Senseonics. | --- | --- | --- | --- | |--------------------------------------------------------------------------------------|-------|-------|--------------------------------------| | Eversense® | | | | | CGM System The world's FIRST and ONLY long-term Continuous Glucose Monitoring System | | | | | Tim Goodnow, PhD President and CEO | | | Corporate Presentation November 2021 | FORWARD-LOOKING STATEMENTS This presentation, including the remarks of management contains forward-looking statements, as defined in ...

Senseonics Holdings, Inc. (NYSE:SENS) Q3 2021 Earnings Conference Call November 10, 2021 4:30 PM ET Company Participants Tim Goodnow – CEO Carsten Beckwith – Investor Relations Nick Tressler – CFO Conference Call Participants Mathew Blackman – Stifel Jayson Bedford – Raymond James Connex Stephenson – Craig Hallum Operator Good day, and welcome to the Senseonics Third Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there ...

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, 2021 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) 3841 ...

Senseonics Holdings, Inc. (NYSE:SENS) Q2 2021 Results Conference Call August 9, 2021 4:30 PM ET Company Participants Philip Taylor - IR Tim Goodnow - President and CEO Nick Tressler - CFO Mukul Jain - COO Mirasol Panlilio - VP and General Manager, Global Commercial Operations Conference Call Participants Mathew Blackman - Stifel Chris Pasquale - Guggenheim Danielle Antalffy - SVB Leerink Jayson Bedford - Raymond James Trent McCarthy - Craig-Hallum Capital Operator Good day and welcome to the Senseonics Seco ...

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 June 30, 2021 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) Delaware ...

Financial Data and Key Metrics Changes - In Q1 2021, total net revenue was $2.8 million compared to $36,000 in Q1 2020, indicating significant growth [27] - Gross profit in Q1 2021 increased by $20.2 million year-over-year to $526,000, primarily due to filling resupply orders with existing written-off inventory [27] - The total net loss for Q1 2021 was $249.5 million or $0.68 per share, compared to $42.6 million or $0.21 per share in Q1 2020, largely due to a $239.4 million increase in other expenses [31][32] Business Line Data and Key Metrics Changes - Revenue generated in the US was approximately $310,000, while revenue from Europe was over $2.5 million, reflecting Ascensia's initial sales support [9][27] - Sales and marketing expenses decreased by $9.5 million year-over-year to $1.6 million, attributed to the strategic changes in market commercialization [28] Market Data and Key Metrics Changes - The company expects global net revenue for 2021 to be in the range of $12 million to $15 million, with an annual revenue cadence split roughly 40% in the first half and 60% in the second half [33] - Ascensia is now active in several European countries, including Germany, Italy, and Spain, with a large sales force of over 250 professionals [20] Company Strategy and Development Direction - The collaboration with Ascensia focuses on the commercialization of the Eversense system, allowing Senseonics to concentrate on research, development, and manufacturing [7][8] - The company aims to enhance the Eversense product's market presence through a comprehensive direct-to-consumer advertising campaign [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the partnership with Ascensia and its potential to drive patient adoption of Eversense, particularly in the Medicare population [18][37] - The company is preparing for the launch of the 180-day Eversense product and is optimistic about the FDA review process [24][66] Other Important Information - The company announced that Centene Corporation is now covering Eversense, which is expected to boost healthcare providers' confidence in recommending the product [16] - Ascensia is implementing new access programs to support patients with high deductibles and those without coverage for Eversense [18][19] Q&A Session Summary Question: Update on installed base in US and international markets - Management indicated that as of the end of Q1, there were about 4,000 patients in Europe and about 1,000 in the US, with no quarterly updates planned [43] Question: Expectations for gross margin - Management expects gross margin for the year to remain in the range of negative 25% to negative 35% [46] Question: US relaunch strategy - The focus will initially be on reestablishing relationships with existing prescribers before expanding to new accounts in the second half of the year [50] Question: ACO partnership significance - Management expressed excitement about the ACO partnership, highlighting its potential for A1c reduction and economic returns [58] Question: Readiness for 180-day product - Management is confident in their ability to ramp up manufacturing capacity in anticipation of the 180-day product approval [60]

PART I: Financial Information [ITEM 1: Financial Statements](index=3&type=section&id=ITEM%201%3A%20Financial%20Statements) This section presents Senseonics Holdings, Inc.'s unaudited condensed consolidated financial statements and related notes for Q1 2021 and FY 2020 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Cash and cash equivalents | $178,610 | $18,005 | | Total current assets | $191,331 | $30,246 | | Total assets | $195,947 | $35,918 | | Total current liabilities | $15,688 | $16,638 | | Derivative liabilities | $243,018 | $62,119 | | Total liabilities | $381,846 | $177,190 | | Accumulated deficit | $(898,025) | $(648,511) | | Total stockholders' deficit | $(185,899) | $(144,083) | - The company's cash and cash equivalents significantly increased from **$18.0 million** at December 31, 2020, to **$178.6 million** at March 31, 2021, primarily due to recent financing activities. Total assets also saw a substantial increase from **$35.9 million** to **$195.9 million**[8](index=8&type=chunk) - Derivative liabilities surged from **$62.1 million** to **$243.0 million**, contributing to a large increase in total liabilities from **$177.2 million** to **$381.8 million**. The accumulated deficit worsened from **$(648.5) million** to **$(898.0) million**[8](index=8&type=chunk) [Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) | Metric | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | Change (in thousands) | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | | Total revenue | $2,846 | $36 | $2,810 | | Cost of sales | $2,320 | $19,670 | $(17,350) | | Gross profit (loss) | $526 | $(19,634) | $20,160 | | Operating loss | $(11,316) | $(43,831) | $32,515 | | Total other (expense) income, net | $(238,198) | $1,238 | $(239,436) | | Net loss | $(249,514) | $(42,593) | $(206,921) | | Basic and diluted net loss per common share | $(0.68) | $(0.21) | $(0.47) | - Total revenue increased significantly to **$2.8 million** in Q1 2021 from **$36 thousand** in Q1 2020. Cost of sales decreased substantially from **$19.7 million** to **$2.3 million**, leading to a positive gross profit of **$0.5 million** compared to a gross loss of **$(19.6) million** in the prior year[10](index=10&type=chunk) - Operating loss improved from **$(43.8) million** to **$(11.3) million**. However, a substantial increase in 'Total other (expense) income, net' from **$1.2 million** income to **$(238.2) million** expense, primarily due to non-cash fair value adjustments of derivatives and options, resulted in a much larger net loss of **$(249.5) million** in Q1 2021 compared to **$(42.6) million** in Q1 2020[10](index=10&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'%20Equity%20(Deficit)) | Metric | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :----------------------------------- | :----------------------------- | :----------------------------- | | Common Stock (Shares) | 427,915 | 265,582 | | Common Stock (Amount) | $428 | $266 | | Additional Paid-In Capital | $711,698 | $504,162 | | Accumulated Deficit | $(898,025) | $(648,511) | | Total Stockholders' Deficit | $(185,899) | $(144,083) | - The number of common shares outstanding increased significantly from **265.6 million** at December 31, 2020, to **427.9 million** at March 31, 2021, primarily due to new stock issuances and conversions of preferred stock and notes[13](index=13&type=chunk) - Additional paid-in capital increased by over **$200 million**, reflecting the capital raised through equity offerings. Despite this, the accumulated deficit grew substantially due to the net loss incurred during the period, leading to a larger total stockholders' deficit[13](index=13&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Metric | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Net cash used in operating activities | $(16,258) | $(29,048) | | Net cash used in investing activities | $(11) | $(100) | | Net cash provided by (used in) financing activities | $176,674 | $(47,985) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $160,405 | $(77,133) | | Cash, cash equivalents and restricted cash, at ending of period | $178,610 | $18,805 | - Net cash used in operating activities decreased from **$(29.0) million** in Q1 2020 to **$(16.3) million** in Q1 2021, primarily due to adjustments for non-cash items like changes in fair value of derivatives and options, despite a larger net loss[15](index=15&type=chunk) - Net cash provided by financing activities dramatically increased to **$176.7 million** in Q1 2021, compared to **$(48.0) million** used in Q1 2020. This was driven by significant proceeds from common stock issuance and preferred stock issuance[15](index=15&type=chunk) - The company experienced a net increase in cash, cash equivalents, and restricted cash of **$160.4 million** in Q1 2021, resulting in an ending balance of **$178.6 million**, a substantial improvement from the **$18.8 million** at the end of Q1 2020[15](index=15&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [1. Organization and Nature of Operations](index=8&type=section&id=1.%20Organization%20and%20Nature%20of%20Operations) - Senseonics Holdings, Inc. is a Delaware corporation focused on developing and commercializing long-term, implantable continuous glucose monitoring (CGM) systems for diabetes management[17](index=17&type=chunk) - Senseonics, Incorporated is a wholly-owned subsidiary, originally incorporated in 1996[18](index=18&type=chunk) [2. Liquidity and Capital Resources](index=8&type=section&id=2.%20Liquidity%20and%20Capital%20Resources) - The company has incurred substantial losses and cumulative negative cash flows since its inception, with an accumulated deficit of **$898.0 million** as of March 31, 2021. It has never been profitable[19](index=19&type=chunk) - Operations are primarily funded through the issuance of preferred stock, common stock, convertible notes, and debt[19](index=19&type=chunk) | Financing Activity | Date | Net Proceeds (in millions) | Shares Issued | | :-------------------------------- | :---------------- | :------------------------ | :---------------- | | Underwritten Public Offering | Jan 2021 | $106.1 | 59,740,259 | | Registered Direct Offering | Jan 2021 | $46.1 | 40,000,000 | | Series A Preferred Stock Purchase | Jan 2021 | $22.8 (gross) | 22,783 shares | | PHC Notes Issuance | Aug 2020 | $35.0 (principal) | 2,941,176 common shares (financing fee) | | Equity Line Agreement (Series B Preferred Stock) | Nov 2020 | Up to $12.0 | N/A (commitment) | - As of March 31, 2021, cash and cash equivalents stood at **$178.6 million**[19](index=19&type=chunk) [3. Summary of Significant Accounting Policies](index=10&type=section&id=3.%20Summary%20of%20Significant%20Accounting%20Policies) - Financial statements are prepared in accordance with U.S. GAAP for interim information, with certain condensations permitted by SEC rules[27](index=27&type=chunk) - Management makes estimates for items such as stock-based compensation, long-lived asset recoverability, deferred taxes, derivative liabilities, and inventory obsolescence, considering COVID-19 impacts[29](index=29&type=chunk) - The company operates and manages its business as a single segment: glucose monitoring products[30](index=30&type=chunk) - Revenue is recognized when customers obtain control of the product, typically upon delivery, at a fixed price to strategic partners and distributors. Variable consideration (discounts) reduces revenue[38](index=38&type=chunk)[39](index=39&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) - For the three months ended March 31, 2021, **81%** of total revenue was derived from one customer, Ascensia, a significant concentration change from the prior year[44](index=44&type=chunk) - Recently adopted ASU 2019-12 (Simplifying Income Taxes) had no material impact. ASU 2016-13 (Credit Losses) and ASU 2020-06 (Convertible Instruments) will be adopted in future periods, with no significant impact expected from ASU 2016-13[51](index=51&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk) [4. Inventory, net](index=16&type=section&id=4.