Terry Gregg – CEO Steve Pacelli – EVP, Strategy and Corporate Development Kevin Sayer – President and COO

Tom Gunderson – Piper Jaffray Ben Andrew – William Blair Bill Plovanic – Canaccord Jayson Bedford – Raymond James Mimi Pham – ABR Healthco Suraj Kalia – Northland Securities Danielle Antalffy – Leerink Swann Robert Marcus – Leerink Swann Greg Simpson – Wunderlich Securities

Welcome to the DexCom 2013 First Quarter Earnings Conference Call. My name is John and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I would now turn the call over to Mr. Terry Gregg. Mr. Gregg, you may begin.

Thank you, operator, and thanks for joining us for this first quarter 2013 conference call. I’m going to ask Steve Pacelli to go read our Safe Harbor statement. Steve?

Thanks, Terry. Some of the statements that we will make in today’s call may constitute forward-looking statements. These statements reflect management’s expectations about future events, operating plans and performance and speak only as of the date hereof. These forward-looking statements involve a number of risks and uncertainties. A list of the factors that could cause actual results to be materially different from those expressed or implied by any of these forward-looking statements is detailed under the section Risk Factors and elsewhere in our Annual Report on Form 10-K, our quarterly reports on Form 10-Q and our other reports filed with the SEC. We undertake no obligation to update publically or revise these forward-looking statements for any reason. Additionally, we will discuss certain financial information that has not been prepared in accordance with GAAP with respect to our cash operating loss. This non-GAAP information is provided to enhance your overall understanding of our current financial performance. The presentation of this additional information should not be considered in isolation or as a substitute for results or superior to results prepared in accordance with GAAP. Terry?

Thank you, Steve and joining me today are Kevin Sayer, our President and Chief Operating Officer; Jess Roper, our Chief Financial Officer; and Steve Pacelli, whom you’ve just heard from, our Executive Vice President of Strategy and Corporate Development. As we just held our Q4 2012 earnings call in late February, today’s call will be largely a financial update with Kevin reviewing our first quarter 2013 financial results providing a brief operations update. I will then follow with some concluding thoughts. Kevin?

