SENS: Senseonics Holdings Analysis and Research Report

2018-03-10 - by Asif , Contributing Analyst - 465 views

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Senseonics Holdings was originally incorporated as ASN Technologies, Inc. in Nevada on June 26, 2014. On December 4, 2015, the company were reincorporated in Delaware and changed its name to Senseonics Holdings, Inc. Also, on December 4, 2015, the company entered into a merger agreement with Senseonics, Incorporated and SMSI Merger Sub, Inc., or the Merger Agreement, to acquire Senseonics, Incorporated. Senseonics, Incorporated was originally incorporated on October 30, 1996 and commenced operations on January 15, 1997. The transactions contemplated by the Merger Agreement were consummated on December 7, 2015, referred to herein as the Acquisition. Pursuant to the terms of the Merger Agreement, (i) all issued and outstanding shares of Senseonics, Incorporated's preferred stock were converted into shares of Senseonics, Incorporated common stock, $0.01 par value per share, or the Senseonics Shares, (ii) all outstanding Senseonics Shares were exchanged for 57,739,953 shares of its common stock, $0.001 par value per share, or the Company Shares, reflecting an exchange ratio of one Senseonics Share for 2.0975 Company Shares, or the Exchange Ratio, and (iii) all outstanding options and warrants to purchase Senseonics Shares, or the Senseonics Options and Senseonics Warrants, respectively, were each exchanged or replaced with options and warrants to acquire shares of its common stock, or the Company Options and Company Warrants, respectively. Accordingly, Senseonics, Incorporated became its wholly-owned subsidiary.

Following the closing of the Acquisition, the business of Senseonics, Incorporated became its sole focus and all of its operations following the closing of the Acquisition consist of the historical Senseonics, Incorporated business. Unless otherwise indicated or the context otherwise requires, all references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section to "the Company," "we," "our," "ours," "us" or similar terms refer to (i) Senseonics, Incorporated prior to the closing of the Acquisition, and (ii) Senseonics Holdings, Inc. and its subsidiaries subsequent to the closing of the Acquisition and all share and per share information in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section gives retroactive effect to the exchange of Senseonics Shares, Senseonics Options and Senseonics Warrants for Company Shares, Company Options and Company Warrants, respectively, in the Acquisition, as well as the corresponding exercise price adjustments for the such options and warrants.

Senseonics Holdings is a medical technology company focused on the design, development and commercialization of glucose monitoring products to improve the lives of people with diabetes by enhancing their ability to manage their disease with relative ease and accuracy. The company's continuous glucose monitoring, or CGM, systems, Eversense and Eversense XL, are reliable, long‑term, implantable CGM systems that Senseonics Holdings has designed to continually and accurately measure glucose levels in people with diabetes for a period of up to 90 and 180 days, respectively, as compared to six to fourteen days for currently available CGM systems. The company believe Eversense and Eversense XL will provide people with diabetes with a more convenient method to monitor their glucose levels in comparison with the traditional method of self‑monitoring of blood glucose, or SMBG, as well as currently available CGM systems. The company's Eversense and Eversense XL systems are currently approved for sale in Europe and the company submitted its Eversense system pre-market approval, or PMA, application to the U.S. Food and Drug Administration, or FDA, in October 2016. The company intend to initiate commercial launch in the United States promptly following the receipt of PMA approval.

Corporate History

From its founding in 1996 until 2010, the company devoted substantially all of its resources to researching various sensor technologies and platforms. Beginning in 2010, the company narrowed its focus to designing, developing and refining a commercially viable glucose monitoring system. On May 10, 2016, the company received regulatory approval to commercialize Eversense in Europe. In June 2016, the company made its first product shipment of Eversense through its distribution agreement with Rubin Medical, or Rubin. Since its inception, Senseonics Holdings has funded its activities primarily through equity and debt financings.

In March 2016, the company completed a public offering of its common stock, or the March 2016 Offering, selling 15,800,000 shares of common stock at a price to the public of $2.85 per share, for aggregate gross proceeds of $45.0 million. Net proceeds from the March 2016 Offering were approximately $40.9 million, after deducting underwriting discounts and commissions and estimated offering-related transaction costs payable by it. In April 2016, the underwriters for the March 2016 Offering partially exercised their option to purchase additional shares of common stock, purchasing an additional 1,439,143 shares, from which the company received additional net proceeds of approximately $3.9 million, after deducting underwriting discounts and commissions and estimated offering-related transaction costs payable by it.

On June 30, 2016 the company entered into an Amended and Restated Loan and Security Agreement with Oxford Finance LLC, or Oxford, and Silicon Valley Bank, or SVB, to potentially borrow up to an aggregate principal amount of $30.0 million. Under the terms of the agreement, the company initially borrowed an aggregate of $15 million from Oxford and SVB on June 30, 2016. The company used $11 million of the $15 million to retire existing loans with Oxford, including a final payment fee of $1 million. In each of November 2016 and March 2017, the company borrowed an additional $5 million upon achieving certain milestones. The agreement also permits it to borrow up to an additional $5 million upon the achievement of specified milestones through the end of 2017. The agreement provides for monthly payments of interest only for a period of 18 months, followed by an amortization period of 30 months.

In June 2017, the company completed an underwritten offering of its common stock, or the May 2017 Offering, selling 29,078,014 shares of common stock at a price of $1.41 per share, for aggregate gross proceeds of $41.0 million. Net proceeds from the May 2017 Offering were approximately $40.4 million, after deducting underwriting discounts and commissions and estimated offering-related transaction costs payable by it.