%20Inventory%2C%20net) | Inventory Category | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :----------------- | :----------------------------- | :----------------------------- | | Finished goods | $556 | $203 | | Work-in-process | $3,562 | $2,626 | | Raw materials | $2,466 | $2,452 | | Total | $6,584 | $5,281 | - Total inventory increased from **$5.3 million** at December 31, 2020, to **$6.6 million** at March 31, 2021, driven by increases in finished goods and work-in-process[54](index=54&type=chunk) - No charge for inventory obsolescence was recorded for the three months ended March 31, 2021, compared to a **$15.0 million** charge in the prior year period[55](index=55&type=chunk) [5. Prepaid Expenses and Other Current Assets](index=18&type=section&id=5.%20Prepaid%20Expenses%20and%20Other%20Current%20Assets) | Category | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :------------------------ | :----------------------------- | :----------------------------- | | Contract manufacturing | $3,345 | $3,324 | | Insurance | $294 | $50 | | Marketing and sales | $292 | $53 | | Total | $4,451 | $3,774 | - Prepaid expenses and other current assets increased to **$4.5 million** at March 31, 2021, from **$3.8 million** at December 31, 2020, primarily due to increases in insurance and marketing/sales prepayments[56](index=56&type=chunk) [6. Accrued Expenses and Other Current Liabilities](index=18&type=section&id=6.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) | Category | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Interest on notes payable | $2,929 | $1,773 | | Professional and administration services | $1,472 | $880 | | Compensation and benefits | $1,095 | $4,344 | | Product warranty and replacement obligations | $557 | $646 | | Total | $9,635 | $11,674 | - Total accrued expenses and other current liabilities decreased to **$9.6 million** at March 31, 2021, from **$11.7 million** at December 31, 2020. This was mainly due to a significant reduction in compensation and benefits accruals, partially offset by an increase in interest on notes payable[57](index=57&type=chunk) [7. Notes Payable, Preferred Stock and Stock Purchase Warrants](index=18&type=section&id=7.%20Notes%20Payable%2C%20Preferred%20Stock%20and%20Stock%20Purchase%20Warrants) - The company received a **$5.8 million** PPP Loan in April 2020, with a **1.0%** interest rate and a two-year term. Forgiveness is possible based on usage for payroll and other eligible costs, but a workforce reduction will decrease the forgivable amount[58](index=58&type=chunk)[59](index=59&type=chunk)[61](index=61&type=chunk) - An Equity Line Agreement with Energy Capital allows for the purchase of up to **$12.0 million** in Series B convertible preferred stock. The associated put/call option is classified as a liability and its fair value increased to **$68.9 million** as of March 31, 2021[63](index=63&type=chunk)[64](index=64&type=chunk) - All **25,783** shares of Series A Preferred Stock issued to Masters have been converted to common stock as of March 31, 2021, generating **$22.8 million** in gross proceeds[66](index=66&type=chunk) - The company issued **$35.0 million** in PHC Notes to PHC, bearing **9.5%** interest (decreasing to **8.0%** upon 180-day Eversense approval in the US) and maturing October 31, 2024. These notes are convertible into common stock at **$0.54** per share[69](index=69&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk) - The PHC Notes include embedded conversion features and other provisions requiring bifurcation as a derivative liability, which was recorded at **$25.8 million** initially and is adjusted to fair value each period[76](index=76&type=chunk) | Note Type | Principal (March 31, 2021, in thousands) | Carrying Amount (March 31, 2021, in thousands) | | :---------- | :--------------------------------------- | :--------------------------------------------- | | 2023 Notes | $15,700 | $13,248 | | 2025 Notes | $51,199 | $26,803 | | PHC Notes | $35,000 | $12,257 | | PPP Loan | $5,763 | $5,763 | | Total | $107,662 | $58,071 | | Interest Expense Category | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | | :------------------------ | :------------------------------------------ | :------------------------------------------ | | Effective Interest Rate Interest | $1,771 | $2,180 | | Debt Discount and Fees | $2,217 | $1,891 | | Issuance Costs | $67 | $58 | | Loss on Extinguishment | $3,183 | $0 | | Final Payment Fee | $0 | $240 | | Total Interest Expense | $7,238 | $4,369 | [8. Stockholders' Deficit](index=25&type=section&id=8.%20Stockholders'%20Deficit) - During Q1 2021, the company sold **99,740,259** shares of common stock through an underwritten public offering (**59,740,259** shares) and a registered direct offering (**40,000,000** shares)[86](index=86&type=chunk) - No shares were sold under the Open Market Sale Agreement in Q1 2021, compared to **175,289** shares sold for **$0.1 million** in Q1 2020[85](index=85&type=chunk) [9. Stock-Based Compensation](index=26&type=section&id=9.%20Stock-Based%20Compensation) - The 2015 Equity Incentive Plan allows for incentive stock options, non-qualified stock options, and restricted stock units. Shares reserved automatically increase annually by **3.5%** of outstanding common stock[87](index=87&type=chunk)[88](index=88&type=chunk) - The Inducement Plan (adopted May 2019) reserved **1,800,000** shares for inducement grants to new employees or directors[89](index=89&type=chunk) - The 2016 Employee Stock Purchase Plan (ESPP) allows participants to purchase common stock at **85%** of the lower fair market value on the offering or purchase date, through payroll deductions[90](index=90&type=chunk)[91](index=91&type=chunk) - The 1997 Stock Option Plan no longer grants new awards since the 2015 Plan became effective[94](index=94&type=chunk) [10. Fair Value Measurements](index=28&type=section&id=10.%20Fair%20Value%20Measurements) | Financial Instrument | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Money market funds (Level 1) | $170,003 | $3 | | PHC Option (Level 3 asset) | $1,104 | $1,886 | | Energy Capital Option (Level 3 liability) | $68,923 | $16,255 | | Embedded features of 2023 Notes (Level 3 liability) | $7,085 | $622 | | Embedded features of PHC Notes (Level 3 liability) | $150,091 | $45,647 | | Embedded features of 2025 Notes (Level 2 liability) | $84,120 | $15,850 | | Masters Option (Level 3 liability) | $0 | $23,479 | - The fair value of Level 3 instruments increased significantly from **$84.1 million** at December 31, 2020, to **$226.7 million** at March 31, 2021, primarily due to a **$112.6 million** loss on change in fair value of derivatives and a **$52.7 million** loss on fair value adjustment of the Energy Capital Option[96](index=96&type=chunk) - Key unobservable inputs for Level 3 measurements include risky (bond) rates (**15.0%**-**30.0%**), stock price volatility (**95%** for PHC Notes), and probabilities of conversion provisions (**5.0%**-**75.0%**)[96](index=96&type=chunk) [11. Income Taxes](index=29&type=section&id=11.%20Income%20Taxes) - No tax provision or benefit was recorded for Q1 2021 or Q1 2020. A full valuation allowance is maintained against net deferred tax assets due to uncertainty of future benefit realization[97](index=97&type=chunk) - The CARES Act did not result in material adjustments to the company's income tax provision or net deferred tax assets[98](index=98&type=chunk) [12. Related Party Transactions](index=29&type=section&id=12.%20Related%20Party%20Transactions) - Ascensia, through its parent company PHC, holds a noncontrolling ownership interest and board representation. Revenue from Ascensia was **$2.4 million** in Q1 2021, with **$1.4 million** due as of March 31, 2021[99](index=99&type=chunk) - Roche Holding A.G. also has a noncontrolling interest. Revenue from Roche was less than **$0.1 million** in both Q1 2021 and Q1 2020[100](index=100&type=chunk) [ITEM 2: Management Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=ITEM%202%3A%20Management%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes Senseonics' business, strategic shifts, and financial performance for Q1 2021, covering revenue, expenses, and liquidity, highlighting the Ascensia partnership and financing [Overview](index=30&type=section&id=Overview) - Senseonics is a medical technology company developing and commercializing long-term, implantable continuous glucose monitoring (CGM) systems, Eversense and Eversense XL, for diabetes management[103](index=103&type=chunk) - The Eversense system offers 90-day and 180-day wear periods, significantly longer than non-implantable CGM systems (7-14 days)[103](index=103&type=chunk) - Revenue is generated from sales of Eversense Sensor Packs and Smart Transmitter Packs to distributors and strategic fulfillment partners[104](index=104&type=chunk)[105](index=105&type=chunk) [COVID-19 and Restructuring and Transition of Commercial Strategy](index=31&type=section&id=COVID-19%20and%20Restructuring%20and%20Transition%20of%20Commercial%20Strategy) - In March 2020, due to the COVID-19 pandemic and limited cash, Senseonics temporarily suspended commercial sales and marketing of Eversense in the US to new patients, focusing on existing users and 180-day product development[108](index=108&type=chunk) - A workforce reduction of approximately **60%** occurred in March 2020, primarily impacting sales personnel[108](index=108&type=chunk) - In August 2020, a collaboration and commercialization agreement was signed with Ascensia, granting them exclusive worldwide distribution rights for Eversense CGM systems, with a phased transition of commercial responsibilities[109](index=109&type=chunk) - Ascensia is obligated to meet minimum annual revenue targets and sales/marketing spend to maintain exclusivity, while Senseonics remains responsible for product development and manufacturing[109](index=109&type=chunk) [United States Development and Commercialization of Eversense](index=33&type=section&id=United%20States%20Development%20and%20Commercialization%20of%20Eversense) - The Eversense CGM system received FDA PMA approval for 90-day use in June 2018 and non-adjunctive indication (dosing claim) in June 2019, allowing it to replace fingerstick blood glucose measurements[110](index=110&type=chunk)[112](index=112&type=chunk) - The PROMISE pivotal clinical trial for the 180-day Eversense system showed a MARD of **8.5%**-**9.6%** with reduced calibration. A PMA supplement application was submitted to the FDA on September 30, 2020[111](index=111&type=chunk) - FDA approved a subgroup of PROMISE trial participants to continue for 365 days to gather feasibility data for a 365-day sensor, with plans to seek IDE approval for a clinical trial in H2 2021[114](index=114&type=chunk) - Eversense received MRI approval in the United States in 2019, a first for the CGM category, meaning the sensor does not need to be removed during MRI scans[113](index=113&type=chunk) [European Commercialization of Eversense](index=33&type=section&id=European%20Commercialization%20of%20Eversense) - Eversense XL received CE mark in September 2017 for up to 180-day sensor life and began commercialization in Europe in Q4 2017[115](index=115&type=chunk) - The distribution agreement with Roche Diagnostics International AG expired on January 31, 2021, with sales transitioning to Ascensia[116](index=116&type=chunk)[117](index=117&type=chunk) [Financial Overview](index=35&type=section&id=Financial%20Overview) - Revenue increased by **$2.8 million** to **$2.8 million** for Q1 2021, primarily due to the transition of commercial responsibility to Ascensia and their orders for European distribution[132](index=132&type=chunk) - Cost of sales decreased by **$17.4 million** to **$2.3 million**, mainly due to a **$15.0 million** reduction in inventory obsolescence and **$1.2 million** in scrap expense, along with