What changed in this filing

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Item 1. Business

2022-02-14 compared with 2021-02-11 · 133 added, 128 removed, 555 unchanged (32% of the section changed)

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We are a medical device company primarily focused on the design, development and commercialization of continuous glucose monitoring, or CGM, systems for use by people with diabetes and by healthcare providers.

We received approval from the United States (U.S.) Food and Drug Administration, or FDA, and commercialized our first product in 2006.

We received approval from the United States Food and Drug Administration, or FDA, and commercialized our first product in 2006.

We launched our latest generation system, the Dexcom G6 ® integrated Continuous Glucose Monitoring System, or G6, in 2018.

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Stockholders may request copies of these documents by mail or telephone, at the address or phone number provided above.

Product Candidates

We are pursuing regulatory approvals for our next generation G7 CGM system.

The G7 carries forward many of the same features as our G6 CGM system and adds several new or improved features, including

The G7 is designed with the goal of carrying forward many of the same features as our G6 CGM system and adding several new or improved features, including:

• Reduced size .

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In March 2018, we obtained marketing authorization from the FDA for the G6 via the de novo process.

The G6 is the first type of CGM system permitted by the FDA to be used as part of an integrated system with other compatible medical devices and electronic interfaces, which may include automated insulin dosing systems, insulin pumps, blood glucose meters or other electronic devices used for diabetes management.

The G6 was the first type of CGM system permitted by the FDA to be used as part of an integrated system with other compatible medical devices and electronic interfaces, which may include automated insulin dosing systems, insulin pumps, blood glucose meters or other electronic devices used for diabetes management.

G6 and substantially equivalent devices of this generic type that may later receive marketing authorization are referred to as integrated continuous glucose monitoring systems, or iCGMs, and have been classified as Class II devices by the FDA.

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The G6 is designed to allow our transmitter to run an algorithm to generate a glucose value and to communicate directly to a patient’s compatible mobile device, including iPhone ® , iPod touch ® , iPad ® , and certain Android ® mobile devices.

A patient’s glucose data can also be displayed on wearable devices,

like the Apple Watch ® and Wear OS by Google devices.

A patient’s glucose data can also be displayed on wearable devices, like the Apple Watch ® and Wear OS by Google devices.

The G6 transmitter has a labeled useful life of three months.

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In October 2019, we also received marketing authorization from the FDA for the Dexcom G6 Pro, or G6 Pro, which allows healthcare professionals to purchase the G6 for use with their patients.

The G6 Pro has many of same features as the G6 and is intended for healthcare professionals to use with their patients ages two years and up.

The G6 Pro has many of same features as the G6

and is intended for healthcare professionals to use with their patients ages two years and up.

The G6 Pro may be used in a blinded or unblinded mode for up to 10 days.

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Since the G6 is classified by the FDA as a Class II device, it is subject to special controls and modifications of, or revisions to, the device may be made under the 510(k) process.

Global revenues associated with the sales of our previous commercial products, the Dexcom G4 ® Platinum CGM system and G5® Mobile CGM system, or G5 Mobile, amount to less than 10% of our revenue for the fiscal year ended 2020 and we anticipate phasing out these commercial products by the end of 2021.

Dexcom Share ®

The Dexcom Share remote monitoring system, offered for use with any current Dexcom system, uses an app on the patient’s iPhone, iPod touch, iPad or Android mobile device to securely and wirelessly transmit glucose information to the cloud and then to apps on the mobile devices of up to five designated recipients, or “followers,” who can remotely monitor a patient’s glucose information and receive alert notifications anywhere they have a wireless connection.

A patient’s glucose data can also be displayed on a patient’s or follower’s wearable device, such as the Apple Watch and Wear OS by Google devices, when used in conjunction with the patient’s or follower’s iPhone or Android mobile device.

The Dexcom Share remote monitoring system, offered for use with any current Dexcom system, uses an app on the patient’s compatible iPhone, iPod touch, iPad or Android mobile device to securely and wirelessly transmit glucose information to the cloud and then to apps on the mobile devices of up to five designated recipients, or “followers,” who can remotely monitor a patient’s glucose information and receive alert notifications anywhere they have a wireless connection.

Dexcom Real-Time API

In July 2021, we received FDA 510(k) clearance for our Real-Time API, which expands connectivity and interoperability of the Dexcom CGM digital ecosystem.

Dexcom Real-Time API enables invited third-party developers to integrate real-time CGM data into their digital health apps and devices.

In July 2021, we obtained CE Mark approval for our new Dexcom ONE CGM system, or Dexcom ONE, which we have launched in four countries:

Bulgaria, Estonia, Latvia and Lithuania.

Dexcom ONE consists of three main components:

a Dexcom ONE sensor, a Dexcom ONE transmitter, and a Dexcom ONE app as the display device for users with a compatible mobile device.

Dexcom ONE carries many of the same features as the G6, and is indicated for persons, including pregnant women, ages 2 years and older.

Like our other CGM systems, Dexcom ONE is designed to replace finger stick blood glucose testing for diabetes treatment decisions.

Data and Insulin Delivery Collaborations

We have entered into multiple collaboration agreements that leverage our technology platform to integrate our CGM products with insulin delivery systems.

The general purpose of these development and commercial relationships is to integrate our technology into the insulin pump or pen product offerings of the respective partner, enabling the partner’s insulin delivery device to receive and display glucose readings from our transmitter and, in some cases, use the glucose readings for semi-automated insulin delivery.

device to receive and display glucose readings from our transmitter and, in some cases, use the glucose readings for semi-automated insulin delivery.

Currently, we have announced significant insulin delivery partnerships with Eli Lilly, Insulet, Novo Nordisk, Tandem Diabetes and The Ypsomed Group.

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It also provides us with non-exclusive license rights under Verily’s other intellectual property rights to develop, manufacture, and commercialize those kinds of glucose monitoring products and certain CGM product companion software functionalities.

In consideration of Verily’s performance of its obligations under the joint development plan of the Restated Collaboration Agreement, the licenses granted to us and the amendment of the original agreement, we have made upfront and incentive payments, and will make potential additional milestone payments of up to $275.0 million that may become due and payable by us upon the achievement of future product regulatory approval and revenue milestones.

