德康醫療 (DXCM) 2012 Q2 法說會逐字稿

Welcome to the second quarter earnings release call. My name is Monica, and I'll 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 will now turn the call over to Terry Gregg. Mr. Gregg, you may begin.

歡迎參加第二季財報發布電話會議。我是 Monica，將擔任今天會議的接線員。目前所有與會者皆為僅收聽模式。稍後我們將進行問答環節。請注意，本次電話會議將被錄音。現在我將把電話交給 Terry Gregg。Gregg 先生，您可以開始了。

Thank you, operator, and thanks to all of you joining us on the call today. As is our usual and customary process, I'm going to ask Steve Pacelli to read our Safe Harbor statement.

謝謝接線員，也感謝各位今天加入我們的電話會議。依照我們一貫且慣常的流程，我將請 Steve Pacelli 宣讀我們的「安全港」聲明。

Thanks, Terry. Some of the statements that we will be make in today's call may constitute forward-looking statements. They statements reflect management's expectations about future events, operating plans and performance and speak only as of the date. These forward-looking statements involve a number of risks and uncertainties. A list of the factors that could cause actual results that could be materially different than those expression order implied in 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 other reports filed with the SEC. We take no obligation to update publicly or revise these forward-looking statements for any reason. Terry?

謝謝你，Terry。我們今天電話會議中將作出的部分陳述可能構成前瞻性陳述。這些陳述反映管理層對未來事件、營運計畫與績效的預期，且僅截至本日有效。這些前瞻性陳述涉及多項風險與不確定性。可能導致實際結果與這些前瞻性陳述中明示或暗示之內容存在重大差異的因素清單，已在我們的 Form 10-K 年度報告、Form 10-Q 季度報告以及其他向 SEC 提交的報告中的「風險因素」章節及其他部分詳述。我們不承擔因任何原因公開更新或修訂這些前瞻性陳述的義務。Terry？

Thank you, Steve. Joining me today are Kevin Sayer, our President; Jess Roper, our Chief Financial Officer; and Steve in his new role as our Executive Vice President of Strategy and Corporate Development. As our Company grows, our needs naturally will evolve. And as we expand our footprint globally, Steve will be responsible for the business development and strategies that are required to commercialize our platform internationally. His new title reflects that focus.

謝謝你，Steve。今天與我一同出席的有：我們的總裁 Kevin Sayer；我們的財務長 Jess Roper；以及 Steve——他將以新職務「策略與企業發展執行副總裁」參與。隨著公司成長，我們的需求自然會演進。當我們在全球擴大布局時，Steve 將負責推動在國際上商業化我們平台所需的業務開發與策略。他的新職稱反映了這項重點。

Additionally, as you all know, we use partnerships to expand the awareness and benefits of CGM as a critical tool in the management of diabetes and glycemic variability. Today we have four insulin pump partnerships in various stages of development and a critical care program with Edwards Lifesciences. Managing these relationships is a very demanding endeavor. And I have also asked Steve to focus his efforts in this area by leading our participation on the steering committees that govern these partnerships. Steve will continue to lead our investor relations as well as our legal and intellectual property groups.

此外，各位都知道，我們透過合作夥伴關係來提升對 CGM 的認知，並強調其作為糖尿病與血糖波動管理關鍵工具的效益。目前我們與四家胰島素幫浦夥伴處於不同開發階段，並與 Edwards Lifesciences 推動一項重症照護計畫。管理這些關係是一項非常艱鉅的工作。我也請 Steve 將重心放在此領域，帶領我們參與管理這些合作關係之指導委員會。Steve 也將持續負責投資人關係，以及我們的法務與智慧財產團隊。

Before we review our second quarter 2012 financial results and provide our customary operations update, I would like to spend a few minutes updating investors on the status of our Gen 4 submission. As we disclosed during our Q1 earnings conference call in May, we filed a PMA with the Food and Drug Administration at the end of the first quarter seeking approval of our Gen 4 system.

在我們回顧 2012 年第二季財務結果並提供一貫的營運更新之前，我想先花幾分鐘向投資人更新我們 Gen 4 送件的進度。如同我們在 5 月第一季財報電話會議中揭露的，我們已於第一季末向美國食品藥物管理局（FDA）提交 PMA，申請核准我們的 Gen 4 系統。

Within a matter of days, FDA launched a interactive review of our submission, which has continued for the past several months. Additionally, in mid-July, the FDA visited our manufacturing facility to conduct the Gen 4 PMA audit in addition to our biannual quality system inspection technique review. And I'm pleased to report that we could be colluded the audit with no findings or formal observations. We believe we remain on track for an approval of Gen 4 before the year end, and of course I am hopeful we will obtain approval sooner. I would now like to turn the call over to Kevin Sayer.

在短短幾天內，FDA 即對我們的申請啟動互動式審查，並在過去幾個月持續進行。此外，7 月中旬 FDA 造訪我們的製造工廠，進行 Gen 4 PMA 稽核，同時也執行我們每兩年一次的品質系統稽核技術審查。我很高興報告，我們已完成該稽核，且沒有任何缺失或正式觀察事項。我們相信仍按計畫可在年底前取得 Gen 4 核准，當然我也希望能更早取得核准。接下來我想把電話交給 Kevin Sayer。

Thank you, Terry. I'll start with the financial update. DexCom generated $21.5 million in product revenue for the second quarter of 2012, compared to $15.2 million for the same quarter in 2011, a $6.3 million or 42% increase. Our split between consumable and durable revenues was between 70% to 75% consumable and between 25% to 30% on the durable side.

謝謝你，Terry。我先從財務更新開始。DexCom 於 2012 年第二季創造 2,150 萬美元的產品營收，相較 2011 年同期的 1,520 萬美元，增加 630 萬美元或 42%。我們在耗材與耐用品營收的分布約為：耗材 70% 至 75%，耐用品 25% 至 30%。

AFPs for sensors remain consistent, and AFPs for our hardware remains consistent on a gross basis. However, over the first half of the year we offered a $200 rebate to all of our customers purchasing new hardware. The effect of this rebate, based upon actual redemption activity, was an offset of approximately $200,000 to sales for Q2.

感測器的平均售價（ASP）維持一致，我們硬體的 ASP 以毛額基礎計也維持一致。然而，在上半年我們對所有購買新硬體的客戶提供 200 美元回饋。依據實際兌領情況，該回饋對第二季銷售的抵減影響約為 20 萬美元。

Our international business continued to perform well in Q2, and we're pleased to report that we initiated the first, albeit limited, phase of our Gen 4 launch in Europe, and we will finance to introduce Gen 4 in other European countries over the coming months. On the domestic distributor front, our split between direct and distributor business remained consistent with the prior quarter.

我們的國際業務在第二季持續表現良好；我們也很高興報告，我們已在歐洲啟動 Gen 4 上市的第一階段（雖然規模有限），並計畫在未來幾個月將 Gen 4 推廣至其他歐洲國家。在美國國內經銷方面，我們直銷與經銷業務的占比與前一季一致。

And as a reminder, all of our international business is through third party distribution. Let me remind you once again that only two domestic distributors stock our starter kids, and all other participation -- participate in our drop-ship program. With respect to sensors, the distributors carry less than one month's inventory, more like two to three weeks. On the international side, our distributor credit terms are very tight and often require significant upfront payments for products. Given those terms, international distribution channel levels are also very low.

並提醒各位，我們所有國際業務皆透過第三方經銷進行。我再提醒一次，只有兩家國內經銷商備有我們的入門套件（starter kits）庫存，其他所有經銷商——都參與我們的直運（drop-ship）計畫。就感測器而言，經銷商持有的庫存不到一個月，更接近兩到三週。在國際端，我們對經銷商的信用條件非常嚴格，且往往要求產品的大額預付款。在這些條件下，國際經銷通路的庫存水位也非常低。

Sequentially product revenue for Q2 of 2012 increased 16% from the prior quarter. Total revenue for the second quarter of 2012 was $23.5 million, compared to $21.4 million during the same quarter in 2011. I would again remind invests that in Q2 2011 we received a $4 million milestone payment from Animas based on CE mark approval of the Vibe. Our product gross product totaled $10.6 million, generating a gross margin of 49% for Q2 2012, compared to gross profit of $6.8 million and a gross margin of 45% for the same quarter in the prior year.