sales of previously impaired inventory[133](index=133&type=chunk) - Gross profit improved significantly to **$0.5 million** in Q1 2021 from a **$(19.6) million** loss in Q1 2020[134](index=134&type=chunk) - Sales and marketing expenses decreased by **$9.5 million** to **$1.6 million**, largely due to headcount reduction and the transfer of marketing responsibilities to Ascensia[135](index=135&type=chunk) - Research and development expenses decreased by **$2.1 million** to **$5.3 million**, driven by lower clinical trial costs (PROMISE trial), reduced contract fabrication, and personnel costs[136](index=136&type=chunk) - General and administrative expenses decreased by **$0.7 million** to **$5.0 million**, mainly from reduced legal, occupancy, and administrative expenses, partially offset by increased stock-based compensation[137](index=137&type=chunk) - Total other expense, net, was **$(238.2) million** in Q1 2021, a **$239.4 million** decrease from Q1 2020, primarily due to a **$191.2 million** non-cash loss on fair value of embedded derivatives and a **$52.7 million** non-cash loss on fair value adjustment of the Energy Capital Option[138](index=138&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) - The company has historically incurred substantial losses and negative cash flows, with an accumulated deficit of **$898.0 million** as of March 31, 2021[140](index=140&type=chunk) - As of March 31, 2021, cash and cash equivalents were **$178.6 million**[140](index=140&type=chunk) | Financing Activity | Net Proceeds (in millions) | | :-------------------------------- | :------------------------ | | Underwritten Public Offering (Jan 2021) | $106.1 | | Registered Direct Offering (Jan 2021) | $46.1 | | Masters Series A Preferred Stock (Jan 2021) | $22.8 (gross) | | PHC Notes (Aug 2020) | $35.0 (principal) | | Energy Capital Equity Line Agreement (Nov 2020) | Up to $12.0 | | PPP Loan (Apr 2020) | $5.8 | | Open Market Sale Agreement (Q1 2020) | $0.1 | | Total Net Cash Provided by Financing Activities (Q1 2021) | $176.7 | | Total Net Cash Used in Financing Activities (Q1 2020) | $(48.0) | - Management believes existing cash and cash equivalents will be sufficient to meet anticipated operating needs through 2022, contingent on successful commercialization, product development, and regulatory approvals[149](index=149&type=chunk)[168](index=168&type=chunk) - Net cash used in operating activities decreased to **$(16.3) million** in Q1 2021 from **$(29.0) million** in Q1 2020, despite a larger net loss, due to significant non-cash adjustments[171](index=171&type=chunk)[172](index=172&type=chunk) - Net cash provided by financing activities was **$176.7 million** in Q1 2021, a substantial increase from **$(48.0) million** used in Q1 2020, driven by common stock and preferred stock issuances[174](index=174&type=chunk)[175](index=175&type=chunk) [Off-Balance Sheet Arrangements](index=50&type=section&id=Off-Balance%20Sheet%20Arrangements) - The company did not have any off-balance sheet arrangements during the three months ended March 31, 2021[176](index=176&type=chunk) [ITEM 3: Quantitative and Qualitative Disclosures about Market Risk](index=50&type=section&id=ITEM%203%3A%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section details the company's exposure to interest rate and foreign currency market risks and its current management approach [Interest Rate Risk](index=50&type=section&id=Interest%20Rate%20Risk) - The company's primary exposure to market risk is interest rate sensitivity, affecting its **$178.6 million** cash and cash equivalents held in interest-bearing money market accounts[177](index=177&type=chunk) - Due to the short-term maturities and low-risk profile of investments, a **100** basis point change in interest rates would not materially affect the fair market value of cash equivalents[177](index=177&type=chunk) - Interest rates on notes payable are fixed, and the company does not currently engage in hedging transactions for interest rate risk[177](index=177&type=chunk) [Foreign Currency Risk](index=50&type=section&id=Foreign%20Currency%20Risk) - The majority of international sales are Euro-denominated, making the U.S. dollar value of sales susceptible to Euro exchange rate fluctuations[178](index=178&type=chunk) - Foreign currency transaction gains and losses have not been material, and a hypothetical **10%** change in exchange rates is not expected to have a material impact[178](index=178&type=chunk) - The company does not currently engage in hedging transactions for foreign currency exchange rate risk[178](index=178&type=chunk) - The COVID-19 pandemic has introduced significant volatility in financial markets, potentially increasing foreign currency and interest rate risk[179](index=179&type=chunk) [ITEM 4: Controls and Procedures](index=50&type=section&id=ITEM%204%3A%20Controls%20and%20Procedures) This section addresses the company's internal controls over financial reporting and disclosure procedures, including SEC amendments for smaller reporting companies [Changes to Smaller Reporting Company Requirements](index=50&type=section&id=Changes%20to%20Smaller%20Reporting%20Company%20Requirements) - SEC amendments to 'accelerated filer' definitions mean certain low-revenue issuers are no longer required to have an independent auditor attest to management's assessment of ICFR under SOX Section 404(b)[180](index=180&type=chunk) - As a result of these amendments, Senseonics is no longer required to have its independent auditor attest to its ICFR, but management must still assess its effectiveness[181](index=181&type=chunk) - The company will reassess its non-accelerated filer classification as of December 31, 2021, based on its public float as of June 30, 2021[182](index=182&type=chunk) [Evaluation of Disclosure Controls and Procedures](index=51&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Management, with the assistance of the CEO and CFO, concluded that disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2021[183](index=183&type=chunk) [Changes in Internal Control over Financial Reporting](index=51&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, the company's ICFR during the quarter ended March 31, 2021[184](index=184&type=chunk) PART II: Other Information [ITEM 1: Legal Proceedings](index=36&type=section&id=ITEM%201%3A%20Legal%20Proceedings) This section discloses ongoing legal proceedings, including a civil complaint filed against the company regarding marketing practices - The company is subject to litigation and claims in the ordinary course of business[185](index=185&type=chunk) - In February 2021, a civil complaint was filed in the Western District of Texas alleging violations of the federal False Claims Act and the Texas Medicaid Fraud Prevention Law related to the company's marketing practices for Eversense CGM System. The government declined to intervene[186](index=186&type=chunk) - The company is reviewing the claim and believes it has meritorious defenses[186](index=186&type=chunk) [ITEM 1A: Risk Factors](index=36&type=section&id=ITEM%201A%3A%20Risk%20Factors) This section refers to the company's risk factors, noting no material changes from prior annual filings - The company's risk factors have not changed materially from those described in its Annual Report on Form 10-K[187](index=187&type=chunk) [ITEM 2: Unregistered Sales of Equity and Securities and Use of Proceeds](index=36&type=section&id=ITEM%202%3A%20Unregistered%20Sales%20of%20Equity%20and%20Securities%20and%20Use%20of%20Proceeds) This section reports no unregistered sales of equity and securities or use of proceeds for the period - This item is not applicable for the reporting period[188](index=188&type=chunk) [ITEM 3: Defaults Upon Senior Securities](index=36&type=section&id=ITEM%203%3A%20Defaults%20Upon%20Senior%20Securities) This section reports no defaults upon senior securities for the period - This item is not applicable for the reporting period[189](index=189&type=chunk) [ITEM 4: Mine Safety Disclosures](index=37&type=section&id=ITEM%204%3A%20Mine%20Safety%20Disclosures) This section reports no mine safety disclosures for the period - This item is not applicable for the reporting period[190](index=190&type=chunk) [ITEM 5: Other Information](index=37&type=section&id=ITEM%205%3A%20Other%20Information) This section reports no other information for the period - No other information is reported under this item[191](index=191&type=chunk) [ITEM 6: Exhibits](index=37&type=section&id=ITEM%206%3A%20Exhibits) This section lists the exhibits filed or incorporated by reference in the Quarterly Report on Form 10-Q - The exhibits listed on the Exhibit Index are filed or incorporated by reference as part of this Quarterly Report on Form 10-Q[191](index=191&type=chunk) [SIGNATURES](index=38&type=section&id=SIGNATURES) This section contains the required signatures for the Quarterly Report on Form 10-Q - The report is duly signed on behalf of Senseonics Holdings, Inc. by Nick B. Tressler, Chief Financial Officer, on May 13, 2021[195](index=195&type=chunk)[196](index=196&type=chunk)[197](index=197&type=chunk)

PART I [Item 1. Business](index=7&type=section&id=Item%201.%20Business) Senseonics develops and commercializes long-term, implantable continuous glucose monitoring systems, Eversense and Eversense XL, for diabetes management, shifting to a distribution partnership with Ascensia in 2020 - Senseonics develops and commercializes long-term, implantable continuous glucose monitoring (CGM) systems, Eversense and Eversense XL, designed for **90 and 180 days** respectively, significantly longer than other non-implantable systems (7-14 days)[19](index=19&type=chunk) - The Eversense CGM system received CE mark in June 2016, Eversense XL in September 2017, and U.S. FDA approval for Eversense in June 2018. In June 2019, FDA approved a non-adjunctive indication, allowing it to replace fingerstick blood glucose measurements for treatment decisions[19](index=19&type=chunk) - A PMA supplement application for the 180-day Eversense CGM System was submitted to the FDA on September 30, 2020, following PROMISE trial results showing **8.5%-9.6% MARD** with reduced calibration (one per day). FDA review is anticipated by April 15, 2021, with approval expected no earlier than H2 2021, potentially delayed by COVID-19 resource reallocation[20](index=20&type=chunk) - In August 2020, Senseonics entered an exclusive worldwide distribution agreement with Ascensia Diabetes Care Holdings AG for its 90-day and 180-day Eversense systems, with Ascensia handling sales, marketing, and customer support, while Senseonics retains product development and manufacturing[24](index=24&type=chunk)[28](index=28&type=chunk)[30](index=30&type=chunk) - The COVID-19 pandemic led to temporary suspension of U.S. commercial sales to new patients in Q1 2020, a **60% workforce reduction** (over half sales personnel), and reduced access to clinics for sensor insertions, impacting insertion volumes[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk) - The Eversense XL received regulatory approval in Europe in April 2020 to be **MRI-safe**, a first for the CGM category, eliminating the need for sensor removal during MRI scans[23](index=23&type=chunk) [Overview](index=7&type=section&id=Overview) Senseonics develops long-term implantable CGM systems, Eversense and Eversense XL, with 90 and 180-day sensors, having received FDA approval for the 90-day system and pursuing approval for longer durations - Senseonics' Eversense and Eversense XL CGM systems offer 90-day and 180-day implantable sensors, respectively, providing longer duration, superior accuracy, wireless communication, on-body vibratory alerts, and data sharing capabilities[19](index=19&type=chunk) - The Eversense CGM system received CE mark in June 2016, Eversense XL in September 2017, and U.S. FDA approval for Eversense in June 2018. A non-adjunctive indication was approved in June 2019, allowing it to replace fingerstick blood glucose measurements for treatment decisions[19](index=19&type=chunk) - The PROMISE trial for the 180-day Eversense product showed performance matching the 90-day product (MARD **8.5%-9.6%**) with reduced calibration (one per day). A PMA supplement was submitted to the FDA on September 30, 2020, with approval anticipated no earlier than H2 2021 due to FDA resource reallocation for COVID-19[20](index=20&type=chunk) - Feasibility data for