At our election, we may make these milestone payments in shares of our common stock or cash.

See Note 2 to the consolidated financial statements in Part II, Item 8 and Exhibit 10.31 of this Annual Report for a further description of the Restated Collaboration Agreement.

In consideration of Verily’s performance of its obligations under the joint development plan of the Restated Collaboration Agreement, the licenses granted to us and the amendment of the original agreement, we have made upfront and incentive payments, and will make potential additional milestone payments for future product regulatory approval and sales-based milestones.

At our election, we may make these payments in shares of our common stock or cash.

If we elect to make these milestone payments in cash, any such cash payment would be equal to the number of shares that would otherwise be issued for the given milestone payment multiplied by the value of our stock on the date the relevant milestone is achieved, adjusted for stock splits, dividends, and the like.

See Note 2 “Development and Other Agreements” to the consolidated financial statements in Part II, Item 8 and Exhibit 10.31 of this Annual Report for a further description of the Restated Collaboration Agreement, including the number of shares of stock for milestone payments.

Market Opportunity

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The 2022 CDC Report also lists diabetes as the seventh leading cause of death by disease in the United States, excluding comorbidities associated with the disease.

The report states that diabetes is the primary cause of death for more than 87,000 Americans each year, and contributes to the death of more than 280,000 Americans annually.

According to the Congressional Diabetes Caucus website, diabetes is the leading cause of kidney failure, adult-onset blindness, lower-limb amputations, and a significant cause of heart disease, stroke, high blood pressure and nerve damage.

According to the IDF, there were an estimated 6.7 million deaths attributable to diabetes globally in 2021 between the ages of 20 and 79 years.

The American Diabetes Association, or ADA, Fast Facts, revised in February 2020, states that diabetes is the primary cause of death for more than 83,000 Americans each year, and contributes to the death of more than 270,000 Americans annually.

According to the ADA, one in every four healthcare dollars was spent on treating people with diabetes in 2017, and the direct medical costs and indirect expenditures attributable to diabetes in the United States were an estimated $327 billion, an inflation-adjusted increase of approximately 26% since 2012.

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The ADA also found that in 2017, average medical expenditures among people with diagnosed diabetes were 2.3 times higher than for people without diabetes.

According to the IDF, 2019 expenditures attributable to diabetes were estimated to be $760 billion globally.

The IDF estimates that expenditures attributable to diabetes will grow to $845 billion globally by 2045.

According to the IDF, 2021 expenditures attributable to diabetes were estimated to be $966 billion globally, an increase of 27% from their previous estimate in 2019.

Type 1 Diabetes

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Depending on the severity of Type 2 diabetes, individuals may require diet and nutrition management, exercise, oral medications or insulin injections to regulate blood glucose levels.

We estimate that approximately 6.0 million Type 2 patients must use insulin to manage their diabetes.

We estimate that between 5.0 and 6.0 million people with Type 2 diabetes in the United States must use insulin to manage their diabetes.

Type 2 diabetes is occurring with increasing frequency in young people, with the increase in prevalence related to an increase in obesity amongst children.

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We are extending our commercial efforts for this population through several channels, including through strategic partnerships.

In the future, we expect to expand our product offering to address people with pre-diabetes, people who are obese, people who are pregnant, and people in the hospital setting.

In the future, we plan to expand our product offering and cleared/approved indications to address people with pre-diabetes, people who are obese, people who are pregnant, and people in the hospital setting.

Although the majority of our revenue has been generated in the United States, we have expanded our operations to include certain countries in Africa, Asia, Europe, Latin America, and the Middle East, as well as Australia, Canada, and New Zealand.

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Patients can monitor their glucose levels and trends on compatible wearable devices, such as Apple Watch and Wear OS by Google devices, when used with a compatible mobile device.

Also, our Share remote monitoring systems enable users of our current CGM systems to have their sensor glucose information remotely monitored by their family, friends or designated recipient, or follower, by wirelessly transmitting data from the user’s smart phone to the cloud and then to the follower’s mobile device.

Also, our Share remote monitoring systems enable users of our current CGM systems to have their sensor glucose information remotely monitored by their family, friends or other designated recipient, or follower, by wirelessly transmitting data from the user’s smart phone to the cloud and then to the follower’s mobile device.

Several followers can remotely monitor a patient’s glucose information and receive secondary alert notifications from almost anywhere with an Internet connection via each follower’s mobile device.

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• Driving the adoption of our ambulatory products through a direct sales and marketing effort, as well as key distribution arrangements.

• Driving additional adoption through technology integration partnerships such as our current partnerships with Eli Lilly, Insulet, Novo Nordisk, Tandem Diabetes, The Ypsomed Group and others.

• Driving additional adoption through technology integration partnerships such as our current partnerships with Eli Lilly, Insulet, Novo Nordisk, Tandem Diabetes, The Ypsomed Group and others globally.

• Seeking broad coverage policies and reimbursement for our products from private third-party payors and national health systems.

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We have used our extensive database of continuous glucose data to create and refine software, algorithms and other technology for the display of data to customers.

Products in Development

We have gained our technology expertise by learning to design implants that can withstand the rigors of functioning within the human body for extended periods of time, as well as other issues such as device sealing, miniaturization, durability and sensor geometry.

We are leveraging this technology platform to enhance the capabilities of our current products (including obtaining expanded indications of use) and to develop additional CGM products.

We plan to develop future generations of technologies focused on improved performance and convenience and that will enable intelligent insulin administration.

Over the longer term, we plan to continue to develop and improve networked platforms with open architecture, connectivity and transmitters capable of communicating with other devices.

We intend to expand our efforts to accumulate CGM patient data and metrics and apply predictive modeling and machine learning to generate interactive CGM insights that can inform patient behavior.

We continue to pursue and support development partnerships with insulin pump companies and companies or institutions developing insulin delivery systems, including automated insulin delivery systems.

