Summary
DexCom, Inc. (DXCM) announced a significant strategic collaboration with Google Life Sciences LLC (GLS) on August 10, 2015. This partnership aims to jointly develop next-generation continuous glucose monitoring (CGM) products. The agreement involves an initial upfront payment from DexCom to GLS of $35 million in DexCom common stock, with potential for an additional $65 million in milestones payable in cash or stock, contingent on development and regulatory achievements. This collaboration signifies DexCom's commitment to innovation and expanding its product pipeline in the rapidly growing diabetes technology market.
Key Highlights
- 1DexCom entered into a material definitive agreement with Google Life Sciences LLC (GLS) on August 10, 2015.
- 2The Collaboration Agreement focuses on the joint development of next-generation continuous glucose monitoring (CGM) products.
- 3DexCom will pay GLS an upfront fee of $35 million in DexCom common stock.
- 4Additional milestone payments of up to $65 million are contingent on achieving development and regulatory objectives.
- 5Milestone payments can be made in cash or DexCom common stock at DexCom's election.
- 6Royalties will be paid to GLS only if aggregate product sales exceed $750 million, starting in the high single digits and declining.
- 7The agreement includes an exclusive license for DexCom to use certain GLS intellectual property for the developed products.
Frequently Asked Questions
The primary purpose of the Collaboration Agreement is for DexCom and Google Life Sciences to jointly develop a series of next-generation continuous glucose monitoring (CGM) products, leveraging the expertise and intellectual property of both companies to advance diabetes technology.
DexCom will pay an upfront fee of $35 million in DexCom common stock. Additionally, there are potential milestone payments totaling up to $65 million, which DexCom can elect to pay in either cash or DexCom common stock upon achievement of specific development and regulatory goals.
Yes, royalty payments to Google Life Sciences will only commence if aggregate product sales exceed $750 million. The royalty rate will start in the high single digits and decline to the mid-single digits based on DexCom's total product sales.
The agreement is terminable by either party upon uncured material breach, if specific product development timelines (FDA submission for the second product) are not met, or if sales fall below a specified aggregate dollar amount. DexCom also has the right to terminate upon the expiration of the last patent covering a developed product.