a 365-day sensor is being gathered from a subgroup of PROMISE trial participants, with plans to seek Investigational Device Exemption (IDE) from the FDA in H2 2021 for a clinical trial, including a pediatric population, targeting enrollment in H1 2022[21](index=21&type=chunk) [2020 and Significant Recent Developments](index=9&type=section&id=2020%20and%20Significant%20Recent%20Developments) In 2020, Senseonics faced COVID-19 disruptions, leading to workforce reductions and a strategic shift to an exclusive distribution partnership with Ascensia for global commercialization - The COVID-19 pandemic led to a global health emergency, impacting Senseonics' operations, including a shift to remote work and reduced access to clinics for sensor insertions, with insertion volumes remaining below pre-COVID-19 levels[25](index=25&type=chunk)[26](index=26&type=chunk) - In Q1 2020, Senseonics temporarily suspended U.S. commercial sales and marketing to new patients and reduced its workforce by approximately **60%** (over half sales personnel) to focus resources on supporting existing users and developing the 180-day Eversense product[27](index=27&type=chunk) - An exclusive worldwide distribution agreement was signed with Ascensia Diabetes Care Holdings AG in August 2020, transferring sales, marketing, and customer support responsibilities to Ascensia, while Senseonics maintains product development and manufacturing[28](index=28&type=chunk)[30](index=30&type=chunk) - Ascensia began U.S. sales support for the 90-day Eversense product on October 1, 2020, with full commercial responsibilities transitioning in Q2 2021. Ascensia also assumed commercial responsibilities for Eversense XL in key European markets starting February 1, 2021[30](index=30&type=chunk) [Background](index=11&type=section&id=Background) Diabetes is a growing global health crisis, and CGM systems like Eversense, with their non-adjunctive FDA label, offer superior glucose monitoring and expanded access for patients, including Medicare beneficiaries - Diabetes affects an estimated **463 million** people worldwide, projected to grow to **700 million** by 2045, driven by Type 2 diabetes, aging populations, and increased prevalence in younger individuals[31](index=31&type=chunk) - CGM systems offer advantages over traditional fingerstick monitoring by providing continuous, real-time glucose data, improving glycemic control, and aiding in hypoglycemia avoidance[32](index=32&type=chunk) - In June 2019, the Eversense CGM system received a non-adjunctive label from the FDA, allowing its use as a therapeutic CGM to replace fingerstick glucose testing for treatment decisions, including insulin dosing, and expanding access to Medicare patients[33](index=33&type=chunk) - CMS finalized a national payment rate for Eversense in November 2019, making it the first CGM technology reimbursed through the Part B Medical Services benefit for Medicare beneficiaries. In December 2020, CMS established national payment amounts for CPT Category III codes for implantable interstitial glucose sensor procedures (insertion, removal, removal/insertion) as a medical benefit[35](index=35&type=chunk) [Commercial Strategy](index=13&type=section&id=Commercial%20Strategy) Senseonics is transitioning to an exclusive global commercial partnership with Ascensia, focusing on product development while Ascensia handles sales, marketing, and customer support, having secured coverage for over 200 million U.S. lives - Senseonics is transitioning to an exclusive global sales model through Ascensia, moving from a direct sales and distributor network, with Ascensia assuming full commercial responsibilities in the U.S. by Q2 2021 and in select European markets from February 2021[36](index=36&type=chunk)[38](index=38&type=chunk)[42](index=42&type=chunk) - In Q1 2020, Senseonics temporarily suspended U.S. commercial sales to new patients and reduced its direct sales organization to focus on supporting existing users and developing the 180-day Eversense product[37](index=37&type=chunk) - The company achieved coverage for over **200 million** covered lives in the U.S. through positive insurance payor decisions in 2020. The Eversense Bridge Program, which provided financial assistance to eligible U.S. patients, ended on December 31, 2020, with Ascensia expected to initiate a new patient assistance program[39](index=39&type=chunk) - Net revenues are derived from sales of the Eversense CGM system, sold in two kits: the disposable Sensor Pack and the durable Smart Transmitter Pack[43](index=43&type=chunk) [Distribution Agreement with Roche Diabetes Care](index=15&type=section&id=Distribution%20Agreement%20with%20Roche%20Diabetes%20Care) Senseonics' exclusive distribution agreement with Roche Diabetes Care for EMEA and other countries expired on January 31, 2021, with amendments in 2019 and 2020 facilitating the transition to Ascensia - Senseonics had an exclusive distribution agreement with Roche Diabetes Care for EMEA (excluding Scandinavia and Israel) and **17 other countries**, which expired on January 31, 2021[44](index=44&type=chunk)[47](index=47&type=chunk) - The agreement was amended in December 2019 to lower minimum volumes for 2020 and increase pricing, and again in November 2020 to facilitate the transition to Ascensia[45](index=45&type=chunk)[46](index=46&type=chunk) [Collaboration and Commercialization Agreement with Ascensia Diabetes Care Holdings AG](index=15&type=section&id=Collaboration%20and%20Commercialization%20Agreement%20with%20Ascensia%20Diabetes%20Care%20Holdings%20AG) Senseonics granted Ascensia exclusive worldwide distribution rights for its Eversense CGM systems in August 2020, with Ascensia managing commercial activities and Senseonics focusing on product development and manufacturing - Senseonics granted Ascensia exclusive worldwide distribution rights for its 90-day and 180-day Eversense CGM systems, with initial exceptions for existing distribution agreements[48](index=48&type=chunk) - Ascensia began U.S. sales support for the 90-day Eversense product on October 1, 2020, with full commercial responsibilities expected in Q2 2021. The 180-day product will be marketed upon FDA approval[48](index=48&type=chunk) - Ascensia receives a portion of net revenue (**mid-teens to mid-forty's percentages**) and is obligated to achieve minimum annual revenue targets and sales/marketing spend to maintain exclusivity[48](index=48&type=chunk) - Senseonics remains responsible for product development, manufacturing, and regulatory submissions, while Ascensia handles sales, marketing, market access, patient/provider onboarding, and first-level customer support[48](index=48&type=chunk) [Clinical Development and Regulatory Pathway](index=17&type=section&id=Clinical%20Development%20and%20Regulatory%20Pathway) Senseonics completed pivotal trials for its 90-day and 180-day Eversense systems, submitted a PMA supplement for the 180-day product, and is gathering data for a 365-day sensor, while Eversense XL received MRI-safe approval in Europe - The Eversense XL CGM system received a CE mark in Europe in September 2017 and is commercially available in overseas markets[50](index=50&type=chunk) - The PRECISE II U.S. pivotal trial for the 90-day Eversense system was completed in 2016, leading to FDA PMA approval in June 2018 with a MARD of **8.5%** (using an updated algorithm)[50](index=50&type=chunk)[56](index=56&type=chunk) - The PROMISE pivotal trial for the U.S. 180-day Eversense system completed enrollment in September 2019, showing MARD of **8.5%-9.6%** with one calibration per day. A PMA supplement was submitted to the FDA on September 30, 2020[51](index=51&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk) - A subgroup of PROMISE trial participants continued for 365 days to gather feasibility data for a 365-day sensor. Senseonics plans to seek Investigational Device Exemption (IDE) in H2 2021 for a clinical trial, including a pediatric population, targeting enrollment in H1 2022[61](index=61&type=chunk) - In April 2020, Eversense XL received regulatory approval in Europe for **MRI compatibility**, meaning the sensor does not need to be removed during MRI scanning, a first for the CGM category[62](index=62&type=chunk) [Our Technology](index=20&type=section&id=Our%20Technology) Senseonics' Eversense CGM system offers accurate, long-duration glucose monitoring via an implantable sensor, smart transmitter, and mobile app, with future plans for extended sensor life and combined CGM/FGM functionalities - The Eversense system consists of a small, subcutaneously inserted sensor, an external removable smart transmitter providing vibratory alerts, and a mobile app for real-time glucose readings and data management[64](index=64&type=chunk) - Key advantages of Eversense include exceptional accuracy (especially in low glucose range), longest sensor duration (**90-180 days**), convenience (water-resistant, rechargeable, removable transmitter, wireless communication, remote monitoring, meal/workout tracking), on-body vibe alerts, and 24/7 support[66](index=66&type=chunk) - The sensor uses a micro-fluorometer and glucose-indicating hydrogel to measure glucose levels, communicating data wirelessly via NFC to the smart transmitter. The sensor is remotely powered by the transmitter every five minutes[66](index=66&type=chunk)[68](index=68&type=chunk) - Future product development focuses on reducing calibration to once daily/weekly, extending sensor duration to **365 days**, and developing a 'Freedom' product combining CGM and Flash Glucose Monitoring (FGM) in an implantable sensor[72](index=72&type=chunk) [Sales and Marketing](index=22&type=section&id=Sales%20and%20Marketing) Senseonics focuses on Eversense adoption among diabetes patients and providers, establishing a CES network, with Ascensia now managing global sales, marketing, and customer support through a strategic partnership - Senseonics focuses on driving awareness and adoption of its CGM system among intensively managed patients and healthcare providers, emphasizing the need for a strong network of trained proceduralists[73](index=73&type=chunk)[75](index=75&type=chunk) - The Certified Eversense Specialist (CES) network was launched in 2019 to provide alternative proceduralists (e.g., dermatologists, plastic surgeons) for endocrinologists who prescribe Eversense but prefer to refer the insertion procedure[75](index=75&type=chunk) - Healthcare providers value Eversense's accuracy and sensor duration, and the insertion process is generally considered simple or feasible[76](index=76&type=chunk) - As a result of the strategic partnership, Ascensia is now responsible for sales, marketing, market access, patient and provider onboarding, and first-level customer support, with joint committees for collaboration[77](index=77&type=chunk) [Reimbursement](index=24&type=section&id=Reimbursement) Securing third-party payor coverage and adequate reimbursement is critical for Eversense's market acceptance, with ongoing efforts to overcome 'experimental' designations and ensure consistent payment for the device and procedures - Access to coverage and adequate reimbursement from third-party payors (commercial and government) is essential for Eversense's market acceptance and sales[78](index=78&type=chunk) - Approximately **200 million** people in the U.S. may have coverage and access to Eversense through commercial or government (Medicare) payors[78](index=78&type=chunk) - Some commercial payors initially denied coverage, deeming Eversense 'experimental,' despite real-world data supporting its clinical benefits. Inconsistent payment for sensor placement by healthcare providers remains a challenge[79](index=79&type=chunk) - The Eversense Bridge Program, a patient access program providing financial assistance, ended on December 31, 2020, with Ascensia expected to initiate a new patient assistance program[39](index=39&type=chunk)[79](index=79&type=chunk) - Outside the U.S., coverage for CGM systems varies by country and region, with third-party distributors (now Ascensia) responsible for securing these approvals[80](index=80&type=chunk) [Manufacturing and Quality Assurance](index=26&type=section&id=Manufacturing%20and%20Quality%20Assurance) Senseonics outsources all Eversense manufacturing to contract manufacturers in North America and Europe, maintains ISO 13485:2016 certification, and manages supply chain risks from single-sourced