically significant improvements in maintaining their glucose levels within the target range when compared to patients relying solely on single-point finger stick measurements. Additional peer-review published data from our trial for the SEVEN demonstrated that patients with access to seven days of continuous glucose data statistically improved glucose control by further increasing their time spent with glucose levels in the target range, thereby reducing time spent in both hyperglycemic and hypoglycemic ranges. Peer-review published data from our repeated use trial demonstrated a statistically significant reduction in hemoglobin A1c levels, a measure of the average amount of glucose in the blood over the prior three months, in patients using our system compared to patients relying solely on single-point finger stick measurements. Finally, results of a major multicenter clinical trial funded by the Juvenile Diabetes Research Foundation demonstrated that patients with Type 1 diabetes who used continuous glucose monitoring devices to help manage their disease experienced significant improvements in glucose control.
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Access to Real-Time Values, Trend Information and Alerts.
At the push of a button, people with diabetes can view their current glucose value, along with a graphical display of one-, three-, six-, twelve- or twenty-four-hour trend information. Without continuous monitoring, the individual is often unaware if his or her glucose is rising, declining or remaining constant. Access to continuous real-time glucose measurements provides people with diabetes information that may aid in attaining better glucose control. Additionally, our G4 PLATINUM alerts people with diabetes when their glucose levels approach inappropriately high or low levels so that they may intervene.
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Intuitive User Interface.
We have developed a user interface that we believe is intuitive and easy to use. The G4 PLATINUM receiver’s compact design includes user-friendly buttons, an easy-to-read color display, simple navigation tools, audible alerts and graphical display of trend information.
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Convenience and Comfort.
Our G4 PLATINUM provides people with diabetes with the benefits of continuous monitoring, without having to perform finger stick tests for every measurement. Additionally, the disposable sensor electrode that is inserted under the skin is a very thin wire, minimizing potential discomfort associated with inserting or wearing the disposable sensor. The external portion of the sensor, including the transmitter, is small, has a low profile and is designed to be easily worn under clothing. The wireless receiver is the size of a small digital music player and
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Establish our technology platform as the leading approach to continuous glucose monitoring and leverage our development expertise to rapidly bring products to market.
We have developed proprietary core technology and expertise that provides a broad platform for the development of innovative products for continuous glucose monitoring. We received approval from the FDA and commercialized our first product in 2006. In 2007, we received approval and began commercializing our second generation system, the SEVEN. In 2009 we received approval for our third generation system, the SEVEN PLUS, which is designed for up to seven days of continuous use, and we began commercializing this product in the first quarter of 2009. On October 5, 2012, we received approval from the FDA for our fourth generation system, the DexCom G4 PLATINUM, which is designed for up to seven days of continuous use, and we began commercializing this product in the U.S. in the fourth quarter of 2012. We plan to continue to invest in the development of our technology platform and to obtain additional FDA approvals for our continuous glucose monitoring systems for both the ambulatory and in-hospital markets as well as for our integrated insulin pump delivery systems. We expect to continue to provide performance improvements, expanded indications and introduce new products to establish and maintain a leadership position in the market. In the future, we may develop our technology to support applications beyond glucose sensing.
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Drive the adoption of our ambulatory products through a direct sales and marketing effort.
We have a small direct field sales force to call on endocrinologists, physicians and diabetes educators who can educate and influence patient adoption of continuous glucose monitoring. In addition, the FDA’s approval of a Pediatric Indication for the G4 PLATINUM in February 2014 will allow our direct field sales force to call on pediatric endocrinologists and pediatricians who can educate and influence parents to adopt continuous glucose monitoring for their children aged two years or older with diabetes. We believe that focusing efforts on these participants is important given the instrumental role they each play in the decision-making process for diabetes therapy. To complement our sales efforts, we have entered into distribution arrangements that allow distributors to sell our G4 PLATINUM. We currently sell the G4 PLATINUM only in the United States, Australia, New Zealand and in portions of Europe, Latin America and the Middle East, but plan to expand our sales elsewhere in the future.
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Drive additional adoption through technology integration partnerships.
We have development agreements with Animas and Tandem to develop products that will integrate our ambulatory product technology into the Animas conventional insulin pump, and the Tandem t:slim system, as applicable, enabling the partner’s insulin pump to receive glucose readings from our transmitter and display this information on the pump’s screen. We believe people with diabetes who have adopted continuous subcutaneous insulin infusion (“CSII”) are individuals who more aggressively manage their diabetes and may be more inclined to utilize our continuous glucose monitoring systems.
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Seek broad coverage policies and reimbursement for our products.
Our approved products are not reimbursed by virtue of a national coverage decision by Medicare. As of February 2014, the seven largest private third-party payors, in terms of the number of covered lives, have issued coverage policies for the category of continuous glucose monitoring devices. Many of these coverage policies, however, are restrictive in nature and require the policy holder to comply with extensive documentation and other requirements to demonstrate medical necessity under the policy. We have
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Drive increased utilization and adoption of our products through a cloud-based data repository platform.
Through our acquisition of SweetSpot, we hope to develop a software platform that enables people with diabetes to aggregate and analyze data from numerous diabetes devices and share the data with their healthcare providers. We believe that by producing reports detailing metrics such as the individual’s glycemic variability that may be shared with physicians and caregivers will lead to better health outcomes, and we expect that as more people with diabetes adopt our system, that utilization of our sensors will increase.
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Expand the use of our products to other patient care settings and patient demographics.
On February 3, 2014, the FDA approved a Pediatric Indication for the G4 PLATINUM, enabling us to market and sell that system in the United States to persons two years old and older who have diabetes. We believe our sensor technology may also be beneficial to women who develop gestational diabetes during their pregnancy and we intend to seek approval for a pregnancy indication in the future. We believe there is an unmet medical need for continuous glucose monitoring in the hospital setting. According to the ADA, diabetes related hospitalizations totaled 24.3 million days in 2007, an increase of 7.4 million days from 2002. In addition, studies show that many hospital patients without diabetes suffer episodes of hyperglycemia. As of 1998, as many as 1.5 million hospitalized patients in the United States had significant hyperglycemia without a history of diabetes. A study of over 1,500 hospitalized patients, of which only 13% had a history of diabetes, concluded that intensive insulin therapy to maintain blood glucose levels reduced mortality among critically ill patients in the surgical intensive care unit and improved patient outcomes. To address this patient population, we entered into an exclusive agreement with Edwards to develop jointly and market a specific product platform for the in-hospital critical care glucose monitoring market.
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Provide a high level of customer support, service and education.
We support our sales and marketing efforts with a customer service program that includes customer training and support. We provide direct technical support by telephone 24 hours a day in the U.S. and Canada to customers, endocrinologists, physicians and diabetes educators to promote safe and successful use of our products.
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Pursue the highest safety and quality levels for our products.
We have established an organization that is highly focused on product quality and customer safety. We have developed in-house engineering, quality assurance, clinical and regulatory expertise, and data analysis capabilities. Additionally, we seek to continue to establish credible and open relationships with regulatory bodies, physician opinion leaders and scientific experts. These capabilities and relationships will assist us in designing products that we believe will meet or exceed expectations for reliable, safe performance.
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an improved sensor wire design that allows more scalable manufacturing,
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a smaller, sleeker receiver that is capable of displaying data in color,
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a new transmitter design that offers improved communication range with the receiver which allows for improved data capture,
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additional user interface and algorithm enhancements that are intended to make the user experience more customizable and to make its glucose monitoring function more accurate especially in the hypoglycemic range, and
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the ability to market and sell to an expanded patient population due to the approval by the FDA of, and our obtaining a CE Mark for, a Pediatric Indication.
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creating awareness of the benefits of continuous glucose monitoring and the advantages of our technology with endocrinologists, physicians, diabetes educators and people with diabetes;
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providing strong and simple educational and training programs to healthcare providers and people with diabetes to ensure easy, safe and effective use of our systems; and
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maintaining a readily accessible telephone and web-based technical and customer support infrastructure, which includes clinicians, diabetes educators and reimbursement specialists, to help referring physicians, diabetes educators and people with diabetes as necessary.
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recruit and retain adequate numbers of effective sales personnel;
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effectively train our sales personnel in the benefits of our products;
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establish and maintain successful sales, marketing, training and education programs that encourage endocrinologists, physicians and diabetes educators to recommend our products to their patients; and
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manage geographically disbursed operations.
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significantly greater name recognition;
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established relations with healthcare professionals, customers and third-party payors;
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established distribution networks;
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additional lines of products, and the ability to offer rebates or bundle products to offer higher discounts or incentives to gain a competitive advantage;
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greater experience in conducting research and development, manufacturing, clinical trials, obtaining regulatory approval for products and marketing approved products; and
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greater financial and human resources for product development, sales and marketing, and patent litigation.
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safe, reliable and high quality performance of products;
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cost of products and eligibility for reimbursement;
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comfort and ease of use;
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effective sales, marketing and distribution;
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brand awareness and strong acceptance by healthcare professionals and people with diabetes;
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customer service and support and comprehensive education for people with diabetes and diabetes care providers;
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speed of product innovation and time to market;
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regulatory expertise; and
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technological leadership and superiority.
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our systems may not be safe or effective to the FDA’s satisfaction;
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the data from our pre-clinical studies and clinical trials may be insufficient to support approval;
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the manufacturing process or facilities we use may not meet applicable requirements; and
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changes in FDA approval policies or adoption of new regulations may require additional data.
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the FDA or other regulatory authorities do not approve a clinical trial protocol or a clinical trial, or place a clinical trial on hold;
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patients do not enroll in clinical trials at the rate we expect;
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patients do not comply with trial protocols;
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patient follow-up is not at the rate we expect;
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patients experience adverse side effects;
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patients die during a clinical trial, even though their death may not be related to our products;
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institutional review boards and third-party clinical investigators may delay or reject our trial protocol;
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third-party clinical investigators decline to participate in a trial or do not perform a trial on our anticipated schedule or consistent with the clinical trial protocol, good clinical practices or other FDA requirements;
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the company or third-party organizations do not perform data collection, monitoring and analysis in a timely or accurate manner or consistent with the clinical trial protocol or investigational or statistical plans;
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third-party clinical investigators have significant financial interests related to the Company or study that FDA deems to make the study results unreliable, or the Company or investigators fail to disclose such interests;
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regulatory inspections of our clinical trials or manufacturing facilities, which may, among other things, require us to undertake corrective action or suspend or terminate our clinical trials;
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changes in governmental regulations or administrative actions applicable to our trial protocols;
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the interim or final results of the clinical trial are inconclusive or unfavorable as to safety or efficacy; and
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the FDA concludes that our trial design is inadequate to demonstrate safety and efficacy.
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establishment registration and device listing;
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QSR, which requires manufacturers to follow design, testing, control, storage, supplier/contractor selection, complaint handling, documentation and other quality assurance procedures;
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labeling regulations, which prohibit the promotion of products for unapproved or off-label uses or indications and impose other restrictions on labeling, advertising and promotion;
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medical device reporting regulations, which require that manufacturers report to the FDA if a device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to recur;
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voluntary and mandatory device recalls to address problems when a device is defective and/or could be a risk to health; and
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corrections and removal reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health.
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warning letters or untitled letters that require corrective action;
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fines and civil penalties;
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unanticipated expenditures;
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delays in approving or refusal to approve our future continuous glucose monitoring systems or other products;
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FDA refusal to issue certificates to foreign governments needed to export our products for sale in other countries;
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suspension or withdrawal of FDA approval;
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product recall or seizure;
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interruption of production;
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operating restrictions;
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injunctions; and
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criminal prosecution.
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ITEM 1A.
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RISK FACTORS
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the approval to sell our G4 system in the European Union, Australia, New Zealand, and the countries in Asia and Latin America that recognize our CE Mark in June 2012 and approval for our G4 PLATINUM system in the United States in October 2012 means that we have limited experience selling our new G4 system;
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the recent approval for a Pediatric Indication of our G4 PLATINUM system in the United States, European Union, Australia, New Zealand and the countries in Asia and Latin America that recognize our CE Mark means that we have limited experience selling and marketing the DexCom G4 PLATINUM system to persons aged two to 17 years or their legal guardians;
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widespread market acceptance of our products by physicians and people with diabetes will largely depend on our ability to demonstrate their relative safety, efficacy, reliability, cost-effectiveness and ease of use;
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the limited size of our sales force and our relative inexperience in marketing, selling and distributing our products;
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we may not have sufficient financial or other resources to adequately expand the commercialization efforts for our products;
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our FDA and other regulatory submissions may be delayed, or approved with limited product labeling;
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we may not be able to manufacture our products in commercial quantities or at an acceptable cost;
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people with diabetes do not generally receive broad reimbursement from third-party payors for their purchase of our products since many payors require that a policy holder meet specific medical criteria to qualify for reimbursement, which may reduce widespread use of our products;
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the uncertainties associated with establishing and qualifying new manufacturing facilities;
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our systems are not labeled as a replacement for the information that is obtained from single-point finger stick devices;
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people with diabetes will need to incur the costs of our systems in addition to single-point finger stick devices;
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the relative immaturity of the continuous glucose monitoring market internationally, and the general absence of international reimbursement of continuous glucose monitoring devices by third-party payors and government healthcare providers outside the United States;
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the introduction and market acceptance of competing products and technologies;
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our inability to obtain sufficient quantities of supplies at appropriate quality levels from our single-source and other key suppliers;
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our inability to manufacture products that perform in accordance with expectations of consumers; and
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rapid technological change may make our technology and our products obsolete.
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the revenue generated by sales of our products and other future products;
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the costs, timing and risks of delay of additional regulatory approvals;
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the expenses we incur in manufacturing, developing, selling and marketing our products;
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our ability to scale our manufacturing operations to meet demand for our current and any future products;
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the costs to produce our continuous glucose monitoring systems;
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the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;
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the rate of progress and cost of our clinical trials and other development activities;
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the success of our research and development efforts;
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the emergence of competing or complementary technological developments;
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the terms and timing of any collaborative, licensing and other arrangements that we may establish; and
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the acquisition of businesses, products and technologies, although we currently have no commitments or agreements relating to any of these types of transactions.
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recruit and retain adequate numbers of effective and experienced sales personnel;
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effectively train our sales personnel in the benefits and risks of our products;
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establish and maintain successful sales, marketing and education programs that educate endocrinologists, physicians and diabetes educators so they can appropriately inform their patients about our products; and
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manage geographically disbursed sales and marketing operations.
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the system may not be deemed by the FDA to be substantially equivalent to appropriate predicate devices;
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the system may not satisfy the FDA's safety or efficacy requirements;
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the data from pre-clinical studies and clinical trials may be insufficient to support approval;
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the manufacturing process or facilities used may not meet applicable requirements; and
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changes in FDA approval policies or adoption of new regulations may require additional data.
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the FDA or other regulatory authorities do not approve a clinical trial protocol or a clinical trial, or place a clinical trial on hold;
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patients do not enroll in clinical trials at the rate we expect;
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patients do not comply with trial protocols;
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patient follow-up does not occur at the rate we expect;
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patients experience adverse side effects;
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patients die during a clinical trial, even though their death may not be related to our products;
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institutional review boards (“IRBs”) and third-party clinical investigators may delay or reject our trial protocol;
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third-party clinical investigators decline to participate in a trial or do not perform a trial on our anticipated schedule or consistent with the investigator agreements, clinical trial protocol, good clinical practices or other FDA or IRB requirements;
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the company or third-party organizations do not perform data collection, monitoring and analysis in a timely or accurate manner or consistent with the clinical trial protocol or investigational or statistical plans;
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third-party clinical investigators have significant financial interests related to the company or study that FDA deems to make the study results unreliable, or the company or investigators fail to disclose such interests;
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regulatory inspections of our clinical trials or manufacturing facilities may, among other things, require us to undertake corrective action or suspend or terminate our clinical trials;
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changes in governmental regulations, policies or administrative actions applicable to our trial protocols;
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the interim or final results of the clinical trial are inconclusive or unfavorable as to safety or efficacy; and
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the FDA concludes that our trial design is inadequate to demonstrate safety and efficacy.
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billing for services;
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financial relationships with physicians and other referral sources;
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inducements and courtesies given to physicians and other health care providers and patients;
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labeling products;
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quality of medical equipment and services;
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confidentiality, maintenance and security issues associated with medical records and individually identifiable health information;
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medical device reporting;
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anti-kickback:
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any scheme to defraud any healthcare benefit program;
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physician payment disclosure requirements;
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false claims; and
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professional licensure.
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we may not be able to obtain adequate supply in a timely manner or on commercially reasonable terms;
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our products are technologically complex and it is difficult to develop alternative supply sources;
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we are not a major customer of many of our suppliers, and these suppliers may therefore give other customers' needs higher priority than ours;
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our suppliers may make errors in manufacturing components that could negatively affect the efficacy or safety of our products or cause delays in shipment of our products;
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we may have difficulty locating and qualifying alternative suppliers for our single-source supplies;
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switching components may require product redesign and submission to the FDA of a PMA supplement or possibly a separate PMA, either of which could significantly delay production;
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our suppliers manufacture products for a range of customers, and fluctuations in demand for the products these suppliers manufacture for others may affect their ability to deliver components to us in a timely manner;
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our suppliers may make obsolete components that are critical to our products; and
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our suppliers may encounter financial hardships unrelated to our demand for components, including those related to changes in global economic conditions, which could inhibit their ability to fulfill our orders and meet our requirements.
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warning letters or untitled letters that require corrective action;
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delays in approving or refusal to approve our continuous glucose monitoring systems;
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fines and civil penalties;
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unanticipated expenditures;
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FDA refusal to issue certificates to foreign governments needed to export our products for sale in other countries;
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suspension or withdrawal of approval by the FDA or other regulatory bodies;
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product recall or seizure;
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interruption of production;
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operating restrictions;
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injunctions; and
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criminal prosecution.
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significantly greater name recognition;
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established relations with healthcare professionals, customers and third-party payors;
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established distribution networks;
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additional lines of products, and the ability to offer rebates or bundle products to offer higher discounts or incentives to gain a competitive advantage;
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greater experience in conducting research and development, manufacturing, clinical trials, obtaining regulatory approval for products and marketing approved products; and
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greater financial and human resources for product development, sales and marketing, and patent litigation.