以季對季來看，2012 年第二季產品營收較前一季成長 16%。2012 年第二季總營收為 2,350 萬美元，相較 2011 年同期的 2,140 萬美元。我再次提醒投資人，2011 年第二季我們曾因 Animas 的 Vibe 取得 CE 認證核准而收到 400 萬美元的里程碑款。我們的產品毛利合計為 1,060 萬美元，2012 年第二季毛利率為 49%；相較之下，前一年同期毛利為 680 萬美元、毛利率為 45%。

Sequentially our product gross profit increased $1.6 million on increased sales of $2.9 million over the prior quarter, and our gross margin remained relatively flat versus Q1. Our flat margin was slightly lower than anticipated and was due primarily to a greater than anticipated write-offs to components and materials relating to the discontinuation of our SEVEN PLUS hardware line internationally. Absent these charges and the ASP effects of our rebate, our gross margin would have been approximately 51%.

以季對季來看，在較前一季增加 290 萬美元的銷售帶動下，我們的產品毛利增加 160 萬美元，而毛利率相較第一季大致持平。我們的持平毛利率略低於預期，主要原因是：因停止在國際市場銷售 SEVEN PLUS 硬體產品線，導致與零組件及材料相關的報廢/沖銷金額高於預期。若排除這些費用以及回饋方案對 ASP 的影響，我們的毛利率約可達 51%。

Research and development expense totaled $10.5 million for Q2 of 2012, compared to $7.0 million in Q2 of 2011, the increased primary the result of development costs associated with our Sweet Spot platform and continued investment in our next generation products. Sequentially, R&D expense increased approximately 8%, again primarily due to higher development costs relating to our Sweet Spot platform, including $300,000 of cash expenses and $800,000 of non-cash charges related to the Sweet Spot acquisition.

2012 年第二季研發費用合計為 1,050 萬美元，相較 2011 年第二季的 700 萬美元增加；增加主要來自與 Sweet Spot 平台相關的開發成本，以及對下一代產品的持續投資。以季對季來看，研發費用約增加 8%，同樣主要因 Sweet Spot 平台相關的較高開發成本所致，其中包括 30 萬美元的現金費用，以及與 Sweet Spot 收購相關的 80 萬美元非現金費用。

For the balance 2012 we will focus our quarterly R&D expenses on completing preparation for our Gen 4 launch, our Gen 4 pediatric trial, continuing to very many our platform, obtain and extend the durability claim for Gen 4, continuing to expand our Sweet Spot platform and furthering our Gen 5 efforts.

在 2012 年剩餘期間，我們將把每季研發費用的重點放在：完成 Gen 4 上市準備、Gen 4 兒科試驗、持續維護我們的平台、取得並延長 Gen 4 的耐用性（durability）主張、持續擴展 Sweet Spot 平台，以及推進 Gen 5 相關工作。

Selling, general, administrative expense totaled as $15.4 million in Q2 2012, compared to $12.2 million during the same quarter in 2011. The increased was due to two factors. An increase in non-cash charges of approximately $800,000, primarily centered in share-based compensation, and additional expansions related to increased selling and marketing costs to support revenue growth. Sequentially SG&A expense remained relatively flat.

2012 年第二季銷售、一般及行政（SG&A）費用合計為 1,540 萬美元，相較 2011 年同期的 1,220 萬美元增加。增加主要來自兩項因素：非現金費用約增加 80 萬美元（主要為股份基礎給付），以及為支持營收成長而增加的銷售與行銷成本相關擴編。以季對季來看，SG&A 費用大致持平。

Our net loss for the second quarter of 2012 totaled $14.7 and includes $7.1 million in non-cash expenses, centered primarily in share-based compensation. And the loss for the quarter was $0.21 per share. We ended the quarter with $62 million in cash, restricted cash and marketable securities, and had work capital of $67 million. We evaluate our balance sheet on an ongoing basis and we continue to believe we are adequately capitalized to support our business operations.

我們 2012 年第二季淨損合計為 1,470 萬美元，其中包含 710 萬美元的非現金費用，主要為股份基礎給付。本季每股虧損為 0.21 美元。季末我們持有 6,200 萬美元的現金、受限制現金及有價證券，營運資金為 6,700 萬美元。我們持續評估資產負債表，並仍相信我們的資本水位足以支持業務營運。

Finally, we remain committed to our guidance of estimated full year 2012 product revenue ranging from $85 million to $92 million. One final financial update. Based on advice from our outside tax advisors, we do not expect the medical device tax to have an impact on our business based on draft IRS guidance. We believe that virtually all if not all of our products are exempt from the tax based upon the retail device carve-outs, which defines a retail device as one that is regularly available for purchase and use by individual consumers who are not medical professionals, and designed such that it was not primarily intended for use in a medical institution or office by a medical professional.

最後，我們仍維持對 2012 年全年產品營收的指引，預估區間為 8,500 萬至 9,200 萬美元。最後再補充一項財務更新：根據外部稅務顧問的建議，依據 IRS 指引草案，我們預期醫療器材稅不會對我們的業務造成影響。我們相信幾乎所有（若非全部）產品都可依「零售器材」豁免條款免稅；該條款將零售器材定義為：一般個人消費者（非醫療專業人士）可定期購買並使用，且其設計並非主要供醫療專業人士在醫療機構或診所內使用的器材。

Now I'll provide an update on the product pipeline. As Terry discussed at the outset of the call, we couldn't be more pleased with the progress we are seeing out of FDA on our Gen 4 submission. We're also pleased to note that in June we received CE market approval for Gen 4 and have commenced commercialization of the system in several countries in Europe.

現在我將就產品研發管線提供最新進度。如 Terry 在電話會議一開始所提到的，我們對於 FDA 在我們第 4 代（Gen 4）送件審查上所展現的進展感到非常振奮，成果令人十分滿意。我們也很高興地指出，我們已於 6 月取得 Gen 4 的 CE 市場核准，並已在歐洲數個國家開始將該系統商業化。

We have I initiated our pediatric trial for Gen 4, and although the final protocol agreed to with FDA is more comprehensive than we initially expected in terms of total number of patients and number of in-clinic days, we're still targeting completion of the pediatric trial before yea rend. We were also working hard on a new algorithm for Gen 4, which we believe will not only further enhance performance, but will enable an extended durability claim as we look to conduct a clinical trial to seek such a claim during the first half of next year.

我們已啟動 Gen 4 的兒科試驗；雖然與 FDA 最終同意的試驗方案在總受試者人數與門診天數方面比我們原先預期更為全面，但我們仍以在年底前完成兒科試驗為目標。我們也正積極開發 Gen 4 的新演算法，我們相信這不僅能進一步提升效能，亦可支援延長耐用性（durability）之宣稱；我們計畫於明年上半年進行臨床試驗以爭取該項宣稱。

We continue to explore the potential of reducing the need for sensor calibration without materially affecting the performance Gen 4, and we are evaluating the clinical and regulatory strategy related thereto. As we stated previously, our long-term goal as a continuous glucose sensing company is to eliminate altogether the need for patients to take fingersticks, and we believe we are making significant progress towards realizing that goal.

