Senseonics Holdings, Inc. (NYSE:SENS) Q3 2024 Earnings Conference Call November 7, 2024 4:30 PM ET Company Participants Jeremy Feffer - LifeSci Advisors Tim Goodnow - President and Chief Executive Officer Rick Sullivan - Chief Financial Officer Brian Hansen - President of CGM at Ascensia Diabetes Care Conference Call Participants Brian Langan - Morgan Stanley Vernon Bernardino - H.C. Wainwright Operator Good day, everyone, and welcome to the Senseonics Third Quarter 2024 Earnings Call. At this time, all par ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2024 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission file number: 001-37717 Senseonics Holdings, Inc. (Exact name of registrant as specified in its charter) Dela ...

Exhibit 99.1 Senseonics Holdings, Inc. Reports Third Quarter 2024 Financial Results GERMANTOWN, Md., November 7, 2024 -- Senseonics Holdings, Inc. (NYSE American: SENS), a medical technology company focused on the development and manufacturing of long-term, implantable continuous glucose monitoring (CGM) systems for people with diabetes, today reported financial results for the third quarter ended September 30, 2024. Recent Highlights & Accomplishments: · Eversense365 approved in the US as an integrated con ...

GERMANTOWN, Md., Oct. 16, 2024 (GLOBE NEWSWIRE) -- Senseonics Holdings, Inc. (NYSE American: SENS), a medical technology company focused on the development and manufacturing of long-term, implantable continuous glucose monitoring (CGM) systems for people with diabetes, today announced it will host a virtual KOL event on Friday, October 25, 2024 at 11:00am ET. To register, click here. The event will feature David T. Ahn, MD, and endocrinologist and Chief of Diabetes Services at Hoag Medical Group, and Jeff C ...

Senseonics' Eversense 365 is approved in the US as an integrated continuous glucose monitoring (iCGM) system for people with Type 1 and Type 2 diabetes aged 18 and older Commercial launch by Ascensia Diabetes Care underway with a new campaign to highlight the unique benefits of having just one CGM for one full year GERMANTOWN, Md. and ST. LOUIS, Oct. 10, 2024 (GLOBE NEWSWIRE) -- Senseonics Holdings, Inc. (NYSE American: SENS) ("Senseonics" or the "Company"), a medical technology company focused on the devel ...

Senseonics Holdings, Inc. (SENS) , along with Ascensia Diabetes Care, announced the receipt of the FDA's clearance for the next-generation Eversense 365 continuous glucose monitoring (CGM) system for people with Type 1 and Type 2 diabetes aged 18 years and above. Eversense 365 has been cleared as an integrated CGM (iCGM) system, indicating that it can integrate with compatible medical devices, including insulin pumps, as part of an automated insulin delivery system. Ascensia, a subsidiary of PHC Holdings Co ...

GERMANTOWN, Md., Sept. 06, 2024 (GLOBE NEWSWIRE) -- Senseonics Holdings, Inc. (NYSE American: SENS), a medical technology company focused on the development and manufacturing of long-term, implantable continuous glucose monitoring (CGM) systems for people with diabetes, today announced plans to participate in the upcoming H.C. Wainwright 26th Annual Global Investment Conference, being held in New York, NY. Management is scheduled to participate in the H.C. Wainwright 26th Annual Global Investment Conference ...

Revenue and Growth - Generated revenue of $4.9 million in Q2 2024, representing an 18% growth compared to the prior year period[2] - U.S. revenue was $3.0 million in Q2 2024, up from $1.8 million in Q2 2023, while international revenue was $1.9 million, down from $2.3 million in the prior year period[3] - Total revenue for June 2024 increased to $4.865 million, up from $4.126 million in June 2023[11] - Net revenue from related parties rose to $4.087 million in June 2024, compared to $3.689 million in June 2023[11] - Full-year 2024 global net revenue is expected to be in the range of $22 million to $24 million, with U.S. new patient starts projected to more than double and the global installed base to increase by approximately 50% compared to 2023[7] Profit and Loss - Gross profit decreased to $0.3 million in Q2 2024 from $0.4 million in Q2 2023, primarily due to increased fixed manufacturing costs[3] - Gross profit for June 2024 decreased to $0.298 million from $0.417 million in June 2023[11] - Net loss was $20.3 million in Q2 2024, slightly improved from $20.4 million in Q2 2023, driven by reduced R&D expenses[4] - Operating loss for June 2024 was $19.493 million, slightly improved from $19.868 million in June 2023[11] - Net loss for June 2024 was $20.287 million, compared to $20.423 million in June 2023[11] - Total comprehensive loss for June 2024 was $20.292 million, slightly better than $20.323 million in June 2023[11] - Basic net loss per common share was $0.03 in June 2024, improved from $0.04 in June 2023[11] - Diluted net loss per common share was $0.03 in June 2024, improved from $0.04 in June 2023[11] Cash and Financial Position - Cash, cash equivalents, short-term investments, and restricted cash totaled $84.9 million as of June 30, 2024, with outstanding indebtedness of $56.2 million[4] Research and Development - Research and development expenses dropped to $10.8 million in June 2024 from $12.83 million in June 2023[11] - Began first-in-human testing for the Gemini System, a fully implantable self-powering system for type 2 diabetes patients[2] Product Development and Launches - The 365-day Eversense system is under FDA review, with a planned product launch in Q4 2024[2] - Collaboration with Mercy healthcare system aims for large-scale implementation of Eversense and remote patient monitoring services, with initial insertions planned for Q3 2024[2] - Established Eon Care Services to provide Eversense insertion procedures and training, supporting expanded access to the product[2] Share Information - Basic weighted-average shares outstanding increased to 616,585,664 in June 2024 from 567,125,022 in June 2023[11]

