Additionally, we will discuss certain financial information that is not been prepared in accordance with GAAP in respect to our convertible debt. This non-GAAP information is provided to you to enhance our overall understanding of our current financial performance. Presentation of this additional information should not be considered isolation or as a substitute or results or superior to results, compared in accordance with GAAP.For reconciliation of our GAAP and non-GAAP financial information, please review the press release we issued today which is available on our website at www.dexcom.com. Terry? Terry Gregg Thanks, Steve. So, I'm going to stay with our standard format for the call today. Jess will start of with our financial review of the quarter, and then I'm going to follow-up with a commercial update including Q1 review our pump partnership, hospital partnership. With Edward, the technology update and then I'll conclude with some comments followed by a question-and-answer period. Jess? Jess Roper Thank you, Terry. DexCom recorded product revenue of approximately $6.8 million for the first quarter of 2010, compared to $2.7 million for the same quarter in 2009, an increase of over 153%. Sequentially, product revenue for Q1 increased by 2% in the prior quarter. During Q1, we sold approximately 2600 systems, sequentially sensor revenues were up 4% from the prior quarter. Total revenue for the first quarter of 2010 was $9.5 million, compared to $5.2 million for the same quarter in 2009 and included $2.8 million in development grant and other revenue from our development and collaboration agreements. Cost of sales including both product and non product totaled $6.1 million for the quarter. Product cost of sales totaled $5.1 million for Q1 of 2010, compared to $3.5 million for the same quarter in 2009. Sequentially product cost of sales declined from $5.5 million in Q4 of 2009 to $5.1 million in Q1 of 2010. The corresponding improved product gross margin totaling $1.6 million in Q1 of 2010 compared to $1.15 million sequentially from the prior quarter was due primarily to additional manufacturing overhead absorptions as we increased our inventory during Q1 to accommodate for current and forecasted increases in sales. Development and other cost of sales totaled $0.9 million for the first quarter of 2010 and remained flat sequentially as compared to the prior quarter.
Research and development expense increased $1.6 million and totaled $4.7 million for Q1 of 2010, compared to $3.2 million in Q1 of 2009l. The increase in R&D costs was attributable to additional efforts with our next generation ambulatory products. Sequentially R&D costs increased by approximately $0.6 million from the prior quarter. As a reminder R&D costs associated with our development and collaboration agreements with Animas and Edwards are included within development and other cost of sales.Selling, general and administrative expense totaled $9.8 million in Q1 of 2010, compared to $7.9 million in Q1 of 2009. The increase was primarily due to additional selling, customer service and international development cost to support revenue growth. Sequentially SG&A increased $0.4 million over the prior quarter. Net loss for the quarter totaled $20.3 million, compared to $13.1 million during the same quarter in 2009 and included $11.8 million in non cash charges. The increase in our net loss was primarily attributable to $7.9 million in non cash charges on the extinguishment of debt upon conversion of our convertible notes. During the quarter, we converted $54 million of our $60 million of convertible debt into approximately 7.2 million shares of common stock, which on an annualized basis will save us approximately $2.6 million in cash interest payments. Based on the remaining convertible debt balance of $6 million, we expect to report between $135,000 and $200,000 of non cash interest expense related to the amortization of the debt discount on a quarterly basis through March of 2012 or until we convert the balance of the remaining notes. Read the rest of this transcript for free on seekingalpha.com