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securities analyst coverage or lack of coverage of our common stock or changes in their estimates of our financial performance;
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variations in quarterly operating results;
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future sales of our common stock by our stockholders;
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investor perception of us and our industry;
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announcements by us or our competitors of significant agreements, acquisitions or capital commitments;
|
•
|
changes in market valuation or earnings of our competitors;
|
•
|
general economic conditions;
|
•
|
regulatory actions;
|
•
|
legislation and political conditions; and
|
•
|
terrorist acts.
|
•
|
our inability to manufacture an adequate supply of product at appropriate quality levels and acceptable costs;
|
•
|
possible delays in our research and development programs or in the completion of any clinical trials;
|
•
|
a lack of acceptance of our products in the marketplace by physicians and people with diabetes;
|
•
|
the inability of customers to receive reimbursements from third-party payors;
|
•
|
failures to comply with regulatory requirements, which could lead to withdrawal of products from the market;
|
•
|
our failure to continue the commercialization of any of our continuous glucose monitoring systems;
|
•
|
competition;
|
•
|
inadequate financial and other resources; and
|
•
|
global economic conditions.
|
•
|
our Board of Directors may, without stockholder approval, issue shares of preferred stock with special voting or economic rights;
|
•
|
our stockholders do not have cumulative voting rights and, therefore, each of our directors can only be elected by holders of a majority of our outstanding common stock;
|
•
|
a special meeting of stockholders may only be called by a majority of our Board of Directors, the Chairman of our Board of Directors, or our Chief Executive Officer;
|
•
|
our stockholders may not take action by written consent;
|
•
|
our Board of Directors is divided into three classes, only one of which is elected each year; and
|
•
|
we require advance notice for nominations for election to the Board of Directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS
|
ITEM 2.
|
PROPERTIES
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
|
|
High
|
|
Low
|
||||
Year Ended December 31, 2013
|
|
|
|
|
||||
First Quarter
|
|
$
|
17.16
|
|
|
$
|
13.69
|
|
Second Quarter
|
|
$
|
22.97
|
|
|
$
|
15.04
|
|
Third Quarter
|
|
$
|
29.24
|
|
|
$
|
21.76
|
|
Fourth Quarter
|
|
$
|
35.97
|
|
|
$
|
26.68
|
|
|
|
High
|
|
Low
|
||||
Year Ended December 31, 2012
|
|
|
|
|
||||
First Quarter
|
|
$
|
11.90
|
|
|
$
|
8.64
|
|
Second Quarter
|
|
$
|
13.20
|
|
|
$
|
9.36
|
|
Third Quarter
|
|
$
|
15.08
|
|
|
$
|
10.65
|
|
Fourth Quarter
|
|
$
|
15.48
|
|
|
$
|
12.03
|
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
|
|
Years Ended December 31,
|
||||||||||||||||||
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
||||||||||
|
|
(in millions, except per share data)
|
||||||||||||||||||
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Product revenue
|
|
$
|
157.1
|
|
|
$
|
93.0
|
|
|
$
|
65.9
|
|
|
$
|
40.2
|
|
|
$
|
18.0
|
|
Development grant and other revenue
|
|
2.9
|
|
|
6.9
|
|
|
10.4
|
|
|
8.4
|
|
|
11.7
|
|
|||||
Total revenue
|
|
160.0
|
|
|
99.9
|
|
|
76.3
|
|
|
48.6
|
|
|
29.7
|
|
|||||
Product cost of sales
|
|
58.1
|
|
|
48.3
|
|
|
36.6
|
|
|
26.1
|
|
|
18.2
|
|
|||||
Development and other cost of sales
|
|
1.8
|
|
|
5.0
|
|
|
3.8
|
|
|
4.1
|
|
|
7.8
|
|
|||||
Total cost of sales
|
|
59.9
|
|
|
53.3
|
|
|
40.4
|
|
|
30.2
|
|
|
26.0
|
|
|||||
Gross profit (deficit)
|
|
100.1
|
|
|
46.6
|
|
|
35.9
|
|
|
18.4
|
|
|
3.7
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and development
|
|
44.8
|
|
|
38.3
|
|
|
29.6
|
|
|
22.0
|
|
|
13.3
|
|
|||||
Selling, general and administrative
|
|
84.2
|
|
|
64.0
|
|
|
51.1
|
|
|
41.7
|
|
|
36.2
|
|
|||||
Total operating expenses
|
|
129.0
|
|
|
102.3
|
|
|
80.7
|
|
|
63.7
|
|
|
49.5
|
|
|||||
Operating loss
|
|
(28.9
|
)
|
|
(55.7
|
)
|
|
(44.8
|
)
|
|
(45.3
|
)
|
|
(45.8
|
)
|
|||||
Interest and other income
|
|
—
|
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
0.3
|
|
|||||
Interest expense
|
|
(0.9
|
)
|
|
(0.2
|
)
|
|
—
|
|
|
(1.5
|
)
|
|
(8.0
|
)
|
|||||
Loss on debt extinguishment upon conversion of convertible debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8.5
|
)
|
|
—
|
|
|||||
Loss before income taxes
|
|
(29.8
|
)
|
|
(55.8
|
)
|
|
(44.7
|
)
|
|
(55.2
|
)
|
|
(53.5
|
)
|
|||||
Income tax expense (benefit)
|
|
—
|
|
|
(1.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net loss
|
|
$
|
(29.8
|
)
|
|
$
|
(54.5
|
)
|
|
$
|
(44.7
|
)
|
|
$
|
(55.2
|
)
|
|
$
|
(53.5
|
)
|
Basic and diluted net loss per share attributable to common stockholders
(1)
|
|
$
|
(0.42
|
)
|
|
$
|
(0.79
|
)
|
|
$
|
(0.68
|
)
|
|
$
|
(0.97
|
)
|
|
$
|
(1.21
|
)
|
Shares used to compute basic and diluted net loss per share attributable to common stockholders
(1)
|
|
71.1
|
|
|
68.7
|
|
|
65.6
|
|
|
56.9
|
|
|
44.3
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
As of December 31,
|
||||||||||||||||||
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash, cash equivalents, and marketable securities
|
|
$
|
54.6
|
|
|
$
|
48.7
|
|
|
$
|
82.0
|
|
|
$
|
47.1
|
|
|
$
|
28.0
|
|
Working capital
|
|
61.0
|
|
|
58.1
|
|
|
89.8
|
|
|
50.2
|
|
|
18.1
|
|
|||||
Total assets
|
|
122.5
|
|
|
106.0
|
|
|
120.5
|
|
|
77.2
|
|
|
46.9
|
|
|||||
Long term obligations
|
|
6.3
|
|
|
9.5
|
|
|
1.3
|
|
|
1.0
|
|
|
46.6
|
|
|||||
Total stockholders’ equity (deficit)
|
|
84.1
|
|
|
77.0
|
|
|
104.5
|
|
|
61.0
|
|
|
(18.4
|
)
|
(1)
|
See Note 2 of the notes to our consolidated financial statements for a description of the method used to compute basic and diluted net loss per share attributable to common stockholders.
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
the revenue generated by sales of our approved products and other future products;
|
•
|
the expenses we incur in manufacturing, developing, selling and marketing our products;
|
•
|
the quality levels of our products and services;
|
•
|
the third-party reimbursement of our products for our customers;
|
•
|
our ability to efficiently scale our manufacturing operations to meet demand for our current and any future products;
|
•
|
the costs, timing and risks of delays of additional regulatory approvals;
|
•
|
the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights, including, but not limited to, defending the patent infringement lawsuit filed against us by Abbott;
|
•
|
the rate of progress and cost of our clinical trials and other development activities;
|
•
|
the success of our research and development efforts;
|
•
|
the emergence of competing or complementary technological developments;
|
•
|
the terms and timing of any collaborative, licensing and other arrangements that we may establish; and
|
•
|
the acquisition of businesses, products and technologies.
|
Contractual Obligations
|
|
Total
|
|
Less
than
1 Year
|
|
1-3
Years
|
|
3-5
Years
|
|
More
than
5 Years
|
||||||||||
Operating leases
|
|
$
|
8.0
|
|
|
$
|
2.7
|
|
|
$
|
5.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Long-term debt
|
|
6.8
|
|
|
2.2
|
|
|
4.6
|
|
|
—
|
|
|
—
|
|
|||||
Purchase commitments
|
|
16.2
|
|
|
16.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
|
$
|
31.0
|
|
|
$
|
21.1
|
|
|
$
|
9.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8.
|
CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
(a)
|
The following documents are filed as part of this Annual Report:
|
Exhibit
Number
|
|
Exhibit Description
|
|
Incorporated by Reference
|
|
Exhibit
Number
|
|
Provided
Herewith
|
||||||
Form
|
|
File No.
|
|
Date of
First Filing
|
|
|||||||||
3.01
|
|
|
Registrant’s Restated Certificate of Incorporation.
|
|
S-1/A
|
|
333-122454
|
|
March 3, 2005
|
|
3.03
|
|
|
|
3.02
|
|
|
Registrant’s Amended and Restated Bylaws.
|
|
8-K
|
|
000-51222
|
|
March 23, 2011
|
|
99.01
|
|
|
|
4.01
|
|
|
Form of Specimen Certificate for Registrant’s common stock.
|
|
S-1/A
|
|
333-122454
|
|
March 24, 2005
|
|
4.01
|
|
|
|
4.02
|
|
|
Second Amended and Restated Investors’ Rights Agreement, dated December 30, 2004.
|
|
S-1
|
|
333-122454
|
|
February 1, 2005
|
|
4.02
|
|
|
|
4.03
|
|
|
Form of Rights Agreement, between DexCom, Inc. and American Stock Transfer & Trust Company, including the Certificate of Designations of Series A Junior Participating Preferred Stock, Summary of Stock Purchase Rights and Forms of Right Certificate attached thereto as Exhibit A, B and C, respectively.
|
|
S-1/A
|
|
000-51222
|
|
March 24, 2005
|
|
4.03
|
|
|
|
10.01
|
|
|
Form of Indemnity Agreement between Registrant and each of its directors and executive officers.
|
|
S-1
|
|
333-122454
|
|
February 1, 2005
|
|
10.01
|
|
|
|
10.02
|
|
|
1999 Stock Option Plan and related agreements.*
|
|
S-1
|
|
333-122454
|
|
February 1, 2005
|
|
10.02
|
|
|
|
10.03
|
|
|
2005 Equity Incentive Plan and forms of stock option agreement and stock option exercise agreements.*
|
|
S-1/A
|
|
000-51222
|
|
March 24, 2005
|
|
10.03
|
|
|
|
10.04
|
|
|
2005 Employee Stock Purchase Plan and form of subscription agreement.*
|
|
S-1/A
|
|
000-51222
|
|
March 24, 2005
|
|
10.04
|
|
|
|
10.05
|
|
|
Agreement Regarding Terms of Sale dated May 23, 2003 between AMI Semiconductor, Inc. and DexCom, Inc.**
|
|
S-1/A
|
|
333-122454
|
|
April 5, 2005
|
|
10.10
|
|
|
|
10.06
|
|
|
Offer letter between DexCom, Inc. and Jorge Valdes dated October 16, 2005.*
|
|
10-K
|
|
000-51222
|
|
February 27, 2006
|
|
10.14
|
|
|
|
10.07
|
|
|
Office Lease Agreement, dated March 31, 2006, between DexCom, Inc. and Kilroy Realty, L.P.
|
|
8-K
|
|
000-51222
|
|
April 7, 2006
|
|
99.01
|
|
|
|
10.08
|
|
|
Offer letter between DexCom, Inc. and Steven R. Pacelli dated April 10, 2006.*
|
|
8-K
|
|
000-51222
|
|
April 13, 2006
|
|
99.01
|
|
|
|
Exhibit
Number
|
|
Exhibit Description
|
|
Incorporated by Reference
|
|
Exhibit
Number
|
|
Provided
Herewith
|
||||||
Form
|
|
File No.
|
|
Date of
First Filing
|
|
|||||||||
10.09
|
|
|
Collaboration Agreement, dated November 10, 2008 between DexCom, Inc. and Edwards Lifesciences LLC.**
|
|
8-K/A
|
|
000-51222
|
|
January 28, 2009
|
|
10.1
|
|
|
|
10.10
|
|
|
Amended and Restated Joint Development Agreement, dated January 12, 2009, between DexCom, Inc. and Animas Corporation.**
|
|
8-K/A
|
|
000-51222
|
|
January 28, 2009
|
|
10.1
|
|
|
|
10.11
|
|
|
OUS Commercialization Agreement, dated January 12, 2009, between DexCom, Inc. and Animas Corporation.**
|
|
8-K/A
|
|
000-51222
|
|
January 28, 2009
|
|
10.2
|
|
|
|
10.12
|
|
|
Form of Amended and Restated Executive Change of Control & Severance Agreement.*
|
|
10-K
|
|
000-51222
|
|
March 5, 2009
|
|
10.20
|
|
|
|
10.13
|
|
|
Amended and Restated Offer Letter Agreement dated December 19, 2008 between DexCom, Inc. and Terrance H. Gregg.*
|
|
10-K
|
|
000-51222
|
|
March 5, 2009
|
|
10.21
|
|
|
|
10.14
|
|
|
Letter Agreement, between Edwards Lifesciences LLC and DexCom, Inc., dated May 5, 2009.
|
|
10-Q
|
|
000-51222
|
|
August 3, 2009
|
|
10.22
|
|
|
|
10.15
|
|
|
Non-Exclusive Distribution Agreement, between RGH Enterprises, Inc. and DexCom, Inc., dated April 30, 2008.**
|
|
10-Q
|
|
000-51222
|
|
August 3, 2009
|
|
10.23
|
|
|
|
10.16
|
|
|
Letter of Amendment of the Amended and Restated Joint Development Agreement, between Animas Corporation and DexCom, Inc., dated July 30, 2009.**
|
|
10-Q
|
|
000-51222
|
|
November 4, 2009
|
|
10.24
|
|
|
|
10.17
|
|
|
Amendment No. 1 to the Commercialization Agreements, between Animas Corporation and DexCom, Inc., dated July 30, 2009.**
|
|
10-Q
|
|
000-51222
|
|
November 4, 2009
|
|
10.25
|
|
|
|
10.18
|
|
|
Amended and Restated Development, Manufacturing, Licensing and Supply Agreement, between DSM PTG, Inc. and DexCom, Inc., dated February 19, 2010.**
|
|
10-K
|
|
000-51222
|
|
March 9, 2010
|
|
10.25
|
|
|
|
10.19
|
|
|
Form of Restricted Stock Unit Award Agreement.
|
|
10-Q
|
|
000-51222
|
|
May 5, 2010
|
|
10.26
|
|
|
|
10.20
|
|
|
First Amendment to Office Lease between DexCom, Inc. and Kilroy Realty, L.P., dated August 18, 2010.
|
|
10-Q
|
|
000-51222
|
|
November 4, 2010
|
|
10.27
|
|
|
|
10.21
|
|
|
2005 Equity Incentive Plan, as amended.*
|
|
10-Q
|
|
000-51222
|
|
May 3, 2011
|
|
10.25
|
|
|
|
10.22
|
|
|
Amendment Number One to Non-Exclusive Distribution Agreement, between RGH Enterprises, Inc. and DexCom, Inc., dated March 29, 2011.**
|
|
10-Q/A
|
|
000-51222
|
|
July 1, 2011
|
|
10.26
|
|
|
|
10.23
|
|
|
Amendment No. 2 to the OUS Commercialization Agreement, between Animas Corporation and DexCom, Inc., dated June 7, 2011.**
|
|
10-Q
|
|
000-51222
|
|
August 3, 2011
|
|
10.27
|
|
|
|
10.24
|
|
|
Offer letter between DexCom, Inc. and Kevin Sayer dated May 3, 2011.*
|
|
10-Q
|
|
000-51222
|
|
August 3, 2011
|
|
10.28
|
|
|
|
10.25
|
|
|
Research and Development Agreement, between Roche Diagnostics Operations, Inc. and DexCom, Inc. dated November 1, 2011.**
|
|
10-K
|
|
000-51222
|
|
February 23, 2012
|
|
10.26
|
|
|
|
Exhibit
Number
|
|
Exhibit Description
|
|
Incorporated by Reference
|
|
Exhibit
Number
|
|
Provided
Herewith
|
||||||
Form
|
|
File No.
|
|
Date of
First Filing
|
|
|||||||||
10.26
|
|
|
Loan and Security Agreement by and among Silicon Valley Bank, Oxford Finance LLC, DexCom, Inc. and SweetSpot Diabetes Care, Inc. dated November 1, 2012.
|
|
10-K
|
|
000-51222
|
|
February 21, 2013
|
|
10.26
|
|
|
|
10.27
|
|
|
Amendment Number Two to Non-Exclusive Distribution Agreement between RGH Enterprises, Inc. and DexCom, Inc., dated March 28, 2013.**
|
|
10-Q
|
|
000-51222
|
|
May 1, 2013
|
|
10.27
|
|
|
|
10.28
|
|
|
Amendment Number Three to Non-Exclusive Distribution Agreement between RGH Enterprises, Inc. and DexCom, Inc., dated December 4, 2013.**
|
|
|
|
|
|
|
|
|
|
X
|
|
10.29
|
|
|
Non-Exclusive Distribution Agreement between Dexcom, Inc. and Diabetes Specialty Center, LLC dated October 12, 2009, as amended on September 30, 2010, October 11, 2011, November 14, 2012 and November 1, 2013.**
|
|
|
|
|
|
|
|
|
|
X
|
|
21.01
|
|
|
List of Subsidiaries.
|
|
|
|
|
|
|
|
|
|
X
|
|
23.01
|
|
|
Consent of Independent Registered Public Accounting Firm.
|
|
|
|
|
|
|
|
|
|
X
|
|
24.01
|
|
|
Power of Attorney. (See page 62 of this Form 10-K).
|
|
|
|
|
|
|
|
|
|
X
|
|
31.01
|
|
|
Certification of Chief Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a).
|
|
|
|
|
|
|
|
|
|
X
|
|
31.02
|
|
|
Certification of Chief Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a).
|
|
|
|
|
|
|
|
|
|
X
|
|
32.01
|
|
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).***
|
|
|
|
|
|
|
|
|
|
X
|
|
32.02
|
|
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).***
|
|
|
|
|
|
|
|
|
|
X
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
|
X
|
||
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
|
|
X
|
||
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
||
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
||
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
||
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
*
|
Represents a management contract or compensatory plan.
|
**
|
Confidential treatment has been requested for certain portions of this document pursuant to an application for confidential treatment sent to the Securities and Exchange Commission. Such portions are omitted from this filing and were filed separately with the Securities and Exchange Commission.
|
***
|
This certification is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that DexCom specifically incorporates it by reference.
|
|
|
|
|
|
|
|
|
|
|
|
DEXCOM, INC.