Financial Data and Key Metrics - Q1 2024 total revenue was $5.1 million, representing 22% growth compared to the prior year period [18] - U S revenue for Q1 2024 was $3 7 million, while revenue outside the U S was $1 4 million [18] - Gross profit in Q1 2024 was $0 3 million, a decrease of $0 1 million from the prior year period, primarily due to higher fixed manufacturing costs [85] - Q1 2024 selling, general and administrative expenses were $8 1 million, an increase of $0 4 million compared to the prior year period, driven by corporate, legal, and patent expenses [22] - Operating loss for Q1 2024 was $18 2 million, compared to $19 7 million in Q1 2023, due to decreases in R&D expenses [22] - Total net loss for Q1 2024 was $18 9 million, or a $0 03 loss per share, compared to a net income of $1 3 million in Q1 2023 [98] - Cash, cash equivalents, and short-term investments totaled $99 1 million as of March 31, 2024, with debt and accrued interest at $55 9 million [98] Business Line Data and Key Metrics - The company is advancing its Eversense CGM system, with a focus on Type 2 patients on basal insulin, who historically have lower adoption rates of advanced technologies [2] - The Eversense RPM program aims to provide comprehensive diabetes management, combining CGM with remote patient monitoring to optimize care [6][19] - The company is collaborating with Mercy, a leading healthcare system, to implement a diabetes population management program using Eversense, targeting 30,000 patients across four states [42][51] - The company is working on a next-generation 365-day Eversense product, with a 510(k) submission filed with the FDA, aiming for a Q4 2024 launch [45][94] Market Data and Key Metrics - The company estimates that less than one quarter of patients eligible for CGM are currently using one, indicating significant growth potential [7] - The U S market remains a key focus, with Q1 2024 sales totaling $3 7 million, while international sales were $1 4 million [18] - The collaboration with Mercy is expected to drive growth, with a controlled launch in the St Louis metro area in July 2024, followed by a broader rollout in Q4 [8] Company Strategy and Industry Competition - The company is focusing on integrating Eversense into large health systems and accountable care organizations, leveraging its iCGM designation and RPM program to differentiate itself [14][17] - The iCGM designation allows Eversense to integrate with insulin pumps, positioning it as a strong competitor in the automated insulin delivery market [83][106] - The company is exploring partnerships with insulin pump manufacturers to further enhance its market position [20][72] Management Commentary on Operating Environment and Future Outlook - Management is optimistic about the growth potential of Eversense, particularly with the upcoming 365-day product launch and the RPM program [13][46] - The company expects Q2 2024 revenue to be consistent with Q1, with full-year guidance to be provided at the upcoming ADA conference [35][71] - Management highlighted the importance of the Mercy collaboration as a key growth catalyst, with the potential to replicate the program across other health systems [9][51] Other Important Information - The company has secured iCGM designation from the FDA, allowing Eversense to integrate with insulin pumps and other medical devices [83] - The 365-day Eversense product is expected to reduce calibration frequency and offer a full year of protection from a single sensor, enhancing its competitive position [63] - The company is working on future-generation products, including Gemini and Freedom, which aim to eliminate the need for an on-body transmitter [63] Q&A Session Summary Question: Update on Ascensia's inventory and new patient growth [88] - The company is seeing over 80% growth in new patient additions compared to the prior year, with inventory levels being managed towards normalization [99] Question: Potential impact of the Mercy collaboration and RPM program [54] - The collaboration with Mercy represents a significant opportunity, with 30,000 eligible patients identified The RPM program is designed to be scalable, with fixed costs per patient and reimbursement handled by Mercy [75] Question: Confidence in the 365-day product approval timeline [76] - The company is confident in the 510(k) submission process and is working closely with the FDA to ensure a timely approval, targeting a Q4 2024 launch [94] Question: Commercial implications of the iCGM designation [77] - The iCGM designation opens opportunities for integration with insulin pumps, though the timeline for commercial integration is still under discussion [106] Question: Details on the 30,000 eligible patients in the Mercy system [78] - The 30,000 patients are CGM-eligible but not currently using CGM, primarily Type 2 patients on insulin or with a history of hypoglycemia [104] Question: Economics of the Mercy collaboration and RPM program [92] - The RPM program follows standard healthcare reimbursement models, with fixed costs per patient and no risk-sharing arrangements [102] Question: Competitive dynamics with other CGMs in the Mercy system [107] - Mercy does not intend to switch existing CGM users but will offer Eversense to all patients, with a focus on those not currently using CGM [80]