critical materials - All components of the Eversense system are manufactured by contract manufacturers in North America and Europe, a strategy expected to continue[82](index=82&type=chunk) - Senseonics holds **ISO 13485:2016** certification for its quality system, which includes design control requirements[83](index=83&type=chunk) - Suppliers are periodically audited for conformity with specifications and regulatory requirements (FDA, state, foreign agencies). While most raw materials are multi-sourced, some critical materials are single-sourced, with inventory maintained to prevent supply interruptions[84](index=84&type=chunk) [Competition](index=26&type=section&id=Competition) The highly competitive CGM market pits Senseonics against well-capitalized rivals like Dexcom, Medtronic, and Abbott, who offer advanced features, necessitating Eversense to compete on accuracy, duration, and convenience despite competitors' greater resources - The CGM market is competitive, with key players including Dexcom, Medtronic, and Abbott, all of whom have FDA-approved CGM systems[85](index=85&type=chunk) - Competitors like Dexcom (G6) and Abbott (Freestyle Libre) offer factory calibration (no user calibration required) and have received iCGM indications for interoperability with other diabetes tech devices like insulin pumps[85](index=85&type=chunk)[86](index=86&type=chunk) - Senseonics also competes with providers of traditional Self-Monitoring Blood Glucose (SMBG) systems (Roche, Abbott, Ascensia) and companies developing real-time intermittent, low-cost transcutaneous, fully implantable, and non-invasive CGM systems[87](index=87&type=chunk)[88](index=88&type=chunk) - Key competitive factors for Eversense are accuracy, duration, convenience, alert functionality, and customer support. However, many competitors have significantly greater financial resources, R&D expertise, and established market positions[89](index=89&type=chunk)[90](index=90&type=chunk) [Intellectual Property](index=27&type=section&id=Intellectual%20Property) Senseonics protects its intellectual property through patents, trademarks, and trade secrets, holding approximately 519 patents as of December 31, 2020, but faces risks of patent litigation and infringement claims in the medical device industry - Senseonics relies on patents, trademarks, copyrights, and trade secrets to protect its intellectual property[91](index=91&type=chunk) - As of December 31, 2020, the company held approximately **519 issued patents** and pending patent applications related to its CGM system, with patents expiring between 2021 and 2043[92](index=92&type=chunk) - The medical device industry is characterized by numerous patents and frequent litigation. Senseonics is aware of third-party patents that may relate to its technology and acknowledges the risk of infringement assertions[94](index=94&type=chunk) - Adverse determinations in intellectual property litigation could lead to significant liabilities, licensing requirements, or restrictions on manufacturing and sales[95](index=95&type=chunk)[97](index=97&type=chunk) - Senseonics also protects trade secrets through non-disclosure and assignment of invention agreements with employees and third parties[99](index=99&type=chunk) [Government Regulation](index=29&type=section&id=Government%20Regulation) Senseonics' Class III medical devices are subject to extensive FDA and international regulations, requiring Premarket Approval, compliance with QSR and MDR, and adherence to evolving rules like the EU Medical Device Regulation - The Eversense System is a **Class III medical device**, subject to extensive regulation by the FDA in the U.S. and other international regulatory bodies[100](index=100&type=chunk)[101](index=101&type=chunk) - Premarket Approval (PMA) is required for marketing in the U.S., and PMA supplements are needed for significant modifications to approved devices[101](index=101&type=chunk)[103](index=103&type=chunk) - Compliance with FDA's Quality System Regulation (QSR) for manufacturing, Medical Device Reporting (MDR) for adverse events, and strict rules against 'off-label' promotion are ongoing requirements[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk) - In the EU, devices must comply with directives (e.g., Active Implantable Medical Device Directive) to bear the CE mark, which is essential for commercial distribution. The EU Medical Device Regulation (MDR) is replacing existing directives, imposing stricter requirements[108](index=108&type=chunk)[112](index=112&type=chunk) - Non-compliance with regulations can lead to severe enforcement actions, including fines, injunctions, product recalls, suspension of production, withdrawal of approvals, and criminal prosecutions[104](index=104&type=chunk)[117](index=117&type=chunk) [Health Insurance Portability and Accountability Act of 1996 and Similar Foreign and State Laws and Regulations Affecting the Transmission, Security and Privacy of Health Information](index=35&type=section&id=Health%20Insurance%20Portability%20and%20Accountability%20Act%20of%201996%20and%20Similar%20Foreign%20and%20State%20Laws%20and%20Regulations%20Af%20ecting%20the%20Transmission%2C%20Security%20and%20Privacy%20of%20Health%20Information) Senseonics is subject to stringent federal, state, and foreign data privacy laws like HIPAA, HITECH, GDPR, and CCPA, with non-compliance risking significant fines and reputational damage, as evidenced by a recent data disclosure incident - Senseonics is subject to HIPAA and HITECH in the U.S., which impose requirements on the privacy, security, and transmission of individually identifiable health information, with direct applicability to business associates and their subcontractors[119](index=119&type=chunk) - The EU Medical Devices Regulation (EU) 2017/745, effective from May 2020 (postponed by COVID-19), will establish a uniform regulatory framework for medical devices in the EEA, strengthening rules on market placement, surveillance, traceability, and manufacturer responsibilities[123](index=123&type=chunk)[124](index=124&type=chunk) - The European General Data Protection Regulation (GDPR), effective May 25, 2018, imposes stringent operational requirements and significant fines (up to **€20 million** or **4% of global turnover**) for non-compliance with personal data processing[125](index=125&type=chunk) - California's Consumer Privacy Act (CCPA), effective January 1, 2020, creates new individual privacy rights and increased obligations for entities handling personal data[126](index=126&type=chunk) - In February 2021, an unintended disclosure of user email addresses in Italy was self-reported to GDPR authorities, highlighting potential adverse reactions and regulatory implications[323](index=323&type=chunk) [Fraud and Abuse Laws](index=39&type=section&id=Fraud%20and%20Abuse%20Laws) Senseonics is subject to federal and state fraud and abuse laws, including the Anti-Kickback Statute, Stark Law, False Claims Act, and HIPAA, with violations carrying severe criminal, civil, and administrative penalties - The federal Anti-Kickback Statute prohibits offering or providing remuneration to induce referrals or purchases reimbursable by federal healthcare programs. Violations can result in imprisonment, fines up to **$100,000 per violation**, and exclusion from federal healthcare programs[130](index=130&type=chunk)[131](index=131&type=chunk) - The Stark Law prohibits physicians from referring Medicare/Medicaid patients to entities providing 'designated health services' (e.g., durable medical equipment) in which the physician has a financial interest. Violations can lead to payment denials, disgorgement of reimbursements, and civil penalties[132](index=132&type=chunk) - The federal False Claims Act allows the government and private parties ('qui tam' lawsuits) to sue for knowingly presenting false or fraudulent claims to the federal government, with penalties including significant civil monetary penalties and treble damages[136](index=136&type=chunk) - HIPAA established federal crimes for healthcare fraud and false statements, prohibiting schemes to defraud healthcare benefit programs or making false statements related to healthcare matters, punishable by felony charges, fines, and imprisonment[138](index=138&type=chunk) - The Civil Monetary Penalties Law authorizes substantial penalties for various prohibited conduct, including presenting false claims or offering remuneration to beneficiaries[139](index=139&type=chunk) - Many states have similar anti-kickback, anti-referral, and false claims laws, some applying regardless of payment source and without the same exceptions as federal laws[140](index=140&type=chunk) - The federal Physician Payment Sunshine Act requires medical device manufacturers to annually report financial arrangements and transfers of value to physicians and teaching hospitals, with reporting expanding to other healthcare providers in 2022[143](index=143&type=chunk) [Healthcare Reform](index=43&type=section&id=Healthcare%20Reform) Ongoing federal and state healthcare reforms, including the PPACA and new Biden administration measures, aim to contain costs, creating uncertainty for medical device reimbursement and industry impact - Healthcare reforms, such as the PPACA, aim to contain costs and may lead to decreased reimbursement for medical devices, increasing pressure on pricing[144](index=144&type=chunk) - Key PPACA provisions, including the individual mandate, medical device tax, and 'Cadillac' tax, have been repealed or eliminated by subsequent legislation[144](index=144&type=chunk) - Ongoing legal challenges to the PPACA's constitutionality and the Biden administration's reform measures create uncertainty about the future healthcare landscape and its impact on Senseonics' business[144](index=144&type=chunk) [Brexit and the Regulatory Framework in the United Kingdom](index=43&type=section&id=Brexit%20and%20the%20Regulatory%20Framework%20in%20the%20United%20Kingdom) Brexit introduces regulatory uncertainty and potential divergence in UK medical device laws, impacting Senseonics' operations and manufacturing, despite a trade agreement outlining approval procedures - Brexit introduces legal uncertainty and potential divergence in national laws and regulations for medical devices in the UK, which could adversely affect Senseonics' business[145](index=145&type=chunk) - The UK and EU agreed on a trade and cooperation agreement outlining procedures for medical product approval, but the long-term regulatory impact on medical devices in the UK is still unclear[145](index=145&type=chunk) - Brexit could create logistical complications for product movement and delivery, especially since several contract manufacturers are located in the UK[145](index=145&type=chunk) [U.S. Foreign Corrupt Practices Act](index=45&type=section&id=U.S.