Making Sense of Senseonics

Stock rises and falls as FDA approval is pending

Senseonics of Germantown, Maryland, produces the Eversense CGM (continuous glucose monitoring) product that it claims is the first implantable device to monitor glucose levels. The market for diabetic care is growing fast. The disease is among the top 10 causes of death in the country. Almost a third of U.S. adults have prediabetes.

The Eversense system, a prescription device that has to be implanted and then removed by a medical professional, is currently approved in the U.S. and Europe. However, the implant can only stay in a person for 90 days. Then the patient has to visit the medical care professional again for removal and reinsertion.

Senseonics has filed for FDA approval to increase the implant’s life to 180 days. If approved, it would reduce the need to visit healthcare professionals by half. FDA approval was anticipated in the first half of 2021, and Senseonics said that it expected to post revenues between $12 million and $15 million in 2021. Analysts projected revenues of $2.89 million in the second quarter. Senseonics traded on a weak note in July and early August.

Of the seven analysts polled by CNN Business, two rated the stock as a buy, while three rated it as a hold. Two analysts had a sell or equivalent rating on the company, and its median target price of $2.25 implied a downside of 25.7 percent over the current prices. As of August 9, Senseonics Holdings, Inc. share price rose 2.6%. The company traded as high as $3.27 and last traded at $3.20. About 83,032 shares were traded during mid-day trading, a decline of 100% from the average daily volume of 36,416,430 shares. The stock had previously closed at $3.12.

As explained in the Woodland Report, “Senseonics has an immensely strong team with leaders who specialize in a plethora of different areas. They all have impeccable track records and are striving to develop and distribute a product that will revolutionize how diabetes is treated going into the future.”

The Woodland Report added, “With FDA approval for the Eversense XL expected by the end of the third quarter, Senseonics will start to eat at the market share of the incumbent companies in the industry, but the real game changer will come with the Eversense 365, as it will open up the Type II market to this new type of CGM devices. Here the opportunity is really huge. There is no competition, and none is expected anytime soon either as their product is already patented. Currently, people with Type II diabetes have only BGM devices like CONTOUR or Dexcom’s products to help them monitor their blood levels, but that requires pricking a finger to get blood and only provides a measurement at that particular moment. The 365 device will require only a 5 minute intervention every year to remove and replace the sensor and if the company gets to the point that won’t need a transmitter, as patients scan your smartphone over the sensor.”

On August 9 Senseonics reported financial results for the quarter ended June 30, 2021. The company generated second quarter 2021 revenue of $3.3 million. Ascensia Diabetes Care launched both a U.S. patient assistance program, reducing out-of-pocket costs to support all diabetes patients including the 200 million covered lives, and a direct-to-consumer digital advertising campaign, to raise patient awareness of Eversense and generate new patient leads. “The PROMISE Study: An Evaluation of the Safety and Accuracy of the Next Generation 180-Day Long-term Implantable Eversense CGM System” demonstrating sensor accuracy MARD of 8.5–9.1%, was presented in June at the ATTD and ADA conferences along with the submission of the manuscript to a major diabetes journal. FDA active review continues for the Eversense® 180-day PMA supplement application. The company raised $50 million in gross proceeds through completion of At-the-Market equity offering program. The use of proceeds is intended primarily for debt service.

According to Tim Goodnow, PhD, president and chief executive officer of Senseonics, “In the second quarter we made progress driving increased patient and provider awareness of Eversense through a targeted direct-to-consumer digital advertising campaign and presentations of the PROMISE Study, an evaluation of our 180-day sensor, at the ADA and ATTD conferences. As announced when we submitted this data to the FDA, we are pleased with the strength of the data from the PROMISE Study which we believe represents a top tier CGM safety and accuracy profile. Along with our commercial partner Ascensia Diabetes Care we are excited about the opportunity to offer more patients the longest lasting CGM systems.”

Senseonics reported that total revenue for the quarter was $3.29 million compared to $0.26 million for the second quarter of 2020. U.S. revenue was $0.98 million and revenue outside the U.S. was $2.31 million. Second quarter 2021 gross profit increased by $1.54 million year-over-year, to $0.39 million. The positive gross margin in the quarter was primarily because of the fulfillment of orders using existing written off inventory as a result of the COVID-19 pandemic. Second quarter 2021 sales and marketing expenses decreased by $1.50 million year-over-year, to $1.64 million. The decrease was primarily because of the strategic changes in the company’s go-to-market strategy with the Ascensia global collaboration. Second quarter 2021 research and development expenses increased by $3.31 million year-over-year, to $7.11 million. The increase was primarily driven by clinical study costs and primarily non-cash, stock-based compensation and other personnel related expenses. Second quarter 2021 general and administrative expenses increased by $3.09 million year-over-year, to $7.53 million. The increase was primarily due to primarily non-cash, stock-based compensation and other personnel related costs.

Net loss was $180.32 million, or $0.42 per share, in the second quarter of 2021, compared to $7.52 million, or $0.03 per share, in the second quarter of 2020. Net loss increased by $172.81 million because of a $169.43 million increase in other expenses primarily related to non-cash accounting charges resulting from the accounting for embedded derivatives related to certain of the company financings, as well as a $3.36 million increase in loss from operations.

As of June 30, 2021, cash, cash equivalents, short and long-term investments were $215.0 million and outstanding indebtedness was $109.9 million. The company continues to expect that global net revenue to Senseonics for the full year 2021 will be in the range of $12.0 million to $15.0 million.

The Woodland Report concluded, “The technology has huge potential to disrupt the current CGM market, which is a $5-plus billion market today growing at about a 35% CAGR (according to SENS management) and dominated by three large companies: DexCom (DXCM), Abbott Labs (ABT) and Medtronic (MDT). This market is exclusively focused on the Type 1 and Type 2 diabetes patients which are intensively managed, that means they require insulin shots and many diabetes patients use insulin pumps since they are unable to produce any insulin themselves. The number of people with diagnosed diabetes in the USA in 2020 was 34.2 of which 1.6 MM have Type I Diabetes, unfortunately the number of people with Diabetes is growing at an immensely rapid pace as reported in the National Diabetes Statistics Report, 2020.”

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