PART I: Financial Information [ITEM 1: Financial Statements](index=3&type=section&id=ITEM%201%3A%20Financial%20Statements) This section presents the company's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity changes, cash flows, and detailed accounting notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and stockholders' equity decreased, while total liabilities increased, driven by a significant rise in current liabilities due to new notes payable Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :-------------------------------- | :------------- | :------------------ | | Total assets | $126,516 | $138,220 | | Total liabilities | $69,898 | $64,768 | | Total stockholders' equity | $18,962 | $35,796 | | Cash and cash equivalents | $90,544 | $75,709 | | Short term investments, net | $8,169 | $33,747 | | Note payable, current portion, net | $17,937 | — | [Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29) The company reported a **net loss of $18.9 million** in Q1 2024, a decline from **net income of $1.3 million** in Q1 2023, mainly due to the absence of prior year's exchange-related and derivative fair value gains Unaudited Condensed Consolidated Statements of Operations Highlights (in thousands) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :---------------------------------- | :-------------------------------- | :-------------------------------- | | Total revenue | $5,047 | $4,137 | | Cost of sales | $4,712 | $3,723 | | Gross profit | $335 | $414 | | Operating loss | $(18,232) | $(19,709) | | Total other (expense) income, net | $(645) | $21,033 | | Net (Loss) Income | $(18,877) | $1,324 | | Basic net (loss) income per common share | $(0.03) | $0.00 | | Diluted net (loss) income per common share | $(0.03) | $0.00 | - **Exchange related gain, net** decreased significantly from **$18,776k** in Q1 2023 to **$0k** in Q1 2024[11](index=11&type=chunk) - **Gain on change in fair value of derivatives** decreased significantly from **$5,778k** in Q1 2023 to **$0k** in Q1 2024[11](index=11&type=chunk) [Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit)](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity%20%28Deficit%29) Total stockholders' equity decreased from **$35.8 million** to **$19.0 million**, primarily due to a **net loss of $18.9 million**, partially offset by stock-based compensation and common stock issuances Changes in Stockholders' Equity (in thousands) | Metric | Balance, December 31, 2023 | Net Loss (Q1 2024) | Stock-based compensation expense (Q1 2024) | Balance, March 31, 2024 | | :-------------------------------- | :------------------------- | :----------------- | :----------------------------------------- | :------------------------ | | Total Stockholders' Equity (Deficit) | $35,796 | $(18,877) | $1,801 | $18,962 | - **Issued common stock for vested RSUs and ESPP purchase** contributed **$96k** to additional paid-in capital in Q1 2024[14](index=14&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash, cash equivalents, and restricted cash increased by **$15.2 million** in Q1 2024, driven by investing and financing activities, offsetting cash used in operations Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(20,262) | $(19,848) | | Net cash provided by investing activities | $25,379 | $29,947 | | Net cash provided by (used in) financing activities | $10,034 | $(807) | | Net increase in cash, cash equivalents | $15,151 | $9,292 | | Cash, cash equivalents, and restricted cash at ending of period | $90,860 | $45,085 | - **Financing activities shifted from using** **$0.8 million** cash in Q1 2023 to providing **$10.0 million** in Q1 2024, primarily due to proceeds from the issuance of term loans[178](index=178&type=chunk)[179](index=179&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes detail financial statements, covering operations, liquidity, accounting policies, revenue, debt, equity, and related party transactions, emphasizing going concern uncertainty and funding strategies [1. Organization and Nature of Operations](index=8&type=section&id=1.%20Organization%20and%20Nature%20of%20Operations) Senseonics Holdings, Inc. is a medical technology company developing and manufacturing long-term, implantable continuous glucose monitoring (CGM) systems - **The company specializes in long-term, implantable continuous glucose monitoring (CGM) systems**[17](index=17&type=chunk) [2. Liquidity and Capital Resources](index=8&type=section&id=2.