We are also exploring how to extend our offerings to other populations, including for people with Type 2 diabetes that are non-insulin using, people with pre-diabetes, people who are obese, people who are pregnant, and people in the hospital setting.

Eventually, we may apply our technological expertise to products beyond glucose monitoring.

Disposable Sensor and Reusable Transmitter

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After a stabilization period with the G6, the user will begin receiving CGM data on his or her mobile device or dedicated receiver through the ten-day usage period.

After a stabilization period with the G5 Mobile, the user is required to calibrate the

sensor with two measurements from a single-point finger stick device and the disposable sensor begins wirelessly transmitting the continuous glucose data at specific intervals to the handheld receiver or compatible mobile device.

Users are prompted by the receiver or mobile app, if using the G5 Mobile, to calibrate the system twice per day with finger stick measurements throughout the use period to ensure reliable operation.

Calibration may be accomplished by using any FDA cleared blood glucose meter.

Our G6 system has labeling from the FDA and CE Mark permitting their use as a replacement for finger sticks for making therapeutic adjustments, although the G5 Mobile still requires two daily finger stick calibrations.

Our G6 system has labeling from the FDA and CE Mark permitting their use as a replacement for finger sticks for making therapeutic adjustments.

The disposable sensor contained in the G6 system is intended to function for up to ten days, after which the sensor should be replaced.

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A receiver may be required as the primary display device or a backup to the mobile device in some jurisdictions, including the United States.

Products in Development

We are leveraging this technology platform to enhance the capabilities of our current products (including obtaining expanded indications of use) and to develop additional CGM products.

We plan to develop future generations of technologies focused on improved performance and convenience and that will enable intelligent insulin administration.

Over the longer term, we plan to continue to develop and improve networked platforms with open architecture, connectivity and transmitters capable of communicating with other devices.

We intend to expand our efforts to accumulate CGM patient data and metrics and apply predictive modeling and machine learning to generate interactive CGM insights that can inform patient behavior.

We continue to pursue and support development partnerships with insulin pump companies and companies or institutions developing insulin delivery systems, including automated insulin delivery systems.

Eventually, we may apply our technological expertise to products beyond glucose monitoring.

Commercial Operations

We have built a direct sales organization in the United States, Canada and certain countries in Europe to call on health care professionals, such as endocrinologists, physicians and diabetes educators, who can educate and influence patient adoption of continuous glucose monitoring.

We have built a direct sales organization in the United States, Australia, Canada, New Zealand, and some countries in Europe to call on health care professionals, such as endocrinologists, physicians and diabetes educators, who can educate and influence patient adoption of continuous glucose monitoring.

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, and to ensure that health care professionals and patients are knowledgeable about our products and their functionality.

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We directly market our products in the United States, Austria, Canada, Germany, Ireland, Switzerland, and the United Kingdom primarily to endocrinologists, physicians and diabetes educators.

To complement our direct sales efforts, we have entered into distribution arrangements in the United States, Australia and New Zealand, and certain countries in Africa, Asia, Europe, Latin America, and the Middle East that allow distributors to sell our products.

To complement our direct sales efforts, we have entered into distribution arrangements in the United States, and certain countries in Africa, Asia, Europe, Latin America, and the Middle East, as well as Australia, Canada, and New Zealand that allow distributors to sell our products.

We expect to continue investing in our field sales force and believe our direct, highly specialized and focused sales organization and our domestic and international distribution agreements are sufficient for us to support our sales efforts for at least the next twelve months.

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We currently manufacture our products at our headquarters in San Diego, California and at our manufacturing facility in Mesa, Arizona.

As of December 31, 2020, our headquarters facilities had approximately 31,000 square feet of laboratory space and approximately 28,000 square feet of controlled environment rooms.

Our Mesa, Arizona facility has approximately 14,000 square feet of laboratory space and approximately 33,000 square feet of controlled environment rooms.

As of December 31, 2021, we had approximately 64,000 square feet of laboratory space and approximately 101,500 square feet of controlled environment rooms.

In 2020, we commenced construction of a new facility in Malaysia that we anticipate will add substantial manufacturing capacity.

There are technical challenges to increasing manufacturing capacity, including FDA qualification of new manufacturing facilities, equipment design and automation, material procurement, problems with production yields, and quality control and assurance.

There are technical challenges to increasing manufacturing capacity, finding or enhancing new manufacturing facilities capable of meeting regulatory requirements, U.S.

state licensure of manufacturing facilities, equipment design and automation, material procurement, problems with production yields, and quality control and assurance.

We have focused significant effort on continual improvement programs in our manufacturing operations intended to improve quality, yields and throughput.

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Additionally, the production of our continuous glucose monitoring systems must occur in a highly controlled and clean environment to minimize particles and other yield- and quality-limiting contaminants.

Developing and maintaining commercial-scale manufacturing facilities has and will continue to require the investment of substantial additional funds and the hiring and

retaining of additional management, quality assurance, quality control and technical personnel who have the necessary manufacturing experience.

Developing and maintaining commercial-scale manufacturing facilities has and will continue to require the investment of substantial additional funds and the hiring and retention of additional management, quality assurance, quality control and technical personnel who have the necessary manufacturing experience.

We manufacture our current CGM systems with certain components supplied by outside vendors and other components that we manufacture internally.

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We purchase certain components and materials used in manufacturing from single sources due to quality considerations, costs or constraints resulting from regulatory or other requirements.

As of December 31, 2020, those single sources include suppliers of application-specific integrated circuits used in our transmitters, seals used for the applicator and certain polymers used to synthesize polymeric membranes for our sensors.

As of December 31, 2021, those single sources include

suppliers of application-specific integrated circuits used in our transmitters, seals used for the applicator and certain polymers used to synthesize polymeric membranes for our sensors.

For additional information, please see our Risk Factor entitled, “ We depend upon third-party suppliers and outsource to other parties, making us vulnerable to supply disruptions, suboptimal quality, non-compliance and/or price fluctuations, which could harm our business .” For supply risks related to COVID-19, see our Risk Factor entitled “ The outbreak of the SARS-Cov-2 virus and its variants and the COVID-19 disease that it causes, or similar public health crises, could have a material adverse impact on our business, financial condition and results of operations, including our manufacturing, commercial operations and sales .”