%20Foreign%20Corrupt%20Practices%20Act) The U.S. FCPA prohibits corrupt payments to foreign officials and mandates accurate record-keeping, with violations leading to severe criminal and civil penalties - The FCPA prohibits corrupt payments to foreign government officials by U.S. corporations and requires accurate financial record-keeping and internal accounting controls[148](index=148&type=chunk) - Violations of the FCPA can lead to criminal and civil fines, imprisonment, disgorgement, and debarment from government contracts[148](index=148&type=chunk) [UK Bribery Act and other anti-corruption laws](index=45&type=section&id=UK%20Bribery%20Act%20and%20other%20anti-corruption%20laws) Senseonics is subject to the UK Bribery Act 2010 and other global anti-corruption laws, prohibiting improper payments and imposing liability for failing to prevent bribery, with non-compliance leading to severe penalties - The UK Bribery Act 2010 and other anti-corruption laws prohibit improper payments to government officials or other persons to gain business advantages[149](index=149&type=chunk) - Under the UK Bribery Act, companies can be liable for failing to prevent bribery by associated persons[149](index=149&type=chunk) - Failure to comply with anti-corruption and trade control laws can lead to criminal and civil penalties, disgorgement, and other sanctions[150](index=150&type=chunk) [Employees and Human Capital Resources](index=45&type=section&id=Employees%20and%20Human%20Capital%20Resources) As of December 31, 2020, Senseonics had 82 employees, primarily in operations and R&D, focusing on attracting and retaining skilled talent through competitive compensation, equity, and professional development in an inclusive culture - As of December 31, 2020, Senseonics had **82 employees**, with over half holding Ph.D., M.D., master's, or other post-graduate degrees, primarily in operations and R&D[151](index=151&type=chunk) - The company's success depends on attracting and retaining highly skilled employees, management, and technical personnel in the competitive medical technology industry[152](index=152&type=chunk) - Senseonics offers competitive pay, bonuses, equity ownership opportunities, professional development, and comprehensive benefits to promote employee well-being and foster an inclusive culture[152](index=152&type=chunk)[153](index=153&type=chunk) [Corporate Information](index=47&type=section&id=Corporate%20Information) Senseonics Holdings, Inc., reincorporated in Delaware in 2015, has its principal offices in Germantown, Maryland, and its common stock is listed on the NYSE American under 'SENS' - Senseonics Holdings, Inc. was reincorporated in Delaware in December 2015, following the acquisition of Senseonics, Incorporated[155](index=155&type=chunk)[156](index=156&type=chunk) - The company's common stock is listed on the NYSE American under the symbol '**SENS**'[157](index=157&type=chunk) [Available Information](index=47&type=section&id=Available%20Information) Senseonics Holdings, Inc. provides free access to its annual, quarterly, and current reports, including amendments, on its website and the SEC's website after filing - Annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments are available free of charge on the company's website (www.senseonics.com) and the SEC's website (www.sec.gov)[158](index=158&type=chunk) [Item 1A. Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) Senseonics faces significant risks including operating losses, reliance on Ascensia, COVID-19 impacts, intense competition, reimbursement challenges, product defects, and financial instability from debt and stock volatility - Senseonics has incurred significant operating losses since inception, with net losses of **$175.2 million** in 2020, and does not expect profitability for several years, leading to an accumulated deficit of **$648.5 million** as of December 31, 2020[163](index=163&type=chunk) - The company's future revenue is substantially dependent on the success of its collaboration and commercialization agreement with Ascensia, and failure by Ascensia to perform satisfactorily could adversely affect financial results[165](index=165&type=chunk) - The COVID-19 pandemic has materially affected operations, including clinical trials, supply chain, and regulatory reviews (e.g., delaying 180-day Eversense approval), and its long-term impact on business and financial performance is uncertain[171](index=171&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk) - Failure to secure or retain adequate coverage and reimbursement for Eversense and its insertion/removal procedures by third-party payors is a critical risk to market acceptance and financial results[197](index=197&type=chunk) - The CGM market is highly competitive, with established players like Dexcom, Medtronic, and Abbott having greater resources and advanced product features (e.g., factory calibration, iCGM indications), posing a significant competitive threat[209](index=209&type=chunk)[213](index=213&type=chunk) - The company's stock price has been highly volatile, experiencing extreme fluctuations and trading volumes unrelated to operating performance, which may continue and be influenced by various market and company-specific factors[343](index=343&type=chunk)[346](index=346&type=chunk) [Summary of Risks Affecting Our Business](index=47&type=section&id=Summary%20of%20Risks%20Affecting%20Our%20Business) Senseonics faces substantial risks from operating losses, reliance on Ascensia, COVID-19 impacts, regulatory hurdles, intense competition, reimbursement challenges, manufacturing issues, stock volatility, and regulatory compliance - Senseonics has incurred significant operating losses since inception and profitability is not assured[161](index=161&type=chunk) - Future revenue is substantially dependent on the collaboration and commercialization agreement with Ascensia, and their performance is critical[161](index=161&type=chunk) - The COVID-19 pandemic has materially affected operations, clinical trials, and regulatory reviews, with unpredictable long-term impacts[161](index=161&type=chunk) - Failure to secure or retain adequate reimbursement for Eversense and related procedures by third-party payors could adversely affect the business[161](index=161&type=chunk) - The market is highly competitive, with primary competitors pursuing new technologies that could render Eversense less competitive or obsolete[161](index=161&type=chunk) - The company has limited operating history as a commercial-stage company and faces difficulties inherent in rapidly evolving markets[161](index=161&type=chunk) - The stock price has been highly volatile and may continue to be so, often unrelated to operating performance[161](index=161&type=chunk) - Risks associated with outsourced manufacturing, loss of key suppliers, and disruptions to facilities could negatively affect operating results[161](index=161&type=chunk) - Failure to comply with extensive foreign, U.S. federal, state, and local laws and regulations could harm the business and incur significant compliance expenditures[161](index=161&type=chunk) [Risks Relating to our Business and our Industry](index=50&type=section&id=Risks%20Relating%20to%20our%20Business%20and%20our%20Industry) Senseonics faces business risks from operating losses, reliance on Ascensia, COVID-19 disruptions, commercialization challenges, product defects, intense competition, and supply chain vulnerabilities - Senseonics has incurred significant net losses (**$175.2 million** in 2020, **$115.5 million** in 2019, **$94.0 million** in 2018) and has an accumulated deficit of **$648.5 million** as of December 31, 2020, with no expectation of profitability for several years[163](index=163&type=chunk) - Future success is heavily dependent on the collaboration with Ascensia; if Ascensia fails to effectively market and sell Eversense, commercialization efforts and financial results will be adversely affected[165](index=165&type=chunk) - The COVID-19 pandemic has disrupted operations, clinical trials, and regulatory reviews (e.g., delaying 180-day Eversense FDA approval), impacting productivity, supply chain, and sales[171](index=171&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk)[177](index=177&type=chunk)[181](index=181&type=chunk) - Successful commercialization requires timely regulatory approvals, reliable suppliers, market acceptance, adequate reimbursement, and effective education of healthcare providers and patients[183](index=183&type=chunk) - The company is dependent on its single product, Eversense, and its success relies on continuous development of enhanced product offerings (e.g., reduced calibration, longer duration sensors) to remain competitive[191](index=191&type=chunk)[195](index=195&type=chunk) - Undetected errors or defects in Eversense could harm reputation, decrease market acceptance, and lead to product liability claims, which are costly to defend and may exceed insurance coverage[241](index=241&type=chunk)[242](index=242&type=chunk)[243](index=243&type=chunk) - Reliance on third-party manufacturers and a limited number of suppliers for components creates risks of quality defects, supply interruptions, and inability to meet demand, potentially affecting gross margins and operating results[227](index=227&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk)[231](index=231&type=chunk) [Risks Related to our Financial Results and Need for Financing](index=77&type=section&id=Risks%20Related%20to%20our%20Financial%20Results%20and%20Need%20for%20Financing) Senseonics requires significant sales for profitability, but faces fluctuating operating results, substantial debt obligations with restrictive covenants, and financial stability threats from economic conditions and foreign exchange risks - Senseonics needs to generate significant sales to achieve profitability, and its operating expenses are expected to increase with commercialization and R&D efforts[255](index=255&type=chunk) - Operating results are subject to significant fluctuations due to factors like regulatory approvals, Ascensia's sales performance, product pricing, reimbursement policies, manufacturing interruptions, and changes in fair value of derivative instruments[256](index=256&type=chunk)[257](index=257&type=chunk)[259](index=259&type=chunk) - Covenants under the PHC Note Purchase Agreement and convertible note indentures impose financial restrictions (e.g., minimum revenue/liquidity targets, limitations on indebtedness, mergers) that could accelerate debt or limit business operations[261](index=261&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk) - Servicing existing debt requires significant cash flow, and the company may need to sell assets, restructure debt, or obtain additional equity, which may be dilutive or unavailable[266](index=266&type=chunk) - Prolonged negative economic conditions, pressure on healthcare spending, and foreign currency exchange risks (especially for Euro-denominated sales) could adversely affect financial condition[268](index=268&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk) - The company does not intend to pay cash dividends in the foreseeable future, as all available funds will be retained for business operations and expansion[369](index=369&type=chunk) [Risks Related to Development of our Products](index=82&type=section&id=Risks%20Related%20to%20Development%20of%20our%20Products) Product development at Senseonics is lengthy and uncertain, with modifications requiring potentially delayed regulatory approvals and clinical trials for new versions facing costly, unpredictable outcomes that could hinder market introduction - Modifications or upgrades to the Eversense system require additional regulatory approvals (e.g., PMA supplements), which may be delayed or denied, preventing the sale of modified products[271](index=271&type=chunk)[272](index=272&type=chunk) - Medical device development is a lengthy, expensive, and uncertain process, with clinical trials for new versions (e.g., 365-day sensor) potentially incurring additional costs or delays[273](index=273&type=chunk) - Failure to successfully complete clinical trials or unfavorable results could prevent marketing approval, lead to post-marketing testing, or even removal of products from the market[274](index=274&type=chunk) [Risks Related to our Employee Matters and Managing our Growth](index=83&type=section&id=Risks%20Related%20to%20Employee%20Matters%20and%20Managing%20our%20Growth) Senseonics' success depends on retaining key personnel and managing growth, facing risks from staff loss, challenges in expanding systems, and potential employee misconduct leading to penalties and reputational harm - Senseonics is highly dependent on key executives and qualified scientific, clinical, manufacturing, and sales/marketing personnel. The loss of these individuals could impede R&D and commercialization objectives[275](index=275&type=chunk)[276](index=276&type=chunk) - Anticipated growth in employees and operations requires implementing improved systems and recruiting/training additional personnel, which may be difficult to manage effectively due to limited financial resources and management experience[278](index=278&type=chunk) - Employees, contractors, and distributors may engage in misconduct or non-compliance with regulatory standards (e.g., FDA regulations, healthcare fraud laws), leading to significant civil/criminal penalties, exclusion from healthcare programs, and reputational harm[280](index=280&type=chunk) - The company is exposed to potential product liability claims inherent in medical device design, manufacture, testing, and sale, which could result in substantial damages, litigation costs, and reputational harm, potentially exceeding insurance coverage[281](index=281&type=chunk)[282](index=282&type=chunk) [Risks Related to our Intellectual Property](index=85&type=section&id=Risks%20Related%20to%20our%20Intellectual%20Property) Senseonics' intellectual property protection through patents, trademarks, and trade