%20Liquidity%20and%20Capital%20Resources) The company has an **accumulated deficit of $888.1 million**, raising **substantial doubt about its ability to continue as a going concern**, relying on a **$50.0 million Term Loan Facility** and equity offerings for funding - **Accumulated deficit** of **$888.1 million** as of March 31, 2024[19](index=19&type=chunk) - **Unrestricted cash, cash equivalents, and marketable securities** totaled **$98.7 million** as of March 31, 2024[19](index=19&type=chunk) - **Substantial doubt exists regarding the company's ability to continue as a going concern** for the one-year period following the financial statements issuance date, necessitating additional funding[21](index=21&type=chunk) - Secured a **$50.0 million Term Loan Facility**, with Tranche 1 (**$25.0 million**) funded in September 2023 and Tranche 2 (**$10.0 million**) funded in January 2024[23](index=23&type=chunk) - Exchanged up to **$30.8 million** of 2025 Notes for **$7.5 million** cash and **35.1 million common shares** in August 2023[24](index=24&type=chunk) [3. Summary of Significant Accounting Policies](index=12&type=section&id=3.%20Summary%20of%20Significant%20Accounting%20Policies) Financial statements are prepared under U.S. GAAP, with management estimates, operating as a single segment for glucose monitoring products, and evaluating new accounting pronouncements - **Financial statements are prepared in accordance with U.S. GAAP** for interim financial information[31](index=31&type=chunk) - **The company operates in one segment: glucose monitoring products**[33](index=33&type=chunk) - **Evaluating the impact of new accounting standards** ASU No. 2023-07 (Segment Reporting) and ASU No. 2023-09 (Income Tax Disclosures)[34](index=34&type=chunk)[35](index=35&type=chunk) [4. Revenue Recognition](index=14&type=section&id=4.%20Revenue%20Recognition) Revenue primarily comes from Eversense system sales to Ascensia and other distributors, recognized upon customer control or patient consumption, with Ascensia being a key customer and U.S. revenue share increasing in Q1 2024 - **Revenue is derived from sales of Eversense systems** to Ascensia, third-party distributors, and strategic fulfillment partners[38](index=38&type=chunk) - **88%** of total revenue for Q1 2024 (**92%** for Q1 2023) was from Ascensia[41](index=41&type=chunk) Revenue by Geographic Region (in thousands) | Geographic Region | Three Months Ended March 31, 2024 (Amount) | % of Total (2024) | Three Months Ended March 31, 2023 (Amount) | % of Total (2023) | | :---------------- | :----------------------------------------- | :---------------- | :----------------------------------------- | :---------------- | | United States | $3,677 | 72.8% | $2,162 | 52.3% | | Outside of the United States | $1,370 | 27.2% | $1,975 | 47.7% | | Total | $5,047 | 100.0% | $4,137 | 100.0% | [5. Net (Loss) Income per Share](index=15&type=section&id=5.%20Net%20%28Loss%29%20Income%20per%20Share) The company reported a basic and diluted **net loss per common share of $(0.03)** for Q1 2024, compared to **$0.00 net income per share** in Q1 2023, excluding dilutive shares during net loss periods Net (Loss) Income per Share | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :---------------------------------- | :-------------------------------- | :-------------------------------- | | Basic net (loss) income per common share | $(0.03) | $0.00 | | Diluted net (loss) income per common share | $(0.03) | $0.00 | | Basic weighted-average shares outstanding | 614,588,546 | 497,473,222 | - **77,850,384 anti-dilutive shares were outstanding** in Q1 2024, excluded from diluted EPS due to **net loss**[45](index=45&type=chunk) [6. Marketable Securities](index=17&type=section&id=6.%20Marketable%20Securities) Marketable securities decreased from **$33.7 million** to **$8.2 million**, primarily commercial paper and government securities maturing within nine months of 2024, with minor unrealized losses Marketable Securities (in thousands) | Type | March 31, 2024 (Estimated Market Value) | December 31, 2023 (Estimated Market Value) | | :-------------------------- | :-------------------------------------- | :----------------------------------------- | | Commercial Paper | $4,669 | $7,598 | | Corporate debt securities | — | $7,981 | | Government and agency securities | $3,500 | $18,168 | | Total | $8,169 | $33,747 | - **All marketable securities are scheduled to mature** within the remaining nine months of 2024[46](index=46&type=chunk) [7. Inventory, net](index=18&type=section&id=7.%20Inventory%2C%20net) Net inventory decreased from **$8.8 million** to **$8.0 million**, with work-in-process as the largest component and minimal obsolescence provisions Inventory, net (in thousands) | Category | March 31, 2024 | December 31, 2023 | | :--------------- | :------------- | :---------------- | | Finished goods | $2,092 | $2,160 | | Work-in-process | $4,602 | $5,332 | | Raw materials | $1,269 | $1,284 | | Total | $7,963 | $8,776 | - **Less than $0.1 million was recorded for inventory obsolescence** in cost of sales for both Q1 2024 and Q1 2023[48](index=48&type=chunk) [8. Prepaid Expenses and Other Current Assets](index=18&type=section&id=8.