我們持續探索在不對 Gen 4 的效能造成實質影響的前提下，降低感測器校正需求的可能性，並正在評估相關的臨床與法規策略。如先前所述，作為一家連續血糖感測公司，我們的長期目標是完全消除病患需要採指尖血（fingersticks）的需求，而我們相信我們正朝著實現該目標取得顯著進展。

Finally, we are making good progress in our cloud-based information management efforts with Sweet Spot. Sweet Spot's current 510k clearance allows for the upload and analysis of data derived from any FDA-cleared blood glucose meter, and we had our first face-to-face meeting with the FDA in July to define the regulatory [path] to include CGM and insulin pump data as part of our cloud-based platform.

最後，我們在 Sweet Spot 的雲端資訊管理工作上也取得良好進展。Sweet Spot 目前的 510k 核准允許上傳並分析任何經 FDA 核准之血糖機所產生的資料；我們也在 7 月與 FDA 進行了首次面對面會議，以界定將 CGM 與胰島素幫浦資料納入我們雲端平台的法規[路徑]。

Finally, I will provide an update on our partnerships. Shifting to our integration partnerships, Animas continues to commercialize the Vibe system in Europe, and our understanding is the system is being well received by patients and physicians. With regard to the filing of a PMA supplement for US approval of the Vibe, our timing is largely dependent on the speed with which FDA processes are Gen 4 filing, but we hop to be am a position to file before year end.

最後，我將就我們的合作夥伴關係提供最新進度。轉到整合合作方面，Animas 持續在歐洲商業化 Vibe 系統，而據我們了解，該系統受到病患與醫師的良好接受。至於在美國申請 Vibe 核准所需的 PMA 補充申請（PMA supplement）送件時程，我們的時間點在很大程度上取決於 FDA 處理我們 Gen 4 送件的速度，但我們希[望]能在年底前具備送件條件。

Although somewhat earlier in the development cycle, we continue to see nice progress on both the Roche and Tandem integration products. Finally on the Edwards front, work on the second generation in-hospital glucose monitoring system is near complete, and as Edwards mentioned in their recent earnings call, they expect to obtain a CE mark for the second generation GlucoClear system before the end of 2012. I would now like to turn the call over to Terry for some concluding remarks.

雖然仍處於較早的開發階段，我們在 Roche 與 Tandem 的整合產品上仍持續看到不錯的進展。最後在 Edwards 方面，第二代院內血糖監測系統的工作已接近完成；正如 Edwards 在其近期財報電話會議中所提到的，他們預期在 2012 年底前取得第二代 GlucoClear 系統的 CE 認證。接下來我想把電話交回 Terry 做一些結語。

Thanks, Kevin. The second quarter is always an exciting time for DexCom, for in June of each year we head to the annual scientific sessions meeting of the American Diabetes Association. This year's meeting in Philadelphia was no exception. We kicked off the meeting on Friday evening with an overview of our Gen 4 pivotal trail data presented by our Medical Director, Dr. David [Price] as part of an oral presentation on factors to be considered when evaluating a study reporting CGM data.

謝謝你，Kevin。第二季對 DexCom 來說一向令人振奮，因為每年 6 月我們都會參加美國糖尿病協會（American Diabetes Association）的年度科學年會。今年在費城的會議也不例外。我們在週五晚間以我們醫務總監 David [Price] 醫師對 Gen 4 關鍵性試驗（pivotal trial）數據的概述揭開序幕，該內容是以口頭報告形式呈現，主題為在評估一項報告 CGM 數據的研究時應考量的因素。

Dr. Price educated the audience on how to care, C-A-R-E about CGM data by outlining key questions to be asked of investigators, including "C," calibration. What was the frequency of calibration? Was it prospective or retrospective? Was it performed by trial subjects or by clinical staff? And what was the reference used? Blood glucose meters, laboratory instrument?

Price 醫師透過提出關鍵問題，向聽眾說明如何關注（C-A-R-E）CGM 數據，包括「C」代表校正（calibration）：校正頻率為何？是前瞻性或回溯性？是由試驗受試者執行或由臨床人員執行？以及使用何種參考標準？血糖機、實驗室儀器？

"A" for analytical techniques. Was the sample size adequate to draw conclusions? Was the data presented as mean relative difference, mean absolute relative difference, or median absolute relative difference? And was Clark air grid A zone distinguished from Clark air grid A and B zones? "R" for range. Was the range of glucose values appropriate, and was the rate of change of glucose values reflected? And finally, "E," for excluded data, or outlier values, outlier sensors or other data excluded.

「A」代表分析技術（analytical techniques）：樣本數是否足以得出結論？數據是以平均相對差（mean relative difference）、平均絕對相對差（mean absolute relative difference），或中位數絕對相對差（median absolute relative difference）呈現？以及是否區分 Clark air grid A 區與 Clark air grid A 與 B 區？「R」代表範圍（range）：血糖值範圍是否適當，且是否反映血糖變化速率？最後，「E」代表排除的數據（excluded data），亦即被排除的離群值、離群感測器或其他被排除的資料。

[You have] to ask yourself why is Dr. Price's message so important? Well, imagine the GPS system in your car or even your speedometer showing you your position or speed 15 to 25 minutes ago. What value is that to you? You need current information in order to take action. And CGM systems must display critical, accurate and real-time information to the patient or, in the case of hospital-based products, to the healthcare professional, to be an effective tool.

[你必須]問自己：為什麼 Price 醫師的訊息如此重要？試想一下，如果你車上的 GPS 系統，甚至是速度表，顯示的是你 15 到 25 分鐘前的位置或速度，那對你有什麼價值？你需要即時資訊才能採取行動。而 CGM 系統必須向病患（或在院內產品的情境下，向醫療專業人員）呈現關鍵、準確且即時的資訊，才能成為有效的工具。

Shortly after Dr. Price's presentation, we saw for the first time a presentation by independent researchers comparing our Gen 4 sensor, currently being reviewed by the FDA, to the Enlite sensor technology to in a direct head-to-head comparison. As expected, the Gen 4 demonstrated superior accuracy to the Enlite sensor and as a result of this data presentation, DexCom was besieged by the various artificial pancreases investigators from across the globe requesting the Gen 4 technology for their ongoing studies.

在 Price 醫師報告後不久，我們首次看到獨立研究人員的簡報，將目前正由 FDA 審查的我們 Gen 4 感測器與 Enlite 感測器技術進行直接正面對決比較。如預期，Gen 4 展現出優於 Enlite 感測器的準確度；也因為這份數據的發表，DexCom 受到來自全球各地人工胰臟（AP）研究者的密集詢問，要求取得 Gen 4 技術用於其進行中的研究。

Of course, as an investigational device, we turned to FDA to seek their collaboration on behalf of researchers and patients involved in these AP studies, and we're pleased to note that FDA has swiftly responded to allow inclusion of Gen 4 in these studies and the switch by investigators to be made expeditiously and efficiently.

當然，作為研究用裝置（investigational device），我們轉向 FDA，代表參與這些 AP 研究的研究者與病患尋求其合作；我們也很高興地指出，FDA 已迅速回應，允許在這些研究中納入 Gen 4，並讓研究者能夠迅速且有效率地完成切換。

The importance of prospective, real-time, unblinded CGM as an effective tool in managing diabetes continues to gain momentum. At the recent keystone conference, Dr. Robert Ratner, the Chief Scientific Officer of the American Diabetes Association, went so far as to conclude that blinded, retrospective CGM has no place in diabetes. His view was supported from the podium by key opinion leaders such as Dr. Irl Hirsch an Dr. Jay Skyler.

前瞻性、即時、非盲測（unblinded）的 CGM 作為糖尿病管理有效工具的重要性持續升溫。在近期的 keystone 會議上，美國糖尿病協會首席科學官 Robert Ratner 醫師甚至下結論認為：盲測、回溯性的 CGM 在糖尿病領域沒有立足之地。其觀點也在會場上獲得 Irl Hirsch 醫師與 Jay Skyler 醫師等關鍵意見領袖的支持。

And a recent publication in Diabetes Technology and Therapeutics reported the lack of any glycemic improvement in both type 1 and type 2 patients in a study evaluating retrospective blinded CGM in 102 type 1 and type 2 patients over the course of ten months. Finally, I am pleased to note that two recent independent surveys conclude that DexCom is the market leader in the category and continues to gain share sequentially.