(Registrant)
|
||
|
|
|
|
|||
Dated: February 20, 2014
|
|
|
|
By:
|
|
/
S
/ J
ESS
R
OPER
|
|
|
|
|
|
|
Jess Roper, Chief Financial Officer
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
||
/
S
/ T
ERRANCE
G
REGG
|
|
Chief Executive Officer and Director
(Principal Executive Officer)
|
|
February 20, 2014
|
Terrance Gregg
|
|
|
|
|
|
|
|
||
/
S
/ K
EVIN
S
AYER
|
|
President, Chief Operating Officer and Director
|
|
February 20, 2014
|
Kevin Sayer
|
|
|
|
|
|
|
|
||
/
S
/ J
ESS
R
OPER
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
|
February 20, 2014
|
Jess Roper
|
|
|
|
|
|
|
|
||
/
S
/ J
ONATHAN
L
ORD
|
|
Chairman of the Board of Directors
|
|
February 20, 2014
|
Jonathan Lord, M.D.
|
|
|
|
|
|
|
|
||
/
S
/ S
TEVE
A
LTMAN
|
|
Director
|
|
February 20, 2014
|
Steve Altman
|
|
|
|
|
|
|
|
||
/S/ N
ICHOLAS
A
UGUSTINOS
|
|
Director
|
|
February 20, 2014
|
Nicholas Augustinos
|
|
|
|
|
|
|
|
||
/
S
/ B
ARBARA
K
AHN
|
|
Director
|
|
February 20, 2014
|
Barbara Kahn
|
|
|
|
|
|
|
|
||
/
S
/ J
AY
S
KYLER
|
|
Director
|
|
February 20, 2014
|
Jay Skyler, M.D.
|
|
|
|
|
|
|
|
||
/
S
/ E
RIC
T
OPOL
|
|
Director
|
|
February 20, 2014
|
Eric Topol, M.D.
|
|
|
|
|
|
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
|
F-2
|
|
Consolidated Balance Sheets
|
|
|
F-3
|
|
Consolidated Statements of Operations
|
|
|
F-4
|
|
Consolidated Statements of Comprehensive Loss
|
|
|
F-5
|
|
Consolidated Statements of Stockholders’ Equity
|
|
|
F-6
|
|
Consolidated Statements of Cash Flows
|
|
|
F-7
|
|
Notes to Consolidated Financial Statements
|
|
|
F-8
|
|
|
/s/ Ernst & Young LLP
|
|
As of December 31,
|
||||||
|
2013
|
|
2012
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
43.2
|
|
|
$
|
8.1
|
|
Short-term marketable securities, available-for-sale
|
11.4
|
|
|
40.6
|
|
||
Accounts receivable, net
|
26.1
|
|
|
19.5
|
|
||
Inventory
|
9.0
|
|
|
7.4
|
|
||
Prepaid and other current assets
|
3.4
|
|
|
2.0
|
|
||
Total current assets
|
93.1
|
|
|
77.6
|
|
||
Property and equipment, net
|
20.7
|
|
|
18.9
|
|
||
Restricted cash
|
1.0
|
|
|
1.0
|
|
||
Intangible assets, net
|
3.6
|
|
|
4.2
|
|
||
Goodwill
|
3.2
|
|
|
3.2
|
|
||
Other assets
|
0.9
|
|
|
1.1
|
|
||
Total assets
|
$
|
122.5
|
|
|
$
|
106.0
|
|
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued liabilities
|
$
|
14.1
|
|
|
$
|
8.7
|
|
Accrued payroll and related expenses
|
15.1
|
|
|
9.2
|
|
||
Current portion of long-term debt
|
2.2
|
|
|
0.2
|
|
||
Current portion of deferred revenue
|
0.7
|
|
|
1.4
|
|
||
Total current liabilities
|
32.1
|
|
|
19.5
|
|
||
Other liabilities
|
1.7
|
|
|
2.1
|
|
||
Long-term debt, net of current portion
|
4.6
|
|
|
6.8
|
|
||
Long-term portion of deferred revenue
|
—
|
|
|
0.6
|
|
||
Total liabilities
|
38.4
|
|
|
29.0
|
|
||
Commitments and contingencies (Note 4)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.001 par value, 5.0 shares authorized; no shares issued and outstanding at December 31, 2013 and December 31, 2012, respectively
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value, 100.0 authorized; 72.8 and 72.5 issued and outstanding, respectively, at December 31, 2013; and 69.7 and 69.5 shares issued and outstanding, respectively, at December 31, 2012
|
0.1
|
|
|
0.1
|
|
||
Additional paid-in capital
|
559.5
|
|
|
522.6
|
|
||
Accumulated other comprehensive loss
|
(0.1
|
)
|
|
(0.1
|
)
|
||
Accumulated deficit
|
(475.4
|
)
|
|
(445.6
|
)
|
||
Total stockholders’ equity
|
84.1
|
|
|
77.0
|
|
||
Total liabilities and stockholders’ equity
|
$
|
122.5
|
|
|
$
|
106.0
|
|
|
Years Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Product revenue
|
$
|
157.1
|
|
|
$
|
93.0
|
|
|
$
|
65.9
|
|
Development grant and other revenue
|
2.9
|
|
|
6.9
|
|
|
10.4
|
|
|||
Total revenue
|
160.0
|
|
|
99.9
|
|
|
76.3
|
|
|||
Product cost of sales
|
58.1
|
|
|
48.3
|
|
|
36.6
|
|
|||
Development and other cost of sales
|
1.8
|
|
|
5.0
|
|
|
3.8
|
|
|||
Total cost of sales
|
59.9
|
|
|
53.3
|
|
|
40.4
|
|
|||
Gross profit
|
100.1
|
|
|
46.6
|
|
|
35.9
|
|
|||
Operating expenses
|
|
|
|
|
|
||||||
Research and development
|
44.8
|
|
|
38.3
|
|
|
29.6
|
|
|||
Selling, general and administrative
|
84.2
|
|
|
64.0
|
|
|
51.1
|
|
|||
Total operating expenses
|
129.0
|
|
|
102.3
|
|
|
80.7
|
|
|||
Operating loss
|
(28.9
|
)
|
|
(55.7
|
)
|
|
(44.8
|
)
|
|||
Interest and other income
|
—
|
|
|
0.1
|
|
|
0.1
|
|
|||
Interest expense
|
(0.9
|
)
|
|
(0.2
|
)
|
|
—
|
|
|||
Loss before income taxes
|
(29.8
|
)
|
|
(55.8
|
)
|
|
(44.7
|
)
|
|||
Income tax expense (benefit)
|
—
|
|
|
(1.3
|
)
|
|
—
|
|
|||
Net loss
|
$
|
(29.8
|
)
|
|
$
|
(54.5
|
)
|
|
$
|
(44.7
|
)
|
Basic and diluted net loss per share
|
$
|
(0.42
|
)
|
|
$
|
(0.79
|
)
|
|
$
|
(0.68
|
)
|
Shares used to compute basic and diluted net loss per share
|
71.1
|
|
|
68.7
|
|
|
65.6
|
|
|
Years Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Net loss
|
$
|
(29.8
|
)
|
|
$
|
(54.5
|
)
|
|
$
|
(44.7
|
)
|
Unrealized gain (loss) on short-term available-for-sale marketable securities
|
—
|
|
|
—
|
|
|
—
|
|
|||
Foreign currency translation gain (loss)
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|||
Comprehensive loss
|
$
|
(29.8
|
)
|
|
$
|
(54.5
|
)
|
|
$
|
(44.8
|
)
|
|
|
Common stock
|
|
Additional
paid-in
capital
|
|
Accumulated
other
comprehensive
income (loss)
|
|
Accumulated
deficit
|
|
Total
stockholders’
equity
|
|||||||||||||
Shares
|
|
Amount
|
|
||||||||||||||||||||
Balance at December 31, 2010
|
|
62.1
|
|
|
$
|
0.1
|
|
|
$
|
407.4
|
|
|
$
|
(0.1
|
)
|
|
$
|
(346.4
|
)
|
|
$
|
61.0
|
|
Issuance of stock in follow-on offering in May 2011 at $15.19 per share for cash, net of offering costs of $0.2
|
|
4.7
|
|
|
—
|
|
|
71.2
|
|
|
—
|
|
|
—
|
|
|
71.2
|
|
|||||
Issuance of common stock under equity incentive plans
|
|
0.6
|
|
|
—
|
|
|
2.2
|
|
|
—
|
|
|
—
|
|
|
2.2
|
|
|||||
Issuance of common stock for Employee Stock Purchase Plan
|
|
0.1
|
|
|
—
|
|
|
1.3
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
|||||
Share-based compensation for employee stock options and award grants
|
|
—
|
|
|
—
|
|
|
13.5
|
|
|
—
|
|
|
—
|
|
|
13.5
|
|
|||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(44.7
|
)
|
|
(44.7
|
)
|
|||||
Balance at December 31, 2011
|
|
67.5
|
|
|
0.1
|
|
|
495.6
|
|
|
(0.1
|
)
|
|
(391.1
|
)
|
|
104.5
|
|
|||||
Issuance of common stock under equity incentive plans
|
|
1.3
|
|
|
—
|
|
|
2.1
|
|
|
—
|
|
|
—
|
|
|
2.1
|
|
|||||
Issuance of common stock for Employee Stock Purchase Plan
|
|
0.2
|
|
|
—
|
|
|
1.5
|
|
|
—
|
|
|
—
|
|
|
1.5
|
|
|||||
Issuance of common stock for SweetSpot acquisition and milestone
|
|
0.5
|
|
|
—
|
|
|
5.0
|
|
|
—
|
|
|
—
|
|
|
5.0
|
|
|||||
Share-based compensation for employee stock options and award grants
|
|
—
|
|
|
—
|
|
|
18.4
|
|
|
—
|
|
|
—
|
|
|
18.4
|
|
|||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(54.5
|
)
|
|
(54.5
|
)
|
|||||
Balance at December 31, 2012
|
|
69.5
|
|
|
0.1
|
|
|
522.6
|
|
|
(0.1
|
)
|
|
(445.6
|
)
|
|
77.0
|
|
|||||
Issuance of common stock under equity incentive plans
|
|
2.8
|
|
|
—
|
|
|
10.2
|
|
|
—
|
|
|
—
|
|
|
10.2
|
|
|||||
Issuance of common stock for Employee Stock Purchase Plan
|
|
0.2
|
|
|
—
|
|
|
1.9
|
|
|
—
|
|
|
—
|
|
|
1.9
|
|
|||||
Share-based compensation for employee stock options and award grants
|
|
—
|
|
|
—
|
|
|
24.8
|
|
|
—
|
|
|
—
|
|
|
24.8
|
|
|||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(29.8
|
)
|
|
(29.8
|
)
|
|||||
Balance at December 31, 2013
|
|
72.5
|
|
|
$
|
0.1
|
|
|
$
|
559.5
|
|
|
$
|
(0.1
|
)
|
|
$
|
(475.4
|
)
|
|
$
|
84.1
|
|
|
Years Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Operating activities
|
|
|
|
|
|
||||||
Net loss
|
$
|
(29.8
|
)
|
|
$
|
(54.5
|
)
|
|
$
|
(44.7
|
)
|
Adjustments to reconcile net loss to cash used in operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
7.0
|
|
|
6.6
|
|
|
3.8
|
|
|||
Share-based compensation
|
24.6
|
|
|
18.4
|
|
|
13.5
|
|
|||
Accretion and amortization related to marketable securities, net
|
0.3
|
|
|
0.8
|
|
|
0.9
|
|
|||
Amortization of debt issuance costs
|
0.4
|
|
|
0.1
|
|
|
—
|
|
|||
Release of valuation allowance against deferred tax assets
|
—
|
|
|
(1.3
|
)
|
|
—
|
|
|||
Change in fair value of contingent consideration
|
2.5
|
|
|
0.7
|
|
|
—
|
|
|||
Other non-cash expenses
|
0.2
|
|
|
—
|
|
|
—
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
(6.5
|
)
|
|
(7.0
|
)
|
|
(5.9
|
)
|
|||
Inventory
|
(1.6
|
)
|
|
0.7
|
|
|
(0.1
|
)
|
|||
Prepaid and other assets
|
(1.4
|
)
|
|
(0.8
|
)
|
|
1.2
|
|
|||
Restricted cash
|
—
|
|
|
(0.1
|
)
|
|
0.8
|
|
|||
Accounts payable and accrued liabilities
|
2.4
|
|
|
0.3
|
|
|
1.0
|
|
|||
Accrued payroll and related expenses
|
5.8
|
|
|
2.4
|
|
|
1.1
|
|
|||
Deferred revenue
|
(1.2
|
)
|
|
0.1
|
|
|
(1.6
|
)
|
|||
Deferred rent and other liabilities
|
(0.3
|
)
|
|
0.5
|
|
|
(0.1
|
)
|
|||
Net cash provided by (used in) operating activities
|
2.4
|
|
|
(33.1
|
)
|
|
(30.1
|
)
|
Investing activities
|
|
|
|
|
|
||||||
Purchase of available-for-sale marketable securities
|
(16.3
|
)
|
|
(66.4
|
)
|
|
(102.7
|
)
|
|||
Proceeds from the maturity of available-for-sale marketable securities
|
45.1
|
|
|
104.3
|
|
|
64.3
|
|
|||
Purchase of property and equipment
|
(7.9
|
)
|
|
(9.5
|
)
|
|
(8.0
|
)
|
|||
Net cash provided by (used in) investing activities
|
20.9
|
|
|
28.4
|
|
|
(46.4
|
)
|
|||
Financing activities
|
|
|
|
|
|
||||||
Net proceeds from issuance of common stock
|
12.0
|
|
|
3.6
|
|
|
74.7
|
|
|||
Net proceeds from issuance of long-term debt
|
—
|
|
|
6.6
|
|
|
—
|
|
|||
Repayment of long-term debt
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|||
Repayment of equipment loan
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
|||
Net cash provided by financing activities
|
11.8
|
|
|
10.2
|
|
|
74.2
|
|
|||
Increase in cash and cash equivalents
|
35.1
|
|
|
5.5
|
|
|
(2.3
|
)
|
|||
Cash and cash equivalents, beginning of period
|
8.1
|
|
|
2.6
|
|
|
4.9
|
|
|||
Cash and cash equivalents, ending of period
|
$
|
43.2
|
|
|
$
|
8.1
|
|
|
$
|
2.6
|
|
Supplemental disclosure of cash flow information
|
|
|
|
|
|
||||||
Cash paid during the year for interest
|
$
|
0.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Supplemental disclosure of non-cash transactions
|
|
|
|
|
|
||||||
Issuance of common stock in connection with acquisition and contingent consideration
|
$
|
—
|
|
|
$
|
6.1
|
|
|
$
|
—
|
|
|
Fair Value Measurements Using
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash equivalents
|
$
|
—
|
|
|
$
|
28.7
|
|
|
$
|
—
|
|
|
$
|
28.7
|
|
Marketable securities, available for sale
|
|
|
|
|
|
|
|
||||||||
U.S. government agencies
|
—
|
|
|
8.9
|
|
|
—
|
|
|
8.9
|
|
||||
Corporate debt
|
—
|
|
|
2.5
|
|
|
—
|
|
|
2.5
|
|
||||
Total marketable securities, available for sale
|
$
|
—
|
|
|
$
|
11.4
|
|
|
$
|
—
|
|
|
$
|
11.4
|
|
Restricted cash
|
$
|
1.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1.0
|
|
Contingent consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4.2
|
|
|
$
|
4.2
|
|
|
Fair Value Measurements Using
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash equivalents
|
$
|
—
|
|
|
$
|
4.5
|
|
|
$
|
—
|
|
|
$
|
4.5
|
|
Marketable securities, available for sale
|
|
|
|
|
|
|
|
||||||||
U.S. government agencies
|
—
|
|
|
31.8
|
|
|
—
|
|
|
31.8
|
|
||||
Corporate debt
|
—
|
|
|
8.0
|
|
|
—
|
|
|
8.0
|
|
||||
Commercial paper
|
—
|
|
|
0.8
|
|
|
—
|
|
|
0.8
|
|
||||
Total marketable securities, available for sale
|
$
|
—
|
|
|
$
|
40.6
|
|
|
$
|
—
|
|
|
$
|
40.6
|
|
Restricted cash
|
$
|
1.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1.0
|
|
Contingent consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1.7
|
|
|
$
|
1.7
|
|
|
Twelve Months Ended
December 31, |
||||||
|
2013
|
|
2012
|
||||
Fair value measurement at the beginning of period
|
$
|
1.7
|
|
|
$
|
—
|
|
Contingent consideration recorded upon acquisition
|
—
|
|
|
2.2
|
|
||
Changes in fair value measurement included in operating expenses
|
2.5
|
|
|
0.6
|
|
||
Contingent consideration settled
|
—
|
|
|
(1.1
|
)
|
||
Fair value measurement at end of period
|
$
|
4.2
|
|
|
$
|
1.7
|
|
|
Years Ended December 31,
|
|||||||
|
2013
|
|
2012
|
|
2011
|
|||
Options outstanding to purchase common stock
|
5.8
|
|
|
7.4
|
|
|
7.8
|
|
Unvested restricted stock units
|
3.6
|
|
|
3.0
|
|
|
1.9
|
|
Total
|
9.4
|
|
|
10.4
|
|
|
9.7
|
|
|
December 31, 2013
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Market
Value
|
||||||||
U.S. government agencies
|
$
|
8.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8.9
|
|
Corporate debt
|
2.5
|
|
|
—
|
|
|
—
|
|
|
2.5
|
|
||||
Total
|
$
|
11.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11.4
|
|
|
December 31, 2012
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Market
Value
|
||||||||
U.S. government agencies
|
$
|
31.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
31.8
|
|
Corporate debt
