1093557--2/27/2007--DEXCOM

related topics

{product, candidate, development}

{product, liability, claim}

{property, intellectual, protect}

{regulation, change, law}

{product, market, service}

{control, financial, internal}

{customer, product, revenue}

{operation, natural, condition}

{cost, regulation, environmental}

{personnel, key, retain}

{regulation, government, change}

{debt, indebtedness, cash}

{loss, insurance, financial}

We have a limited operating history and our STS We have incurred losses since inception and anticipate that we will incur continued losses for the foreseeable future. If we are unable to establish adequate sales, marketing and distribution capabilities or enter into and maintain arrangements with third parties to sell, market and distribute our STS, our business may be harmed. We have limited manufacturing capabilities and manufacturing personnel, and if our manufacturing capabilities are insufficient to produce an adequate supply of products at appropriate quality levels, our growth could be limited and our business could be harmed. Our STS does not have reimbursement and is not approved for insurance coverage. If we are unable to obtain adequate reimbursement at acceptable prices for our products from third-party payors, we will be unable to generate significant revenue. Our manufacturing operations are dependent upon third-party suppliers, making us vulnerable to supply problems and price fluctuations, which could harm our business. Abbott Diabetes Care, Inc. has filed a patent infringement lawsuit against us. If we are not successful in defending against its claims, our business could be materially impaired. We are subject to claims of infringement or misappropriation of the intellectual property rights of others, which could prohibit us from shipping affected products, require us to obtain licenses from third parties or to develop non-infringing alternatives, and subject us to substantial monetary damages and injunctive relief. Our inability to adequately protect our intellectual property could allow our competitors and others to produce products based on our technology, which could substantially impair our ability to compete. We operate in a highly competitive market and face competition from large, well-established medical device manufacturers with significant resources, and, as a result, we may not be able to compete effectively. No continuous glucose monitoring system, including our STS, has yet received FDA clearance as a replacement for single-point finger stick devices, and our products may never be approved for that indication. Technological breakthroughs in the glucose monitoring market could render our products obsolete. If we are unable to successfully complete the pre-clinical studies or clinical trials necessary to support additional PMA applications, we may be unable to commercialize our continuous glucose monitoring systems under development, which could impair our financial position. We depend on clinical investigators and clinical sites to enroll patients in our clinical trials and other third parties to manage the trials and to perform related data collection and analysis, and, as a result, we may face costs and delays that are outside of our control. We have not received, and may never receive, FDA approval to market our continuous glucose monitoring systems that are under development. We may be unable to continue the commercialization of our STS or the development and commercialization of our other continuous glucose monitoring systems without additional funding. Potential long-term complications from our STS or other continuous glucose monitoring systems under development may not be revealed by our clinical experience to date. If we or our suppliers fail to comply with ongoing regulatory requirements, or if we experience unanticipated problems with our products, these products could be subject to restrictions or withdrawal from the market. We face the risk of product liability claims and may not be able to maintain or obtain insurance. We may be subject to fines, penalties and injunctions if we are determined to be promoting the use of our products for unapproved off-label uses. We conduct business in a heavily regulated industry and if we fail to comply with these laws and government regulations, we could suffer penalties or be required to make significant changes to our operations. The majority of our operations are conducted at two facilities in San Diego, California. Any disruption at these facilities could increase our expenses. We may be liable for contamination or other harm caused by materials that we handle, and changes in environmental regulations could cause us to incur additional expense. Failure to obtain regulatory approval in foreign jurisdictions will prevent us from marketing our products abroad. Our success will depend on our ability to attract and retain our personnel. We have incurred and will incur increased costs as a result of recently enacted and proposed changes in laws and regulations relating to corporate governance matters. Valuation of share-based payments, which we are required to perform for purposes of recording compensation expense under FAS 123(R), involves significant assumptions that are subject to change and difficult to predict. Future changes in financial accounting standards or practices or existing taxation rules or practices may cause adverse unexpected revenue and/or expense fluctuations and affect our reported results of operations. Our loan and security agreement contains restrictions that may limit our operating flexibility.

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1093557--2/27/2007--DEXCOM_INC