此外，《Diabetes Technology and Therapeutics》近期的一篇發表指出：在一項為期十個月、針對 102 名第一型與第二型糖尿病患者、評估回溯性盲測 CGM 的研究中，並未觀察到任何血糖控制改善。最後，我也很高興指出，兩項近期的獨立調查皆認定 DexCom 為該類別的市場領導者，且市占率持續逐季提升。

We remain keenly focused on the patient. Designing, developing, and delivering advanced technology products that are considered first in class yet are simple and convenient for patients to use. Our market share gains and Company growth are a testament to that philosophy and execution. Diabetes is challenging. Our goal is to be part of the solution, not part of the problem. With that I will open up the call to Q&A.

我們仍高度聚焦於病患：設計、開發並交付先進技術產品，這些產品被視為同級最佳（first in class），同時又讓病患使用起來簡單且便利。我們的市占率提升與公司成長正是這一理念與執行力的證明。糖尿病充滿挑戰；我們的目標是成為解決方案的一部分，而不是問題的一部分。接下來我將開放問答（Q&A）。

(Operator Instructions). Our first question comes from Ben Andrew of William Blair. Please go ahead.

（接線生指示）。我們的第一個問題來自 William Blair 的 Ben Andrew。請開始。

Hi, guys, this is Todd in for Ben today. Thanks for take be the call. My first question is on the international side. Could you guys give some color on how much European operations are contributing to the business right now and where you see that going in the next year or so?

嗨，各位好，我是 Todd，今天代 Ben 提問。謝謝讓我參與這通電話。我的第一個問題是關於國際市場。你們能否多談一些目前歐洲營運對業務的貢獻大約是多少，以及你們認為未來一年左右會如何發展？

This is Kevin. Right now we've said it's approaching 10% in our comments, and so it's getting up to that level. We see it continuing to grow. But again, it still remains as fraction of what we're doing as a total basis right now. We see it picking up steam over time.

我是 Kevin。我們先前在評論中提到，目前已接近 10%，所以正逐步達到那個水準。我們預期它會持續成長。但同樣地，就目前整體而言，它仍只是我們總業務的一小部分。我們認為隨著時間推移會逐漸加速。

Okay. And then how -- maybe some comments on how the, like, reimbursement environment is going over in Europe? Have you seen any changes to that within the past year or six months?

了解。那接著——也許請你們談談歐洲那邊的給付（reimbursement）環境目前如何？在過去一年或六個月內，你們有看到任何變化嗎？

It's still pretty tough. There's not a lot of approval for stand-alone CGM. What has happened over there -- and Terry spent a lot more time with these international doctors than I have -- the product is working so well that it's gaining acceptance and physicians are buying it and using it. Do you want to add to that?

仍然相當艱難。對於獨立式 CGM 的核准給付並不多。那邊發生的情況是——而 Terry 與這些國際醫師相處的時間比我多得多——產品表現非常好，因此正在獲得接受，醫師正在購買並使用它。你要補充一下嗎？

I think for the first time we are a beginning to see a more US-type of payment out-of-pocket by individuals. In the way in which the product gets distributed from our distributor generally to a clinic, it goes within the clinic budget, and physicians prescribe is it to the patients. But we're beginning to see the first signs of, again, the traction, particularly Gen 4 as a technology adoption. Patients are now willing to pay out of pocket, and there are a number of programs where there's some limited reimbursement, and certainly we've got dossiers on file as we go through that interactive process with those different funds.

我認為我們第一次開始看到更接近美國型態的個人自費支付。就產品從我們的經銷商一般分銷到診所的方式而言，它會納入診所預算，然後醫師再開立處方給病患。但我們開始看到一些初步跡象，顯示市場牽引力正在形成，特別是 Gen 4 作為技術採用的推進。病患現在願意自費，且也有一些方案提供有限度的給付；當然，隨著我們與不同基金進行互動流程，我們也已備妥並提交相關申請文件（dossiers）。

Okay. Thanks. Very helpful. Just one last question. Could you guys comment on any trends that you saw as far as attrition rates and utilization rates in the first half of the year?

好的。謝謝。非常有幫助。最後一個問題。你們能否評論一下今年上半年在流失率（attrition rates）與使用率（utilization rates）方面看到的任何趨勢？

It is our standard practice not to comment on attrition rates, and we continue to subscribe to that. It is difficult for us to actually nail that down, as we've said on multiple calls, only from a standpoint that off-label use does occur and it is hard for us to narrow down exactly how long a patient is using the product. We read the blogs like everybody else, and we see it anywhere from it's reported seven days, which we would prefer, all the way of to 30 days. So it's very difficult.

我們一貫的做法是不評論流失率，我們也會繼續遵循這個原則。正如我們在多次電話會議中所說，這件事其實很難精準界定，主要是因為確實存在超適應症使用（off-label use），而且我們很難縮小範圍、精確判斷病患使用產品的時間長短。我們跟大家一樣也會看部落格，看到的說法從報導的七天（這是我們比較希望的），一直到 30 天都有。所以真的非常困難。

Okay. Thanks for take be the questions.

好的。謝謝讓我提問。

Our next question comes from Thom Gunderson of Piper Jaffray. Please go ahead.

下一個問題來自 Piper Jaffray 的 Thom Gunderson。請開始。

Hi, good afternoon. Maybe the same question asked a different way, but maybe we can get a bit more color, Terry, on consumer behavior. You and your team are talking to your customers a lot. The back office people are talking to them. Have you noticed anything either since Q1, or maybe in 2012, that shows any change one way or the other in behavior on CGM holidays or reorder rates or anything in that category?

嗨，下午好。也許是同一個問題換個方式問，但 Terry，或許我們可以更了解一些消費者行為的細節。你和你的團隊經常與客戶溝通，後勤辦公室的人也在跟他們聯繫。你們是否注意到自第一季以來，或可能在 2012 年以來，在 CGM 休假（CGM holidays）或再訂購率（reorder rates）或這類別的任何行為上，有任何一個方向的變化？

No, Thom, we really haven't. I mean, it has been status quo. We're dialing down into a customer relations effort to gain more information, and again it becomes very difficult to narrow that down in terms of the "reorder patterns," and it depends on the pair for that particular patient, if they're willing to allow patients to order one box or two boxes or three boxes. Each additional box gets tougher for us to try to analyze how soon patients would use a product or in fact, as you described, if they're taking a holiday/

沒有，Thom，我們真的沒有看到。我是說，一直都維持現狀。我們正在加強一項客戶關係的工作以取得更多資訊；但同樣地，要在「再訂購模式（reorder patterns）」方面把它縮小到很明確其實很困難，而且也取決於該名病患的保險給付方是否願意讓病患一次訂購一盒、兩盒或三盒。每多一盒，我們就越難分析病患會多快用完產品，或如你所說，他們是否在休假／

We see certainly -- as we look at the kind of external analyses that are available to us -- and again we have to always be mindful that these responders are typically the most aggressive in the way in which they treat their diabetes -- we see no pattern change in them -- in one session, however long that may be, and they immediately start another session. And many of them will comment that I can live without my pump, I can't live without my sensor. So from that standpoint, no, we haven't seen any real change.

我們確實看到——當我們查看外部可取得的各類分析時——而且我們必須一直留意，這些回覆者通常是治療糖尿病方式最積極的一群——我們在他們身上看不到模式的改變：在一個使用週期（不論那有多長）結束後，他們會立刻開始下一個週期。很多人還會說，我可以沒有我的幫浦，但我不能沒有我的感測器。所以從這個角度來看，沒有，我們沒有看到任何真正的變化。

And then is there -- last time we talked, I think you thought you were going to pay the medical device tax. Now you're not. Is there anything that changed other than a draft IRS document and an accountant that wrote his name on it?

