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FDA OKs pediatric use of DexCom's glucose monitoring system

San Diego’s DexCom Inc. (Nasdaq: DXCM) on Monday received approval from the Food and Drug Administration to use its continuous glucose monitoring system -- which had previously been approved only for diabetes patients above the age of 18 -- for children as young as 2.

DexCom CEO Terrance Gregg said he was “thrilled” with the approval for the pediatric version of the system, which provides 24-hour glucose monitoring through lightweight wireless transmitters on the abdomen and upper buttocks.

"Daily management (of glucose levels) is relentless, but parents can now have greater peace of mind that a child’s diabetes is under control,” he said.

In a column in the Motley Fool investment website, finance writer Leo Sun said the FDA approval should boost DexCom’s sales in the coming year. Sun noted that diabetes is one of the most common chronic diseases in children in the United States, affecting 151,000 people below the age of 20.

News of the FDA decision pushed DexCom’s price up nearly 6 percent in after-hours trading Monday, hitting a 52-week high of $42.16. But by noon on Tuesday the gain had narrowed to only around 2 percent, at slightly below $40.

Even before the FDA approval, DexCom sales were on an upward swing. Preliminary results show that in the fourth quarter, DexCom's product revenues more than doubled over the previous year, hitting $42.5 million. Although the company has yet to make a profit, it has trimmed its losses from 25 cents per share in the fourth quarter of 2012 to 8 cents per share in the last quarter.

That news was enough to lead Canaccord Genuity, a Canadian investment firm, to raise its price target for DexCom from $34 to $44 last week. Benchmark Co., a New York investment firm, set a $44 price target a week before.

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