Third-Party Reimbursement

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In September 2016, Germany’s Federal Joint Committee agreed to provide reimbursement for continuous glucose monitoring systems under certain conditions which we believe we meet.

We also have coverage under certain international markets and Medicaid coverage in 40 states.

As of December 31, 2020, 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.

In addition, we have negotiated contracted rates with all seven of those third-party payors for the purchase of our current CGM systems by their members.

We also have coverage under certain international markets and Medicaid coverage in about 44 states.

As of December 31, 2021, the eight 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.

In addition, we have negotiated contracted rates with all of those third-party payors for the purchase of our current CGM systems by their members.

We have personnel with reimbursement expertise to assist customers in obtaining reimbursement from private third-party payors.

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Protection of our intellectual property is a strategic priority for our business.

We rely on a combination of patents, copyrights, trademarks, tradenames, trade secrets, nondisclosure agreements and other measures to establish and protect our proprietary rights.

We rely on a combination of patents, copyrights, trademarks, trade names, trade secrets, nondisclosure agreements and other measures to establish and protect our proprietary rights.

Our patent portfolio includes numerous issued and pending patent applications in the U.S.

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We seek to protect our proprietary information and other intellectual property by generally requiring our employees, consultants, contractors, suppliers, outside scientific collaborators and other advisors to execute non-disclosure and assignment of invention agreements on commencement of their employment or engagement.

Agreements with our employees also forbid them from bringing the proprietary rights of third parties to us.

Agreements with our employees also forbid

them from bringing the proprietary rights of third parties to us.

We also generally require confidentiality or material transfer agreements from third parties that receive our confidential data or materials.

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Some devices are placed in Class III, which requires approval of a PMA application, if they are deemed by the FDA to pose the greatest risk, such as life-sustaining, life-supporting or certain implantable devices, or to be “not substantially equivalent” either to a previously 510(k) cleared device or to a “preamendment” Class III device in commercial distribution before May 28, 1976 for which PMA applications have not been required.

The Food and Drug Administration Modernization Act of 1997 established a new route to market for low to moderate risk medical devices that are automatically placed into Class III due to the absence of a predicate device, called the “Request for Evaluation of Automatic Class III Designation,” or the de novo classification procedure.

This procedure allows a manufacturer whose novel device is automatically classified into Class III to request down-classification of its medical device into Class I or Class II on the basis that the device presents low or moderate risk, rather than requiring the submission and approval of a PMA.

Prior to the enactment of the Food and Drug Administration Safety and Innovation Act, or FDASIA, in July 2012, a medical device could only be eligible for de novo classification if the manufacturer first submitted a 510(k) pre-market notification and received a determination from the FDA that the device was not substantially equivalent.

FDASIA streamlined the de novo classification pathway by permitting (under Section 513(f)(2) of the FDCA) manufacturers to request de novo classification directly without first submitting a 510(k) pre-market notification to the FDA and receiving a not substantially equivalent determination.

FDASIA sets a review time for FDA of 120 days following receipt of the de novo application, but FDA does not always meet this timeline and has publicly only committed to a review goal of 150 days for 50% of applications.

If the manufacturer seeks reclassification into Class II, the manufacturer must include a draft proposal for special controls that are necessary to provide a reasonable assurance of the safety and effectiveness of the medical device.

The FDA may reject the reclassification petition if it identifies a legally marketed predicate device that would be appropriate for a 510(k) or determines that the device is not low to moderate risk or that general controls would be inadequate to control the risks and special controls cannot be developed.

If a previously unclassified new medical device does not qualify for the 510(k) pre-market notification process because no predicate device to which it is substantially equivalent can be identified, the device is automatically classified into Class III.Under FDA law, the de novo classification procedure allows a manufacturer whose novel device is automatically classified into Class III to request down-classification of its medical device into Class I or Class II on the basis that the device presents low or moderate risk, rather than requiring the submission and approval of a PMA.

If the FDA agrees with the down-classification, the de novo applicant will then receive authorization to market the device, and a classification regulation will be established for the device type.

The device can then be used as a predicate device for future 510(k) submissions by the manufacturer or a competitor.

In December 2018, the FDA issued proposed regulations to govern the de novo classification process, which if finalized would further impact this path to market.

As an alternative to the de novo process, a company could also file a reclassification petition, or the FDA could initiate such a process, seeking to change the automatic Class III designation of a novel postamendment device under Section 513(f)(3) of the FDCA.

The FDA issued a final rule (to take effect March 17, 2019) to clarify the process where the FDA initiates such reclassification (issuance of a proposed reclassification order;

optional panel consultation;

and final reclassification order published in the Federal Register).

Our G4 PLATINUM and G5 Mobile systems (excluding associated Share System functionalities and mobile applications) were classified as devices requiring PMA approval.

A PMA application must be supported by valid scientific evidence, which typically requires extensive data, including technical, pre-clinical, clinical, manufacturing and labeling data, to demonstrate to the FDA’s satisfaction the safety and efficacy of the device.

A PMA application also must include a complete description of the device and its components, a detailed description of the methods, facilities and controls used to manufacture the device, and proposed labeling.

After a PMA application is submitted and found to be sufficiently complete, the FDA begins an in-depth review of the submitted information.

During this review period, the FDA may request additional information or clarification of information already provided.

Also during the review period, an advisory panel of experts from outside the FDA may be

convened to review and evaluate the application and provide recommendations to the FDA.

In addition, the FDA generally will conduct a pre-approval inspection of the manufacturing facility to evaluate compliance with QSR, which requires manufacturers to implement and follow design, testing, control, documentation and other quality assurance procedures.

FDA review of a PMA application generally takes between one and three years, but may take significantly longer.

The FDA can delay, limit or deny approval of a PMA application for many reasons, including:

• our systems may not be safe or effective to the FDA’s satisfaction;

• the data from our pre-clinical studies and clinical trials may be insufficient to support approval;

• the manufacturing process or facilities we use may not meet applicable requirements;

• changes in FDA approval policies or adoption of new regulations may require additional data.