另外，上次我們談到時，我記得你認為你們會需要繳醫療器材稅（medical device tax）。但現在你們不需要了。除了 IRS 的一份草案文件以及一位會計師在上面簽名之外，還有任何其他改變嗎？

This is Steve. Actually, I don't think we were specific that we were going to have to pay for it. I think our comments were very reserved previously because we were waiting for our outside advisors to get their report done. I don't think this is a change. Obviously it's a pleasant outcome for us, but I don't think it's a change of position.

我是 Steve。其實我不認為我們之前有明確說過我們一定得繳。我想我們先前的評論非常保守，因為我們在等外部顧問完成他們的報告。我不認為這是立場的改變。顯然這對我們來說是個令人愉快的結果，但我不認為這是立場轉變。

Okay. And then last question, also international, but, Terry, you've been travelling outside of Europe. Is there any advances that we should start to be paying attention to in the BRIC countries?

好的。最後一個問題，也與國際市場有關：Terry，你最近也到歐洲以外的地方出差。在金磚四國（BRIC）方面，有沒有任何進展是我們應該開始關注的？

Well, certainly -- unfortunately diabetes is a global epidemic, and its fastest rate of growth is outside US, outside of Europe and certainly looking at the BRIC countries. We are, I would classify, deep in discussions with a number of distributors. Everything we do outside the US will be through a distributor network as to what is our best solution, who has the biggest footprint in the space, and also the regulatory acumen to get us through the various regulatory agencies that we -- we're going through.

嗯，當然——不幸的是，糖尿病是全球性的流行病，而且其成長最快的速度是在美國以外、歐洲以外，尤其是在金磚四國。我們可以說正與多家經銷商進行深入討論。我們在美國以外所做的一切都會透過經銷商網路來進行，以找出我們的最佳方案：誰在該領域的覆蓋最廣，以及誰具備法規方面的專業能力，能協助我們通過各個監管機構——我們正在走的流程。

I would say the first on our list and the closest we are to launch would be India sometime yet this year. Then you look at China and Japan would be 2013 from that standpoint. And there are obviously some countries in South America that look like they have enough economic wherewithal to begin that process as well.

我會說我們清單上的第一個、也最接近上市的會是印度，可能在今年稍晚。接著看中國與日本，從這個角度來看會是 2013 年。另外，南美也有一些國家看起來具備足夠的經濟實力，可以開始推動這個流程。

Thank you.

謝謝。

We have Bill Plovanic of Canaccord on line. Please go ahead.

線上有 Canaccord 的 Bill Plovanic。請開始。

Thanks, good evening. Can you hear me okay?

謝謝，晚安。你們聽得到我嗎？

Absolutely.

當然。

Great, guys. Any commentary on the Roche SEVEN PLUS, how they're doing with that?

很好，各位。對於 Roche 的 SEVEN PLUS，你們能否評論一下他們那邊的進展如何？

I can take that. You know what, Bill, we started up in the first quarter and the program is going. It has not had a material impact to our revenues yet. Relationships are starting to be made out in the field with our reps and the Roche reps. It's too early to tell or make a call on the program.

我可以回答。Bill，你知道的，我們在第一季啟動，這個計畫正在進行中。到目前為止，它對我們的營收尚未造成重大影響。我們的業務代表與 Roche 的業務代表在市場端開始建立合作關係。現在要判斷或對這個計畫下結論還太早。

Is there any commentary or color you could give -- I mean, in terms of the sequential cadence of the patients over the past few quarters?

你們能否提供任何評論或更多細節——我是說，就過去幾季病患數的逐季變化節奏而言？

Sequential cadence. Do you mean patient growth?

逐季節奏。你的意思是病患成長嗎？

Yes.

是的。

No, we've kind of dialed down on disclosures as far as numbers between kits and hardware and stuff. No, but suffice it to say we are comfortable with where we are.

沒有，我們在揭露方面已經收斂了，尤其是套件（kits）與硬體（hardware）等數字的拆分。不過可以這麼說：我們對目前的狀況感到滿意。

Any update on the Gen 4 manufacturing? Where are you, how many lines, how much can you make? How is that coming along?

Gen 4 的製造進度有沒有更新？你們目前到哪個階段、有幾條產線、產能能做到多少？進展如何？

Bill, we started off the year, we were going to start with one manufacturing line again that way, and we made decision in the first quarter that we needed to build another one. And part of the CapEx that you see is the equipment related to another Gen 4 manufacturing line. The other one is up, the other one is near completion of being up, and we're fine-tuning some of these processes, so we'll have the volumes we need to launch this I thing in a very big way. And so we're quite well -- we can certainly support what we're selling in Europe and what way need with our clinical studies. We have a not turned on the switch to produce thousands of sensors a day yet, and nor would it be prudent to do so until we see approvals right around the corner.

Bill，我們年初的規劃是先從一條製造產線開始；但我們在第一季做了決定，需要再建一條。你看到的資本支出（CapEx）其中一部分，就是與另一條 Gen 4 製造產線相關的設備。第一條已經就緒，另一條也接近完成，我們正在微調其中一些流程，這樣我們就能具備所需的產量，以非常大規模的方式推出這個產品。因此我們準備得相當充分——我們當然可以支援我們在歐洲的銷售，以及臨床研究所需的量。我們還沒有把開關打開到每天生產數千個感測器的程度，而且在看到核准近在眼前之前，這麼做也不明智。

Do you still feel confident with the gross margins getting into the 70%, 75% as we get the full manufacturing going?

你們是否仍有信心，隨著完整量產展開，毛利率可以提升到 70%、75%？

Absolutely. And that's going to be a function of volumes as well, but the we they will the cost profile of the Gen 4 sensor will be much better than SEVEN PLUS over time.

絕對有。而且這也會取決於出貨量；但隨著時間推進，Gen 4 感測器的成本結構會比 SEVEN PLUS 好得多。

Okay. That's all I had. Thanks.

好的。我就這些。謝謝。

Our next question, comes from Chris Cooley from Stephens. Please go ahead.

下一個問題來自 Stephens 的 Chris Cooley。請開始。

Thank you. Good evening. I appreciate you taking the questions. Could you maybe just explain or give us some update in the pediatric trials, both in terms of its -- the indications and how you're managing that process while still waiting for the Gen 4 approval? I mean obviously when that trial wraps. I'm just curious how you're managing those processes dually. And then I have a quick follow-up. Thanks.

謝謝。晚安。感謝你們回答問題。能否請你們說明或更新一下兒科試驗（pediatric trials）的情況，包含適應症（indications）以及在仍等待 Gen 4 核准的同時，你們如何管理這個流程？我的意思是，顯然等到那個試驗結束時……我只是好奇你們如何同時管理這兩個流程。之後我還有一個簡短的追問。謝謝。

Well, we had been encouraged by the Food and Drug Administration to initiate the clinical trials in pediatrics as soon as possible following our submission. We did. It was, as Kevin mentioned in his comments, getting down to the degree of specificity that the agency wanted to see in a protocol. There's a lot of back and forth. Particularly as we go down in age group to very young patients, there's a sensitivity obviously from the investigators as to what they're willing to do. We need samples, but certainly can't be looking at [Venus] samples as an example out of a very young population.