Thank you, Terry. I will start with the financial update. DexCom generated $27.8 million in product revenue for the first quarter of 2013 compared to $18.6 million for the same quarter in 2012, a $9.2 million or 49% increase. Sequentially, product revenue for Q1 of 2013 decreased 12% from the prior quarter, which is consistent with the 11% decrease we experienced from Q4 2011 to Q1 2012. The seasonality is not unexpected, as annual insurance deductibles reset and flexible spending accounts are largely unfunded in Q1 requiring patient to spend more out of pocket dollars to obtain our products. Total revenue for the first quarter of 2013 was $29.6 million compared to $20.1 million during the same quarter in 2012. Our product gross profit totaled $15.4 million, generating a product gross margin of 55% for Q1 2013 compared to a product gross profit of $9.0 million and a product gross margin of 49% for the same quarter in the prior year. As a reminder, product gross margin continues to be affected by a number of factors related our G4 Platinum launch, including the impact of our $399 in-warranty upgrade program which expired at the end of January, continued manufacturing scale-up activities for G4 Platinum, and the continued support of our SEVEN PLUS sensor manufacturing operations. Some final thoughts on our product revenues and our gross profits during Q1. Our split between consumable and durable revenues was again slightly more heavily weighted to durables in Q1 due to existing patients upgrading to the G4 Platinum. With approximately 30% of our product revenues generated by sales of G4 Platinum hardware and approximately 70% generated by sales of both SEVEN PLUS and G4 Platinum sensors. ASP for sensors has increased slightly to a range of approximately $65 to $70 per sensor and the ASP for our hardware continued at approximately $800 to $850 for starter kit. Our international business performance remained consistent in Q1 and continues to represent between 5% and 10% of product revenue, but remained somewhat overshadowed by our strong domestic growth. Research and development expense totaled $9.3 million for Q1 of 2013 which would slight compared to $9.4 million in Q1 of 2012. Sequentially, R&D expense was up 7% as a result of increased spending on the development of our mobile platforms. We continue to expect R&D expense for the full – we continue to expect that R&D expense for the full year would be relatively flat versus 2012. However, we will always consider adjusting our R&D spend to take advantage of near term opportunities such as advanced integrated pump CGM systems, mobile and cloud base data platforms, system performance improvements, all of the elements of our GEN5 system and continued research on our G6 sensor platform. Selling, general and administrative expense totaled $18.1 million in Q1 of 2013 compared to $15.4 million during the same quarter in 2012. The increased primarily related to sales, administrative, and IT cost to support revenue growth. Of the $2.7 million increase, $400,000 of it is centered in non-cash share-based compensation. The remaining increase was primarily related to investments on the sales and marketing side of the business. In particular, the re-organization of our U.S. field team and expanded head count in our sales organization. Our net loss for the first quarter of 2013 totaled $11.1 million and included $7.2 million in non-cash expense, expenses centered in share-based compensation, depreciation and amortization. Absent these non-cash charges, our operating loss for Q1 2013 would have been $3.7 million, compared this cash operating loss of $3.7 million to our cash operating loss of $9.7 million in Q1 2012. We are pleased with our progress in driving the company to profitability. Let me say it another way. Of the $9.2 million increase in sales from Q1 2012 to Q1 2013, $6 million dropped to the bottom line on a cash basis. I’m able to say we’re excited about the long term profitability profile we believe we’re going to achieve here at DexCom. The business model is maturing as we planned. Our net loss per share for the quarter was $0.16. With respect to our balance sheet, we ended the first quarter with $45.3 million in cash and marketable securities, down only $3.4 million from the end of 2012. Finally, we will reiterate our product revenue guidance for 2013 of $120 million to $130 million. Now, I’ll give you a business update. Turning to our business, we continue to be extremely pleased with the commercial launch of the G4 Platinum system. With its significantly improved accuracy, convenience and reliability, we believe that the G4 Platinum fulfills the potential of CGM as the first and most essential tool in treatment of diabetes. Patient testimonials and blog postings regarding the performance of the system have been nothing short of remarkable. With G4 Platinum, we believe we have finally achieved the promise of CGM. As we mentioned during our earnings call late in February during the first quarter, we filed a PMA supplement with the Food and Drug Administration seeking a pediatric indication for the G4 Platinum. We have also received CE Mark approval for pediatric patients and have begun marketing to pediatric patients in Europe. With respect to our U.S. pediatric submission, similar to our previous filings. We continue to have a regular, open dialog with the FDA. We remained excited about the prospects of a pediatric indication as it not only significantly expand the number of endocrinologists we can call on in the United States, we expect to be able to recommend our technology to patients as young as two years old which will be a first for CGM. Many of our future generation products, particularly our mobile and cloud-based products will be very applicable to this market segment. In particular, we continue to make considerable progress on the DexCom share system, a remote monitoring system developed to address the unique challenges faced by caregivers in assisting people with type 1 diabetes. As a reminder, the DexCom share system is a docking station for the G4 Platinum receiver enabling wireless transmission and glucose information such as the patient’s trend graph and alert notifications from the G4 Platinum to designated recipients, allowing the recipient to view the patient’s data on a smartphone. For example, a parent could receive their child’s glucose information during the nighttime while they sleep in another room, or during the school day while the parent is at work. It will also have non-pediatric applications such as for a spouse while at work or when traveling. We expect to file the DexCom Share System with the FDA in the third quarter of this year. On the international front, we are pleased to report that we have received approval from Health Canada to begin marketing the G4 system in Canada. Our initial approval is for adults only. However, we expect to file supplements seeking pediatric approval later this quarter. Our distributor in Canada expects to commence a limited launch at the beginning of Q3 with the full launch commencing before the end of Q3. We also continue to explore opportunities in China, Japan, and other Asian geographies during the first quarter and we had a number of productive meetings with potential business partners in both China and Japan. We are currently evaluating potential partners and better educating ourselves on the most prudent regulatory path into these countries. By the end of the year, we expect to be commercial in up to 30 countries worldwide compared to approximately 20 at the end of 2012. We continue development on the Gen5 system, working on an improved applicator combined with a mobile phone interface. The FDA has been very cooperative with us regarding our efforts to develop a mobile CGM platform. The path is becoming more clearer with each and every step we take. For example, the share product in this data platform represents a very well thought out and delivered approach for our first connected product offering. Shifting to our integration partnerships, we are pleased to report that Animas has filed a PMA with the FDA seeking approval of the Animas 5 system in the U.S. Animas continues to commercialize the Animas 5 system in Europe and has reported strong success where the product is launched. We continue to work diligently with Tandem diabetes care to incorporate the G4 Platinum into a next-generation version of Tandem’s GSwim. We expect to be in a position to assist Tandem in filing a PMA with the Food and Drug Administration before the end of this year. Finally on the Edwards front, to quote Edwards CEO Michael Mussallem, “We remain enthusiastic about the significant opportunity represented by GlucoClear system.” As we mentioned during our Q4 earnings call, we don’t expect significant sales for GlucoClear this year, however, Edwards management expect 2013 to be a pivotal year as Edwards complete traditional studies in Europe and gains greater clarity on the path towards U.S. approval. We remain enthusiastic about the significant opportunity represented by this technology. I look forward to supporting Edwards as they bring our best-in-class sensor technology to the critical care setting. I would now like to turn the call over to Terry for some concluding remarks. Terry?