|
8.0
|
|
|
—
|
|
|
—
|
|
|
8.0
|
|
||||
Commercial paper
|
0.8
|
|
|
—
|
|
|
—
|
|
|
0.8
|
|
||||
Total
|
$
|
40.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
40.6
|
|
|
|
December 31,
|
||||||
|
|
2013
|
|
2012
|
||||
Accounts receivable
|
|
$
|
28.8
|
|
|
$
|
20.7
|
|
Less allowance for doubtful accounts, sales returns and discounts
|
|
(2.7
|
)
|
|
(1.2
|
)
|
||
Total
|
|
$
|
26.1
|
|
|
$
|
19.5
|
|
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
Raw materials
|
$
|
4.8
|
|
|
$
|
2.5
|
|
Work-in-process
|
0.3
|
|
|
0.4
|
|
||
Finished goods
|
3.9
|
|
|
4.5
|
|
||
Total
|
$
|
9.0
|
|
|
$
|
7.4
|
|
|
|
December 31,
|
||||||
|
|
2013
|
|
2012
|
||||
Furniture and fixtures
|
|
$
|
2.6
|
|
|
$
|
2.5
|
|
Computer equipment
|
|
15.2
|
|
|
12.0
|
|
||
Machinery and equipment
|
|
19.0
|
|
|
16.2
|
|
||
Leasehold improvements
|
|
10.5
|
|
|
9.3
|
|
||
Total
|
|
47.3
|
|
|
40.0
|
|
||
Accumulated depreciation and amortization
|
|
(26.6
|
)
|
|
(21.1
|
)
|
||
Property and equipment, net
|
|
$
|
20.7
|
|
|
$
|
18.9
|
|
|
|
Weighted-Average
Amortization Period
(in months)
|
|
Gross
Amount
|
|
Accumulated
Amortization
|
|
Intangible Assets, net
|
||||||
Intangible assets subject to amortization
|
|
|
|
|
|
|
|
|
||||||
Developed technology
|
|
109
|
|
$
|
3.2
|
|
|
$
|
(0.7
|
)
|
|
$
|
2.5
|
|
Customer-related intangible
|
|
70
|
|
0.6
|
|
|
(0.2
|
)
|
|
0.4
|
|
|||
Covenants not-to-compete
|
|
70
|
|
0.6
|
|
|
(0.2
|
)
|
|
0.4
|
|
|||
Total
|
|
|
|
$
|
4.4
|
|
|
$
|
(1.1
|
)
|
|
$
|
3.3
|
|
Intangible assets not subject to amortization
|
|
|
|
|
|
|
|
|
||||||
In-process research and development
|
|
|
|
|
|
|
|
0.2
|
|
|||||
Trademarks and trade names
|
|
|
|
|
|
|
|
0.1
|
|
|||||
Goodwill
|
|
|
|
|
|
|
|
3.2
|
|
|||||
Total
|
|
|
|
|
|
|
|
$
|
3.5
|
|
|
|
Weighted-Average
Amortization Period
(in months)
|
|
Gross
Amount
|
|
Accumulated
Amortization
|
|
Intangible Assets, net
|
||||||
Intangible assets subject to amortization
|
|
|
|
|
|
|
|
|
||||||
Developed technology
|
|
109
|
|
$
|
3.2
|
|
|
$
|
(0.3
|
)
|
|
$
|
2.9
|
|
Customer-related intangible
|
|
70
|
|
0.6
|
|
|
(0.1
|
)
|
|
0.5
|
|
|||
Covenants not-to-compete
|
|
70
|
|
0.6
|
|
|
(0.1
|
)
|
|
0.5
|
|
|||
Total
|
|
|
|
$
|
4.4
|
|
|
$
|
(0.5
|
)
|
|
$
|
3.9
|
|
Intangible assets not subject to amortization
|
|
|
|
|
|
|
|
|
||||||
In-process research and development
|
|
|
|
|
|
|
|
0.2
|
|
|||||
Trademarks and trade names
|
|
|
|
|
|
|
|
0.1
|
|
|||||
Goodwill
|
|
|
|
|
|
|
|
3.2
|
|
|||||
Total
|
|
|
|
|
|
|
|
$
|
3.5
|
|
|
|
||
Fiscal Year Ending
|
|
||
2014
|
$
|
0.6
|
|
2015
|
0.7
|
|
|
2016
|
0.5
|
|
|
2017
|
0.5
|
|
|
2018
|
0.3
|
|
|
Thereafter through 2021
|
0.9
|
|
|
|
|
||
Total
|
$
|
3.5
|
|
|
|
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
Accounts payable trade
|
$
|
4.2
|
|
|
$
|
3.9
|
|
Accrued tax, audit, and legal fees
|
1.2
|
|
|
0.7
|
|
||
Clinical trials
|
0.3
|
|
|
0.1
|
|
||
Accrued other including warranty
|
4.8
|
|
|
2.8
|
|
||
Acquisition-related liabilities
|
3.6
|
|
|
1.2
|
|
||
Total
|
$
|
14.1
|
|
|
$
|
8.7
|
|
|
|
December 31,
|
||||||
|
|
2013
|
|
2012
|
||||
Accrued paid time off
|
|
$
|
2.7
|
|
|
$
|
2.3
|
|
Accrued wages, bonus and taxes
|
|
11.3
|
|
|
6.1
|
|
||
Other accrued employee benefits
|
|
1.1
|
|
|
0.8
|
|
||
Total
|
|
$
|
15.1
|
|
|
$
|
9.2
|
|
|
Years Ended December 31,
|
||||||
|
2013
|
|
2012
|
||||
Beginning balance
|
$
|
0.3
|
|
|
$
|
0.3
|
|
Charges to costs and expenses
|
4.1
|
|
|
1.9
|
|
||
Costs incurred
|
(3.5
|
)
|
|
(1.9
|
)
|
||
Ending balance
|
$
|
0.9
|
|
|
$
|
0.3
|
|
|
|
||
Market value of DexCom common stock issued on the Closing
|
$
|
3.9
|
|
Fair value of contingent consideration
|
2.2
|
|
|
Total purchase price
|
$
|
6.1
|
|
|
Estimated Fair Value
(in millions)
|
|
Estimated Useful Life in Months
|
||
Net assumed liabilities
|
$
|
(1.8
|
)
|
|
|
Developed technology
|
3.2
|
|
|
109
|
|
In-process research and development
|
0.2
|
|
|
51
|
|
Trademarks and trade names
|
0.1
|
|
|
|
|
Customer-related intangible
|
0.6
|
|
|
70
|
|
Covenants not-to-compete
|
0.6
|
|
|
70
|
|
Goodwill
|
3.2
|
|
|
|
|
Total purchase price allocation
|
$
|
6.1
|
|
|
|
|
|
December 31,
|
||||||
|
|
2013
|
|
2012
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Net operating loss carryforwards
|
|
$
|
132.8
|
|
|
$
|
123.5
|
|
Capitalized research and development expenses
|
|
7.2
|
|
|
8.1
|
|
||
Tax credits
|
|
7.3
|
|
|
5.5
|
|
||
Share-based compensation
|
|
12.2
|
|
|
10.1
|
|
||
Fixed and intangible assets
|
|
1.1
|
|
|
1.0
|
|
||
Other, net
|
|
5.4
|
|
|
4.5
|
|
||
Total gross deferred tax assets
|
|
166.0
|
|
|
152.7
|
|
||
Less: valuation allowance
|
|
(164.7
|
)
|
|
(151.3
|
)
|
||
Deferred tax liability related to acquired intangibles assets
|
|
(1.4
|
)
|
|
(1.5
|
)
|
||
Net deferred tax asset (liability)
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
|
December 31,
|
|||||||
|
|
2013
|
|
2012
|
|
2011
|
|||
Income taxes (benefit) at statutory rates
|
|
35.00
|
%
|
|
35.00
|
%
|
|
35.00
|
%
|
State income tax, net of federal benefit
|
|
2.70
|
%
|
|
2.74
|
%
|
|
2.16
|
%
|
Permanent items
|
|
(3.64
|
)%
|
|
(0.84
|
)%
|
|
(0.41
|
)%
|
Research and development credits
|
|
6.17
|
%
|
|
1.43
|
%
|
|
3.93
|
%
|
Stock and officers compensation
|
|
(2.23
|
)%
|
|
(3.01
|
)%
|
|
(2.37
|
)%
|
Rate change
|
|
7.11
|
%
|
|
(2.13
|
)%
|
|
0.29
|
%
|
Other
|
|
0.08
|
%
|
|
(1.15
|
)%
|
|
(2.02
|
)%
|
Change in valuation allowance
|
|
(45.15
|
)%
|
|
(29.76
|
)%
|
|
(36.65
|
)%
|
|
|
0.04
|
%
|
|
2.28
|
%
|
|
(0.07
|
)%
|
|
|
||
Balance at January 1, 2011
|
$
|
3.6
|
|
Increases related to current year tax positions
|
0.8
|
|
|
Balance at December 31, 2011
|
4.4
|
|
|
Increases related to current year tax positions
|
0.5
|
|
|
Decreases due to statute of limitation expiration
|
(0.1
|
)
|
|
Balance at December 31, 2012
|
4.8
|
|
|
Adjustments related to prior year tax positions
|
0.5
|
|
|
Increases related to current year tax positions
|
0.9
|
|
|
Balance at December 31, 2013
|
$
|
6.2
|
|
|
|
Number of
Shares
|
|
Weighted-
Average
Exercise
Price
|
|
Weighted-
Average
Remaining
Contractual
Term
(years)
|
|
Aggregate Intrinsic
Value
|
|||||
Outstanding at December 31, 2012
|
|
7.4
|
|
|
$
|
7.67
|
|
|
|
|
|
||
Exercised
|
|
(1.5
|
)
|
|
6.64
|
|
|
|
|
|
|||
Forfeited
|
|
—
|
|
|
8.18
|
|
|
|
|
|
|||
Outstanding at December 31, 2013
|
|
5.9
|
|
|
$
|
7.94
|
|
|
4.3
|
|
$
|
160.3
|
|
Exercisable at December 31, 2013
|
|
5.8
|
|
|
$
|
7.91
|
|
|
4.3
|
|
$
|
159.1
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
Intrinsic value of options exercised
|
|
$
|
29.8
|
|
|
$
|
2.7
|
|
|
$
|
3.0
|
|
Fair value of options vested
|
|
$
|
1.3
|
|
|
$
|
3.7
|
|
|
$
|
5.7
|
|
|
|
Shares
|
|
Weighted Average
Grant Date
Fair Value
|
|||
|
|
(in millions)
|
|
|
|||
Nonvested at December 31, 2012
|
|
0.3
|
|
|
$
|
5.52
|
|
Vested
|
|
(0.2
|
)
|
|
5.95
|
|
|
Forfeited
|
|
—
|
|
|
5.00
|
|
|
Nonvested at December 31, 2013
|
|
0.1
|
|
|
$
|
4.60
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
Cost of sales
|
|
$
|
2.6
|
|
|
$
|
2.1
|
|
|
$
|
1.4
|
|
Research and development
|
|
8.5
|
|
|
6.2
|
|
|
4.6
|
|
|||
Selling, general and administrative
|
|
13.5
|
|
|
10.1
|
|
|
7.5
|
|
|||
Share-based compensation expense included in operating expenses
|
|
$
|
24.6
|
|
|
$
|
18.4
|
|
|
$
|
13.5
|
|
|
|
Years Ended December 31,
|
||||||
|
|
2013
|
|
2012
|
|
2011
|
||
Risk free interest rate
|
|
n/a
|
|
1.2
|
%
|
|
1.5 – 2.5
|
|
Dividend yield
|
|
n/a
|
|
—
|
%
|
|
—
|
%
|
Expected volatility of the Company’s stock
|
|
n/a
|
|
0.70
|
|
|
0.68 – 0.69
|
|
Expected life (in years)
|
|
n/a
|
|
6.1
|
|
|
6.1
|
|
|
|
Years Ended December 31,
|
|||||||
|
|
2013
|
|
2012
|
|
2011
|
|||
Risk free interest rate
|
|
0.13 – 0.17
|
|
|
0.11 – 0.19
|
|
|
0.21 – 0.26
|
|
Dividend yield
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Expected volatility of the Company’s stock
|
|
0.30 – 0.39
|
|
|
0.39 – 0.70
|
|
|
0.31 – 0.49
|
|
Expected life (in years)
|
|
1
|
|
|
1
|
|
|
1
|
|
|
|
Shares
|
|
Weighted Average
Grant Date
Fair Value
|
|
Aggregate
Intrinsic Value
|
|||||
Nonvested at December 31, 2012
|
|
3.0
|
|
|
$
|
11.60
|
|
|
|
||
Granted
|
|
2.4
|
|
|
17.29
|
|
|
|
|||
Vested
|
|
(1.5
|
)
|
|
11.97
|
|
|
|
|||
Forfeited
|
|
(0.3
|
)
|
|
12.60
|
|
|
|
|||
Nonvested at December 31, 2013
|
|
3.6
|
|
|
$
|
15.13
|
|
|
$
|
126.9
|
|
|
|
December 31,
|
||||
|
|
2013
|
|
2012
|
||
Stock options and awards under our plans:
|
|
|
|
|
||
Stock options granted and outstanding
|
|
5.9
|
|
|
7.4
|
|
Unvested RSUs
|
|
3.6
|
|
|
3.0
|
|
Reserved for future grant
|
|
0.5
|
|
|
0.5
|
|
Employee Stock Purchase Plan
|
|
2.6
|
|
|
2.1
|
|
Total
|
|
12.6
|
|
|
13.0
|
|
|
|
For the Three Months Ended
|
||||||||||||||
|
|
December 31
|
|
September 30
|
|
June 30
|
|
March 31
|
||||||||
Year ended December 31, 2013
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
$
|
51.7
|
|
|
$
|
42.9
|
|
|
$
|
35.8
|
|
|
$
|
29.6
|
|
Gross profit
|
|
34.1
|
|
|
27.6
|
|
|
21.9
|
|
|
16.5
|
|
||||
Total operating expenses
|
|
36.4
|
|
|
33.4
|
|
|
31.8
|
|
|
27.4
|
|
||||
Net loss
|
|
(2.6
|
)
|
|
(6.0
|
)
|
|
(10.1
|
)
|
|
(11.1
|
)
|
||||
Basic and diluted net loss per share
|
|
$
|
(0.04
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
(0.16
|
)
|
Year ended December 31, 2012
|
|
|
|
|
|
|
|
|
||||||||
Revenues (a)
|
|
$
|
33.3
|
|
|
$
|
23.1
|
|
|
$
|
23.5
|
|
|
$
|
20.1
|
|
Gross profit (a)
|
|
17.5
|
|
|
8.4
|
|
|
11.2
|
|
|
9.4
|
|
||||
Total operating expenses
|
|
25.9
|
|
|
25.7
|
|
|
25.9
|
|
|
24.8
|
|
||||
Net loss (a)
|
|
(8.5
|
)
|
|
(17.3
|
)
|
|
(14.7
|
)
|
|
(14.1
|
)
|
||||
Basic and diluted net loss per share
|
|
$
|
(0.12
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
(0.21
|
)
|
(a)
|
The sum of the four quarters may not agree to the year total due to rounding within a quarter.
|
|
|
||
Allowance for doubtful accounts
|
|
||
Balance December 31, 2010
|
$
|
0.5
|
|
Provision for doubtful accounts
|
0.7
|
|
|
Write-off and adjustments
|
(0.7
|
)
|
|
Recoveries
|
0.1
|
|
|
Balance December 31, 2011
|
$
|
0.6
|
|
|
|
||
Allowance for doubtful accounts
|
|
||
Balance December 31, 2011
|
$
|
0.6
|
|
Provision for doubtful accounts
|
1.2
|
|
|
Write-off and adjustments
|
(0.7
|
)
|
|
Recoveries
|
0.1
|
|
|
Balance December 31, 2012
|
$
|
1.2
|
|
|
|
||
Allowance for doubtful accounts
|
|
||
Balance December 31, 2012
|
$
|
1.2
|
|
Provision for doubtful accounts
|
2.7
|
|
|
Write-off and adjustments
|
(1.4
|
)
|
|
Recoveries
|
0.1
|
|
|
Balance December 31, 2013
|
$
|
2.6
|
|
Product
|
Description
|
Transfer Price*
|
STK-KD-001
|
Dexcom G4 PLATINUM Pediatric Receiver Kit – BLK
|
[****]
|
STK-KD-PNK
|
Dexcom G4 PLATINUM Pediatric Receiver Kit – PNK
|
[****]
|
STK-KD-BLU
|
Dexcom G4 PLATINUM Pediatric Receiver Kit – BLU
|
[****]
|
1.0
|
SCOPE
|
1.1
|
This Quality Agreement (the “Quality Agreement”) is incorporated within the Distribution Agreement dated April 30, 2008, as amended on March 29, 2011 and March 28, 2013 between Distributor and Company pertaining to the distribution and sale of Products. Capitalized terms not otherwise defined herein shall have the meaning assigned to them in the Agreement.
|
1.2
|
This Quality Agreement shall be effective on the Effective Date and shall remain in effect until the Agreement expires, is terminated or the Quality Agreement is modified.
|
2.0
|
DEFINITIONS / ACRONYMS
|
2.1
|
“Applicable Documents”: Documents used to develop a specific document (i.e. standards, regulations) and documents referenced in the text of the specific document.
|
2.2
|
"Government Agency" means any body which has the authority to act on behalf of the government of the Union or State to ensure that the requirements of all
|
2.3
|
"Customer Complaint" means any written, electronic or oral communication that alleges deficiencies related to the identity, quality, durability, reliability, safety or performance of a medical device that has been placed on the market.
|
2.4
|
“CGM”: Continuous Glucose Monitoring.
|
2.5
|
“Correction” means repair, modification, adjustment, relabeling, destruction, or inspection (including patient monitoring) of a product without its physical removal to some other location.
|
2.6
|
“Document” means any information, either written or stored electronically, including specifications, procedures, standards, methods, instructions, plans, files, forms, notes, reviews, analyses, and reports.
|
2.7
|
“Government Agency” means a federal (e.g. FDA) or state (Health and Human Services Food and Drug Branch) organization that has the power to provide services for conformity assessment on the conditions set out in the Federal Food, Drug, and Cosmetic Act (FD&C Act) and United States Code (U.S.C) as part for the sale of medical device products. This normally means assessing the manufacturers conformity to the essential requirements listed in each directive.