The FDA can delay, limit or deny approval of a PMA application for many reasons.

If an FDA evaluation of a PMA application or manufacturing facilities is favorable, the FDA will either issue an approval letter, or approvable letter, which usually contains a number of conditions which must be met in order to secure final approval of the PMA.

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Clinical trials are almost always required to support a PMA application and are sometimes required for a 510(k) clearance.

These trials generally require submission of an application for an investigational device exemption, or IDE to the FDA.

The IDE application must be supported by appropriate data, such as animal and laboratory testing results, showing that it is safe to test the device in humans and that the testing protocol is scientifically sound.

The IDE application must be approved in advance by the FDA for a specified number of patients, unless the product is deemed a non-significant risk device and eligible for abbreviated IDE requirements.

Generally, clinical trials for a significant risk device may begin once the IDE application is approved by the FDA and the study protocol and informed consent are approved by appropriate institutional review boards at the clinical trial sites.

The FDA’s approval of an IDE allows clinical testing to go forward, but does not bind the FDA to accept the results of the trial as sufficient to prove the product’s safety and efficacy, even if the trial meets its intended success criteria.

All clinical trials must be conducted in accordance with the FDA’s IDE regulations, which govern investigational device labeling, prohibit promotion, and specify an array of Good Clinical Practice requirements, which include among other things, recordkeeping, reporting and monitoring responsibilities of study sponsors and study investigators.

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• the FDA concludes that the results from our trial and/or trial design are inadequate to demonstrate safety and effectiveness of the product.

We have a Class I data management service which we market to clinics.

In addition to our CGM device, we have a Class I data management service which we market to clinics.

This service helps healthcare providers and patients see, understand and use blood glucose meter data to diagnose and manage diabetes.

The service also allows researchers to control the transfer of data from certain diabetes devices to research tools and databases according to their own research workflows.

The infrastructure of the data management service is considered “medical device data systems,” or MDDS, and does not require 510(k) clearance.

The infrastructure of the data management service is considered “medical device data systems,” or MDDS.

MDDS are hardware or software products that transfer, store, convert formats, and display medical device data.

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MDDS are not intended to be used for active patient monitoring.

In 2016, the 21st Century Cures Act amended the Food, Drug, and Cosmetic Act’s definition of “device” to exclude certain software functions, thus products meeting the definition of MDDS are no longer considered devices and thus are not subject to FDA regulatory requirements.

Additional functions of, or intended uses for, our software platform may require us to obtain either 510(k) clearance or PMA approval from the FDA.

To obtain 510(k) clearance, we must submit a pre-market notification demonstrating that the software system is substantially equivalent to a previously cleared 510(k) device or a pre-amendment device that was in commercial distribution before May 28, 1976 for which the FDA has not yet called for the submission of a PMA application.

The FDA’s 510(k) clearance pathway generally takes from three to twelve months from the date the application is completed, but can take significantly longer.

After a medical device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a significant change in its intended use, requires a new 510(k) clearance.

In March 2018, we obtained marketing authorization for our G6 as an iCGM system for determining glucose (sugar) levels in children aged two and older and adults with diabetes, via the de novo process.

The 21st Century Cures Act excluded certain software functions from the definition of “device”, thus products meeting the definition of MDDS (which previously might have been regulated as Class I, 510(k)-exempt devices) are no longer considered devices and thus are not subject to FDA regulatory requirements.

Additional functions of, or intended uses for, our software platform may require us to obtain marketing authorization from the FDA.

After a device is authorized for marketing and placed in commercial distribution, numerous regulatory requirements apply.

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Also, the FDA may require us to conduct post-market surveillance studies or order us to establish and maintain a system for tracking our products through the chain of distribution to the patient level.

The FDA and the Food and Drug Branch of the California Department of Health Services enforce regulatory requirements by conducting periodic, unannounced inspections and market surveillance.

The FDA and the Food and Drug Branch of the

California Department of Health Services enforce regulatory requirements by conducting periodic, unannounced inspections and market surveillance.

Inspections may include the manufacturing facilities of our subcontractors.

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Anti-kickback Laws.

The federal Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting, receiving, offering or providing remuneration directly or indirectly to induce either the referral of an individual, or the furnishing, recommending, or arranging of a good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid.

The federal Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting, receiving, offering or providing remuneration directly or indirectly to induce either the referral of an individual, or the furnishing, recommending, or arranging for the referral of a good or service, for which payment may be made, in whole or in part, under a federal healthcare program such as Medicare and Medicaid.

The definition of “remuneration” has been broadly interpreted to include anything of value, including such items as gifts, discounts, the furnishing of supplies or equipment, credit arrangements, waiver of payments, and providing anything at less than its fair market value.

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Therefore, conduct and business arrangements that do not fully satisfy each applicable exception or safe harbor element may result in increased scrutiny by government enforcement authorities or invite litigation by private citizens under federal whistleblower laws.

Violation of the Anti-Kickback Statute is a felony and conviction could result in the assessment of fines of up to $100,000 per violation or imprisonment for up to 10 years or both.

Federal Civil False Claims Act.

The federal Civil False Claims Act prohibits knowingly presenting, or causing to be presented a false claim or the knowing use of false statements or records to obtain payment from the federal government.

When an entity is determined to have violated the False Claims Act, it must pay three times the actual damages sustained by the government, plus mandatory civil penalties of between $11,181 and $22,363 (adjusted for inflation) for each separate false claim.

When an entity is determined to have violated the False Claims Act, it may be subject to repayment of three times the actual damages sustained by the government, plus mandatory civil penalties of between $11,803 and $23,607 (adjusted for inflation) for each separate false claim.

Suits filed under the False Claims Act can be brought by any individual on behalf of the government and such individuals (known as “relators” or, more commonly, as “whistleblowers”) may share in any amounts paid by the entity to the government in fines or settlement.

These whistleblower-initiated False Claims Act cases are commonly referred to as “qui tam” actions.

These whistleblower-initiated False Claims Act cases are commonly referred to as “qui

tam” actions.