Thanks, Kevin. As I reflect upon the six months after our launch of the G4 platinum. We have learned a number of important things. Accuracy is everything. Data demonstrates that the sensor is 20% more accurate in the 40 to 400 range and 30% more accurate below 70 milligrams per deciliter which is a especially important to detect hypoglycemia. While we believe accuracy is essential, we have also learned that the overall patient experience is what really matters. We believe that our best-in-class accuracy and reliability empowers people to take control of their diabetes. G4 Platinum has had a new standard by which all future sensor technologies will be measured. In fact, just a few weeks ago at the National Institute of Health sponsored meeting on the development of an artificial pancreas, investigators from Boston University and Mass General Hospital reported the results of a 24-patient comparative study between Medtronic Enlite sensor, the Abbott Navigator sensor and the DexCom G4 Platinum. The researchers reported an MARD or main aptitude relative difference of 17.9% for the Enlite, a 12.5% MARD for the Navigator, and a 10.8% MARD for the G4 Platinum, a 10.8% MARD for G4. The researchers are currently completing a small outpatient study of an artificial pancreas system using the G4 Platinum and have received IDE approval for a larger follow-up study to be conducted at two New England Diabetes camps this summer. But we are certainly not stopping here. Prior to the G4 Platinum launch, we went several years without a new product introduction. That will not happen again. As Kevin highlighted, just this year, we have filed for pediatric indication, we supported Animas in filing the Animas Vibe system. We have committed to filing the DexCom share system in Q3 and assisting Tandem in filing a sensor pump combination system before year-end. I’m also pleased to report that we have completed development of a next generation algorithm for the G4 Platinum to further improve our sensor performance, and we expect to file a PMA supplement for the new algorithm late this year or early next. So we have the potential for up to five new product introductions in the next 12 to 18 months. All of these introductions are incremental steps towards our ultimate goal of replacing finger sticks. We entered 2013 with our principal message in the diabetes community of CGM first targeted to both patients and professionals, simply stated CGM should be the first tool you use when treating diabetes. CGM is the best tool to determine a patient’s glycemic variability and the best tool to understand the action of insulin and other anti-diabetes agents in improving glucose control independent of how these agents are delivered. Our field team has been very effective in delivering that message. And while largely anecdotal, we believe a number of physicians are beginning to embrace the G4 Platinum as a frontline tool in large part because of its convenience and simplicity in addition to its exquisite accuracy. Our second goal this year is to improve our outreach about the benefits of the G4 Platinum. A recent survey of approximately 300 patients indicated that for about 70% of the 7-plus respondents, their physician was the most influential driver in choosing CGM. And only 15% of the G4 Platinum respondents cited that their physician has the driving factor. This is supports our belief that we are experiencing an increase in patient-to-patient communication as a key factor in the uptick of CGM adoption. Finally a brief comment on type 2 patients in CGM use. When I mentioned glycemic variability earlier, I was not restricting my comments to only type 1 patients. Excessive glycemic variability occurs in both type 1 and type 2 patients. And likely, excessive glycemic variability is getting a lot of negative recognition in the literature with reduction of glycemic variability cited as potentially more impactful than reduction of A1c to improve diabetes management. Several studies have linked excessive glycemic variability to adverse health outcomes including diminished cognitive functions, retinopathy, and increased cardiovascular disease. While we know that chronic elevated glucose contribute to the adverse clinical outcomes associated with diabetes including both micro and macro vascular conditions that acute daily glycemic variability is now being identified as causing oxidative stress believed to be the underlying cause of these long term complications. And we have seen an increase in the number of private payers covering insulin using type 2 patients. And just last year, 12 payers of approximately 20 million covered lives have amended their policies to provide coverage for type 2 patients and this is an addition to both Cigna and Anthem who have had policy in place. CGM is the only tool to determine the level of glycemic variability in order to take corrective actions to improve glucose control. We believe our future is very bright. Thank you and we will now open it up for questions.

Thank you. We will now begin the question-and-answer session. (Operator Instructions). Our first question comes from Tom Gunderson from Piper Jaffray. Please go ahead. Tom Gunderson – Piper Jaffray: Hi, good afternoon everybody.

Hey, Tom. Tom Gunderson – Piper Jaffray: So just a quick clarification on the last part, Terry, I think you said 20 million covered lives for the 12 payers in T2, that’s in addition to whatever covered lives you have for Cigna or Aetna are including?

No. That’s in addition to. That’s just in the last 12 months, Tom. Tom Gunderson – Piper Jaffray: Got it.

So you’ve seen that improve obviously, we knew that Cigna that we had established coverage, but this is new, this is primarily the responsibility of our managed care group and they’ve done an outstanding job of improving that policy coverage. Tom Gunderson – Piper Jaffray: And I know these are difficult, if not impossible to count, but do you want to venture a guess as to what percentage of your sales is going to type 2?

At this point still in my opinion de minimis. Tom Gunderson – Piper Jaffray: Okay. And then maybe one of you could talk about how the change in the sales build force is going to re-org, and the expanded head count, that clinical associates being shifted over to territory people, give us one more color on that if you could.

Yes Tom, this is Kevin. I’ll take that. We have with the exception of just a couple thoughts, we’ve built the entire organization, the additional 20 territories that we had outlined our sales reps who have converted over are all doing extremely well. The talent available to us with our business and our product has been outstanding. We’ve added some absolute value of people who have hit the ground running. Most all of our territories are performing the way we expected them to. We were off to the races. With respect to the clinical aspect, our patient care team is what we have put together in essence, to replace those clinical specialists in the field. We have expanded that from 4 to 12 people who worked the phones continually and have a very, very structured program with respect to contacting our new patients, and sometimes taking educational calls from those who’ve been patient for a longer period of time versus our normal tech services group which responds to product issues. And I can tell you that group is fully staffed and doing very well also. So everything’s quick in the way we wanted it to. Tom Gunderson – Piper Jaffray: Got it and then my last question, I’ll let some others. As ADA is always off in June, and yet we won’t have one of these calls until after that, are there any highlights or things we should look for at ADA that would be interesting to DexCom investors?