|
2.8
|
“Lot” or “Batch” means one or more components or finished devices that consist of a single type, model, class, size, composition, or software version that are manufactured under essentially the same conditions and that are intended to have uniform characteristics and quality within specified limits.
|
2.9
|
“Label” means a display of written, printed, or graphic matter upon the immediate container of any article. Any word, statement, or other information appearing on the immediate container must also appear “on the outside container or wrapper, if any there be, of the retain package of such article, or is easily legible through the outside container of wrapper.”
|
2.10
|
“Labeling” means any Labels and other written, printed, or graphic matter (1) upon any article or any of its containers or wrappers, or (2) displaying such article” at any time while a device is held for sale after shipment or delivery for shipment in interstate commerce.
|
2.11
|
“Quality Records” means Documents containing recorded information, regardless of the medium or characteristic, which demonstrate the effectiveness of the quality management system and that provide evidence that products meet regulatory requirements and comply with specified product requirements.
|
2.12
|
“Removal” means the physical removal of a device from its point of use to some other location for repair, modification, adjustment, relabeling, destruction, or inspection.
|
2.13
|
“Stock Recovery” means the correction or removal of a device that has not been marketed or that has not left the direct control of the manufacturer, i.e., the device is located on the premises owned, or under the control of, the
|
2.14
|
"Recall" means when there is a risk of death or serious deterioration to the state of health, the return of a medical device to the supplier, its modification by the supplier at the site of installation, its exchange or its destruction, in accordance with the instructions contained in the advisory notice.
|
2.15
|
"Medical Device Reporting System" is a system of incident reporting to the Federal Food and Drug Administration (FDA), for all medical devices which are approved for inter-state commerce, where such incidents lead to corrective action relevant to medical devices. Medical Device Reporting Systems maintained by the Distributor shall comply with all applicable laws, the rules and regulations promulgated by the Federal or any State. This system is intended to allow data to be correlated between the FDA and manufactures to improve the protection of health and safety of patients, users and others by reducing the likelihood of the same type of adverse incident being repeated in different places at different times.
|
3.0
|
PROCESS CONTROLS
|
3.1
|
Both parties shall be responsible for all process control activities relative to the Products, including but not limited to, assurance of receipt, identification, traceability, storage, handling, inventory control, contamination control, complaint handling and trending and process validations, as required by Title 21 of United States Code of Federal Regulations, and other applicable regulations, and governmental laws.
|
3.2
|
Both parties shall maintain appropriate documented procedures.
|
3.3
|
Company shall provide evidence that packaging containers maintain the integrity, quality, function, and sterility of the product for the entire shelf life, and not produce toxic residues during storage. Packaging must prevent or indicate the occurrence of tampering.
|
4.0
|
TRAINING AND DOCUMENT CHANGE CONTROL
|
4.1
|
Distributor shall be responsible for managing an effective employee training program and document change control system relative to the receipt, identification, traceability, storage, handling, inventory control, contamination control and complaint handling and trending at the location of Distributor and its third party suppliers.
|
4.2
|
Distributor must train its employees to perform their job function and to this Quality Agreement as required.
|
5.0
|
VALIDATION
|
5.1
|
Distributor shall be responsible for managing qualified processes and systems as required of suppliers (e.g. computer system) by law.
|
5.2
|
Both parties shall be responsible for managing an effective product and process validation system relative to the distribution of the Products at the location of the Distributor and its third party suppliers.
|
5.3
|
Both parties shall develop and implement validation or qualification protocols for significant processes, equipment, and computer systems.
|
5.4
|
Company shall be responsible for managing an effective product and process validation system relative to the manufacture of the Products at the location of the Company and its third party suppliers.
|
6.0
|
DISTRIBUTION AND HANDLING
|
6.1
|
Products shipped by the Distributor must be shipped using documented procedures for the handling, storage, packaging, preservation, and delivery of the Products.
|
6.2
|
Distributor shall deliver Products to its customers using documented procedures for handling, storage, packing, preservation, and delivery of the Products.
|
6.3
|
Disposables must have at least three months of expiration dating left, unless specific variance by lot number has been agreed to by both parties, before being shipped to any end-user customer.
|
6.4
|
The Distributor will not modify any product packaging that it receives from the Company. Shipping containers shall be validated to ensure that the safety and integrity of the Product is maintained during transit, including shipping methods that conform with the Product’s acceptable temperature and humidity ranges.
|
6.5
|
Distributor must maintain storage & handling as follows:
|
Product Name
|
Storage Temperature
|
Humidity
|
Sensor
|
2-25°C (36-77°F)
|
N/A
|
Transmitter
|
0-45°C (32-113°F)
|
Max 95% Relative
|
Receiver
|
0-45°C (32-113°F)
|
10-85% Relative
|
Product Name
|
Storage Temperature
|
Humidity
|
Sensor
|
2-25°C (36-77°F)
|
0-95% Relative
|
Transmitter
|
0-45°C (32-113°F)
|
10-95% Relative
|
Receiver
|
0-45°C (32-113°F)
|
10-95% Relative
|
7.0
|
LOT TRACEABILITY
|
7.1
|
Distributor shall establish and maintain procedures for identifying the Products by suitable means from receipt and during all stages of production and delivery. This shall include procedures to provide full lot traceability for each unit, lot, or batch of finished Products during all stages of production and delivery to the Distributor.
|
7.2
|
Distributor shall establish and maintain procedures to provide traceability to the first consignee.
|
7.3
|
Distributor shall establish and maintain procedures to provide traceability to the end user.
|
7.4
|
Both parties shall use reasonable efforts to assist the other in maintaining respective lot traceability.
|
7.5
|
Both parties are required to track the following information detailed in the table to the end user.
|
8.0
|
Seven Plus Product
|
Product
|
Description
|
Lot traceability Tracking Requirement
|
STK-7U-030
|
SEVEN PLUS System Kit
|
Lot Number identified on the box
|
STS-7K-041
|
SEVEN Sensors (package of one (1) or four (4))
|
Lot Number identified on the box
|
STR-7U- 030
|
SEVEN PLUS Replacement Receiver
|
Lot Number identified on the box
|
STT-7U- 030
|
SEVEN PLUS Replacement Transmitter
|
Lot Number identified on the box
|
9.0
|
G4 Platinum Product
|
Product
|
Description
|
Lot traceability Tracking Requirement
|
STK-GL-001
|
G4 Platinum Receiver Kit – BLK
|
Lot Number identified on the box
|
STK-GL-PNK
|
G4 Platinum Receiver Kit – PNK
|
Lot Number identified on the box
|
STK-GL-BLU
|
G4 Platinum Receiver Kit – BLU
|
Lot Number identified on the box
|
STT-GL-003
|
G4 Transmitter Kit
|
Lot Number identified on the box
|
STR-GL-001
|
G4 Platinum Replacement Receiver Kit – BLK
|
Lot Number identified on the box
|
STR-GL-PNK
|
G4 Platinum Replacement Receiver Kit – PNK
|
Lot Number identified on the box
|
STR-GL-BLU
|
G4 Platinum Replacement Receiver Kit – BLU
|
Lot Number identified on the box
|
STS-GL-011
|
G4 Platinum Sensors Kit (package of one (1))
|
Lot Number identified on the box
|
STS-GL-041
|
G4 Platinum Sensors Kit (package of four (4))
|
Lot Number identified on the box
|
10.0
|
G4 Platinum Product - Pediatric
|
Product
|
Description
|
Lot traceability Tracking Requirement
|
STK-KD-001
|
G4 Platinum Pediatric Receiver Kit – BLK
|
Lot Number identified on the box
|
STK-KD-PNK
|
G4 Platinum Pediatric Receiver Kit – PNK
|
Lot Number identified on the box
|
STK-KD-BLU
|
G4 Platinum Pediatric Receiver Kit – BLU
|
Lot Number identified on the box
|
STT-GL-003
|
G4 Transmitter Kit
|
Lot Number identified on the box
|
STR-KD-001
|
G4 Platinum Replacement Receiver Kit – BLK
|
Lot Number identified on the box
|
STR-KD-PNK
|
G4 Platinum Replacement Receiver Kit – PNK
|
Lot Number identified on the box
|
STR-KD-BLU
|
G4 Platinum Replacement Receiver Kit – BLU
|
Lot Number identified on the box
|
STS-GL-011
|
G4 Platinum Sensors Kit (package of one (1))
|
Lot Number identified on the box
|
STS-GL-041
|
G4 Platinum Sensors Kit (package of four (4))
|
Lot Number identified on the box
|
11.0
|
PACKAGING AND LABELING
|
11.1
|
Company shall provide packaging and labeling specifications that call out clear labeling requirements.
|
11.2
|
Company shall ensure that the labels, inserts and accompanying documentation satisfy the requirements of the applicable regulations.
|
11.3
|
Distributor shall not modify the labels, primary or secondary packaging, inserts or accompanying documentation without the written approval of the Company.
|
12.0
|
FINISHED PRODUCT NON-CONFORMANCES
|
12.1
|
Any nonconforming finished product requires written approval from Company’s Quality Assurance before shipment to any Customer by Distributor.
|
13.0
|
COMPLAINT HANDLING AND REPORTING
|
13.1
|
Distributor shall be responsible for the establishment and maintenance of a system for handling all Tier I Complaints pertaining to Products distributed under the Agreement. "Complaint" means any written, electronic, telephone call and/or oral communication that alleges deficiencies related to the identity, quality, durability, reliability, safety, effectiveness, or performance of a device after it is released to distribution. A complaint is any indication of the failure of a device to meet customer or user expectations for quality or to meet performance specifications. A “Tier I Complaint” includes complaints that pertain to the purchase, payment, billing, delivery, packaging and customer service. This system shall include receipt, review, corrective/preventative action and maintenance of files. Distributor will not perform any Tier II Complaint Handling, as defined below.
|
13.2
|
Company shall be responsible for the establishment and maintenance of a system for handling Tier II Complaints pertaining to Products distributed under the Agreement. A “Tier II Complaint” includes complaints that pertain to product functionality, trouble shooting, or adverse events. This system shall include receipt, review, investigation, corrective/preventative action and maintenance of files. It shall also include adverse event reporting to the appropriate governmental authorities as required by regulations in the applicable jurisdictions.
|
13.3
|
Company shall notify Distributor in writing of legal and regulatory matters relating to the Products, including:
|
13.3.1
|
Any regulatory actions by governmental authorities (e.g., inspection citations, warning letters, or other non-conformance notices).
|
13.3.2
|
Regulatory enforcement actions such as injunctions or seizures.
|
13.3.3
|
FDA registration activity (e.g., non-conformance notices, hold points).
|
13.3.4
|
Complaints received from Customers within the Territory that have not been processed through the Company’s complaint handling system.
|
13.3.5
|
Adverse incidents relating to customers within the Territory (e.g., MDR’s.).
|
13.4
|
Distributor shall notify Company in writing of the following:
|
13.4.1
|
Any serious regulatory action relating to the Products.
|
13.4.2
|
Tier I Complaints regarding Products or Instruments. Distributor shall code, trend and report monthly all phone call inquiries and Tier I Complaint data pertaining to Products.
|
13.4.3
|
If an adverse incident is received that may be subject to FDA’s Medical Device Reporting regulation that pertain to Products and Instruments, then Distributor shall notify Company no later than 24 hours following Distributor’s initial receipt of the adverse event.
|
13.4.4
|
Distributor shall forward all complaints pertaining to Products and Instruments to Company no later than 5 working days following Distributor’s initial receipt of the complaint.
|
14.0
|
FIELD ACTIONS
|
14.1
|
The Company will be responsible for the initiation of any recalls or other field actions related to the Products.
|
14.2
|
Both parties will comply with recalls or general corrective actions, provided such recalls or general corrective actions do not, in the opinion of Company violate or cause Company to violate the laws of any jurisdiction affected by the recalls or corrective action.
|
14.3
|
If Distributor and Company do not agree on a course of action, Company may initiate field actions related to the Products, but may not use field action to cause Distributor to lose Customers.
|
15.0
|
AUDITS
|
15.1
|
Company shall have the right to conduct audits of Distributor’s facilities and operations during normal business hours at its own expense and upon thirty (30) days notice to Distributor in order to assess compliance with all applicable regulations, procedures and this Quality Agreement. Any such audits will be conducted by a national “big four” independent accounting firm (or other independent accounting firm whose audit department is a separate stand alone function of its business and which possesses liability insurance with coverage of at least [****]), subject to such firm’s execution of a confidentiality agreement in form reasonably acceptable to Distributor. Company shall be permitted to conduct one audit per calendar year or more frequently in the
|
16.0
|
RECORD RETENTION
|
16.1
|
Both parties shall retain all sales and medical records as required by law.
|
16.2
|
Prior to any record destruction pertaining to Company Products and Instruments, the Distributor will notify the Company in writing. If the record destruction is not approved the Company will assume responsibility of the records.
|
17.0
|
REGULATORY AND REGISTRATION ADMINISTRATION
|
17.1
|
Distributor, at its expense, is responsible for registration responsibilities, and for agreed upon domestic registration costs in accordance with Federal and State regulations. Distributor shall provide sufficient data and information to support domestic registrations.
|
17.2
|
Company, at its expense, is responsible for registration responsibilities, and for agreed upon registration costs of Products in the Territory. Company shall provide sufficient data and information to support such registrations.
|
18.0
|
QUALITY SYSTEM COMPLIANCE
|
18.1
|
Distributor shall establish and maintain a quality system in compliance with Title 21, United States Code of Federal Regulations and other applicable regulations, and governmental laws. Distributor shall also ensure that its contract vendors maintain a quality system in compliance with current Title 21, United States Code of Federal Regulations and other applicable regulations, and governmental laws.
|
18.2
|
Distributor acknowledges that without registering as an out-of-state home medical device retail facility, an out-of-state home medical device retail facility shall not sell or distribute prescription devices in this state through any person or media other than a wholesaler who is licensed pursuant to Chapter 9 (commencing with Section 4000) of Division 2 of the California Business and Professions Code.
|
19.0
|
ADDITIONAL DISTRIBUTOR REQUIREMENTS
|
19.1
|
Distributor agrees to comply with all applicable laws and regulations. Distributor agrees to obtain the necessary licenses to meet its obligations under this agreement.
|
19.2
|
Records should be accurate, indelible and legible. Entries must be dated and the person performing a documented task must be identified. Records must provide a complete history of the work performed. Products identified in this Quality Agreement are not in conflict with the laws of the importing country.
|
1.1.3
|
"Intellectual Property Rights" means any rights with respect to any intellectual property including but not limited to rights with respect to or under or pursuant to any patents, trademarks, copyrights, know-how and trade secrets;
|
1.1.4
|
"FOB Shipping Point" means freight on board the place from which the Company ships the Products to the Distributor;
|
1.1.5
|
"Price" means the Price identified in
Schedule 1
,
as amended from time to time in accordance with Section 2.2, below;
|
1.1.6
|
"Products" means the Products identified in
Schedule 1
,
as amended from time to time in accordance with Section 2.2, below; and
|
1.2.1
|
The words "include", "including" and "in particular" shall be construed as being by way of illustration only and shall not be construed as limiting the generality of any foregoing words.
|
1.2.3
|
Section and paragraph headings are inserted for ease of reference only and shall not affect construction.
|
1.2.3
|
Section and paragraph headings are inserted for ease of reference only and shall not affect construction.
|
2.1
|
The Company appoints the Distributor to be its non-exclusive distributor in the Territory for the Products and the Distributor hereby accepts such appointment subject to the terms of this Agreement. Distributor agrees that it shall sell products only to end-user customers
,
and not to other distributors. Distributor also agrees it may market and promote Products to users for ambulatory (non-surgical) applications only
.
Distributor shall not sell, market or promote Products for use in critical care
,
intensive care or surgical settings. The Company reserves the right to appoint other non-exclusive distributors and agents in the Territory for the Products. The Company also reserves the right to sell the Products directly to Customers in the Territory.
|
2.2
|
The Company may from time to time at its discretion offer additional products to the Distributor for inclusion in this Agreement.