嗯，FDA（美國食品藥物管理局）曾鼓勵我們在提交申請後，儘快啟動兒科的臨床試驗。我們也照做了。正如 Kevin 在他的評論中提到的，關鍵在於把方案（protocol）細化到主管機關希望看到的具體程度。過程中有很多來回溝通。尤其當我們把年齡層往下延伸到非常年幼的病患時，研究者對於他們願意做什麼顯然會更敏感。我們需要樣本，但當然不能以非常年幼族群的靜脈（[Venus]）採血樣本為例來做那樣的要求。

Of course, agency asked us to look at that younger population knowing that, quite frankly -- which we had advised them -- that the product has been used in literally month-old patients. Off-label, but again that's the discretion the attending physician, how he or she chooses to use a product for the benefit of their patients. So it was an iterative process, and now once we got the protocol signed off on by the agency, we already had several pediatric sites that we had chosen, went through the IRB process with them, and we -- as Kevin again mentioned, we've started enrolling patients in the first of those clinical trial sites.

當然，主管機關要求我們研究更年幼的族群；坦白說——我們也曾告知他們——該產品實際上已被用於甚至只有一個月大的病患。這屬於超適應症使用（off-label），但同樣地，這取決於主治醫師的裁量，他或她如何選擇使用產品以造福其病患。因此這是一個反覆迭代的過程；而現在一旦主管機關核准了方案，我們先前就已選定數個兒科試驗中心，也已與他們完成 IRB（機構審查委員會）流程；並且——如 Kevin 再次提到的——我們已在第一個臨床試驗中心開始收案（enrolling patients）。

Super. I apologize if I missed the prepared marks. Kevin, I think when you walked through the developmental partnership agreements, you touched on Animas, Roche, Tandem and Edwards. I missed Insulet, if it was am there. Could you give us an update on that?

太好了。如果我漏看了事先準備的標記，先跟各位致歉。Kevin，我想你在說明開發合作協議時，提到了 Animas、Roche、Tandem 和 Edwards。我沒有聽到 Insulet（如果有提到的話可能是我漏了）。你能否就那部分給我們一個最新進度？

We don't have any development work going on with Insulet right now. We know they're very focused on their next generation product, and I think when they work that out, I think we'll resume discussions. So that's where that is.

我們目前沒有與 Insulet 進行任何開發工作。我們知道他們非常專注於下一代產品，我想等他們把那部分理順之後，我們會再恢復討論。所以目前就是這樣的狀態。

Okay. Thank you so much for your time.

好的。非常感謝你撥冗。

Our next question comes from the Danielle Antalffy of Leerink Swann.

下一個問題來自 Leerink Swann 的 Danielle Antalffy。

Good afternoon, guys. Thanks so much for take be the question. Just focusing on gross margins again and the impact of the transition to Gen 4. You had some impact internationally, pretty meaningful impact on the gross margin front. I just wanted to get a sense of could you remind us how long you expect the transition to take once you do get approval, and what we should expect on the gross margin side in the first few quarters post launch?

各位下午好。非常感謝讓我提問。我想再聚焦在毛利率以及轉換到第 4 代（Gen 4）的影響。你們在國際市場那邊對毛利率有一些影響，而且相當明顯。我想請教的是：一旦取得核准後，你們預期這個轉換期會持續多久？以及在上市後的前幾個季度，毛利率面我們應該預期會是什麼樣的走勢？

Well, there's a lot of transitioning going on as we launch, because we will still be manufacturing SEVEN PLUS sensors for at least a 12-month period to support the patients that have hardware that's in warranty. Production of the SEVEN PLUS sensors will go down over that period of time. Nevertheless, we'll have to support two manufacturing lines. On top of that, we'll be transferring to -- transitioning to the Gen 4 hardware platform, and so we'll have that start-up as well.

嗯，因為我們在上市時會有很多轉換在同時進行。我們仍將至少在 12 個月期間持續生產 SEVEN PLUS 感測器，以支援仍在保固期內、使用既有硬體的病患。在這段期間，SEVEN PLUS 感測器的產量會逐步下降。儘管如此，我們仍必須支援兩條製造產線。此外，我們也會轉移到——轉換到 Gen 4 的硬體平台，因此也會有那邊的啟動成本。

So I think you've got a few quarters of margins that will go up as our volumes go up and as we get more efficient with Gen 4 manufacturing, offset by costs related to the transition in having to run two lines. And we're running two lines today. We're running a very limited scale line on Gen 4, because we are manufacturing for our clinical studies and for Europe right now, while the remainder of manufacturing is on SEVEN PLUS.

所以我認為接下來會有幾個季度，隨著我們的出貨量提升、以及 Gen 4 製造效率提高，毛利率會上升；但同時會被轉換成本所抵銷，因為我們必須同時運行兩條產線。而我們今天其實就已經在跑兩條線了。我們在 Gen 4 上目前是非常有限規模的產線，因為我們正在為臨床研究以及歐洲市場生產；其餘的製造仍在 SEVEN PLUS 上。

The impact in this quarter related primarily hardware. We cannot sell under the EU guidelines the old SEVEN PLUS hardware anymore. The communication protocol was no longer valid, so we had some left and we worked it down to a relatively small number given the size of our Company. We wrote that off and took that charge. And so we'll see, goes over the next year. A lot of it depends on timing, Danielle. How much of the SEVEN PLUS we work down, and how quickly we launch Gen 4.

本季的影響主要與硬體有關。依照歐盟指引，我們已不能再銷售舊的 SEVEN PLUS 硬體，因為其通訊協定已不再有效。我們手上還有一些庫存，考量到公司規模，我們已把它消化到相對小的數量。我們將其報廢並認列了那筆費用。接下來一年會怎麼走還要看情況。Danielle，很多取決於時點：我們能把 SEVEN PLUS 消化到什麼程度，以及我們能多快推出 Gen 4。

Okay. That's great. Thank you so much for that. And then lastly, just on the competitive front, we saw a very small data set from a competitor. This was of course an in-hospital product, but the accuracy looked pretty good. So I just wanted to get your guy's perspective on the competitive front going forward. Thanks.

好的。非常好。非常感謝。最後一個問題是競爭面：我們看到某個競爭對手一個非常小的資料集。那當然是院內使用的產品，但準確度看起來相當不錯。我想聽聽你們對未來競爭態勢的看法。謝謝。

Yes, this is Terry. We look at the competitive front really from the product offered by Medtronic and their Enlite sensor. We did head-to-head by Dr. Russell and Dr. Damiano out of Mass General, and we were obviously pleased at ADA with the outcome of that showing us to be far superior. I think your are referring to the in-hospital -- they also -- situation -- they presented at ADA, and I think it gave us a glimpse into how really truly early stage they are.

是的，我是 Terry。我們看競爭主要還是看 Medtronic 的產品以及他們的 Enlite 感測器。我們由麻省總醫院（Mass General）的 Russell 醫師與 Damiano 醫師做了正面對比（head-to-head），而我們在 ADA 上對結果當然很滿意，顯示我們明顯更優。我想你指的是院內——他們也——那個情境——他們在 ADA 上的展示，我認為那讓我們看到他們其實仍處於非常早期的階段。

They finally came forth with acknowledging that on that particular presentation and technology, they had to do confirmatory calibrations every four hours. And that there were also suffering from an extensive time lag, which -- 15 to 25 minutes of time lag, which meant they to go back retrospectively to do some shifting from a standpoint of it was not really what we would consider to be real-time analysis. So it's retrospective. So again, until they can move that forward to a level that makes sense and patients and healthcare professionals will see real-time, I really wouldn't put them in that kind of competitive landscape that others that [have forth] like Medtronic.

他們終於在那場特定的簡報與技術上承認，他們必須每四小時做一次確認性校正（confirmatory calibrations）。而且他們也受到相當長的時間延遲影響——大約 15 到 25 分鐘的延遲——這意味著他們必須回頭以回溯方式做一些位移調整；從我們的角度看，那並不是我們所認為的即時分析，而是回溯性的。因此，再次強調，在他們能把技術推進到一個合理的水準、讓病患與醫護人員能看到即時資訊之前，我不會把他們放在像其他已經[推出]的競爭格局中，例如 Medtronic。

Okay. Great, thanks so much.

好的。非常好，謝謝。

(Operator Instructions). Our next question comes from Raj Denhoy of Jefferies. Please go ahead.