It’s interesting question, Tom. And I would just say I think the influence of the artificial pancreas group certainly will be on the podium talking about their experiences. As you know, in that environment, everything is kind of geared towards the artificial pancreas arena from the scientific community. So that for us, will probably be the highlight especially given, we’re in 22 out of approximately 25 artificial pancreas programs around the world. And so that would be the highlight for us. Outside of that, I’m not aware of anything in particular, that you should be looking for. Tom Gunderson – Piper Jaffray: Got it. Thank you, guys.

Our next question comes from Ben Andrew from William Blair. Please go ahead. Ben Andrew – William Blair: Good afternoon, can you hear me?

Hey, Ben.

Yes. Ben Andrew – William Blair: Hey guys. So, a few questions from me, please. First, Terry you talked a little bit about the peds who are allowed and I think 15% to 20% of your installed base is peds, what should that be say in a year from now?

30%. Ben Andrew – William Blair: Okay. And what does it take to get there? Is it just getting in front the DexCom and those are products that just need detail? Does it take staffing? What sort of movements on the part DexCom does that require?

Well, first of all, to get an approval and second beyond that just get in front them. I mean luckily, that it is a rare situation in which there is a solo practitioner with a pediatric endocrinology practice there generally grouped with young adults and adults or in at least close proximity. So that won’t require adding new bodies to our group beyond what we’ve done in the re-org, so we’re not going to be looking at substantial windshield time by the sales group. It’s just the ability to go call on them on a routine basis and talk about the benefits of the G4 Platinum. Many of them know it already but like anything, I mean the more shots on goal, the more packs go in kind of attitude and so this will be the first time that we’ve been able to call on that sector. Ben Andrew – William Blair: Okay. And that Terry, any information or content that in the sequence and the launch about utilization trends your patient retention from G4 other than anecdotal commentary?

No, not really. I think we need at least a quarter or two to truly understand. We have stated earlier and it has been truly anecdotal the feeling, it looks like they’re using it. They’re being patient using the product more frequently. And I can’t attribute directly as that more patients is using it without taking a holiday. We certainly read in the blogs and that is the best metric we have right now. There’s a great regularization from that standpoint. Greater confidence in the product, but beyond that, it’s hard to come up with qualitative or quantitative metrics on that then. Ben Andrew – William Blair: Okay. And then finally, can you talk a little bit about the next generation algorithm for the G4? What does that bring you in the order of magnitude improvement of M ARD or other feature? Thank you.

Yes, I can tell you that overall, it’s going to improve the MARD by about two points from the 40 to 400 and day one through day seven. That’s important because if you look at what the folks at Boston University and Mass General, they’re at 10.8. We certainly think that we can get and what we published with the FDA was 13% in ARD. So if we could get down into that overall range of around 11, we would be sub-10 at some point during the week because as you know DexCom sensors get better over time. So day four is better than day one and day seven is usually as good as day four if not better. So we’re excited about that opportunity to improve the outcome of that. Ben Andrew – William Blair: Thank you.

Our next question comes from Bill Plovanic from Canaccord. Please go ahead. Bill Plovanic – Canaccord: Hey, great. Thanks. Good evening and congratulations on a solid quarter.

Thanks, Bill.

Thanks, Bill. Bill Plovanic – Canaccord: Just – I’d like to whoever answered Ben’s question there, so as you look at G4, you’ve talked about kind of new product launches, we talked about. When would we expect this new algorithm to come? I think I missed that in the prepared remarks.

We hope to file it certainly like fourth quarter or late in 2014 and it would come sometime after that. And as Terry said earlier, that is really an accuracy enhancement for us. So we don’t have any real launch plans to share with you on that but that will come out and be approved sometime next year. Bill Plovanic – Canaccord: And is that what the hardware – the study, the 24-patient study that you referenced Terry, is that what they used?

No.

They’re just used in G4 Platinum. We originally, we developed the part of this algorithm is part of an AP project and then like everything else we do, we expanded that. If it’s good enough for that project and we get comfortable with it, it’s certainly something we want to incorporate for everybody. So that’s how it kind of evolved over time and we got excited. Bill Plovanic – Canaccord: Okay. And then you’ve gone through the G4 upgrade, how many of the customers are left to upgrade and did you have a lot of the $399s this quarter?

We had a good number. It wasn’t unexpectedly high or low. It was a piece of it. It had a little bit of a negative impact on margins but not a whole lot. What we’ve seen, Bill, is quite a few have upgraded but we’ve also seen is a lot of them are waiting until they’re out of warranty because they want insurance to cover that purchase of the new system. So, while the $399 upgrade is appealing to a number of people, there are a lot of people who manage their diabetes dollars very closely and they’re waiting to where they can get the upgrade. What we’ve also noticed with those customers on the SEVEN PLUS side is they’re pleading through every sensor they have in their closet and everything they have on their shelf and their reorder numbers are actually lower than what we’ve experienced historically because they don’t want to upgrade with any SEVEN PLUS sensors sitting on the shelf. So what we’re seeing is a rapid conversion in our sales numbers to GEN4 sensors probably faster than we’ve converted on a hardware side as people are using the stock that they have. Bill Plovanic – Canaccord: Okay. And then I got a ton of questions but I’ll ask one more and let it slide. As you look at gross margins, do you still think the peak on the disposable of 70%, 75% by the end of this year and then where are the controller receiver, transmitter receiver margins today and where do you think those can go? That’s my question. Thanks.