If
the Distributor accepts those products, this Agreement will be amended and signed by authorized representatives of the Parties and thereafter such products shall be treated as the Products. In addition
,
the Company may amend the pricing set forth on
Schedule 1.
|
3.1
|
The Distributor is and shall act as an independent contractor, and not as a partner, co venturer, agent, employee, franchisee or representative of the Company. No partnership, joint venture, agency or employment is intended between Company and Distributor.
|
3.2
|
Except as may be specifically provided for in this Agreement, the Distributor shall be responsible for any and all expenses incurred by Distributor in the performance of Distributor's duties under this Agreement.
|
3.3
|
Nothing in this Agreement shall be construed as giving Distributor authority to enter into obligations on the Company's behalf or to act as the Company's agent for any purpose; nor shall the Distributor hold itself out as having any such authority.
|
4.1.1
|
to use its best efforts to develop the market for the Products, promote the Products to Customers, physicians and certified diabetes educators, distribute and sell the Products to Customers throughout the Territory;
|
4.1.2
|
to maintain a properly trained and equipped sales force for the Products, including but not limited to making its sales personnel available to the Company for training in the use and sale of the Products and coordination of sales efforts;
|
4.1.3
|
to maintain such ordering, billing and filling of customer orders, facilities and personnel as the Company may reasonably specify;
|
4.1.8
|
to implement
and
maintain a system, satisfactory to the Company, to identify the Distributor's Customers to which each batch of Products have been delivered ("batch" being the lot number marked by the Company on each unit container of the Products). Distributor shall maintain a tracking system sufficient to allow the Distributor the ability to take appropriate corrective action in the market if required;
|
5.1.1
|
to provide Distributor and Distributor's Customers technical assistance and support for the Products via access to the Company's technical services telephone line at such times as the Company shall determine in its sole discretion;
|
5.1.2
|
to attend regional sales meetings and national conventions as reasonably requested by the Distributor; and
|
5.1.3
|
to provide training classes for the Distributor's sales and internal Product support personnel on the Products as requested by the Distributor and agreed to by the Company.
|
6.1.2
|
in relation to the Products, not to seek Customers outside the Territory or establish any branch or maintain any distribution depot outside the Territory;
|
6.1.3
|
it may market and promote Products to users for ambulatory (non-surgical) applications only. Distributor shall not sell, market or promote Products for use in critical care, intensive care or surgical settings.
|
7.2
|
The Products will be supplied FOB Shipping Point freight prepaid. Freight costs will be included on the invoice.
|
7.3
|
All invoices submitted by the Company to the Distributor shall be payable within [****] after the date of such invoice. If the Distributor fails to pay or procure payment of the full amount when due, and without in any manner excusing such violation, the
|
7.4
|
The Distributor shall bear the cost of any sales, excise or other taxes imposed by any governmental authority unless appropriate tax exemption certificate or resale certificate is provided to the Company prior to shipment.
|
7.6
|
The Distributor shall establish and maintain creditworthiness with the Company, which shall be established prior to the effective date of this Agreement in the sole judgment of the Company, based on the Company's review of Distributor's credit references.
|
8.1
|
Subject to availability, the Company shall use its reasonable efforts to supply the Distributor's requirements for the Products. No order shall be effective until approved and accepted in writing by the Company. The Company may, in its sole discretion, reject or cancel any order for any or no reason and the Company shall incur no liability of any kind for such action or for any delay or failure of delivery or performance.
|
8.2
|
Nothing in this Agreement shall prevent the Company from selling or supplying Products to third parties in or outside the Territory.
|
8.3
|
The Company will provide free of charge Product literature as reasonably requested by Distributor. If the Company determines that the Distributor's requests for Products literature are in excess of Company
'
s reasonable capacity, then Company and the Distributor shall mutually agree upon a fee schedule for Product literature.
|
8.4
|
The Distributor hereby agrees that if it makes reference to or statements about the Products in the Distributor's own catalogues, promotional literature
,
advertisements or the like:
|
8.4.1
|
it will inform the Company in advance and take such steps as the Company may reasonably require to ensure the accuracy of any such references or statements; and
|
8.4.2
|
it will incorporate such references to the Company and to the Company's patents, trademarks, copyrights and other Intellectual Property Rights as the Company may reasonably require.
|
8.5
|
Nothing in this Agreement shall require the Company to give the Distributor any right of priority over the Company's other distributors or customers.
|
8.6
|
Nothing in this Agreement shall require the Distributor to give the Company any right of priority over the Distributor's other contracted vendors.
|
8.7
|
Nothing in this Agreement shall prevent the Company from ceasing to make or sell all or any of the Products at any time; or from modifying or replacing any of the Products at any time; or making or selling products which are competitive with the Products; all with a 60 day written notice to the Distributor.
|
9.1
|
Confidential Information shall mean all information supplied by one Party to the other Party, or to which a Party has access including all written material, product samples, Specifications, drawings, designs, plans, layouts, procedures, computer programs, models, prototypes, business plans, financial information, customer lists or other information of any description belonging to a Party or in the other Party's possession.
|
9.2
|
Each of the Parties shall keep secret and use only for the purposes of this Agreement all oral or written Confidential Information.
|
9.3
|
The obligations of confidentiality and non-use shall expire five (5) years from the date of termination or expiration of this Agreement, and without prejudice to the generality of the foregoing, no obligation of confidentiality or non-use shall apply at any time to information which:
|
9.3.2
|
comes into the public domain, otherwise than by reason of the act or omission of the Party who receives the same (the "Recipient");
|
9.3.4
|
can be proved to the reasonable satisfaction of the other Party to have been developed independently by the Recipient without resort to the disclosure; or
|
9.3.5
|
which the Recipient is obligated to disclose by law or by any body having the force of law.
|
9.4.2
|
not disclose such Confidential Information to any third party who is not bound by this Agreement other than properly authorized officers, employees or agents of the Party who are required to receive the Confidential Information on a need-to know basis for implementing this Agreement;
|
9.4.4
|
without prejudice to the generality of the foregoing, shall exercise an equivalent degree of care in protecting the Confidential Information as that which it uses to protect its own information of like sensitivity and importance.
|
11.2
|
The Distributor shall resell the Products only in the original packaging for the Products and shall not alter such packaging or labelling without the Company's prior written consent.
|
11.3
|
The Distributor shall comply with all reasonable requests by the Company with regard to identification of the Company's Intellectual Property Rights and the like on any promotional material prepared by the Distributor in connection with the Products.
|
12.1
|
Subject to the following provisions, this Agreement shall be deemed to commence on the Effective Date and shall terminate on the second anniversary of the Effective Date (the "Term"), provided that either Party may terminate this Agreement at any time upon [****]
prior written notice to the other Party. The Parties may at any time agree in writing to extend the Term or to renew this Agreement.
|
12.2
|
The Company may terminate this Agreement immediately, by providing written notice to the Distributor, in the event of any of the following events:
|
12.2.3 the Distributor shall become insolvent or have a receiver appointed of its business or
|
go into liquidation (except for the purposes of amalgamation or reorganization).
|
13.2
|
Termination of this Agreement shall not prejudice the rights and remedies of either Patty against the other in respect of any antecedent claim or breach of this Agreement, except that neither Party shall be entitled to claim damages against the other for termination of this Agreement pursuant to Section 12. The provisions of Sections 3, 5, 8, 9, 11, 12, 13 and 16 shall survive the termination of this Agreement.
|
14.1
|
Both parties to this Agreement shall indemnify, defend and hold harmless the other party from and against all claims, demands, losses, expenses (including, but not limited to attorney fees) and liability from:
|
14.2
|
The Distributor shall indemnify, defend and hold harmless the Company from and against all claims, demands, losses, expenses (including, but not limited to attorney fees) and liability from any claim arising from warranties made by the Distributor different from or in addition to those made in writing by the Company.
|
16.1
|
Law, Licenses, and Permit
s. Both parties to this Agreement are in compliance with any and all laws and regulations governing the sale of the Products and have all licenses and permits necessary to represent the Products in the Territory. Distributor further represents and warrants that the solicitation and sale of Company's Products under this Agreement will not violate any law or regulation, including any law or regulation governing the sale of Products in the Territory.
|
16.2
|
Organization/Power/Authority.
Distributor and the Company
,
if other than individuals, are duly organized and existing and in good standing under the laws of the state and country of their organization and are entitled to own or lease their properties and to carry on their businesses as and in the places where such properties are now owned, leased or operated, or such businesses are now conducted. Both parties to this Agreement have full power and authority to provide the services specified herein and all corporate and other proceedings necessary to be taken by both parties in connection with the transactions provided for by this Agreement and necessary to make the same effective have been duly and validly taken, and this Agreement has been duly a
|
16.4
|
Consents
. Distributor is not and will not be required to give any notice to or obtain any consent from any person in connection with the execution and delivery of this Agreement or the consummation or performance of any of the transactions contemplated hereby.
|
17.1
|
Notice
. Any notice or other communication required or permitted to be given under this Agreement shall be properly served only if it is in writing addressed as set out below. Notice may be sent by any of the following methods: (ii) nationally recognized overnight courier service; (iii) U.S. Postal Service certified or registered mail, return receipt requested, postage prepaid. Service shall be deemed to have been duly given on the date of delivery or on the date which is seven (7) days from the date of deposit in the U.S. Postal Service in the manner described above. Either party may change the names, addresses and facsimile numbers for receipt of notice by complying with this Section
|
17.3
|
Force Majeure.
If
either pm1y to this Agreement is delayed or prevented from fulfilling any of its obligations under this Agreement (other than an obligation to pay money) by an event of force majeure, said party shall not be liable under this Agreement for said delay or failure. "Force Majeure" shall mean any cause beyond the reasonable control of a party including, but not limited to, acts of God, vandalism, wars, terrorism, civil unrest, blockades, strikes, lightning, fires, floods, explosions, hurricanes, and other causes not within the control of the party claiming a force majeure situation. The party claiming an event of force majeure shall promptly notify the other party by providing written notice of the reason for the delay, the anticipated length of time and alternate proposals, if any, which the party wishes to make to alleviate any difficulties or hardships which may be suffered as a result of the delay. The notification shall be by telephonic communications, confirmed by letter sent in accordance with Section 17.1. Neither party to this Agreement shall be deemed to be in default by reason of delay or failure due to force majeure.
|
17.4
|
Waiver
. A waiver by either party of a breach or failure to perform shall not constitute a waiver of any subsequent breach or failure.
|
17.5
|
Severability
. In the event that any provision of this Agreement is for any reason held to be invalid or unenforceable or contrary to public policy, such provision shall be treated as severable, leaving valid the remainder of this Agreement.
|
17.6
|
Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall constitute an original document, but all of which together shall constitute only one Agreement.
|
17.7
|
Applicable Law and Jurisdiction.
This Agreement shall be governed by the laws of the State of California without regard to such State's conflict of laws principles applicable to contracts made and performed wholly with in such State. The Distributor hereby irrevocably agrees and consents to the exclusive jurisdiction of the federal and state courts located in the State of California and to accept service by pre-paid registered letter of any writ or summons in any such action notwithstanding that Distributor may otherwise be considered outside the jurisdiction of the California courts.
|
17.8
|
Authorization
. Each of the persons executing this Agreement on behalf of a corporation or other legal entity personally warrants and represents that s/he has the requisite and necessary approval and authority to execute this Agreement on behalf of the corporation or other legal entity on whose behalf that person signed.
|
17.9
|
Entire Agreement
. This Agreement, including amendment(s) if any, together with the Schedules identified herein, constitutes the complete understanding of the parties and supersedes any and all other agreements, ether oral or written, between the parties with respect to the subject matter hereof and no other agreement, statement or promise relating to the subject matter of this Agreement which is not contained herein shall be valid or binding.
|
|
Chief Financial Officer
|
Product
|
Description
|
Transfer
Price
|
STK-7U-030
|
SEVEN PLUS Starter Kit
|
[****]
|
STS-7K-041
|
SEVEN Sensors (package of four (4)) ("Sensor 4-pack")
|
[****]
|
STR-70-030
|
SEVEN PLUS Receiver
|
[****]
|
STT-7U-030
|
SEVEN PLUS Transmitter
|
[****]
|
Primary Unique Insurance #
|
Alpha/Numeric
|
Distributor's Unique Identifier for this specific plan at the lowest level
|
Primary Insurance Phone #
|
Alpha/Numeric
|
Customer's Insurance Payer's Phone #
|
|
|
|
|
|
|
Secondary Insurance Policy ID #
|
Alpha/Numeric
|
Customer's Insurance Policy ID #
|
Secondary Insurance Payor
|
Alpha/Numeric
|
Customer's Insurance Payer
|
Secondary Insurance Plan
|
Alpha/Numeric
|
Customer's Insurance Plan
|
Secondary Unique Insurance #
|
Alpha/Numeric
|
Distributor's Unique Identifier for this specific plan at the lowest level
|
Secondary Insurance Phone #
|
Alpha/Numeric
|
Customer's Insurance Payer's Phone #
|
Secondary Insurance Co-Pay Amount
|
Currency
|
Customer's portion of financial responsibilty
|
Secondary Insurance Allowable Amount
|
Currency
|
Financial Amount Insurance Company will Cover
|
Persription Expiration Date
|
Date
|
Persription Expiration Date (MM/DD/YYYY)
|
Perscribing Physician's NPI #
|
Alpha/Numeric
|
Physician's National Provider Identifier (NPI) #
|
Perscribing Physician's Last Name
|
Alpha
|
Perscribers Last Name
|
Perscribing Physician's First Name
|
Alpha
|
Perscribers First Name
|
Perscribing Physician's City
|
Alpha/Numeric
|
Perscribing Physician's City
|
Perscribing Physician's State
|
Alpha
|
Perscribing Physician's State
|
Perscribing Physician's Zip
|
Number
|
Perscribing Physician's Zip
|
Contract#
|
Alpha/Numeric
|
Distributor's Contract Number
|
Transaction Type Description
|
Alpha/Numeric
|
Product Transaction Type: What type of sale is this? Standard Sale, Return, Inventory Adjustment, Transfer between branches.
|
Return Good Authorization (RGA) Number
|
Alpha/Numeric
|
Quality Number procured from Dexcom, if product is to be returned to Dexcom
|
Invoice/Transaction Number (Debit or Credit)
|
Alpha/Numeric
|
Distributor's Invoice/Transaction Number (Debit or Credit)
|
InvoiceDate
|
Date
|
Date of Distributor's Invoice (MM/DD/YYYY)
|
ProductID
|
Alpha/Numeric
|
Manufacturer Product ID (SKU)
|
ProductDescription
|
Alpha/Numeric
|
Product Description reported by Distributor
|
Product Serial Number
|
Alpha/Numeric
|
Product's Serial Number (only applicable for STKs)
|
Product Lot Number
|
Alpha/Numeric
|
Product's Lot Number
|
Quantity
|
Number
|
Quantity Sold
|
UOM
|
Alpha/Numeric
|
Product Unit of Measure (i.e. kit, 4-pack box, sensor, crate, skid)
|
UnitCost
|
Currency
|
Distributor's Contract Cost (If provided) - Unit Cost preferred to Total Cost
|
UnitRebate
|
Currency
|
Distributor's Rebate (if claimed) - Unit Rebate preferred to Total Rebate
|
Product SKU
|
Product Description
|
Transfer Price*
|
STK-7U-030
|
SEVEN PLUS Starter Kit*
|
[****]
|
STS-7K-041
|
SEVEN Sensors (package of four (4))*
|
[****]
|
STR-7U-030
|
SEVEN PLUS Replacement Receiver*
|
[****]
|
STT-7U-030
|
SEVEN PLUS Replacement Transmitter*
|
[****]
|
4.
|
Section 4
. A new section 4.1.33 shall be added as follows:
|
1.0
|
SCOPE
|
1.1
|
This Quality Agreement (the “Quality Agreement”) is incorporated within the Distribution Agreement that was effective October 12, 2009, between Distributor and Company pertaining to the distribution and sale of Products (the “Agreement”). Capitalized terms not otherwise defined herein shall have the meaning assigned to them in the Agreement. To the extent the terms of the Quality Agreement and the Agreement conflict, the terms set forth in the Quality Agreement shall superseded the Agreement.
|
1.2
|
This Quality Agreement shall be effective on the Effective Date and shall remain in effect until the Agreement expires, is terminated or the Quality Agreement is modified.
|
2.0
|
PROCESS CONTROLS
|
2.1
|
Distributor shall be responsible for supplier appropriate process control activities relative to the Products, including but not limited to, assurance of receipt, identification, traceability, storage, handling, inventory control and facility contamination control.
|
2.2
|
Company shall provide evidence that packaging containers maintain the integrity, quality, function, and sterility of the product for the entire shelf life, and not produce toxic residues during storage. Packaging must prevent or indicate the occurrence of tampering.
|
3.0
|
TRAINING AND DOCUMENT CHANGE CONTROL
|
3.1
|
Distributor must train its employees to perform their job function and to this Quality Agreement as required.
|
4.0
|
QUALIFICATION
|
4.1
|
Distributor shall be responsible for managing qualified processes and systems as required of suppliers (e.g. computer system) by law.
|
5.0
|
DISTRIBUTION AND HANDLING
|
5.1
|
Products shipped by the Distributor must be shipped using standard procedures for the handling, storage, packaging, preservation, and delivery of the Products.
|
5.2
|
Distributor shall deliver Products to its customers using standard procedures for handling, storage, packing, preservation, and delivery of the Products.
|
6.0
|
LOT TRACEABILITY
|
6.1
|
Distributor shall establish and maintain appropriate procedures for identifying the Products by suitable means from receipt and during all stages of delivery.
|
Product
|
Description
|
Lot traceability Tracking Requirement
|
STK-7U-030
|
SEVEN PLUS System Kit
|
Lot Number identified on the box
|
STS-7K-041
|
SEVEN Sensors (package of four (4))
|
Lot Number identified on the box
|
STR-7U-030
|
SEVEN PLUS Replacement Receiver
|
Lot Number identified on the box
|
STT-7U-030
|
SEVEN PLUS Replacement Transmitter
|
Lot Number identified on the box
|
7.0
|
PACKAGING AND LABELING
|
7.1
|
Company shall provide packaging and labeling specifications that call out clear labeling requirements.
|
7.2
|
Company shall ensure that the labels, inserts and accompanying documentation satisfy the requirements of the applicable regulations.
|
8.0
|
COMPLAINT HANDLING AND REPORTING
|
8.1
|
Distributor shall be responsible for the establishment and maintenance of a system for handling complaints pertaining to the process of distributing Products under the Agreement pursuant to current Distributor policy. This system shall include receipt, review, corrective/preventative action and maintenance of files. Distributor will not knowingly perform any Device Complaint handling, as defined below.
|
8.2
|
Company shall be responsible for the establishment and maintenance of a system for handling Device Complaints pertaining to Products distributed under the Agreement. A “Device Complaint” includes complaints that pertain to Product functionality, trouble shooting, or adverse events. This system shall include receipt, review, investigation, corrective/preventative action and maintenance of files.
|
8.3
|
Company shall notify Distributor in writing of legal and regulatory matters relating to the Products, including:
|
8.3.1
|
Any regulatory actions by governmental authorities (e.g., inspection citations, warning letters, or other non-conformance notices).
|
8.3.2
|
Regulatory enforcement actions such as injunctions or seizures.
|
8.3.3
|
FDA registration activity (e.g., non-conformance notices, hold points).
|
8.3.4
|
Complaints received from Customers within the Territory that have not been processed through the Company’s complaint handling system.
|
8.3.5
|
Adverse incidents relating to Customers within the Territory (e.g., MDR’s.).
|
8.4
|
Distributor shall notify Company in writing of the following:
|
8.4.1
|
Any serious regulatory action relating to the Products that Distributor may become aware of.
|
8.4.2
|
Escalated Complaints regarding Products or Instruments. Distributor shall code, trend and report monthly Escalated Complaint data pertaining to Products, at Distributor’s request.
|
8.4.3
|
Distributor shall forward all complaints pertaining to Products and Instruments to Company no later than 10 working days following Distributor’s initial receipt of the complaint.
|
9.0
|
FIELD ACTIONS
|
9.1
|
The Company will be responsible for the initiation and cost of any recalls or other field actions related to the Products.
|
9.2
|
Both parties will comply with recalls or general corrective actions, provided such recalls or general corrective actions do not, in the opinion of Company violate or cause Company to violate the laws of any jurisdiction affected by the recalls or corrective action.
|
9.3
|
If Distributor and Company do not agree on a course of action, Company may initiate field actions related to the Products, but may not use field action to cause Distributor to lose Customers.