False Claims Act cases may also be initiated by the U.S.

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Federal enforcement agencies also have showed increased interest in pharmaceutical companies’ product promotion, health care professional engagements, and patient assistance programs, including reimbursement and co-pay support services, and a number of investigations into these programs have resulted in significant civil and criminal settlements.

In addition, the Affordable Care Act amended federal law to provide that the

government may assert that a claim for items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act.

In addition, the Affordable Care Act amended federal law to provide that the government may assert that a claim for items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act.

Criminal prosecution is also possible for knowingly making or presenting a false or fictitious or fraudulent claim to the federal government.

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The Stark Law is a strict liability statute, therefore, to the extent that the statute is implicated and an exception does not apply, the statute is violated.

Violations of the Stark Law must be reported and returned to Medicare in order to avoid potential liability under the federal False Claims Act for avoiding a known obligation to return identified overpayments.

Violations of the Stark Law must be reported and payment for improper referrals returned to Medicare in order to avoid potential liability under the federal False Claims Act for avoiding a known obligation to return identified overpayments.

In the fall of 2020, we transitioned our Medicare business to distributors and no longer bill Medicare directly for DME and related supplies.

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Civil Monetary Penalties Law .

The Civil Monetary Penalties Law, or CMPL, authorizes the imposition of substantial civil money penalties against an entity that engages in certain prohibited activities including but not limited to violations of the Stark Law or Anti-Kickback Statute, knowing submission of a false or fraudulent claim, employment of an excluded individual, and the provision or offer of anything of value to a Medicare or Medicaid beneficiary that the transferring party knows or should know is likely to influence beneficiary selection of a particular provider for which payment may be made in whole or part by a federal health care program, commonly known as the Beneficiary Inducement CMP.

The Civil Monetary Penalties Law, or CMPL, authorizes the imposition of substantial civil money penalties against an entity that engages in certain prohibited activities including but not limited to violations of the Stark Law or Anti-Kickback Statute, knowing submission of a false or fraudulent claim, employment of an excluded individual, and the provision or offer of anything of value to a Medicare or Medicaid beneficiary that the transferring party knows or should know is likely to influence beneficiary selection of a particular provider or supplier for which payment may be made in whole or part by a federal health care program, commonly known as the Beneficiary Inducement CMP.

Remuneration is defined under the CMPL as any transfer of items or services for free or for less than fair market value.

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Health Insurance Portability and Accountability Act of 1996 (HIPAA).

The Health Insurance Portability and Accountability Act of 1996, as amended by the American Recovery and Reinvestment Act of 2009, and implementing regulations, collectively HIPAA, created two new federal crimes:

healthcare fraud and false statements relating to healthcare matters.

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HIPAA, as well as a number of other federal and state privacy-related laws, also extensively regulate the use and disclosure of individually identifiable health information, known as “protected health information,” and require covered entities, including health plans and most health care providers, to implement administrative, physical and technical safeguards to protect the security of such information.

Certain provisions of the security and privacy regulations apply to business associates (entities that handle protected health information on behalf of covered entities), and business associates are subject to direct liability for violation of these provisions.

Certain provisions of the security and privacy regulations apply to business associates (entities that handle protected health information on behalf of

covered entities), and business associates are subject to direct liability for violation of these provisions.

In addition, a covered entity may be subject to criminal and civil penalties as a result of a business associate violating HIPAA, if the business associate is found to be an agent of the covered entity.

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In addition to enforcement by OCR, state attorneys general are authorized to bring civil actions seeking either injunction or damages in response to violations that threaten the privacy of state residents.

Dexcom is a covered entity under HIPAA and in

certain circumstances, may also be a business associate of another covered entity.

Dexcom is a covered entity under HIPAA and in certain circumstances, may also be a business associate of another covered entity.

The HIPAA privacy regulations and security regulations impose and will continue to impose significant costs on us in order to comply with these standards.

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For example, the Federal Trade Commission uses its consumer protection authority to initiate enforcement actions in response to alleged privacy and data security violations.

Further, certain states have proposed or enacted legislation that will create new data privacy and security obligations for certain entities, such a the California Consumer Privacy Act, or CCPA, which came into effect January 1, 2020 and was recently amended and expanded by the California Privacy Rights Act (CPRA) passed on November 3, 2020.

Further, certain states have proposed or enacted legislation that will create new data privacy and security obligations for certain entities, such as the California Consumer Privacy Act, or CCPA, which came into effect January 1, 2020 and was amended and expanded by the California Privacy Rights Act, or CPRA, passed on November 3, 2020.

The CCPA and CPRA, among other things, create new data privacy obligations for covered companies and provides new privacy rights to California residents, including the right to opt out of certain disclosures of their information.

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It remains unclear what, if any, additional modifications will be made to the CPRA by the California legislature or how it will be interpreted.

Therefore the effects of the CCPA and CPRA are significant and will likely require us to modify our data processing practices, and may cause us to incur substantial costs and expenses to comply, particularly given our base of operations in California.

Therefore, the effects of the CCPA and CPRA are significant and have required us to modify our data processing practices, and may cause us to incur substantial costs and expenses to ensure ongoing compliance, particularly given our base of operations in California.

Other states are also seeking to regulate consumer privacy stringently, and both Virginia and Colorado signed comprehensive privacy legislation into law in 2021.

These laws (the Virginia Consumer Data Protection Act and the Colorado Privacy Act) are set to come into force in 2023 and a number of other state legislatures are actively considering passing similar consumer privacy laws, including those in New York and Washington.

In addition to the laws discussed above, we may see more stringent state and federal privacy legislation passed in 2022 and beyond, as the increased cyber-attacks during the COVID-19 pandemic have once again put a spotlight on data privacy and security in the U.S.

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Reporting requirements will go into effect in 2022 for payments and transfers of value made to these additional practitioner-types in 2021.

CMS has the potential to impose penalties of up to $1.15 million per year for violations of the Physician Payment Sunshine Act, depending on the circumstances, and reported payments also have the potential to draw scrutiny to our relationships with physicians, which may have implications under the Anti-Kickback Statute and and other healthcare laws.