We’re never going to have fabulous electronic site margins under transmitter and receiver. We don’t build enough of them at this point in time. We’ve had a lot of discussions with some of the cell phone manufacturers and one of them called us. They designed a SKU. They built 55 million of them and they shut down the line, they never build it again. We don’t – we can’t quite do that and get those kinds of efficiencies. We’re very convinced that we can get our GEN4 sensor margins up in the 70% to 75% range and we can even go better than that as volumes permit us over time. And the hardware margins will be what they are. They’re there less than those, they will never get to 75%. Bill Plovanic – Canaccord: Should we, as we think about them, always kind of float around maybe a 50% range?

Yes, that’s fair. Bill Plovanic – Canaccord: Thank you.

Our next question comes from Jayson Bedford from Raymond James. Please go ahead. Jayson Bedford – Raymond James: Good afternoon, thanks for taking the questions. Any way you can talk about growth and shipments to new patients in the quarter?

The new patient pattern is consistent with what we had during most of Q4. We do have upgrades, we’ve always had upgrades and they’ve always been a reasonable part of our sales, but when you have a lot of new patients coming on as well, we really don’t have any numbers to share today. It’s been very strong. Jayson Bedford – Raymond James: Right, and then in terms of the sales force re-org there, have the reps either been able to go deeper into existing accounts, or you’re finding the reps being to able to open up new accounts, and I guess it’s a way of asking the installed base…

Yes, I’ll take it… Jayson Bedford – Raymond James: Sure.

Yes, I’ll take it first and then Terry’s been out in the field also. What I’ve seen in the times I’ve seen that our guys are going a lot deeper into a lot of accounts where they’ve been before because of the performance and the acceptance of this product by the patients, that a lot of our long time physicians are seeing, is they prescribe GEN4, the reaction they’re getting is oh my gosh, this thing is wonderful and they are prescribing a lot more. We’re getting broader coverage as well, but my observation again anecdotally, I don’t have numbers sitting here, is we’re going a lot deeper with our existing physician base. Terry, you want to add to that?

Yes, certainly. With the – each year, we target a particular message, as I indicated in my prepared remarks. CGM first is the message of 2013 and then outreach patient-to-patient communication. But within the CGM first, we are beginning to see traction. I’ve mentioned there was anecdotal as we get information back on the field force. But certainly, they’re spending much more time in each office than they historically have because the physicians are willing to give them more patients. Historically, it is always been much of a – unfortunately, a pump-centric type of environment in which they had to operate. And we’re moving the needle on that. We haven’t moved it dramatically, but we are moving the needle. So as a result of that, they are spending more time and as Kevin said, that means that they’re going deeper into each of those accounts. And again, in many of these accounts, there are multiple endocrinologists who would be sufficient to say that not every single endocrinologist in a particular group practice would necessarily be prescribing any technology for that matter, let alone CGM. So they are broadening even within a group practice of endocrinology to call on more physicians. And of course then in relationships with our partners, we oftentimes – they call on, in some cases, high insulin prescribing physicians who are not endocrinologists. You could certainly think that they were diabetologists, but we’re beginning to see scripts coming from those as well and that’s a little hard to make a judgment how much is coming in from patient-to-patient or how much is coming in from our referral from either a Tandem or an Animas, or even Roche partner. Jayson Bedford – Raymond James: That’s helpful. Just last one for me and I’ll jump back in queue. Just to clarify the comment on utilization, is it fair to assume that it’s stable? It’s not going down or up at least on G4, it’s largely stable from what you’ve seen?

At the very least, it is stable. Jayson Bedford – Raymond James: Okay. Thank you.

Our next question comes from Mimi Pham from ABR Healthco. Please go ahead. Mimi Pham – ABR Healthco: Hi, good afternoon. Just I guess a different way of asking the prior question. Last quarter, you said 60% to 65% of your startup kit sales were to new patients. To this quarter, was it same or higher?

You know what? I don’t have that number with me. I think patterns are pretty consistent, so I’d say it’s probably cost the same but Mimi, we don’t have that numbers sitting here. Mimi Pham – ABR Healthco: And then for reimbursement for type 2 CGM with the pipelines, you obviously had the help from the JDRF. Is there a society or the ADA or any kind of other independent group that could help drive CGM reimbursement for type 2s that your managed care group could get help from?