|
10.0
|
AUDITS
|
10.1
|
Company shall have the right to conduct audits of Distributor’s facilities and operations during normal business hours and upon reasonable notice to Distributor in order to assess compliance with all applicable regulations, procedures and this Quality Agreement. Any such audits will be conducted by a national “big four” independent accounting firm (or other independent accounting firm whose audit department is a separate stand alone function of its business and which possesses liability insurance with coverage of at least [****]), subject to such firm’s execution of a confidentiality agreement in form reasonably acceptable to Distributor. Company shall be permitted to conduct one audit per calendar year.
|
11.0
|
RECORD RETENTION
|
11.1
|
Both parties shall retain all medical records as required by law.
|
12.0
|
REGULATORY AND REGISTRATION ADMINISTRATION
|
12.1
|
Company, at its expense, is responsible for registration responsibilities, and for agreed upon registration costs of Products in the Territory. Company shall provide sufficient data and information to support such registrations.
|
13.0
|
ADDITIONAL DISTRIBUTOR REQUIREMENTS
|
13.1
|
Records should be accurate, indelible and legible. Entries must be dated and the person performing a documented task must be identified. Records must provide a complete history of the work performed.
|
1.
|
Section 12.1 of the Agreement shall be amended and restated to read as follows:
|
Product
|
Description
|
Transfer Price*
|
STS-7K-041
|
SEVEN Sensors (package of four (4))
|
[****]
|
Product
|
Description
|
Transfer Price*
|
STS-GL-041
|
Dexcom G4 Platinum Sensor Kit (package of four (4))
|
[****]
|
STK-GL-001
|
Dexcom G4 Platinum Receiver Kit – BLK
|
[****]
|
STK-GL-PNK
|
Dexcom G4 Platinum Receiver Kit – PNK
|
[****]
|
STK-GL-BLU
|
Dexcom G4 Platinum Receiver Kit – BLU
|
[****]
|
STS-GL-003
|
Dexcom G4 Transmitter Kit
|
[****]
|
6.
|
SCHEDULE 3
. Schedule 3 is amended and restated in its entirety as follows:
|
Required Reporting Frequency:
|
Daily
|
Delivery method:
|
Dexcom controlled secure file transfer protocol site specific to the distributor
|
|
|
|
Field
|
Format
|
Comments
|
Customer ID Number
|
Text
|
A unique identifying number for each customer
|
Customer First Name
|
Text
|
|
Customer Last Name
|
Text
|
|
Customer Address
|
Text
|
For ZIP Code use 5-character; text so leading zeros are included; no Zip + 4 numbers
|
Customer DOB
|
Text
|
MM/DD/YYYY
|
Physician First Name
|
Text
|
|
Physician Last Name
|
Text
|
|
Physician ZIP Code
|
Text
|
5-character; text so leading zeros are included; no Zip + 4 numbers
|
Physician NPI
|
Text
|
|
Insurance Name
|
Text
|
|
Dexcom Item Number
|
Text
|
|
Item Quantity
|
Text
|
Unit quantity - e.g. 1 box of sensors is '1', and not the number of individual sensors included
|
Date of Shipment
|
Text
|
MM/DD/YYYY
|
Hardware serial number
|
Text
|
Where distributor stocks and ships hardware
|
Shipper
|
Text
|
Dexcom or Distributor, where distributor provides tracings including shipments from both locations
|
|
|
|
7.
|
SCHEDULE 5
.
Schedule 5 is amended and restated in its entirety as follows:
|
1.0
|
SCOPE
|
1.1
|
This Quality Agreement (the “Quality Agreement”) is incorporated within the Distribution Agreement dated October 12, 2009, as amended on September 30, 2010 and October 11, 2011 between Distributor and Company pertaining to the distribution and sale of Products. Capitalized terms not otherwise defined herein shall have the meaning assigned to them in the Agreement.
|
1.2
|
This Quality Agreement shall be effective on the Effective Date and shall remain in effect until the Agreement expires, is terminated or the Quality Agreement is modified.
|
2.0
|
DEFINITIONS / ACRONYMS
|
2.1
|
“Applicable Documents”: Documents used to develop a specific document (i.e. standards, regulations) and documents referenced in the text of the specific document.
|
2.2
|
"Government Agency" means any body which has the authority to act on behalf of the government of the Union or State to ensure that the requirements of all laws applicable to the Products and Distributor are carried out and adhered to in the State.
|
2.3
|
"Customer Complaint" means any written, electronic or oral communication that alleges deficiencies related to the identity, quality, durability, reliability, safety or performance of a medical device that has been placed on the market.
|
2.4
|
“CGM”: Continuous Glucose Monitoring.
|
2.5
|
“Correction” means repair, modification, adjustment, relabeling, destruction, or inspection (including patient monitoring) of a product without its physical removal to some other location.
|
2.6
|
“Document” means any information, either written or stored electronically, including specifications, procedures, standards, methods, instructions, plans, files, forms, notes, reviews, analyses, and reports.
|
2.7
|
“Government Agency” means a federal (e.g. FDA) or state (Health and Human Services Food and Drug Branch) organization that has the power to provide services for conformity assessment on the conditions set out in the Federal Food, Drug, and Cosmetic Act (FD&C Act) and United States Code (U.S.C) as part for the sale of medical device products. This normally means assessing the manufacturers conformity to the essential requirements listed in each directive.
|
2.8
|
“Lot” or “Batch” means one or more components or finished devices that consist of a single type, model, class, size, composition, or software version that are manufactured
|
2.9
|
“Label” means a display of written, printed, or graphic matter upon the immediate container of any article. Any word, statement, or other information appearing on the immediate container must also appear “on the outside container or wrapper, if any there be, of the retain package of such article, or is easily legible through the outside container of wrapper.”
|
2.10
|
“Labeling” means any Labels and other written, printed, or graphic matter (1) upon any article or any of its containers or wrappers, or (2) displaying such article” at any time while a device is held for sale after shipment or delivery for shipment in interstate commerce.
|
2.11
|
“Quality Records” means Documents containing recorded information, regardless of the medium or characteristic, which demonstrate the effectiveness of the quality management system and that provide evidence that products meet regulatory requirements and comply with specified product requirements.
|
2.12
|
“Removal” means the physical removal of a device from its point of use to some other location for repair, modification, adjustment, relabeling, destruction, or inspection.
|
2.13
|
“Stock Recovery” means the correction or removal of a device that has not been marketed or that has not left the direct control of the manufacturer, i.e., the device is located on the premises owned, or under the control of, the manufacturer, and no portion of the lot, model, code, or other relevant unit involved in the corrective or removal action has been released for sale or use.
|
2.14
|
"Recall" means when there is a risk of death or serious deterioration to the state of health, the return of a medical device to the supplier, its modification by the supplier at the site of installation, its exchange or its destruction, in accordance with the instructions contained in the advisory notice.
|
2.15
|
"Medical Device Reporting System" is a system of incident reporting to the Federal Food and Drug Administration (FDA), for all medical devices which are approved for inter-state commerce, where such incidents lead to corrective action relevant to medical devices. Medical Device Reporting Systems maintained by the Distributor shall comply with all applicable laws, the rules and regulations promulgated by the Federal or any State. This system is intended to allow data to be correlated between the FDA and manufactures to improve the protection of health and safety of patients, users and others by reducing the likelihood of the same type of adverse incident being repeated in different places at different times.
|
3.0
|
PROCESS CONTROLS
|
3.1
|
Both parties shall be responsible for all process control activities relative to the Products, including but not limited to, assurance of receipt, identification, traceability, storage, handling, inventory control, contamination control, complaint handling and trending and process validations, as required by Title 21 of United States Code of Federal Regulations, and other applicable regulations, and governmental laws.
|
3.2
|
Both parties shall maintain appropriate documented procedures.
|
3.3
|
Company shall provide evidence that packaging containers maintain the integrity, quality, function, and sterility of the product for the entire shelf life, and not produce toxic residues during storage. Packaging must prevent or indicate the occurrence of tampering.
|
4.0
|
TRAINING AND DOCUMENT CHANGE CONTROL
|
4.1
|
Distributor shall be responsible for managing an effective employee training program and document change control system relative to the receipt, identification, traceability, storage, handling, inventory control, contamination control and complaint handling and trending at the location of Distributor and its third party suppliers.
|
4.2
|
Distributor must train its employees to perform their job function and to this Quality Agreement as required.
|
5.0
|
VALIDATION
|
5.1
|
Distributor shall be responsible for managing qualified processes and systems as required of suppliers (e.g. computer system) by law.
|
5.2
|
Both parties shall be responsible for managing an effective product and process validation system relative to the distribution of the Products at the location of the Distributor and its third party suppliers.
|
5.3
|
Both parties shall develop and implement validation or qualification protocols for significant processes, equipment, and computer systems.
|
5.4
|
Company shall be responsible for managing an effective product and process validation system relative to the manufacture of the Products at the location of the Company and its third party suppliers.
|
6.0
|
DISTRIBUTION AND HANDLING
|
6.1
|
Products shipped by the Distributor must be shipped using documented procedures for the handling, storage, packaging, preservation, and delivery of the Products.
|
6.2
|
Distributor shall deliver Products to its customers using documented procedures for handling, storage, packing, preservation, and delivery of the Products.
|
6.3
|
Disposables must have at least three months of expiration dating left, unless specific variance by lot number has been agreed to by both parties, before being shipped to any end-user customer.
|
6.4
|
The Distributor will not modify any product packaging that it receives from the Company. Shipping containers shall be validated to ensure that the safety and integrity of the Product is maintained during transit, including shipping methods that conform with the Product’s acceptable temperature and humidity ranges.
|
6.5
|
Distributor must maintain storage & handling as follows:
|
Product Name
|
Storage Temperature
|
Humidity
|
Sensor
|
2-25°C (36-77°F)
|
N/A
|
Transmitter
|
0-45°C (32-113°F)
|
Max 95% Relative
|
Receiver
|
0-45°C (32-113°F)
|
10-85% Relative
|
Product Name
|
Storage Temperature
|
Humidity
|
Sensor
|
2-25°C (36-77°F)
|
15-85% Relative
|
Transmitter
|
0-45°C (32-113°F)
|
10-95% Relative
|
Receiver
|
0-45°C (32-113°F)
|
10-95% Relative
|
7.0
|
LOT TRACEABILITY
|
7.1
|
Distributor shall establish and maintain procedures for identifying the Products by suitable means from receipt and during all stages of production and delivery. This shall include procedures to provide full lot traceability for each unit, lot, or batch of finished Products during all stages of production and delivery to the Distributor.
|
7.2
|
Distributor shall establish and maintain procedures to provide traceability to the first consignee.
|
7.3
|
Distributor shall establish and maintain procedures to provide traceability to the end user.
|
7.4
|
Both parties shall use reasonable efforts to assist the other in maintaining respective lot traceability.
|
7.5
|
Both parties are required to track the following information detailed in the table to the end user.
|
8.0
|
Seven Plus Product
|
Product
|
Description
|
Lot traceability Tracking Requirement
|
STK-7U-030
|
SEVEN PLUS System Kit
|
Lot Number identified on the box
|
STS-7K-041
|
SEVEN Sensors (package of one (1) or four (4))
|
Lot Number identified on the box
|
STR-7U- 030
|
SEVEN PLUS Replacement Receiver
|
Lot Number identified on the box
|
STT-7U- 030
|
SEVEN PLUS Replacement Transmitter
|
Lot Number identified on the box
|
9.0
|
G4 Platinum Product
|
Product
|
Description
|
Lot traceability Tracking Requirement
|
STK-GL-001
|
G4 Platinum Receiver Kit – BLK
|
Lot Number identified on the box
|
STK-GL-PNK
|
G4 Platinum Receiver Kit – PNK
|
Lot Number identified on the box
|
STK-GL-BLU
|
G4 Platinum Receiver Kit – BLU
|
Lot Number identified on the box
|
STT-GL-003
|
G4 Transmitter Kit
|
Lot Number identified on the box
|
STR-GL-001
|
G4 Platinum Replacement Receiver Kit – BLK
|
Lot Number identified on the box
|
STR-GL-PNK
|
G4 Platinum Replacement Receiver Kit – PNK
|
Lot Number identified on the box
|
STR-GL-BLU
|
G4 Platinum Replacement Receiver Kit – BLU
|
Lot Number identified on the box
|
STS-GL-011
|
G4 Platinum Sensors Kit (package of one (1))
|
Lot Number identified on the box
|
STS-GL-041
|
G4 Platinum Sensors Kit (package of four (4))
|
Lot Number identified on the box
|
10.0
|
PACKAGING AND LABELING
|
10.1
|
Company shall provide packaging and labeling specifications that call out clear labeling requirements.
|
10.2
|
Company shall ensure that the labels, inserts and accompanying documentation satisfy the requirements of the applicable regulations.
|
10.3
|
Distributor shall not modify the labels, primary or secondary packaging, inserts or accompanying documentation without the written approval of the Company.
|
11.0
|
FINISHED PRODUCT NON-CONFORMANCES
|
11.1
|
Any nonconforming finished product requires written approval from Company’s Quality Assurance before shipment to any Customer by Distributor.
|
12.0
|
COMPLAINT HANDLING AND REPORTING
|
12.1
|
Distributor shall be responsible for the establishment and maintenance of a system for handling all Tier I Complaints pertaining to Products distributed under the Agreement. "Complaint" means any written, electronic, telephone call and/or oral communication that alleges deficiencies related to the identity, quality, durability, reliability, safety, effectiveness, or performance of a device after it is released to distribution. A complaint is any indication of the failure of a device to meet customer or user expectations for quality or to meet performance specifications. A “Tier I Complaint” includes complaints that pertain to the purchase, payment, billing, delivery, packaging and customer service. This system shall include receipt, review, corrective/preventative action and maintenance of files. Distributor will not perform any Tier II Complaint Handling, as defined below.
|
12.2
|
Company shall be responsible for the establishment and maintenance of a system for handling Tier II Complaints pertaining to Products distributed under the Agreement. A “Tier II Complaint” includes complaints that pertain to product functionality, trouble shooting, or adverse events. This system shall include receipt, review, investigation, corrective/preventative action and maintenance of files. It shall also include adverse event reporting to the appropriate governmental authorities as required by regulations in the applicable jurisdictions.
|
12.3
|
Company shall notify Distributor in writing of legal and regulatory matters relating to the Products, including:
|
12.3.1
|
Any regulatory actions by governmental authorities (e.g., inspection citations, warning letters, or other non-conformance notices).
|
12.3.2
|
Regulatory enforcement actions such as injunctions or seizures.
|
12.3.3
|
FDA registration activity (e.g., non-conformance notices, hold points).
|
12.3.4
|
Complaints received from Customers within the Territory that have not been processed through the Company’s complaint handling system.
|
12.3.5
|
Adverse incidents relating to customers within the Territory (e.g., MDR’s.).
|
12.4
|
Distributor shall notify Company in writing of the following:
|
12.4.1
|
Any serious regulatory action relating to the Products.
|
12.4.2
|
Tier I Complaints regarding Products or Instruments. Distributor shall code, trend and report monthly all phone call inquiries and Tier I Complaint data pertaining to Products.
|
12.4.3
|
If an adverse incident is received that may be subject to FDA’s Medical Device Reporting regulation that pertain to Products and Instruments, then Distributor shall notify Company no later than 24 hours following Distributor’s initial receipt of the adverse event.
|
12.4.4
|
Distributor shall forward all complaints pertaining to Products and Instruments to Company no later than 5 working days following Distributor’s initial receipt of the complaint.
|
13.0
|
FIELD ACTIONS
|
13.1
|
The Company will be responsible for the initiation of any recalls or other field actions related to the Products.
|
13.2
|
Both parties will comply with recalls or general corrective actions, provided such recalls or general corrective actions do not, in the opinion of Company violate or cause Company to violate the laws of any jurisdiction affected by the recalls or corrective action.
|
13.3
|
If Distributor and Company do not agree on a course of action, Company may initiate field actions related to the Products, but may not use field action to cause Distributor to lose Customers.
|
14.0
|
AUDITS
|
14.1
|
Company shall have the right to conduct audits of Distributor’s facilities and operations during normal business hours at its own expense and upon thirty (30) days notice to Distributor in order to assess compliance with all applicable regulations, procedures and this Quality Agreement. Any such audits will be conducted by a national “big four” independent accounting firm (or other independent accounting firm whose audit department is a separate stand alone function of its business and which possesses liability insurance with coverage of at least [****]), subject to such firm’s execution of a confidentiality agreement in form reasonably acceptable to Distributor. Company shall be permitted to conduct one audit per calendar year or more frequently in the instance there exists a material difference between the inventory records of Distributor and Company.
|
15.0
|
RECORD RETENTION
|
15.1
|
Both parties shall retain all sales and medical records as required by law.
|
15.2
|
Prior to any record destruction pertaining to Company Products and Instruments, the Distributor will notify the Company in writing. If the record destruction is not approved the Company will assume responsibility of the records.
|
16.0
|
REGULATORY AND REGISTRATION ADMINISTRATION
|
16.1
|
Distributor, at its expense, is responsible for registration responsibilities, and for agreed upon domestic registration costs in accordance with Federal and State regulations. Distributor shall provide sufficient data and information to support domestic registrations.
|
16.2
|
Company, at its expense, is responsible for registration responsibilities, and for agreed upon registration costs of Products in the Territory. Company shall provide sufficient data and information to support such registrations.
|
17.0
|
QUALITY SYSTEM COMPLIANCE
|
17.1
|
Distributor shall establish and maintain a quality system in compliance with Title 21, United States Code of Federal Regulations and other applicable regulations, and governmental laws. Distributor shall also ensure that its contract vendors maintain a quality system in compliance with current Title 21, United States Code of Federal Regulations and other applicable regulations, and governmental laws.
|
17.2
|
Distributor acknowledges that without registering as an out-of-state home medical device retail facility, an out-of-state home medical device retail facility shall not sell or distribute prescription devices in this state through any person or media other than
|
18.0
|
ADDITIONAL DISTRIBUTOR REQUIREMENTS
|
18.1
|
Distributor agrees to comply with all applicable laws and regulations. Distributor agrees to obtain the necessary licenses to meet its obligations under this agreement.
|
18.2
|
Records should be accurate, indelible and legible. Entries must be dated and the person performing a documented task must be identified. Records must provide a complete history of the work performed. Products identified in this Quality Agreement are not in conflict with the laws of the importing country.