secrets is uncertain, facing risks of patent litigation, infringement claims, and trade secret misappropriation in the medical device industry - Senseonics relies on patents, trademarks, and trade secrets to protect its proprietary technologies, holding approximately **519 issued patents** and pending applications as of December 31, 2020[283](index=283&type=chunk) - Patent applications may not result in issued patents, and existing patents may not protect commercially important aspects of technology or may be challenged, invalidated, or circumvented by competitors[286](index=286&type=chunk) - The medical device industry is characterized by frequent patent litigation. Competitors may assert infringement claims, forcing Senseonics to incur significant legal expenses, pay damages, redesign products, or obtain licenses, which may not be available on reasonable terms[291](index=291&type=chunk)[292](index=292&type=chunk)[294](index=294&type=chunk) - Failure to comply with procedural requirements for patent maintenance can lead to loss of patent rights. Foreign patent laws may offer less protection or make enforcement difficult[290](index=290&type=chunk)[297](index=297&type=chunk) - Reliance on trade secrets is vulnerable to unauthorized disclosure or independent discovery. Claims of wrongful use of competitors' trade secrets or challenges to patent inventorship could also arise[288](index=288&type=chunk)[295](index=295&type=chunk)[296](index=296&type=chunk) [Risks Related to our Legal and Regulatory Environment](index=91&type=section&id=Risks%20Related%20to%20our%20Legal%20and%20Regulatory%20Environment) Senseonics faces significant legal and regulatory risks from extensive FDA and international oversight, with non-compliance leading to severe enforcement actions, costly and uncertain regulatory clearance, and exposure to off-label promotion and anti-corruption laws - Senseonics' products and operations are subject to extensive and complex governmental regulations by the FDA and international authorities, covering product design, development, manufacturing, labeling, marketing, and post-market surveillance[299](index=299&type=chunk)[302](index=302&type=chunk) - Non-compliance can result in severe enforcement actions, including fines, civil penalties, injunctions, warning letters, product recalls, delays in market introduction, and suspension or withdrawal of approvals[303](index=303&type=chunk) - The FDA regulatory clearance process is expensive, time-consuming, and uncertain. Delays in approval, such as for the 180-day Eversense product due to COVID-19 resource reallocation, can prevent revenue generation[304](index=304&type=chunk)[307](index=307&type=chunk)[311](index=311&type=chunk) - Failure to comply with FDA's good manufacturing practice (QSR) regulations by Senseonics or its third-party suppliers could impair marketability and lead to enforcement actions[312](index=312&type=chunk) - Product recalls or serious safety issues can have a significant negative impact on reputation, financial condition, and operating results[313](index=313&type=chunk)[314](index=314&type=chunk)[315](index=315&type=chunk) - Global operations expose the company to anti-corruption laws (U.S. FCPA, UK Bribery Act) and trade/economic sanctions. Violations can lead to severe criminal/civil penalties and other liabilities[316](index=316&type=chunk)[318](index=318&type=chunk)[319](index=319&type=chunk) - Senseonics is subject to federal, state, and foreign healthcare fraud and abuse laws (e.g., Anti-Kickback Statute, False Claims Act, HIPAA), and non-compliance could result in significant penalties and operational restructuring[320](index=320&type=chunk)[324](index=324&type=chunk)[325](index=325&type=chunk) - The company may be liable for off-label promotion of its products, leading to regulatory actions and product liability claims. Off-label use by patients could also result in claims and regulatory intervention[328](index=328&type=chunk)[332](index=332&type=chunk) - Legislative or regulatory healthcare reforms, such as the PPACA, can make it more difficult and costly to obtain regulatory approvals and impact reimbursement levels, adversely affecting business and sales[334](index=334&type=chunk)[335](index=335&type=chunk)[337](index=337&type=chunk)[338](index=338&type=chunk)[342](index=342&type=chunk) [Risks Related to our Common Stock](index=105&type=section&id=Risks%20Related%20to%20our%20Common%20Stock) Senseonics' common stock faces extreme volatility, dilution from future issuances, substantial influence from preferred stockholders, uncertain future funding, PPP Loan forgiveness risks, and GAAP operating result fluctuations from derivative instruments - Senseonics' stock price has been highly volatile, with extreme fluctuations and trading volumes often unrelated to operating performance, and this volatility is expected to continue[343](index=343&type=chunk)[344](index=344&type=chunk)[346](index=346&type=chunk) - Issuance of additional common stock or securities convertible into common stock (e.g., from financings, acquisitions, equity incentive plans) will result in substantial dilution to existing stockholders[347](index=347&type=chunk) - Holders of convertible preferred stock rank senior to common stock upon liquidation and can exert substantial influence over company decisions, including board elections and significant corporate transactions[348](index=348&type=chunk)[349](index=349&type=chunk)[354](index=354&type=chunk)[355](index=355&type=chunk)[356](index=356&type=chunk) - Future funding from agreements with PHC and Energy Capital for convertible preferred stock is contingent on certain conditions (e.g., FDA approval for 180-day product) and is not guaranteed, potentially forcing the company to seek less advantageous capital[357](index=357&type=chunk)[359](index=359&type=chunk) - Forgiveness of the **$5.8 million** PPP Loan is uncertain due to workforce reductions and SBA review, potentially requiring full repayment and causing reputational damage[360](index=360&type=chunk)[361](index=361&type=chunk) - GAAP operating results can fluctuate substantially due to changes in the fair value of liability options and embedded derivatives in convertible notes, which are remeasured each reporting period[362](index=362&type=chunk)[364](index=364&type=chunk)[365](index=365&type=chunk)[367](index=367&type=chunk) - Provisions in corporate charter documents and Delaware law (e.g., staggered board, restrictions on stockholder actions) may prevent or frustrate attempts by stockholders to change management or acquire a controlling interest[370](index=370&type=chunk)[372](index=372&type=chunk)[373](index=373&type=chunk) - The company does not intend to pay cash dividends in the foreseeable future, retaining all funds for business operations and expansion[369](index=369&type=chunk) [Item 1B. Unresolved Staff Comments](index=119&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) Senseonics Holdings, Inc. has no unresolved staff comments from the SEC - There are no unresolved staff comments[388](index=388&type=chunk) [Item 2. Properties](index=119&type=section&id=Item%202.%20Properties) Senseonics' principal offices in Germantown, Maryland, occupy 33,000 square feet under a 2023 lease, with additional sub-leased space vacated in Q4 2020 due to COVID-19 - Senseonics' principal offices are in Germantown, Maryland, occupying approximately **33,000 square feet** under a lease expiring in 2023, with a five-year renewal option[389](index=389&type=chunk) - An additional **30,500 square feet** of sub-leased office space, commencing in September 2019 and expiring in 2023, was vacated in Q4 2020 due to COVID-19[389](index=389&type=chunk) - The company believes its current facilities are suitable and adequate for its needs and plans to expand as employees are added[389](index=389&type=chunk) [Item 3. Legal Matters](index=119&type=section&id=Item%203.%20Legal%20Matters) Senseonics faces ordinary course litigation, including a February 2021 civil complaint under the False Claims Act alleging improper marketing, which the company is reviewing with belief in meritorious defenses - Senseonics is subject to litigation and claims arising in the ordinary course of business[390](index=390&type=chunk) - In February 2021, a civil complaint was filed under the federal False Claims Act and the Texas Medicaid Fraud Prevention Law, alleging improper marketing practices for the Eversense CGM System[391](index=391&type=chunk) - The government declined to intervene in the False Claims Act case, which is being pursued by a relator. Senseonics believes it has meritorious defenses[391](index=391&type=chunk) - Except for the described complaint, there are no other material legal proceedings pending or threatened against the company[393](index=393&type=chunk) [Item 4. Mine Safety Disclosures](index=121&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Senseonics Holdings, Inc. reports that this item is not applicable - This item is not applicable[394](index=394&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=121&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Senseonics' common stock, listed on NYSE American as 'SENS', has never paid dividends and exhibits extreme volatility, with 377.9 million shares outstanding as of February 26, 2021 - Senseonics' common stock is listed on the NYSE American under the symbol '**SENS**'[395](index=395&type=chunk) - The company has never declared or paid cash dividends and intends to retain all future earnings for business operations and expansion. Dividend payments are also restricted by debt agreements[395](index=395&type=chunk)[369](index=369&type=chunk) - As of February 26, 2021, there were **377,883,267 shares** of common stock outstanding, held by **183 holders of record**[396](index=396&type=chunk) - The company's stock price has been highly volatile since March 18, 2016, with extreme fluctuations and trading volumes often unrelated to operating performance[398](index=398&type=chunk)[343](index=343&type=chunk) [Market Information for Common Stock](index=121&type=section&id=Market%20Information%20for%20Common%20Stock) Senseonics' common stock is traded on the NYSE American under the ticker symbol 'SENS' - The common stock of Senseonics Holdings, Inc. is listed on the NYSE American under the symbol '**SENS**'[395](index=395&type=chunk) [Dividend Policy](index=121&type=section&id=Dividend%20Policy) Senseonics has never paid cash dividends and plans to retain all future earnings for business operations and expansion. The ability to pay dividends is further restricted by existing debt agreements - Senseonics has never declared or paid cash dividends on its common stock[395](index=395&type=chunk) - The company intends to retain all available funds and future earnings for business operations and expansion, and does not anticipate paying cash dividends in the foreseeable future[395](index=395&type=chunk) - The ability to pay dividends is limited by restrictions in the company's debt agreements[395](index=395&type=chunk) [Stockholders](index=121&type=section&id=Stockholders) As of February 26, 2021, Senseonics had 377,883,267 common shares outstanding, held by 183 record holders - As of February 26, 2021, **377,883,267 shares** of common stock were outstanding, held by **183 holders of record**[396](index=396&type=chunk) [Performance Graph](index=122&type=section&id=Performance%20Graph) A performance graph compares Senseonics' common stock performance since March 18, 2016, against the Nasdaq Composite and Nasdaq Healthcare Indices, noting historical data is not indicative of future results - A performance graph compares the company's common stock performance since March 18, 2016, against the Nasdaq Composite Index and the Nasdaq Healthcare Index[398](index=398&type=chunk) - The comparison assumes a **$100 investment** and reinvestment of dividends, with historical stockholder return not necessarily indicative of future performance[398](index=398&type=chunk) [Recent Sales of Unregistered Securities](index=122&type=section&id=Recent%20Sales%20of%20Unregistered%20Securities) Senseonics Holdings, Inc. reports no recent sales of unregistered securities - No recent sales of unregistered securities[400](index=400&type=chunk) [Item 6. Selected Consolidated Financial Data](index=122&type=section&id=Item%206.