Well, no. I mean, we look to the ADA from that standpoint because remember ADA is not only type 1 in terms of their care commitment and cure mentality that as a professional organization all about the inclusive of both type 1 and type 2 or JDRF historically has been more towards the type 1. And a lot of that has come from that organization. You have to understand, here’s an interesting dynamic, so and I have stated this number before but I’ll state it again. Every day in the United States 10,000 Americans turn age 65. So you can say well, 65 is the new 55 and what does that mean? Well, it means that we’ve got a lot more patients that are living longer and therefore developing type 2 diabetes. As a result of that, that is something that ADA recognizes and has to embrace. It used to be that the update 65 type 2 diabetes or even type 1 you’re lucky and you certainly would have all of the challenges. I don’t think that’s the situation whatsoever anymore. So, it is a something that they recognized if there’s got to be intervention. And so they’re helping drive that. I think if you now look at some of the things I’ve talked about glycemic variability. The amount of information that’s being published in the literature about the role of excessive hyperglycemia in particular that is impacting and creating some of these economic costs that the payer system is looking to ways in which to reduce that. They’ve made all of the connect-the-dot assessments from that standpoint. So I don’t know I think we need a particular driver I think more than anything we need more peer review independent-type studies and those are ongoing and they will all be published over time and we’ll be able to track them. Mimi Pham – ABR Healthco: And if we see Vibe approved in September or October timeframe, would there be any reason that they would delay that rollout until next year. Just want to clarify if what the filling now in if the fourth quarter approval could mean a fourth quarter launch Vibe?

It could, but again this is a decision that need to made by Animas and just like we’ve commented in the past where we would potentially choose not to launch a product in the fourth quarter with a fourth quarter approval. The fourth quarter for Animas or for any of the pump company is just like DexCom is the biggest quarter. So, I would guess if that approval came late third quarter or very, very early fourth quarter they would probably launch it, but to be honest if it comes in the middle or latter half of the fourth quarter. My guess is they would not want to call their people out of the field and not want to disrupt their selling efforts in Q4 and we’ll probably defer to Q1 to launch it.

Our next question comes from Suraj Kalia from Northland Securities. Please go ahead. Suraj Kalia – Northland Securities: Hi, guys. Congrats on a nice quarter.

Thanks, Suraj.

Thank you. Suraj Kalia – Northland Securities: Terry, let me just ask some macro level questions. A lot company-specific had been asked. Hopefully, you can shed some light here. Where do you all see your current CGM share in the U.S.?

I don’t have any answer. Part of the problem is, we don’t publish our numbers. The other company doesn’t publish their numbers. If we look at independent surveys, if you look at the Q&A as an example from close concerns has a sum of 65% share in the U.S. I don’t believe that for a second. I think that the responders to that particular survey, yes, we probably – they’re what we call super users and yes, we probably have that kind of share but that’s not the broader group. I think there’s another bank that has published data based on a survey and again puts us a little over 50% share. Again, I really don’t. It’s a tough question and our people see that and I always caution them, put your filters on because surveys are, like anything else, it depends upon the body of the responders. But it’s somewhere in that neck of the woods.

Yes, hi. This is Kevin. It’s certainly between and 40% and 60%. That is close as we can get it. Suraj Kalia – Northland Securities: And, Terry, the last one I guess I know this might be a little unfair question, but any thoughts on Medtronic’s PreciSense, the dual sensing CGM that they were developing. Are you all hearing about it in the marketplace, is it dead, is it moribund? If it’s still – do you all see on the competitive landscape? Any thought would be great.

Yes, I don’t really know a lot about it. I’d certainly don’t think it’s dead. I think that they presented some data about their long term intent with it, to use that as part of a redundancy for an artificial pancreas. I don’t know where it’s at developmentally, outside of that, they were at the NIH meeting as well and so, we’ll see. But don’t know where they’re at with that. Suraj Kalia – Northland Securities: Fair enough. Thanks for taking my questions guys.

Our next question comes from Bill Plovanic from Canaccord, please go ahead. Bill Plovanic – Canaccord: Great, thanks. A couple of follow ups here. One was on Tom’s question earlier, just on distribution, you’ve added 20, kind of where do you stand now in terms of your reps? And where do you plan to be by year end?

We’re done adding for the year, when we had the first quarter call, we said we were going to go from 48 to 68 territories and 68 is where we’re going to stop through the end of the year, barring some incredible growth spurt but that’s our plan as we sit here right now, so that’s where we are today and that’s where we’ll stand. Bill Plovanic – Canaccord: Okay, and then as you’ve been scaling the manufacturing on the G4, are you able to make it, are you running in to any problems, just in general how is that going?

Bill, it’s going fabulously. Our manufacturing team has just done an incredible job with this launch. You heard Terry laughing. My favorite email to send them every week is my yield report, these guys are doing a great job with sensor yields. It’s been super. Bill Plovanic – Canaccord: Perfect. And then on the 10-day label was something that get bantered about a while ago. I was just wondering if that’s something that could still be out there with the 10-day label or shut off, or what do you think about that these days?

It is still out there and I can tell you in many studies that we do particularly the ones we do internally, we are running them all now to 10 or 14 days even if we just type the data and cut it off at seven. We’re running them longer so we can get a sense of how the sensor will perform from a physiology perspective within our patients and when that cut-off point would be. I think over time and as we discussed this as a team with respect to shut off, the way we would plan on doing that would we been shut the sensor off based on the signal from the electrode on the sensor when we can see that it’s not up to standard, we would have it shut off that way versus having a fixed shut off at a point in time. And that’s what we think is the best ultimate long-term solution and we will look at that probably not as part – certainly not as part of the current Gen4 system and not in the next gen that we’ll file. We’ll take a look at it after that. Bill Plovanic – Canaccord: So maybe in G5 is what you’re saying?

