Dive Brief:

• Dexcom received a warning letter on March 4 after the Food and Drug Administration found problems at facilities in Arizona and California, the company revealed Friday in a securities filing.
• Dexcom said the warning letter, which the FDA has yet to publish, describes non-conformities in the manufacturing processes and quality management systems at the two facilities.
• The company does not expect the warning letter to materially impact its manufacturing capacity or sales, and it can continue to make and sell devices and seek clearance of new products.

Dive Insight:

FDA inspectors visited Dexcom’s facility in Mesa, Arizona, in June and its San Diego site in October and November. The inspections generated a Form 483 that listed observations the FDA made during its assessments. Dexcom said it has submitted several responses to the Form 483. However, the company still received a warning letter, which “cited deficiencies in the response letters sent by [Dexcom] to the FDA following the Form 483.”

BTIG analysts, in a Sunday note to investors, wrote that they “were surprised by the news” but expect Dexcom to “resolve the issues with little impact to commercial and regulatory operations.” The analysts made the prediction after speaking with Dexcom.

Management does not expect the FDA’s review of Dexcom’s 15-day sensor to be affected, the analysts added.

Dexcom received FDA observations “related to process improvement and documentation requests,” the analysts said, and implemented process controls three months ago in response to the Form 483s. The company said it “intends to continue to undertake certain corrections and corrective actions.”

Dexcom is preparing a response to the warning letter, according to its filing with the Securities and Exchange Commission. 

The company does not expect a material impact from the warning letter on its manufacturing capacity or the fiscal year 2025 guidance but the situation could change. Dexcom said it is unable to “give any assurances that the FDA will be satisfied with its response” or provide a target date for resolving the issues. Until the letter is resolved, the FDA can take legal or regulatory action without further notice.

Leerink Partners, who also spoke with Dexcom management, said in a Sunday note that executives “do not anticipate any incremental costs to materially impact the other pieces of the guidance” such as profit margins. Other medtech companies have needed to increase spending to resolve warning letters.

“While FDA warning letters related to Form 483 responses have resulted in incremental expenses for impacted companies in certain instances, such as [Becton Dickinson] recording a $28mn liability for estimated future costs addressing non-conformities associated with a warning letter, we do not expect this update to move the needle in any capacity,” the analysts said.