CMS has the potential to impose penalties of up to $1.15 million per year for violations of the Physician Payment Sunshine Act, depending on the circumstances, and reported payments also have the potential to draw scrutiny to our relationships with physicians and academic medical institutions, which may have implications under the Anti-Kickback Statute and other healthcare laws.

In addition, there has been a recent trend of increased federal and state regulation of payments and other transfers of value provided to healthcare professionals and entities.

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Other states impose restrictions on device manufacturer marketing practices and require tracking and reporting of gifts, compensation, and other remuneration to healthcare professionals and entities.

The need to build and maintain a robust compliance program with different compliance and/or reporting requirements increases the possibility that a healthcare company may violate one or more of the requirements, resulting in fines and penalties.

The need to build and maintain a robust compliance program with different compliance and/or reporting requirements increases the possibility that a company may violate one or more of the requirements, resulting in fines and penalties.

International Regulation

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The European Union has adopted numerous directives and standards regulating the design, manufacture, clinical trials, labeling and adverse event reporting for medical devices.

To be placed on the European Union market, devices must undergo a conformity assessment and bear the CE mark, indicating that the device

conforms to the essential requirements of the applicable rules.

To be placed on the European Union market, devices must undergo a conformity assessment and bear the CE mark, indicating that the device conforms to the essential requirements of the applicable rules.

The method of assessing conformity varies depending on the class of the product, but normally involves a combination of self-assessment by the manufacturer and a third-party assessment by a “Notified Body.” This third-party assessment, which may consist of an audit of the manufacturer’s quality system and specific testing of the manufacturer’s product, is always required in order for a manufacturer to commercially distribute the product throughout the European Union, except in case of Class I medical devices (those entailing the lowest level of risk).

Outside of the European Union, regulatory approval needs to be sought on a country-by-country basis in order for us to market our products.

The new European Union Medical Device Regulation (MDR) went into force in 2017, replacing the existing Directive and providing three years for transition and compliance, which has been extended by one additional year.

The MDR will become fully applicable in the European Union on May 26, 2021, changing several aspects of the existing regulatory framework.

The European Union Medical Device Regulation, or MDR, went into force in 2017, replacing the existing Directive and providing three years for transition and compliance, which has been extended by one additional year.

The MDR became applicable in the European Union on May 26, 2021, changing several aspects of the existing regulatory framework.

Other countries have adopted medical device regulatory regimes, such as the Classification Rules for Medical Devices published by the Hong Kong Department of Health, the Health Sciences Authority of Singapore regulation of medical devices under the Health Products Act, and Health Canada’s risk classification system for invasive devices, among others.

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As of December 31, 2021, we have approximately 6,300 full-time employees and approximately 700 contract and temporary employees around the globe.

Country Female Male Grand Total

Country Female Male Grand Total Ethnically Diverse

United States 2,000 2,500 4,500 2,800

Non-United States (“OUS”) 700 700 1,400

Non-United States (“OUS”) 1,000 800 1,800 N/A

Grand Total 3,000 3,300 6,300 2,800

*All diversity data is self-reported.

We capture ethnic diversity data in the United States only, comprised of the following categories:

Black or African American, Hispanic or Latino, Asian, American Indian/Alaskan Native, Native Hawaiian or Other Pacific Islander, Two or More Races.

None of our employees are represented by a labor union or covered by a collective bargaining agreement, except for our employees in our Mainz, Germany location that are represented by a Works Council.

We have never experienced any employment-related work stoppages and we consider our employee relations to be good.

Although the COVID-19 pandemic has disrupted business and operations for companies around the globe, the resilience of our employees has enabled us to minimize disruption to our sales, research, clinical studies and operations.

Our onsite employees, particularly in manufacturing and operations, have rapidly adjusted to numerous stringent safety protocols.

Thousands of other employees have shifted to work-from-home status since March 2020.

We are optimistic about the potential to expand our global workforce and create a more inclusive environment for all of our employees.

Diversity, Equity and Inclusion

As a global company, we understand the importance of diversity in our workforce.

This year, we made progress in our commitment to Diversity, Equity & Inclusion (DEI) by formally establishing a DEI Council responsible for coordinating efforts around the organization, and securing resources to drive necessary change.

At the same time, we expanded our Employee Resource Group (ERG) network to better reflect the diversity of our workforce and drive grassroots change.

We now have multiple ERGs, including Dexcom PRIDE, Dexcom African American Network, LatinX, and ABLE, which help build our company community and enable opportunities for development.

Together, these groups helped allocate our initial donation of $250,000 to support organizations dedicated to diversity, equity and inclusion.

The work we have done to date represents the beginning of our DEI journey.

Our journey to create a more diverse, equitable and inclusive workplace continues.

We are proud of the additional ground we have gained in 2021 to advance our efforts and the external recognition received in Forbes magazine, landing on its Best Employers for Women , Best Employers for Diversity and Best in State Employer lists for the U.S.

offices, and the Investors In People Silver Certification awarded to our Dexcom Philippines office.

We established diversity, equity, and inclusion, or DEI, as a corporate objective under our 2021 corporate goal related to the employee experience and commitment.

With expanded talent and diversity staff, we have evolved the DEI Leadership Council, or DLC, as a means for leaders to work closely together to advance the broader DEI strategy across the organization.

We have also added several more employee resource groups for our employees globally.

In 2021, we launched an interactive foundational training program on DEI for our managers, in each of Dexcom’s global locations.

To date, more than 70% of our global people leaders have completed this optional training.

In 2022, foundational DEI training will launch to all employees.

To continue to foster equity through our core talent processes, we rolled out a diversity snapshot data tool for our people leaders to establish a baseline understanding of the diversity of their teams and measure the effectiveness of DEI practices over time.

Our annual talent planning reviews have evolved to include discussion of function-specific DEI strengths and opportunities throughout each team.

In 2022, we plan to launch two pipeline development programs--one specifically aimed at developing top-performing diverse managers, and the other focused on fostering a diverse leadership pipeline.

In 2021, our company internship program doubled the number of women and ethnically diverse participants.