G5 or G6, we’ll see. Bill Plovanic – Canaccord: And then before going to the next question, time line on the G5?

The FDA has been working with this very diligently to define how we can get to a mobile platform and identifying all the risks and all the things we have to do to mitigate those risks and this is very much an ongoing process. We’ve heard from the agency and a number of friends that they’re very comfortable with the device making a jump straight to a phone without something in between or without a medical device around it, without the mitigating factors. So we’re working with them to better understand it. You know, Bill, that’s the beauty of share system. We’re going to have a practice round that is not going to be lights out, all of our patient to turning it on at exactly the same time but we’ll have the server structure built. We’ll learn how to receive the data. We’ll learn to display the data back on the phone. The receiver is still the primary medical device, so with respect to an approval path, that’s something that the FDA can comprehend and that we’ve made them comfortable with. So we’re excited for our first foray there and we’ll see how it goes. With respect to the applicator and the other elements of Gen5, we have made the decision, we’re going to keep manufacturing the same sensor when we go the Gen5 platform. We don’t need to change the sensor at all. And with respect to the other hardware element, we’ll pick the right time when we call of those into manufacturing. So, while we don’t have a timeline, as Terry said, we’ve go about five enhancements and different indications to launch over the next 12 to 18 months. That will keep us very busy. Gen5 will come after that. Bill Plovanic – Canaccord: Definitely. Actually one of my questions was to help me understand the benefit of this shared platform. So really it’s almost a baby step through your Gen5 in terms of getting to the mobile platform eventually. Is it how we should think about it?

Absolutely. From an operations and internal perspective, yes. I can tell you from a customer perspective, it’s much more than that. I was discussing it with a physician this morning the physician’s reaction was a huge wow. I mean, I guess we’re going to be able to take this to school and plug it in the back of the classroom, for example, and data can go to the parent all day long and they can watch them. It can also go to the school nurse. This will be big wow for our patients for the traveling spouse who’s on the road all the time who has type 1 diabetes. The other spouse can watch the data at home and make sure nothing happens. The sense of comfort there is something that’s going to be a big deal and in our minds, as we I walk around here say all at the time, that’s going to sell more sensors. Bill Plovanic – Canaccord: Yes, I do not know if I’d want my wife to see my glucose levels when I travel.

You can take the receiver out of the cradle, though. There is just a way. Bill Plovanic – Canaccord: And then lastly, it’s just does J&J issues with the OneTouch Ultra have any immediate impact on the SAP device, because if they – I think they recall. I’m not exactly sure, but I think they’ve had challenges on the OneTouch and if they’ve got something going the FDA, can they get a PMA approved?

It’s a different division. That’s the Verio of the LifeScan division. Animas is actually a separate operating company. So they have – they operate somewhat together as a diabetes franchise, but they’re two distinct companies. So the warning letter on Verio went to LifeScan, not to Animas. Bill Plovanic – Canaccord: Okay. So the government FDA doesn’t look at J&J as one big company. They break them up into their operating companies.

No. No. No. It’s operating company – at the operating company level. Bill Plovanic – Canaccord: Okay. Thank you very much.

Sure.

Our next question comes from Danielle Antalffy from Leerink Swann. Please go ahead. Danielle Antalffy – Leerink Swann: Hi, guys. Can you hear me okay?

Sure. We can. Danielle Antalffy – Leerink Swann: Okay. Great. Thanks so much for taking the question. I was hoping you could – so Kevin, you mentioned this between hardware and sensor. I was wondering if you could give us any color on the split within sensor revenue of SEVENPLUS versus Gen4?

No. Other than the Gen4, it was substantially more. Danielle Antalffy – Leerink Swann: Okay. Well that’s helpful. And then my second question, as you know, if you speak to your competitor, Medtronic, they claim to be making progress with FDA on the Enlite sensor. I was just hoping to get a sense from you guys of what you’re hearing in the marketplace in anticipation of the Enlite sensor with the (inaudible) device because the way they talk about it, they actually say that they think it’s negatively impacting their diabetes business now because patients are waiting for this device to be approved. So if you have any senses of at least what you guys are seeing in the marketplace on that front because that would imply obviously that there’s a volume of patients waiting to go on this device. Just wondering if you had any comment there?