%20Prepaid%20Expenses%20and%20Other%20Current%20Assets) Prepaid expenses and other current assets slightly increased to **$7.4 million**, with contract manufacturing deposits remaining the largest component Prepaid Expenses and Other Current Assets (in thousands) | Category | March 31, 2024 | December 31, 2023 | | :-------------------------------- | :------------- | :---------------- | | Contract manufacturing | $3,891 | $4,244 | | Tax credits receivable | $1,793 | $1,793 | | Insurance | $745 | $73 | | Total prepaid expenses and other current assets | $7,434 | $7,266 | [9. Accrued Expenses and Other Current Liabilities](index=18&type=section&id=9.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) Accrued expenses and other current liabilities decreased to **$11.1 million**, primarily due to a reduction in compensation and benefits Accrued Expenses and Other Current Liabilities (in thousands) | Category | March 31, 2024 | December 31, 2023 | | :-------------------------------- | :------------- | :---------------- | | Research and development | $4,213 | $3,846 | | Professional and administrative services | $2,123 | $673 | | Compensation and benefits | $1,399 | $4,799 | | Total accrued expenses and other current liabilities | $11,105 | $12,689 | [10. Leases](index=19&type=section&id=10.%20Leases) The corporate headquarters operating lease was extended through May 31, 2033, with consistent **$0.2 million** operating lease expense in Q1 2024 and Q1 2023 - **Lease term for corporate headquarters extended** through May 31, 2033, with one five-year extension option[52](index=52&type=chunk) - **Operating lease expense was** **$0.2 million** for both Q1 2024 and Q1 2023[53](index=53&type=chunk) Operating Lease Assets and Liabilities (in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :-------------------------- | :------------- | :---------------- | | Operating lease ROU assets | $5,097 | $5,180 | | Total operating lease liabilities | $6,497 | $6,582 | [11. Product Warranty Obligations](index=19&type=section&id=11.%20Product%20Warranty%20Obligations) The company provides a one-year warranty on smart transmitters; the warranty reserve remained stable at approximately **$0.5 million** in Q1 2024 Product Warranty Liabilities (in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :-------------------------------- | :------------- | :---------------- | | Balance at beginning of the period | $514 | $781 | | Provision for warranties during the period | $66 | $242 | | Settlements made during the period | $(95) | $(509) | | Balance at end of the period | $485 | $514 | [12. Notes Payable, Preferred Stock and Stock Purchase Warrants](index=20&type=section&id=12.%20Notes%20Payable%2C%20Preferred%20Stock%20and%20Stock%20Purchase%20Warrants) Debt includes a **$50.0 million Term Loan Facility** (**$35.0 million** drawn) and **$20.4 million** in 2025 Convertible Senior Notes, with warrants issued and total interest expense decreasing due to debt settlements - Entered into a Loan and Security Agreement for up to **$50.0 million** in senior secured term loans, with **$25.0 million** (Tranche 1) funded in September 2023 and **$10.0 million** (Tranche 2) funded in January 2024[56](index=56&type=chunk) - **The Loan and Security Agreement includes a minimum cash covenant** (**30%** of outstanding loan) and a performance covenant (**net product revenue** on a trailing six-month basis, commencing July 1, 2024)[59](index=59&type=chunk)[61](index=61&type=chunk) - **Issued warrants to Lenders for** **832,362 common shares** with Tranche 1 and **347,887 shares** with Tranche 2 of the **Term Loan Facility**[63](index=63&type=chunk) - **Outstanding 2025 Notes totaled** **$20.4 million** aggregate principal amount as of March 31, 2024, maturing January 15, 2025, with a **5.25%** coupon[97](index=97&type=chunk)[170](index=170&type=chunk) Interest Expense Related to Notes Payable (in thousands) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | 2025 Notes Interest Expense | $947 | $2,233 | | Loan and Security Agreement Interest Expense | $1,100 | — | | 2023 Notes Interest Expense | — | $189 | | PHC Notes Interest Expense | — | $2,230 | | Total Interest Expense | $2,047 | $4,652 | [13. Stockholders' Equity](index=31&type=section&id=13.%20Stockholders%27%20Equity) The company uses 'at the market' offerings for capital; the 2021 Sales Agreement was terminated, and a new Equity Distribution Agreement with Goldman Sachs yielded minimal net proceeds - **Entered into an Equity Distribution Agreement with Goldman Sachs for up to** **$106.6 million** in 'at the market' offerings; received approximately **$0.1 million** in net proceeds from **108,026 shares** as of March 31, 2024[100](index=100&type=chunk) - **The 2021 Sales Agreement with Jefferies was terminated** in August 2023, with **$106.6 million** remaining available for issuance at termination[99](index=99&type=chunk) [14. Stock-Based Compensation](index=31&type=section&id=14.%20Stock-Based%20Compensation) The company maintains several equity incentive plans (2015, Inducement, 2023 Commercial, ESPP) for employees and partners, with significant shares remaining available for grant or issuance - **46,186,700 shares remained available for grant under the Amended and Restated 2015 Plan** as of March 31, 2024[102](index=102&type=chunk) - **7,675,000 shares remained available for grant under the 2023 Commercial Equity Plan** as of March 31, 2024, for non-employees including Ascensia staff[106](index=106&type=chunk) - **22,729,158 shares of common stock were available for issuance under the 2016 ESPP** as of March 31, 2024, with **199,066 shares** purchased in Q1 2024[107](index=107&type=chunk) [15. Fair Value Measurements](index=34&type=section&id=15.