|
8.
|
All other terms and conditions of the Agreement that are not modified or amended pursuant to this Amendment Number Three shall remain in full force and effect and unaffected hereby. This Amendment Number Three may be executed in two (2) or more counterparts, each of which shall be deemed an original, but together shall constitute one and the same instrument.
|
Product
|
Description
|
Transfer Price*
|
STK-KD-001
|
Dexcom G4 PLATINUM Pediatric Receiver Kit – BLK
|
[****]
|
STK-KD-PNK
|
Dexcom G4 PLATINUM Pediatric Receiver Kit – PNK
|
[****]
|
STK-KD-BLU
|
Dexcom G4 PLATINUM Pediatric Receiver Kit – BLU
|
[****]
|
1.0
|
SCOPE
|
1.1
|
This Quality Agreement (the “Quality Agreement”) is incorporated within the Distribution Agreement dated October 12, 2009, as amended on September 30, 2010, and October 11, 2011, November 14, 2012, and pursuant to the consent to the assignment of the Non-Exclusive Distribution Agreement to Byram Healthcare dated May 2, 2012 (the “Agreement”) between Distributor and Company pertaining to the distribution and sale of Products. Capitalized terms not otherwise defined herein shall have the meaning assigned to them in the Agreement.
|
1.2
|
This Quality Agreement shall be effective on the Effective Date and shall remain in effect until the Agreement expires, is terminated or the Quality Agreement is modified.
|
2.0
|
DEFINITIONS / ACRONYMS
|
2.1
|
“Applicable Documents”: Documents used to develop a specific document (i.e. standards, regulations) and documents referenced in the text of the specific document.
|
2.2
|
"Government Agency" means any body which has the authority to act on behalf of the government of the Union or State to ensure that the requirements of all laws applicable to the Products and Distributor are carried out and adhered to in the State.
|
2.3
|
"Customer Complaint" means any written, electronic or oral communication that alleges deficiencies related to the identity, quality, durability, reliability, safety or performance of a medical device that has been placed on the market.
|
2.4
|
“CGM”: Continuous Glucose Monitoring.
|
2.5
|
“Correction” means repair, modification, adjustment, relabeling, destruction, or inspection (including patient monitoring) of a product without its physical removal to some other location.
|
2.6
|
“Document” means any information, either written or stored electronically, including specifications, procedures, standards, methods, instructions, plans, files, forms, notes, reviews, analyses, and reports.
|
2.7
|
“Government Agency” means a federal (e.g. FDA) or state (Health and Human Services Food and Drug Branch) organization that has the power to provide services for conformity assessment on the conditions set out in the Federal Food, Drug, and Cosmetic Act (FD&C Act) and United States Code (U.S.C) as part for the sale of medical device products. This normally means assessing the manufacturers conformity to the essential requirements listed in each directive.
|
2.8
|
“Lot” or “Batch” means one or more components or finished devices that consist of a single type, model, class, size, composition, or software version that are manufactured under essentially the same conditions and that are intended to have uniform characteristics and quality within specified limits.
|
2.9
|
“Label” means a display of written, printed, or graphic matter upon the immediate container of any article. Any word, statement, or other information appearing on the immediate container must also appear “on the outside container or wrapper, if any there be, of the retain package of such article, or is easily legible through the outside container of wrapper.”
|
2.10
|
“Labeling” means any Labels and other written, printed, or graphic matter (1) upon any article or any of its containers or wrappers, or (2) displaying such article” at any time while a device is held for sale after shipment or delivery for shipment in interstate commerce.
|
2.11
|
“Quality Records” means Documents containing recorded information, regardless of the medium or characteristic, which demonstrate the effectiveness of the quality management system and that provide evidence that products meet regulatory requirements and comply with specified product requirements.
|
2.12
|
“Removal” means the physical removal of a device from its point of use to some other location for repair, modification, adjustment, relabeling, destruction, or inspection.
|
2.13
|
“Stock Recovery” means the correction or removal of a device that has not been marketed or that has not left the direct control of the manufacturer, i.e., the device is located on the premises owned, or under the control of, the manufacturer, and no portion of the lot, model, code, or other relevant unit involved in the corrective or removal action has been released for sale or use.
|
2.14
|
"Recall" means when there is a risk of death or serious deterioration to the state of health, the return of a medical device to the supplier, its modification by the supplier at the site of installation, its exchange or its destruction, in accordance with the instructions contained in the advisory notice.
|
2.15
|
"Medical Device Reporting System" is a system of incident reporting to the Federal Food and Drug Administration (FDA), for all medical devices which are approved for inter-state commerce, where such incidents lead to corrective action relevant to medical devices. Medical Device Reporting Systems maintained by the Distributor shall comply with all applicable laws, the rules and regulations promulgated by the Federal or any State. This system is intended to allow data to be correlated between the FDA and manufactures to improve the protection of health and safety of patients, users and others by reducing the likelihood of the same type of adverse incident being repeated in different places at different times.
|
3.0
|
PROCESS CONTROLS
|
3.1
|
Both parties shall be responsible for all process control activities relative to the Products, including but not limited to, assurance of receipt, identification, traceability, storage, handling, inventory control, contamination control, complaint handling and trending and process validations, as required by Title 21 of United States Code of Federal Regulations, and other applicable regulations, and governmental laws.
|
3.2
|
Both parties shall maintain appropriate documented procedures.
|
3.3
|
Company shall provide evidence that packaging containers maintain the integrity, quality, function, and sterility of the product for the entire shelf life, and not produce toxic residues during storage. Packaging must prevent or indicate the occurrence of tampering.
|
4.0
|
TRAINING AND DOCUMENT CHANGE CONTROL
|
4.1
|
Distributor shall be responsible for managing an effective employee training program and document change control system relative to the receipt, identification, traceability, storage, handling, inventory control, contamination control and complaint handling and trending at the location of Distributor and its third party suppliers.
|
4.2
|
Distributor must train its employees to perform their job function and to this Quality Agreement as required.
|
5.0
|
VALIDATION
|
5.1
|
Distributor shall be responsible for managing qualified processes and systems as required of suppliers (e.g. computer system) by law.
|
5.2
|
Both parties shall be responsible for managing an effective product and process validation system relative to the distribution of the Products at the location of the Distributor and its third party suppliers.
|
5.3
|
Both parties shall develop and implement validation or qualification protocols for significant processes, equipment, and computer systems.
|
5.4
|
Company shall be responsible for managing an effective product and process validation system relative to the manufacture of the Products at the location of the Company and its third party suppliers.
|
6.0
|
DISTRIBUTION AND HANDLING
|
6.1
|
Products shipped by the Distributor must be shipped using documented procedures for the handling, storage, packaging, preservation, and delivery of the Products.
|
6.2
|
Distributor shall deliver Products to its customers using documented procedures for handling, storage, packing, preservation, and delivery of the Products.
|
6.3
|
Disposables must have at least three months of expiration dating left, unless specific variance by lot number has been agreed to by both parties, before being shipped to any end-user customer.
|
6.4
|
The Distributor will not modify any product packaging that it receives from the Company. Shipping containers shall be validated to ensure that the safety and integrity of the Product is maintained during transit, including shipping methods that conform with the Product’s acceptable temperature and humidity ranges.
|
6.5
|
Distributor must maintain storage & handling as follows:
|
Product Name
|
Storage Temperature
|
Humidity
|
Sensor
|
2-25°C (36-77°F)
|
N/A
|
Transmitter
|
0-45°C (32-113°F)
|
Max 95% Relative
|
Receiver
|
0-45°C (32-113°F)
|
10-85% Relative
|
Product Name
|
Storage Temperature
|
Humidity
|
Sensor
|
2-25°C (36-77°F)
|
0-95% Relative
|
Transmitter
|
0-45°C (32-113°F)
|
10-95% Relative
|
Receiver
|
0-45°C (32-113°F)
|
10-95% Relative
|
Product Name
|
Storage Temperature
|
Humidity
|
Sensor
|
2-25°C (36-77°F)
|
0-95% Relative
|
Transmitter
|
0-45°C (32-113°F)
|
10-95% Relative
|
Receiver
|
0-45°C (32-113°F)
|
10-95% Relative
|
7.0
|
LOT TRACEABILITY
|
7.1
|
Distributor shall establish and maintain procedures for identifying the Products by suitable means from receipt and during all stages of production and delivery. This shall include procedures to provide full lot traceability for each unit, lot, or batch of finished Products during all stages of production and delivery to the Distributor.
|
7.2
|
Distributor shall establish and maintain procedures to provide traceability to the first consignee.
|
7.3
|
Distributor shall establish and maintain procedures to provide traceability to the end user.
|
7.4
|
Both parties shall use reasonable efforts to assist the other in maintaining respective lot traceability.
|
7.5
|
Both parties are required to track the following information detailed in the table to the end user.
|
8.0
|
Seven Plus Product
|
Product
|
Description
|
Lot traceability Tracking Requirement
|
STK-7U-030
|
SEVEN PLUS System Kit
|
Lot Number identified on the box
|
STS-7K-041
|
SEVEN Sensors (package of one (1) or four (4))
|
Lot Number identified on the box
|
STR-7U- 030
|
SEVEN PLUS Replacement Receiver
|
Lot Number identified on the box
|
STT-7U- 030
|
SEVEN PLUS Replacement Transmitter
|
Lot Number identified on the box
|
9.0
|
G4 Platinum Product
|
Product
|
Description
|
Lot traceability Tracking Requirement
|
STK-GL-001
|
G4 Platinum Receiver Kit – BLK
|
Lot Number identified on the box
|
STK-GL-PNK
|
G4 Platinum Receiver Kit – PNK
|
Lot Number identified on the box
|
STK-GL-BLU
|
G4 Platinum Receiver Kit – BLU
|
Lot Number identified on the box
|
STT-GL-003
|
G4 Transmitter Kit
|
Lot Number identified on the box
|
STR-GL-001
|
G4 Platinum Replacement Receiver Kit – BLK
|
Lot Number identified on the box
|
STR-GL-PNK
|
G4 Platinum Replacement Receiver Kit – PNK
|
Lot Number identified on the box
|
STR-GL-BLU
|
G4 Platinum Replacement Receiver Kit – BLU
|
Lot Number identified on the box
|
STS-GL-011
|
G4 Platinum Sensors Kit (package of one (1))
|
Lot Number identified on the box
|
STS-GL-041
|
G4 Platinum Sensors Kit (package of four (4))
|
Lot Number identified on the box
|
10.0
|
G4 Platinum Product - Pediatric
|
Product
|
Description
|
Lot traceability Tracking Requirement
|
STK-KD-001
|
G4 Platinum Pediatric Receiver Kit – BLK
|
Lot Number identified on the box
|
STK-KD-PNK
|
G4 Platinum Pediatric Receiver Kit – PNK
|
Lot Number identified on the box
|
STK-KD-BLU
|
G4 Platinum Pediatric Receiver Kit – BLU
|
Lot Number identified on the box
|
STT-GL-003
|
G4 Transmitter Kit
|
Lot Number identified on the box
|
STR-KD-001
|
G4 Platinum Replacement Receiver Kit – BLK
|
Lot Number identified on the box
|
STR-KD-PNK
|
G4 Platinum Replacement Receiver Kit – PNK
|
Lot Number identified on the box
|
STR-KD-BLU
|
G4 Platinum Replacement Receiver Kit – BLU
|
Lot Number identified on the box
|
STS-GL-011
|
G4 Platinum Sensors Kit (package of one (1))
|
Lot Number identified on the box
|
STS-GL-041
|
G4 Platinum Sensors Kit (package of four (4))
|
Lot Number identified on the box
|
11.0
|
PACKAGING AND LABELING
|
11.1
|
Company shall provide packaging and labeling specifications that call out clear labeling requirements.
|
11.2
|
Company shall ensure that the labels, inserts and accompanying documentation satisfy the requirements of the applicable regulations.
|
11.3
|
Distributor shall not modify the labels, primary or secondary packaging, inserts or accompanying documentation without the written approval of the Company.
|
12.0
|
FINISHED PRODUCT NON-CONFORMANCES
|
12.1
|
Any nonconforming finished product requires written approval from Company’s Quality Assurance before shipment to any Customer by Distributor.
|
13.0
|
COMPLAINT HANDLING AND REPORTING
|
13.1
|
Distributor shall be responsible for the establishment and maintenance of a system for handling all Tier I Complaints pertaining to Products distributed under the Agreement. "Complaint" means any written, electronic, telephone call and/or oral communication that alleges deficiencies related to the identity, quality, durability, reliability, safety, effectiveness, or performance of a device after it is released to distribution. A complaint is any indication of the failure of a device to meet customer or user expectations for quality or to meet performance specifications. A “Tier I Complaint” includes complaints that pertain to the purchase, payment, billing, delivery, packaging and customer service. This system shall include receipt, review, corrective/preventative action and maintenance of files. Distributor will not perform any Tier II Complaint Handling, as defined below.
|
13.2
|
Company shall be responsible for the establishment and maintenance of a system for handling Tier II Complaints pertaining to Products distributed under the Agreement. A “Tier II Complaint” includes complaints that pertain to product functionality, trouble shooting, or adverse events. This system shall include receipt, review, investigation, corrective/preventative action and maintenance of files. It shall also include adverse event reporting to the appropriate governmental authorities as required by regulations in the applicable jurisdictions.
|
13.3
|
Company shall notify Distributor in writing of legal and regulatory matters relating to the Products, including:
|
13.3.1
|
Any regulatory actions by governmental authorities (e.g., inspection citations, warning letters, or other non-conformance notices).
|
13.3.2
|
Regulatory enforcement actions such as injunctions or seizures.
|
13.3.3
|
FDA registration activity (e.g., non-conformance notices, hold points).
|
13.3.4
|
Complaints received from Customers within the Territory that have not been processed through the Company’s complaint handling system.
|
13.3.5
|
Adverse incidents relating to customers within the Territory (e.g., MDR’s.).
|
14.4
|
Distributor shall notify Company in writing of the following:
|
14.4.1
|
Any serious regulatory action relating to the Products.
|
14.4.2
|
Tier I Complaints regarding Products or Instruments. Distributor shall code, trend and report monthly all phone call inquiries and Tier I Complaint data pertaining to Products.
|
14.4.3
|
If an adverse incident is received that may be subject to FDA’s Medical Device Reporting regulation that pertain to Products and Instruments, then Distributor shall notify Company no later than 24 hours following Distributor’s initial receipt of the adverse event.
|
14.4.4
|
Distributor shall forward all complaints pertaining to Products and Instruments to Company no later than 5 working days following Distributor’s initial receipt of the complaint.
|
14.0
|
FIELD ACTIONS
|
14.1
|
The Company will be responsible for the initiation of any recalls or other field actions related to the Products.
|
14.2
|
Both parties will comply with recalls or general corrective actions, provided such recalls or general corrective actions do not, in the opinion of Company violate or cause Company to violate the laws of any jurisdiction affected by the recalls or corrective action.
|
14.3
|
If Distributor and Company do not agree on a course of action, Company may initiate field actions related to the Products, but may not use field action to cause Distributor to lose Customers.
|
15.0
|
AUDITS
|
15.1
|
Company shall have the right to conduct audits of Distributor’s facilities and operations during normal business hours at its own expense and upon thirty (30) days notice to Distributor in order to assess compliance with all applicable regulations, procedures and this Quality Agreement. Any such audits will be conducted by a national “big four” independent accounting firm (or other independent accounting firm whose audit department is a separate stand alone function of its business and which possesses liability insurance with coverage of at least [****]), subject to such firm’s execution of a confidentiality agreement in form reasonably acceptable to Distributor. Company shall be permitted to conduct one audit per calendar year or more frequently in the instance there exists a material difference between the inventory records of Distributor and Company.
|
16.0
|
RECORD RETENTION
|
16.1
|
Both parties shall retain all sales and medical records as required by law.
|
16.2
|
Prior to any record destruction pertaining to Company Products and Instruments, the Distributor will notify the Company in writing. If the record destruction is not approved the Company will assume responsibility of the records.
|
17.0
|
REGULATORY AND REGISTRATION ADMINISTRATION
|
17.1
|
Distributor, at its expense, is responsible for registration responsibilities, and for agreed upon domestic registration costs in accordance with Federal and State regulations. Distributor shall provide sufficient data and information to support domestic registrations.
|
17.2
|
Company, at its expense, is responsible for registration responsibilities, and for agreed upon registration costs of Products in the Territory. Company shall provide sufficient data and information to support such registrations.
|
18.0
|
QUALITY SYSTEM COMPLIANCE
|
18.1
|
Distributor shall establish and maintain a quality system in compliance with Title 21, United States Code of Federal Regulations and other applicable regulations, and governmental laws. Distributor shall also ensure that its contract vendors maintain a quality system in compliance with current Title 21, United States Code of Federal Regulations and other applicable regulations, and governmental laws.
|
18.2
|
Distributor acknowledges that without registering as an out-of-state home medical device retail facility, an out-of-state home medical device retail facility shall not sell or distribute prescription devices in this state through any person or media other than
|
19.0
|
ADDITIONAL DISTRIBUTOR REQUIREMENTS
|
19.1
|
Distributor agrees to comply with all applicable laws and regulations. Distributor agrees to obtain the necessary licenses to meet its obligations under this agreement.
|
19.2
|
Records should be accurate, indelible and legible. Entries must be dated and the person performing a documented task must be identified. Records must provide a complete history of the work performed. Products identified in this Quality Agreement are not in conflict with the laws of the importing country.
|
|
|
SUBSIDIARY
(Name under which subsidiary does business)
|
JURISDICTION OF
INCORPORATION
|
DXCM Sweden AB
|
Sweden
|
SweetSpot Diabetes Care, Inc.
|
Delaware
|
|
|
|
|
Date: February 20, 2014
|
By:
|
|
/s/ Terrance H. Gregg
|
|
|
|
Terrance H. Gregg
|
|
|
|
Chief Executive Officer
|
|
|
|
|
Date: February 20, 2014
|
By:
|
|
/s/ Jess Roper
|
|
|
|
Jess Roper
|
|
|
|
Chief Financial Officer
|
|
/s/ Terrance H. Gregg
|
Terrance H. Gregg
|
Chief Executive Officer
|
|
/s/ Jess Roper
|
Jess Roper
|
Chief Financial Officer
|