（接線員指示）。下一個問題來自 Jefferies 的 Raj Denhoy。請繼續。

This is Amy in for Raj today. Thanks so much for taking my question. I just wanted to talk a little bit about R&D. I believe you had indicated that there could be a bit of a -- to expect a step down in the second half of the year. And I'm wondering with pediatric trials being a little bit larger and longer than you had anticipated and you have a lot going on, will we still see a little bit of a step-down, or should we think about this quarter's run rate moving forward?

今天由 Amy 代替 Raj。非常感謝讓我提問。我想稍微談一下研發（R&D）。我記得你們曾提到下半年可能會——研發費用可能會有些下降。我想請問，考量到兒科試驗比你們原先預期更大、時間更長，而且你們手上也有很多事情在進行，我們還會看到一些下降嗎？還是我們應該把本季的費用水準視為未來的 run rate？

Certainly that would be the upper end of moving forward this quarter. We would like to manage it down a bit, but you right, the pediatrics trial is going to cost more and take more time than we thought. We also acquired a company in the first quarter in adds to R&D line, particularly for non-cash expenses. So we'll see how we are in three months.

當然，本季的水準會是未來的上緣。我們希望能把它稍微控下來一些，但你說得對，兒科試驗會比我們想的更花錢、也更耗時。我們也在第一季收購了一家公司，這也增加了研發費用線，特別是非現金費用。因此三個月後我們再看看情況。

Okay, great, thanks. And just one other question regarding the type 2 space. And I know the reimbursement there is still in the very early stages, but what have you all seen in the way of demand? Have you -- are you all seeing any more increase or a shift in that type 2 patient population in demanding CGM is it.

好的，很好，謝謝。還有一個關於第二型糖尿病（type 2）市場的問題。我知道那邊的給付（reimbursement）仍在非常早期階段，但你們在需求方面看到了什麼？你們是否——是否看到第二型病患族群對 CGM 的需求有增加或出現轉變？

Yes, we really have. It's been interesting in that the demand has come from the professional group in terms of healthcare professionals, where the demand originally in the type 1 group was really from the patient level, and we pushed that through to the professional and here we are being very successful in the type 1 market. The type 2, when the healthcare professionals that treat type 2 diabetes recognize the benefit, they're really the ones that are pushing it.

是的，確實有。很有意思的是，需求是從專業端（professional group）也就是醫護人員那邊來的；而在第一型（type 1）族群，最初的需求其實是從病患端出發，我們再把它推到專業端，而我們在第一型市場也因此非常成功。至於第二型，當治療第二型糖尿病的醫護人員認知到其效益時，真正推動的其實是他們。

So we've got what we consider to be kind of the landmark study that Dr. [Podgurski] conducted. We're supporting an another trial of that nature. That was a single center trial, although independent randomized prospective. You still need multi-centers in order to gain traction with the payer community, and so we've elected to go out and basically repeat that study at a different site. So we do see an increase in the desire in pushing for those patients. That said, I would agree with you that the reimbursement landscape is still challenging for those patients.

所以我們有一項我們認為算是里程碑的研究，是由 [Podgurski] 醫師執行。我們也在支持另一項類似性質的試驗。先前那項是單一中心試驗，雖然是獨立、隨機、前瞻性研究，但你仍需要多中心研究，才能在付款方（payer）社群中取得動能。因此我們選擇走出去，基本上在另一個地點重複該研究。我們確實看到推動這些病患使用的意願在增加。話雖如此，我也同意你，對這些病患而言，給付環境仍然具有挑戰。

Great. Thank you very much.

很好。非常感謝。

Our next question comes from the John Putnam of Capstone Investments. Please go ahead.

下一個問題來自 Capstone Investments 的 John Putnam。請繼續。

Very nice quarter, gentlemen. My question was about competition, and I think you've covered it. Thank you.

各位先生，本季表現非常好。我的問題是關於競爭，不過我想你們已經回答過了。謝謝。

Our next question, comes from Ben Haynor of Feltl and Company.

下一個問題來自 Feltl and Company 的 Ben Haynor。

Good afternoon, gentlemen. Thanks for take be the questions. On the mindset of I can live without my pump and -- but not without my CGM that we've seen, are you seeing increased awareness from doctors -- or maybe even peers -- that are saying that CGM might be a better first step than the pump when it comes to managing diabetes?

各位先生下午好。感謝讓我提問。關於我們看到的那種心態：我可以沒有我的幫浦（pump）——但不能沒有我的 CGM。你們是否看到醫師——或甚至同儕——的認知提升，認為在糖尿病管理上，CGM 可能是比幫浦更好的第一步？

Certainly from the physician population. Not yet from the payer population.

在醫師族群方面，確實有。但在付款方族群方面，還沒有。

Sure. And then on the rebates, what kind of redemption rate did you see there? And do you expect some coming through quarter as well, and does that program continue?

了解。那關於回饋金（rebates），你們看到的兌換率（redemption rate）大概是多少？你們是否預期本季也會有一些兌換？以及那個方案是否仍會持續？

The program is not in effect right now. And we're into the going to disclose our redemption rate.

那個方案目前沒有在執行。而且我們不會揭露我們的兌換率。

Okay. Thank you very much.

好的。非常感謝。

Next question comes from Greg Simpson of Wunderlich Securities. Please go ahead.

下一個問題來自 Wunderlich Securities 的 Greg Simpson。請繼續。

Thank you. Congratulations, guys, on a very strong quarter, and Steve, congratulations on the new job and I'm sure the big raise that went along with it. Terry, first of all, a question for you about critical care. It seems like you guys are extremely well positioned over the next few years, maybe as well positioned as anyone. You talked about the interstitial product a little bit on the last call. Could you maybe elaborate either on that product or just the overall strategy going forward?

謝謝。恭喜各位本季表現非常強勁。Steve，也恭喜你升任新職，想必也伴隨著一筆大幅加薪。Terry，首先想請教你一個關於重症照護（critical care）的问题。看起來你們在未來幾年處於非常有利的位置，或許不輸任何人。你在上一通電話會議中稍微提到間質（interstitial）產品。你能否更詳細說明那個產品，或是未來整體策略？

Sure. We view that market opportunity as ones that very robust -- one that is. We know an even the SEVEN PLUS technology is being used in -- I'll call it -- not quite the critical care, although certainly physicians will use it in the ICU as part of an investigation, not anything we're sponsoring, but we do see reports of it. I think as you move downstream in the hospital sector into the step-down ward -- progressive, telemetry, whatever you want to call it -- into the general ward, a robust interstitial sensory would be extremely attractive.

當然。我們認為那個市場機會非常強勁——確實如此。我們知道，甚至 SEVEN PLUS 技術也正在被用於——我姑且這麼說——還不算是重症照護，雖然醫師確實會在 ICU 中把它作為檢查的一部分來使用；這並非我們所贊助的，但我們確實看到相關報告。我認為，當你在醫院端往下游走，從過渡病房——漸進照護、心電遙測（telemetry），隨你怎麼稱呼——進入一般病房時，一個強健的間質感測將會極具吸引力。

And that information comes to us really from the hospital sector as they look at things. They're being challenged in terms of cost of care. And so they also have a challenge with regards to recidivism. As you well know, any CMS patient that gets re-admitted any time in the first 30 days for lack of adequate treatment, and anything that relates to why they were there in the first time, the hospital is on the hook for the treatment of that patient. And so I think all of the hospital sectors are beginning to take a much closer look at the economics of ensuring that patients released are in good health

而這些資訊確實是來自醫院端，他們在評估各種作法時提供給我們的。他們在照護成本方面面臨挑戰，因此在再入院率方面也有壓力。你很清楚，任何 CMS 病患若在前 30 天內因治療不足而再度入院，且與其第一次住院原因相關，醫院就必須負擔該病患的治療費用。因此我認為，整個醫院體系都開始更密切地檢視：如何在經濟面上確保出院病患處於良好健康狀態。

And certainly we know that there are several million patients with diabetes that get admitted every year, and this would not necessarily only be restricted to those patients with diabetes, but anybody again having type of glycemic or malglycemia from that standpoint. We are -- as you all know, we're designated a Gen 6 technology, that we have human feasibility data. Small numbers. But it is built as a very robust, very highly single digit MRAD accuracy and drug interference blocking. And we're continuing to work on that project.