%20Selected%20Consolidated%20Financial%20Data) Senseonics Holdings, Inc. reports that this item is not applicable - This item is not applicable[401](index=401&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=122&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section reviews Senseonics' financial condition and operations, detailing 2020 net losses driven by decreased sales and debt-related expenses, strategic shifts to Ascensia partnership, and recent financings - Senseonics is a medical technology company focused on developing and commercializing long-term, implantable continuous glucose monitoring (CGM) systems, Eversense and Eversense XL[403](index=403&type=chunk) - The company's net revenues are derived from sales of the Eversense CGM system, comprising disposable sensor packs and durable smart transmitter packs[404](index=404&type=chunk) - Sales are highly dependent on patient access to coverage and adequate reimbursement from third-party payors or government agencies[405](index=405&type=chunk) - In 2020, Senseonics transitioned to a strategic partnership with Ascensia for global distribution, allowing the company to focus on product development and regulatory submissions[406](index=406&type=chunk)[415](index=415&type=chunk)[417](index=417&type=chunk) - The COVID-19 pandemic significantly disrupted operations, leading to temporary suspension of U.S. commercial sales to new patients and workforce reductions, impacting insertion volumes[420](index=420&type=chunk)[421](index=421&type=chunk)[424](index=424&type=chunk) - Net loss increased significantly in 2020 to **$175.2 million** (from **$115.5 million** in 2019), primarily due to decreased revenue, increased loss on fair value adjustment, loss on extinguishment of debt, and loss on debt issuance[440](index=440&type=chunk)[448](index=448&type=chunk) - In January 2021, Senseonics completed public and registered direct offerings, raising approximately **$106.1 million** and **$46.1 million** in net proceeds, respectively, to support its liquidity and operating plans[460](index=460&type=chunk)[462](index=462&type=chunk)[463](index=463&type=chunk)[723](index=723&type=chunk)[724](index=724&type=chunk) [Consolidated Statements of Operations and Comprehensive Loss (in thousands)](index=133&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss%20%28in%20thousands%29) | Metric | Year Ended Dec 31, 2020 | Year Ended Dec 31, 2019 | Year Ended Dec 31, 2018 | | :--------------------------------------- | :---------------------- | :---------------------- | :---------------------- | | Revenue, net | $1,368 | $4,924 | $2,039 | | Revenue, net - related parties | $3,581 | $16,377 | $16,874 | | **Total revenue** | **$4,949** | **$21,301** | **$18,913** | | Cost of sales | $22,315 | $40,749 | $27,059 | | **Gross profit (loss)** | **$(17,366)** | **$(19,448)** | **$(8,146)** | | Sales and marketing expenses | $20,550 | $49,555 | $27,730 | | Research and development expenses | $20,413 | $38,430 | $31,863 | | General and administrative expenses | $20,801 | $23,229 | $19,839 | | **Operating loss** | **$(79,130)** | **$(130,662)** | **$(87,578)** | | Total other (expense) income, net | $(96,038) | $15,113 | $(6,393) | | **Net loss** | **$(175,168)** | **$(115,549)** | **$(93,971)** | [Net Loss Comparison (2020 vs. 2019 vs. 2018)](index=122&type=section&id=Net%20Loss%20Comparison%20%282020%20vs.%202019%20vs.%202018%29) | Metric | 2020 (in thousands) | 2019 (in thousands) | 2018 (in thousands) | | :-------------------------------- | :------------------ | :------------------ | :------------------ | | Total revenue | $4,949 | $21,301 | $18,913 | | Cost of sales | $22,315 | $40,749 | $27,059 | | Gross profit (loss) | $(17,366) | $(19,448) | $(8,146) | | Operating loss | $(79,130) | $(130,662) | $(87,578) | | Total other (expense) income, net | $(96,038) | $15,113 | $(6,393) | | Net loss | $(175,168) | $(115,549) | $(93,971) | [Overview](index=123&type=section&id=Overview) Senseonics develops and commercializes long-term implantable CGM systems, Eversense and Eversense XL, with 90 and 180-day sensors, generating revenue from kit sales and relying on third-party reimbursement, shifting to a strategic partnership model in 2020 - Senseonics develops and commercializes long-term, implantable CGM systems (Eversense and Eversense XL) for **90 and 180 days**, respectively, to improve diabetes management[403](index=403&type=chunk) - The Eversense system received CE mark in 2016, Eversense XL in 2017, and U.S. FDA approval for Eversense in 2018, with a non-adjunctive indication in 2019 allowing it to replace fingerstick measurements for treatment decisions[403](index=403&type=chunk) - Net revenues are derived from sales of disposable Eversense Sensor Packs and durable Eversense Smart Transmitter Packs[404](index=404&type=chunk) - Sales are highly dependent on patients obtaining coverage and adequate reimbursement from third-party payors or government agencies[405](index=405&type=chunk) - In 2020, Senseonics initiated strategic partnerships and distribution agreements for global marketing and promotion of its CGM systems[406](index=406&type=chunk) [United States Development and Commercialization of Eversense](index=123&type=section&id=United%20States%20Development%20and%20Commercialization%20of%20Eversense) Senseonics completed PRECISE II and PROMISE trials for its 90-day and 180-day Eversense systems, submitted a PMA supplement, and shifted U.S. commercialization to Ascensia in 2020, while securing payor coverage - The PRECISE II pivotal clinical trial for the 90-day Eversense system was completed in 2016, leading to FDA PMA approval on June 21, 2018, with a MARD of **8.5%**[407](index=407&type=chunk) - The PROMISE pivotal clinical trial for the 180-day Eversense system completed enrollment in September 2019, showing MARD of **8.5%-9.6%** with one calibration per day. A PMA supplement was submitted to the FDA on September 30, 2020[410](index=410&type=chunk) - In June 2019, FDA approved the non-adjunctive indication for Eversense, allowing it to replace fingerstick blood glucose measurement for treatment decisions[412](index=412&type=chunk) - A subgroup of PROMISE trial participants continued for 365 days to gather feasibility data for a 365-day sensor, with plans to seek IDE from the FDA in H2 2021 for a clinical trial[413](index=413&type=chunk) - In August 2020, Senseonics entered a collaboration and commercialization agreement with Ascensia, granting exclusive worldwide distribution rights for Eversense systems. Ascensia began U.S. sales support on October 1, 2020, with full commercial responsibilities transitioning in Q2 2021[415](index=415&type=chunk)[417](index=417&type=chunk) - The Eversense Bridge Program, a patient access program providing financial assistance, was terminated in December 2020, with Ascensia expected to implement a new patient assistance program[411](index=411&type=chunk) [European Commercialization of Eversense](index=127&type=section&id=European%20Commercialization%20of%20Eversense) Eversense XL received CE mark in September 2017, began European commercialization in Q4 2017, and its distribution transitioned from Roche Diabetes Care to Ascensia in February 2021 - Eversense XL received CE mark in September 2017 and began commercialization in Europe in Q4 2017[418](index=418&type=chunk) - The distribution agreement with Roche Diabetes Care for EMEA and **17 other countries** expired on January 31, 2021, with Ascensia assuming commercialization activities in select countries from February 1, 2021[419](index=419&type=chunk) [COVID-19](index=127&type=section&id=COVID-19) The COVID-19 pandemic significantly impacted Senseonics' operations in 2020, leading to reduced sensor insertions, a 60% workforce reduction, and temporary suspension of U.S. commercial sales to new patients - The COVID-19 pandemic, declared a global health emergency in January 2020, led to stay-at-home orders and reduced access to clinics for sensor insertions, impacting Senseonics' operations[420](index=420&type=chunk) - Insertion volumes remained below pre-COVID-19 levels in the latter half of 2020, and the longevity and severity of the pandemic's impact on the business are difficult to predict[421](index=421&type=chunk) - In Q1 2020, Senseonics made significant cost reductions, including a **60% workforce reduction**, and temporarily suspended U.S. commercial sales to new patients to focus on existing users and 180-day Eversense product development[422](index=422&type=chunk)[424](index=424&type=chunk) [Critical Accounting Policies and Use of Estimates](index=129&type=section&id=Critical%20Accounting%20Policies%20and%20Use%20of%20Estimates) Senseonics' U.S. GAAP financial statements rely on significant management estimates for revenue, warranties, inventory, and derivative liabilities, which are based on assumptions and can materially impact reported financial results - Preparation of consolidated financial statements requires management to make estimates and assumptions that materially impact reported amounts, including revenue, warranty obligations, inventory obsolescence, and embedded derivatives[426](index=426&type=chunk) - Estimates are based on historical experience and reasonable assumptions, but actual results may differ[427](index=427&type=chunk) - Revenue from product sales is recognized when customers obtain control, with variable consideration (discounts, reimbursements from programs like Eversense Bridge) treated as a reduction in revenue[429](index=429&type=chunk)[430](index=430&type=chunk) - Warranty obligations for smart transmitters and system components are estimated at shipment and charged to cost of sales, based on product performance data and historical replacement experience[431](index=431&type=chunk) - Inventory is valued at the lower of cost or net realizable value, with adjustments for obsolescence or excess based on demand forecasts and product shelf life[432](index=432&type=chunk) - Derivative financial instruments, such as embedded conversion options and redemption features in convertible notes (2023, 2025, PHC Notes) and options related to financing agreements (Highbridge, Masters, Energy Capital), are bifurcated and remeasured at fair value each reporting period, with changes recorded in other income (expense)[433](index=433&type=chunk)[434](index=434&type=chunk)[435](index=435&type=chunk)[437](index=437&type=chunk)[438](index=438&type=chunk)[439](index=439&type=chunk) [Results of Operations](index=133&type=section&id=Results%20of%20Operations) Senseonics' 2020 total net revenue declined to $4.9 million, resulting in a $17.4 million gross loss and a $175.2 million net loss, driven by decreased sales, workforce reductions, and increased other expenses from derivative liabilities and debt Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Metric | Year Ended Dec 31, 2020 | Year Ended Dec 31, 2019 | Year Ended Dec

Senseonics Holdings, Inc. (NYSE:SENS) Q4 2020 Results Earnings Conference Call March 4, 2021 4:30 PM ET Company Participants Lynn Lewis - The Gilmartin Group, IR Tim Goodnow - President and CEO Nick Tressler - Chief Financial Officer Conference Call Participants Melanie Nuñez - Stifel Danielle Antalffy - SVB Leerink Jayson Bedford - Raymond James Operator Good afternoon. And welcome to the Senseonics Fourth Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instru ...

Product & Technology - Eversense CGM System is the first and only long-term continuous glucose monitoring system[7] - 92% of patients reported no pain or discomfort when using the sensor[3] - The company anticipates approval for a new Eversense 180-day sensor[12] - The company is developing a 365-day sensor with optional FGM point-in-time reading, planned for 2023[48] - The company is developing the Freedom System with an integrated battery and standalone FGM, planned for 2024[50] Commercialization & Partnership - Senseonics has a strategic partnership with Ascensia for global commercialization[14] - Ascensia has approximately $1 billion in global sales[14] - The company is focusing on growth and expansion with Ascensia's commercial organization[16] Financial Projections & Market - Estimated worldwide net revenue is projected to be in the range of $12 million to $15 million in 2021, increasing to $150 million to $200 million in 2025[19] - 32% of Eversense users are new to CGM, indicating market expansion[22] - Eversense has commercial and Medicare coverage for approximately 200 million covered lives since mid-2018[30]