%20Fair%20Value%20Measurements) Financial assets and liabilities are categorized into a three-level fair value hierarchy, with money market funds, commercial paper, and government securities as Level 1/2 assets, and 2025 Notes embedded features as Level 3 liabilities Fair Value Hierarchy of Financial Assets and Liabilities (in thousands, as of March 31, 2024) | Category | Total | Level 1 | Level 2 | Level 3 | | :-------------------------------- | :---- | :------ | :------ | :------ | | **Assets** | | | | | | Money market funds | $87,866 | $87,866 | — | — | | Commercial paper | $4,670 | — | $4,670 | — | | Government and agency securities | $3,500 | $3,500 | — | — | | **Liabilities** | | | | | | Embedded features of the 2025 Notes | $102 | — | — | $102 | - **Significant unobservable inputs for Level 3 liabilities** (2025 Notes embedded features) include stock price volatility (**45.0%**), probabilities of conversion provisions (**5.0-95.0%**), and credit spread (**8.80%**)[112](index=112&type=chunk) [16. Income Taxes](index=34&type=section&id=16.%20Income%20Taxes) No tax provision or benefit was recorded for Q1 2024 or Q1 2023, with a full valuation allowance applied to net deferred tax assets due to benefit uncertainty - **No tax provision or benefit recorded** for the three months ended March 31, 2024, or 2023[113](index=113&type=chunk) - **A full valuation allowance is provided for net deferred tax assets** due to uncertainty of future benefit realization[113](index=113&type=chunk) [17. Related Party Transactions](index=34&type=section&id=17.%20Related%20Party%20Transactions) PHC Holdings Corporation and its subsidiary Ascensia Diabetes Care Holdings AG are related parties, with Ascensia being the primary customer, contributing **$4.5 million** in revenue in Q1 2024 - **PHC Holdings Corporation and its subsidiary Ascensia Diabetes Care Holdings AG are related parties**[114](index=114&type=chunk) - **Revenue from Ascensia was $4.5 million** for Q1 2024, an increase from **$3.8 million** in Q1 2023[115](index=115&type=chunk) - **Amount due from Ascensia was $2.8 million** as of March 31, 2024, and **amount due to Ascensia was $1.1 million**[116](index=116&type=chunk) [18. Subsequent Events](index=36&type=section&id=18.%20Subsequent%20Events) No subsequent events requiring recognition or disclosure were identified through the filing date of this Form 10-Q - **No subsequent events requiring recognition or disclosure were identified** through the filing date of the Form 10-Q[117](index=117&type=chunk) [ITEM 2: Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=ITEM%202%3A%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses the company's financial condition, operations, and liquidity, focusing on implantable CGM systems, commercialization challenges, funding, and reiterating **substantial doubt about its ability to continue as a going concern** [Overview](index=37&type=section&id=Overview) Senseonics is a medical technology company developing and manufacturing long-term implantable continuous glucose monitoring (CGM) systems (Eversense, Eversense XL, E3) with extended sensor life, focusing on early commercialization and strategic partnerships - **The company develops and manufactures long-term, implantable CGM systems** (Eversense, Eversense XL, Eversense E3) for diabetes management[121](index=121&type=chunk) - **Eversense E3 offers up to six months of continuous glucose monitoring**, significantly longer than non-implantable systems (7-14 days)[121](index=121&type=chunk) - **Commercialization efforts focus on driving awareness among intensively managed patients and healthcare providers through strategic partnerships and distribution agreements**[126](index=126&type=chunk) [United States Development and Commercialization of Eversense](index=39&type=section&id=United%20States%20Development%20and%20Commercialization%20of%20Eversense) The company achieved U.S. milestones including FDA approvals for 90-day Eversense, 180-day Eversense E3, and a non-adjunctive indication, with expanded Medicare coverage and a 365-day system FDA 510(k) submission - **FDA approved the 90-day Eversense CGM system** in June 2018 and the **180-day Eversense E3 CGM system** in February 2022[121](index=121&type=chunk)[135](index=135&type=chunk) - Received FDA approval for **non-adjunctive indication** (dosing claim) for Eversense in June 2019, allowing its use for treatment decisions[121](index=121&type=chunk)[131](index=131&type=chunk) - **Medicare coverage for Eversense E3 was expanded** in February 2024 to include all insulin users and non-insulin users with problematic hypoglycemia[124](index=124&type=chunk) - Completed the **ENHANCE pivotal study for the Eversense 365-day system**, supporting a May 2024 **FDA 510(k) submission for a new 365-day product** with once-per-week calibration[125](index=125&type=chunk)[136](index=136&type=chunk) [European Commercialization of Eversense](index=43&type=section&id=European%20Commercialization%20of%20Eversense) The company secured CE marks for Eversense XL (**180-day