Ethnically diverse students accounted for nearly half of our 2021 internship class.

Our annual employee experience survey included a DEI index to help track our efforts on diversity, equity, inclusion, accessibility and belonging, which was favorable across all questions.The work we have done to date represents the beginning of our DEI journey.

We will continue to focus on building a pipeline of opportunities for both the hiring and advancement of qualified individuals, including for women, persons with disabilities, and minority groups that are underrepresented in science and engineering industries.

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Our success depends on employees understanding our strategic vision as well as our day-to-day objectives.

To that end, we employ a mix of communication and engagement channels, including global, regional and functional town halls, regular leadership forums, and quarterly updates on our progress against our strategic goals.

We have also created a cross-functional team focused on improving the employee experience and driving engagement.

To that end, we employ a mix of communication and engagement channels, including a global intranet and social network, and global

regional and functional town halls;

regular leadership forums;

and quarterly updates on our progress against our strategic goals.

We have also deployed digital signage into our manufacturing and distribution areas to ensure that all our onsite employees remain connected to our mission and goals.

In addition, we have a cross-functional team that focuses on improving the employee experience and driving engagement.

A central part of our communications and engagement efforts are connecting people to purpose.

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Whether the Warrior is a professional athlete whose performance depends on Dexcom, or a parent who no longer has to stick their child’s fingers during the night, their experiences reinforce our commitment to expand our reach into new patient populations, geographies and markets.

We value every employee’s unique characteristics, contributions, and perspectives.

In 2021, we launched a listening strategy across multiple points of the employee experience and engaged employees in co-creating our human-centered hybrid workplace and employee experience through their feedback.

As the COVID-19 pandemic continued to produce unpredictability and anxiety, we encouraged our leaders to check in frequently to gauge the well-being of their teams.

We surveyed employee perspectives and expectations about returning to the workplace and continued to provide resources and support to drive productivity and connection as returns to the office were further delayed for many teams.

Our leadership defined a Dexcom-specific employee experience vision, against which we developed an employee engagement survey to measure our current state.

Our survey had more than 80% participation rate.

While employees in large part responded favorably, representing a positive experience and strong engagement, the feedback employees provided informs our action planning related to areas of opportunity, as we continue to evolve toward a world-class employee experience for our organization.

Health, Safety and Wellness

We are deeply committed to the safety, health and wellness of our employees.

The Dexcom Environmental, Health & Safety team develops global safety practices and procedures, trains employees, and monitors compliance.

The Dexcom Environmental, Health, Safety & Sustainability team develops global safety practices and procedures, trains employees, and monitors compliance.

Through these efforts, along with leadership commitment and investment of resources in support of workplace safety initiatives, our total US injury rate has consistently tracked below industry averages.

We also provide comprehensive wellbeing programs that support our employees and their families.

For example, Inspire, our newly launched global wellness platform, helps employees and their family members develop and achieve their physical, emotional, and financial wellbeing goals.

We also provide comprehensive well-being programs that support our employees and their families.

For example, Inspire, our newly launched global wellness platform, helps employees and their family members develop and achieve their physical, emotional, and financial well-being goals.

In 2021, to support our employees’ continued needs related to the COVID-19 pandemic, we provided multiple vaccination clinics for employees and their families, proactive on-site testing for our employees who returned to the workplace, and continued support of remote work for employees whose roles allow for it.

We also continue to evaluate how to maintain a hybrid workplace beyond the pandemic to ensure that we meet our employees’ ever-changing needs outside the workplace.

We recognize that our employees are our most valuable asset.

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To foster a stronger sense of ownership and align the interests of employees with shareholders, we offer an Employee Stock Purchase Plan, and restricted stock units are provided to eligible employees under our broad-based stock incentive programs.

In 2019, we began proactive reviews of both gender and minority pay equity for our global employees in the same or similar roles.

In 2021, we decided to implement a proactive year-end global market adjustment process intended to ensure we maintain pay equity between active employees and potential new external hires.

Through this process, employees who meet predefined criteria may be eligible for an additional adjustment in base salary if they have fallen below Dexcom’s determined minimum.

During this first review we made proactive adjustments in pay to approximately 10% of Dexcom’s global employees.

We believe by continuing to ensure equitable pay between existing and new hires, we will be better positioned to retain valued employees.

Additionally, we continue to proactively review both gender and ethnicity pay equity for our global employees in the same or similar roles.

The goal of these reviews is to identify and close any gaps in average pay, after accounting for legitimate business factors that may explain differences, such as performance, time in role, and tenure with the company.

We have incorporated the findings into our compensation assessment cycles, and we recognize the need to regularly review pay equity to maintain our pay equity goals.

With the implementation of our global market adjustment process, we will now conduct the gender and ethnicity review twice a year.

Growth and Development

We believe that investing in our talent’s growth and development will directly enhance our overall company performance.

Our career development site, includes employee resources focusing on the advancement of six core competencies:

collaboration, effective communication, talent development, driving results, demonstrating self-awareness, and strategic mindset.

The internal site includes several training videos on a wide variety of topics, providing necessary resources for employees to grow in accord with their personal goals.

The site also serves as a hub for our virtual and in-person sessions that align with the development of our six core competencies.

Recently, we enhanced our internal careers platform to more effectively match an employee’s experience with potential career paths at Dexcom.

By providing an easy way for employees to explore new roles, we can increase internal mobility, develop great talent, and reduce turnover.

We value the talented and passionate individuals working at Dexcom and the culture we collectively create.

To support their growth and drive their continued success, we continue to expand our portfolio of development offerings and empower employees and leaders alike to dedicate time to honing their craft.

Because there is no one-size-fits-all approach to developing the skills and knowledge needed to be successful, we continue to evaluate and evolve our learning delivery to meet the needs of our workforce.

We continue to use industry research and feedback from our employees to ensure we provide opportunities for development and growth for employees at all levels across Dexcom.

As we continue to function as a hybrid workplace, we will continue to invest in talent and technology to offer the learning experiences needed to grow and develop critical skills across the organization, regardless of level or location.

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What changed 10-K

Item 1. Business