而且我們確實知道，每年有數百萬名糖尿病患者住院；而這不一定只限於糖尿病患者，也包括任何出現血糖異常或血糖失衡（malglycemia）的人。正如各位所知，我們被定位為第 6 代（Gen 6）技術，並且已有人體可行性資料，樣本數不大。但它的設計非常強健，具備非常高的個位數（single digit）MRAD 準確度，以及藥物干擾阻斷能力。我們也持續推進該專案。

Okay, great, thank you. And then just a question -- or maybe you can engage in a little commentary on the FDA inspection. I view that as obviously a very big deal. And obviously there's two ways that can happen. One it either happens early in the process and then you seem to answer questions endlessly, or it seems to be kind of a last step in the process. Given how quickly it process has been going on, it would appear that maybe the FDA is kind of viewing that as one of the last steps. Is that fair, or can you maybe discuss the flow back and forth between the FDA and follow-up questions, things like that?

好的，很棒，謝謝。接著我想問一個問題——或者你可以就 FDA 稽查稍作評論。我認為那顯然是非常重大的事情，而且顯然有兩種可能：一種是它在流程早期發生，然後你似乎就得無止盡地回答問題；另一種則像是流程的最後一步。鑑於整個流程推進得很快，看起來 FDA 可能把它視為最後幾個步驟之一。這樣理解公平嗎？或者你能否談談你們與 FDA 之間往返的流程、後續提問之類的情況？

I would say that that's a fair assessment. Obviously we're biased in wanting to believe that that's what the FDA is thinking. We can't speak for the FDA. I would say that in several decades of experience, this is the fastest review that either our senior regulatory person who's been in the business about the same time I have, now going on over 40 years. We both agree that this whole developmental review has been the most interactive that we've either one of us has experienced.

我會說這樣的判斷是合理的。當然，我們有偏見，會希望相信這就是 FDA 的想法；我們無法替 FDA 發言。我想說，以數十年的經驗來看，這是最快的一次審查——不論是我們的資深法規主管（他在這行的資歷大約跟我一樣，現在也超過 40 年），或是我自己。我們都同意，整個開發與審查過程是我們任何一方所經歷過最具互動性的一次。

I do believe that the FDA is -- given their resources, are doing everything possible to expedite the review and, hopefully in the not too distant future, the approval. They've seen the data. And I would say in one of their comments to us at ADA, when you had all of these investigators come rushing that wanted to replace either SEVEN PLUS or even alternative sensors in their AP programs, FDA commented, we are very comfortable with the Gen 4 clinical data. But remember this review is not just the clinical data. There was also a manufacturing change as part of this, so it is 17,000 pages of review that they have to go through.

我確實相信 FDA 在其資源限制下，正盡一切可能加速審查，並希望在不久的將來完成核准。他們已經看過資料。我想提到他們在 ADA 對我們的一則評論：當時有許多研究者蜂擁而至，希望在他們的 AP（人工胰臟）計畫中替換掉 SEVEN PLUS 或甚至其他替代感測器時，FDA 表示：我們對 Gen 4 的臨床資料非常有信心。但請記住，這次審查不只是臨床資料；其中也包含製造變更，因此他們必須審閱 17,000 頁的資料。

But I do think that given the comments by the auditor when she came in and when she left were -- we were favorably disposed that this was toward the end of the cycle as part of the review. I think given the gage of interaction even today from a standpoint of discussions with agency post that that audit again it's encouraging. There's nothing that seems to be -- that they're delaying in any way whatsoever. In fact, quite the contrary.

但我確實認為，稽核員在進場與離場時的評論——讓我們相當正面地認為，這是審查週期接近尾聲的一部分。我想就互動程度而言，即使到今天，從稽核之後與主管機關的討論來看也仍然令人鼓舞。看不出他們有任何延宕。事實上，恰恰相反。

Thank you very much. Again, I appreciate the openness.

非常感謝。我也再次感謝你們的坦誠。

(Operator Instructions). Our the next question comes from Steven Lichtman of Oppenheimer and Company. Please go ahead.

（接線員指示）。下一個問題來自 Oppenheimer and Company 的 Steven Lichtman。請繼續。

Thank you. Hi, guys. Just a couple questions. First on all on the sales force. In think last call you said that it's likely to stay steady here in the remainder of 2012. I just want to see if there's any change in those plans. And then just secondly on the manufacturing line comment, I just wanted to make sure. Can you begin a US launch in earnest with just one line-up, or do you need that second line-up? Thanks.

謝謝。嗨，各位。我有兩個問題。第一個是關於銷售團隊。我想上次電話會議你們提到，2012 年剩餘期間人數可能會維持穩定。我想確認這些計畫是否有任何變動。第二個是關於製造產線的評論，我想再確認一下：如果只有一條產線，你們能否開始在美國認真推動上市（launch），還是需要第二條產線？謝謝。

This is Kevin. The second line will be up very soon, so we'll begin our launch with both of them. Fortunately we don't have to shift the entire patient base over day one, but we'll be ready to support our launch upon approval.

我是 Kevin。第二條產線很快就會就緒，所以我們會以兩條產線一起啟動上市。幸運的是，我們不必在第一天就把所有病患基礎全部轉換過去，但在核准後我們會準備好支援上市。

The second piece, with respect to the sales force, our sales force has remained the same size as it was last quarter. There's been no additional head count added. There has been maybe some shifting from one position to another, but no additional bodies. They have achieved this growth with the same-sized group that they had last quarter and at the end of last year. We don't anticipate making it any bigger as we sit here today.

第二點，關於銷售團隊，我們的銷售團隊規模與上季相同，沒有新增人力編制。可能有一些職位之間的調整，但沒有增加人數。他們以與上季、以及去年底相同規模的團隊達成了這樣的成長。就我們目前所見，我們不預期會把團隊再擴大。

Okay, great. Thanks, guys.

好的，很棒。謝謝各位。

We have no further questions in the queue. I will now turn the conference call over to Terry Gregg for any closing remarks.

目前隊列中沒有其他提問。我現在把電話會議交回 Terry Gregg，請他做結語。

Well, thank you. I continue to be extremely impressed by our performance. And you should as well. The advances we are making in the technology of continuous glucose sensing are truly extraordinary, and our long-term vision of replacing fingerstick measurements gets closer every day. In the meantime, we're a executing on our business plan of growing the business and achieving profitability in a timely fashion. We have several tailwinds pushing us forward, and I'm thrilled to be part of a company that transforming the way diabetes is being treated. No one disputes that CGM should be the standard of care, and we're on the cusp of seeing that vision realized. Thank you.

好的，謝謝。我對我們的表現仍然感到非常印象深刻，你們也應該如此。我們在連續血糖感測技術上的進展確實非同凡響，而我們以取代指尖採血測量為目標的長期願景，也一天比一天更接近。同時，我們正依照商業計畫執行，推動業務成長並在適當的時間內達成獲利。我們有多項順風因素推動前進，我也很高興能成為一家正在改變糖尿病治療方式的公司的一份子。沒有人會否認 CGM 應該成為照護標準，而我們正站在即將看到這個願景實現的關鍵時刻。謝謝。

Thank you for participating the in the second quarter earnings release conference call. This concludes today's conference. You may now disconnect.

感謝各位參與第二季財報發布電話會議。今天的會議到此結束。各位現在可以掛線。