In August 2017, the company completed an underwritten offering of its common stock, or the August 2017 Offering, selling 13,383,125 shares of common stock at a price of $2.15 per share, for aggregate gross proceeds of $28.8 million. Net proceeds from the August 2017 Offering were approximately $26.5 million after deducting underwriting discounts and commissions and estimated offering-related transaction costs payable by it.

Senseonics Holdings has never been profitable and its net losses were $17.4 million and $10.9 million for three months ended September 30, 2017 and 2016, respectively, and $42.8 million and $34.0 million for the nine months ended September 30, 2017 and 2016, respectively. As of September 30, 2017, its accumulated deficit totaled $247.5 million, primarily as a result of expenses incurred in connection with its research and development programs and from general and administrative expenses associated with its operations. The company expect to continue to incur significant expenses and increasing operations and net losses for the foreseeable future.

European Development and Commercialization of Eversense

In May 2016, the company received its CE mark for Eversense, which allows it to market and sell Eversense in Europe. In connection with its CE Mark, Senseonics Holdings has agreed to conduct post market surveillance activities. In June 2016, the company commenced commercialization of Eversense in Sweden through its distribution agreement with Rubin, which also has the right to distribute Eversense in Norway and Denmark. Rubin markets and sells medical products for diabetes treatment in the Scandinavian region, including as the exclusive Scandinavian distributor for the insulin pump manufacturer Animas Corporation.

In May 2016, the company entered into a distribution agreement with Roche Diagnostics International AG and Roche Diabetes Care GmbH, together referred to as Roche, pursuant to which the company granted Roche the exclusive right to market, sell and distribute Eversense in Germany, Italy and the Netherlands. In November 2016, the company entered into an amendment to the distribution agreement granting Roche the exclusive right to market, sell and distribute Eversense in Europe, the Middle East and Africa, excluding Sweden, Norway, Denmark, Finland and Israel. Roche is a pioneer in the development of blood glucose monitoring systems and a global leader for diabetes management systems and services. The company began distributing Eversense through Roche in Germany in September 2016 and in Italy and the Netherlands in the fourth quarter of 2016. To date, Senseonics Holdings has begun distributing Eversense in an aggregate of 13 European countries through Rubin and Roche.

In September 2017, the company received the CE Mark for Eversense XL, which is indicated for a sensor life to up to 180 days. The company plan to begin to commercialize Eversense XL in selected European countries by the end of 2017. Senseonics Holdings is also developing Eversense Now, an application designed to remotely monitor the Eversense users’ CGM data in real time. The company expect to receive approval to market Eversense Now in Europe by the end of 2017.

United States Development of Eversense

In 2016, the company completed its Precise II pivotal clinical trial in the United States. This trial, which was fully enrolled with 90 subjects, was conducted at eight sites in the United States. In the trial, the company measured the accuracy of Eversense measurements through 90 days after insertion. The company also assessed safety through 90 days after insertion or through sensor removal. In the trial, the company observed a mean absolute relative difference, or MARD, of 8.8% utilizing two calibration points for Eversense across the 40-400 mg/dL range when compared to YSI blood reference values during the 90-day continuous wear period. The company also observed a MARD of 9.5% utilizing one calibration point for Eversense across the 40-400 mg/dL range when compared to YSI blood reference values during the 90-day continuous wear period. Based on the data from this trial, in October 2016 the company submitted a pre-market approval, or PMA, application to the FDA to market Eversense in the United States. Senseonics Holdings is currently anticipating approval in the first half of 2018. However, the ultimate timing of PMA approval is uncertain and will depend on many factors, including whether the FDA would require the review of Eversense by an advisory panel and the related logistics of convening a panel, the degree and nature of questions raised by the FDA in its review process, and its ability to submit additional data or other information that adequately addresses questions raised by the FDA. Accordingly, the company cannot guarantee the timing of receipt of PMA approval, if at all. For commercialization in the United States, the company intend to distribute its product through its own direct sales and marketing organization. Senseonics Holdings has received Category III CPT codes for the insertion and removal of the Eversense sensor. Following PMA approval, the company intend to pursue a Category I CPT code.

The company expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. In addition, the company expect that its expenses will increase substantially as the company continue the research and development of its other products and maintain, expand and protect its intellectual property portfolio and seek regulatory approvals in other jurisdictions. Furthermore, the company expect to continue to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses that the company did not incur as a private company. The company will need to obtain substantial additional funding in connection with its continuing operations through public or private equity or debt financings or other sources, which may include collaborations with third parties. However, the company may be unable to raise additional funds when needed on favorable terms or at all. The company's failure to raise such capital as and when needed would have a material and adverse impact on its financial condition and its ability to develop and commercialize Eversense and future products and its ability to pursue its business strategy. The company will need to generate significant revenues to achieve profitability, and the company may never do so.

Recent development

March 01, 2018 Senseonics Holdings, Inc. a medical technology company focused on the development and commercialization of Eversense®, a long-term, implantable continuous glucose monitoring (CGM) system for people with diabetes, today announced the U.S. Food and Drug Administration (FDA) Clinical Chemistry and Clinical Toxicology Devices Panel is scheduled to review the premarket approval application (PMA) for Eversense on Thursday, March 29, 2018.

The Eversense PMA application contains data from Senseonics’ U.S. PRECISE II study. The study, considered one of the largest studies of a CGM system in the world, includes over 2 million sensor glucose readings, from 90 patients at eight clinical centers during the full 90-day study duration.

“The scheduling of the advisory panel represents a meaningful milestone toward offering patients in the U.S. a long term, implantable CGM system,” stated Tim Goodnow, President and Chief Executive Officer of Senseonics. “We are excited for the opportunity to discuss the data in support of the Eversense PMA with the panel. We believe the Eversense system’s value to people with diabetes will resonate with the panel as it has with users in Europe .”


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