Well, I look at what’s going on in Europe where the device is available and certainly Animas and Johnson & Johnson have made public comments that they’re growing 30% to 50% in markets in Europe where the Vibe has launched indirect head-to-head competition with the Verio system. So they don’t seem to be too worried about it. I think here in the U.S. when we talk to the folks both J&J and certainly Tandem, they’ve seen to be cannibalizing the installed base. I’m not sure patients quote, are waiting to go to this other system. The challenges and here’s part of our, I call it, a conundrum for a lack of better term. So last year, our Medical Director David Price got up and spoke and talked about all the ways you can manipulate data from a glucose standpoint and that we never do that. We always only do prospective analysis and we’re trying to get out of that same meeting and said that the Enlite was about 13% MARD. We just had the heck out of it. We couldn’t get it to perform that way and then Dr. Russell and Dr. Damiano presented results and said they couldn’t get it to perform that way either, but closer to 18% and 13% and then fast forward to ATDD earlier this year. Medtronic is up and says what Enlite is on a prospective basis closer to 18% which is consistent with what were our experience with it is and actually out in the field experience. Now, I think from an FDA standpoint, you’ve got a product that’s been in before the FDA. They’ve seen our data, which is part of our strategy and now they’re looking at something that can have an MARD for a sensor in order to shut off insulin delivery of somewhere close to 18%. It’s a conundrum. It’s a conundrum for the agency to say what are we going to do here. Now, most recently, you’re hearing from Medtronic talk about Enlite 2 and other things predictive, so I don’t know. I don’t think the market reaction that there’s a huge pent-up demand. I know they’re suffering, but I don’t think it’s related to waiting for the Verio system. Danielle Antalffy – Leerink Swann: Right. Okay, thank you so much. That’s helpful.

Our next question comes from Robert Marcus from Leerink Swann. Please go ahead Robert Marcus – Leerink Swann: Thank you. My questions have been answered.

Our next question comes from Greg Simpson from Wunderlich Securities, please go ahead. Greg Simpson – Wunderlich Securities: Yes, thanks. Good afternoon guys. Let me add my congratulations on a great quarter. Terry, you kind of answered it in response to Bill’s question. I had two questions. My first question, you kind of answered. But I was wondering with the new algorithm for the G4, how does that affect kind of your pacing on the pipeline and kind of the progression to the G5 in other different animals but does it affect your thinking? In other words – I’m sorry, do you do more on the G5 and make them out with G5.5 kind of like you did on G4 because of the FDA process?

This is Kevin. I’ll take that. One of the things we believe were successfully and it’s kind of segmenting some of the improvements in our product and not linking everything together. One of the issues we had with Gen4 in launching it, as you just said, it became Gen4.5 because we took the membrane from the Gen5 system and moved them back when it took so long to file. We’re going to do our improvements in smaller increments and file them and not necessarily interlink them. So we’ll file the algorithm and certainly we will run it with Gen4 and it may in fact be the algorithm we launched Gen5 with. I don’t have the answer to that yet. But we can file the algorithm and then we can launch it anytime that we’re ready. And that’s how we look at it and that’s how we’re going to treat this. And all these things, we’re trying not to link them altogether. We want to do them in the order that best meets our business needs. So it isn’t tied with that. There could be Gen5.5 algorithm but in all reality, that will depend upon the timing of the Gen6 sensor. If a Gen6 sensor comes, then algorithm would be completely different anyway. So we don’t want to do things that aren’t going to lead to increased profitability. And this algorithm, we believe, will lead to increased profitability because again it makes the system more accurate and more reliable for our customers. Greg Simpson – Wunderlich Securities: So, okay. So a pipeline of growth, that’s a nice problem to have. Kevin, let me – you mentioned profitability. So I feel compelled to ask this question. So we’ve seen the growing number of companies for easy money, this question has been answered or asked of you guys on past conference calls. Do you feel and you’re making obviously from a non-cash standpoint your progress towards profitability, can you talk about that in general and just kind of how you feel comfortable with the balance sheet and where you feel like you sit right there?

It’s funny. If somebody were to ask me my favorite numbers that I recited in, in all these numbers, it would be 6. That would be the $6 million drop to the bottom line on $9.2 million in increased sales. Our operating income cash loss was only $3.7 million this quarter compared to number closer to $10 million a year ago and our working capital progressed exactly the way we wanted it to. We have that capacity of close to $30 million that we can take down later this if we needed cash and we’ve made a commitment internally to ourselves, to our management team and to our investors that we’re not going to go raise more equity money. We’re going to turn this thing where it needs to be and with growth like we believe we can do it. So that’s our plan today. Greg Simpson – Wunderlich Securities: Awesome. All right, thanks very much.

We have no further questions at this time.

Okay, I’d like to wrap it and I got a few 35,000 foot level kind of comments, so in March of this year, the American Diabetes Association released new data which estimates the total cost of diabetes in United States has risen to $245 billion per year in 2012 from $174 billion per year in 2007. That’s a 41% increase over just a five year period. Today, nearly 26 million adults and children are living with the disease in United States; an additional 79 million are estimated to have pre-diabetes. Direct medical costs totaled $176 billion last year for hospital and emergency care, office visits, and medications. Indirect medical costs including absenteeism, reduced productivity, and employment cost by diabetes related to disability and loss productivity due to early mortality totaled $69 billion last year. So we have gone from 12.1 million people diagnosed with diabetes in the U.S. in 2002, to 17.5 million in 2007 to nearly 26 million people with diabetes in United States in 2012. The high cost of complications has increased the economic burden over $70 billion annually in just the last five years. And yes we know that CGM can improve outcomes and delay or perhaps even prevent the onset of many of these complications. There’s absolutely no wonder why I’m so excited about the current and future prospects of DexCom. Thank you.

Thank you. Ladies and gentlemen, this concludes today’s conference. Thank you for participating. You may now disconnect.