sensor life**) and Eversense E3, enabling European commercialization, with Ascensia launching Eversense E3 in H2 2022 - **Affixed CE mark for Eversense XL** in September 2017, indicated for up to **180-day sensor life**, with commercialization starting in Q4 2017[137](index=137&type=chunk) - **Affixed CE mark to Eversense E3 CGM system** in June 2022, with Ascensia commencing commercialization in European markets during the second half of 2022[138](index=138&type=chunk) [Financial Overview](index=43&type=section&id=Financial%20Overview) Product revenue comes from Eversense system sales to Ascensia and other partners, recognized upon customer control or patient consumption, with Ascensia as a concentrated customer and U.S. revenue share increasing in Q1 2024 - **Product revenue is generated from sales of Eversense systems** and components to Ascensia, third-party distributors, and strategic fulfillment partners[139](index=139&type=chunk) - **Consignment sales represented approximately 10%** of net sales for Q1 2024, with revenue recognized upon patient consumption[142](index=142&type=chunk) - **Ascensia accounted for 88%** of total revenue in Q1 2024 (**92%** in Q1 2023), indicating high customer concentration[146](index=146&type=chunk) Revenue by Geographic Region (in thousands) | Geographic Region | Three Months Ended March 31, 2024 (Amount) | % of Total (2024) | Three Months Ended March 31, 2023 (Amount) | % of Total (2023) | | :---------------- | :----------------------------------------- | :---------------- | :----------------------------------------- | :---------------- | | United States | $3,677 | 72.8% | $2,162 | 52.3% | | Outside of the United States | $1,370 | 27.2% | $1,975 | 47.7% | | Total | $5,047 | 100.0% | $4,137 | 100.0% | [Results of Operations for the Three Months Ended March 31, 2024 and 2023](index=46&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202024%20and%202023) In Q1 2024, total revenue increased by **$0.9 million** to **$5.0 million**, but gross profit decreased due to higher manufacturing costs and increased revenue share to Ascensia, resulting in a **net loss of $18.9 million** due to the absence of prior year's significant gains - **Total revenue increased by $0.9 million** to **$5.0 million** in Q1 2024, primarily due to increased commercial activities and new patients in the United States[151](index=151&type=chunk) - **Gross profit decreased by $0.079 million** to **$0.3 million** in Q1 2024, with gross margin falling from **10.0%** to **6.6%**, mainly due to higher fixed manufacturing costs and an increased revenue share percentage to Ascensia[152](index=152&type=chunk) - **Research and development expenses decreased by $2.0 million** to **$10.4 million** in Q1 2024, driven by a **$2.8 million** reduction in clinical studies spend[153](index=153&type=chunk) - **Total other income (expense), net, decreased by $21.7 million**, shifting from **$21.0 million** income in Q1 2023 to **$(0.6) million** expense in Q1 2024, primarily due to a **$50.0 million** reduction in gains on derivative fair value and debt settlements[156](index=156&type=chunk) Key Financial Results (in thousands) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Period-to-Period Change | | :---------------------------------- | :-------------------------------- | :-------------------------------- | :---------------------- | | Total revenue | $5,047 | $4,137 | $910 | | Gross profit | $335 | $414 | $(79) | | Research and development expenses | $10,438 | $12,405 | $(1,967) | | Selling, general and administrative expenses | $8,129 | $7,718 | $411 | | Operating loss | $(18,232) | $(19,709) | $1,477 | | Net (Loss) Income | $(18,877) | $1,324 | $(20,201) | [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) With an **accumulated deficit of $888.1 million** and **$98.7 million** in unrestricted cash, **substantial doubt exists regarding the company's ability to continue as a going concern** through Q2 2025, necessitating debt and equity financings like the **$50.0 million Term Loan Facility** - **Accumulated deficit** of **$888.1 million** as of March 31, 2024[157](index=157&type=chunk) - **Unrestricted cash, cash equivalents, and marketable securities** totaled **$98.7 million** as of March 31, 2024[157](index=157&type=chunk) - **Substantial doubt exists regarding the company's ability to continue as a going concern** for the one-year period following the financial statements issuance date, requiring additional funding[167](index=167&type=chunk)[172](index=172&type=chunk) - Secured a **$50.0 million Term Loan Facility**, with **$35.0 million** drawn as of January 2, 2024[158](index=158&type=chunk)[169](index=169&type=chunk) - **Existing cash and cash equivalents are not expected to be sufficient** to fund operations and meet debt covenants through the second quarter of 2025[167](index=167&type=chunk) [Cash Flows](index=54&type=section&id=Cash%20Flows) In Q1 2024, **$20.3 million** was used in operating activities, offset by **$25.4 million** from investing and **$10.0 million** from financing, leading to a **net increase of $15.2 million** in cash and cash equivalents Summary of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(20,262) | $(19,848) | | Net cash provided by investing activities | $25,379 | $29,947 | | Net cash provided by (used in) financing activities | $10,034 | $(807) | | Net increase in cash and cash equivalents | $15,151 | $9,292 | - **Net cash provided by financing activities significantly increased** to **$10.0 million** in Q1 2024, primarily from the issuance of term loans, compared to cash used in Q1 2023[178](index=178&type=chunk) [Contractual Obligations](index=54&type=section&id=Contractual%20Obligations) No material changes to contractual obligations and commitments were reported as of March 31, 2024, compared to the Annual Report on Form 10-K - **No material changes in contractual obligations and commitments** as of March 31, 2024, compared to the Annual Report on Form 10-K filed March 1, 2024[180](index=180&type=chunk) [ITEM 3: Quantitative and Qualitative Disclosures About Market Risk](index=56&type=section&id=ITEM%203%3A%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a 'smaller reporting company,' Senseonics is exempt from detailed quantitative and qualitative market risk disclosures in this Form 10-Q - **The company is exempt from providing detailed market risk disclosures** as it is classified as a 'smaller reporting company'[181](index=181&type=chunk) [ITEM 4: Controls and Procedures](index=56&type=section&id=ITEM%204%3A%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2024, with no material changes in internal control over financial reporting identified [Evaluation of Disclosure Controls and Procedures](index=56&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management, with executive officers, evaluated and concluded that disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2024 - **Disclosure controls and procedures were evaluated and deemed effective** at the reasonable assurance level as of March 31, 2024[182](index=182&type=chunk) [Changes in Internal Control over Financial Reporting](index=56&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) No material changes in internal control over financial reporting were identified during Q1 2024 - **No material changes in internal control over financial reporting occurred** during the quarter ended March 31, 2024[183](index=183&type=chunk) PART II: Other Information [ITEM 1: Legal Proceedings](index=57&type=section&id=ITEM%201%3A%20Legal%20Proceedings) The company faces ordinary course litigation, including a dismissed False Claims Act lawsuit and a new patent infringement lawsuit filed in May 2024, which it intends to vigorously defend - **A False Claims Act lawsuit was dismissed** by the District Court, and the dismissal was affirmed by the Fifth Circuit on February 28, 2024[187](index=187&type=chunk) - **A new patent infringement lawsuit was filed** against the company by Cellspin Soft, Inc. in May 2024, which the company intends to vigorously defend[188](index=188&type=chunk) [ITEM 1A: Risk Factors](index=57&type=section&id=ITEM%201A%3A%20Risk%20Factors) The company faces significant risks, including costly patent litigation and **substantial doubt about its ability to maintain sufficient liquidity** to continue as a going concern, necessitating additional capital - **The medical device industry is characterized by patent litigation**, which could be costly, divert management time, and harm the company's reputation[191](index=191&type=chunk)[197](index=197&type=chunk) - **Substantial doubt exists regarding the company's ability to maintain liquidity sufficient to operate effectively**, raising concerns about its ability to continue as a going concern[198](index=198&type=chunk)[201](index=201&type=chunk) - **A new patent infringement lawsuit was filed** in May 2024, adding to the litigation risk[194](index=194&type=chunk) [ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds](index=61&type=section&id=ITEM%202%3A%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is not applicable to the company for this reporting period - Not applicable[202](index=202&type=chunk) [ITEM 3: Defaults Upon Senior Securities](index=61&type=section&id=ITEM%203%3A%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the company for this reporting period - Not applicable[203](index=203&type=chunk) [ITEM 4: Mine Safety Disclosures](index=61&type=section&id=ITEM%204%3A%20Mine%20Safety%20Disclosures) This item is not applicable to the company for this reporting period - Not applicable[204](index=204&type=chunk) [ITEM 5: Other Information](index=61&type=section&id=ITEM%205%3A%20Other%20Information) No officers or directors adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2024 - **No Rule 10b5-1 or non-Rule 10b5-1 trading arrangement changes** by officers or directors in Q1 2024[205](index=205&type=chunk) [ITEM 6: Exhibits](index=62&type=section&id=ITEM%206%3A%20Exhibits) This section lists all exhibits filed or incorporated by reference as part of the Form 10-Q, including corporate documents, Sarbanes-Oxley certifications, and Inline XBRL documents - **Includes certifications under Sections 302 and 906 of the Sarbanes-Oxley Act** and Inline XBRL documents[208](index=208&type=chunk) [SIGNATURES](index=63&type=section&id=SIGNATURES) The Quarterly Report on Form 10-Q was duly signed by Rick Sullivan, Chief Financial Officer, on May 13, 2024 - **Signed by Rick Sullivan, Chief Financial Officer, on May 13, 2024**[212](index=212&type=chunk)