Q2 2022 Senseonics Holdings Inc Earnings Call
Good day and welcome to the Sensei Onyx second quarter 2022 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please send in a contract specialist by pressing the star key followed by zero.
Good day and welcome to the.
Second quarter 2022 earnings conference call.
All participants will be in a listen only mode.
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I would now like to turn the conference over to Philip Taylor Investor Relations. Please go ahead.
Please note this event is being recorded.
I would now like to turn the conference over to Priscilla Taylor and Mr. relations please go ahead.
Thank you. This is Philip Taylor from they go Martin group before we begin today, let me remind you that the company's remarks include forward statements. These statements reflect management's expectations about future events operating plans regulatory matters product enhancements company performance and other matters and speak only as of the date here.
Thank you. This is Philip Taylor from the GoMartin Group. Before we begin today, let me remind you that the company's remarks include four statements. These statements reflect management's expectations about future events, operating plans, regulatory matters, product enhancement, company performance, and other matters, and speak only as of the date hereof. These forward-looking statements involve a number of risks and uncertainties.
These forward looking statements involve a number of risks and uncertainties a list of the factors that could cause actual could be materially different from express or implied by any of these forward looking statements is detailed under risk factors and elsewhere in our annual report on Form 10-K for the year ended December 31 2000.
A list of the factors that could cause actual risk to be materially different from expressed or implied by any of these forward-looking statements is detailed under Risk Factors and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2021, our 10-Q for the quarter ended June 30, 2022, and other reports filed with the SEC. These documents are available in the Investor Relations section.
'twenty one our 10-Q for the quarter ended June 30th 2022, and other reports filed with the SEC. These documents are available in the Investor relations of our website at Www Dot <unk> Dot com, we undertake no obligation to update publicly or revise these forward looking statements for any reason.
to our website at www.sensionics.com. We undertake no obligation to update publicly or revise these forward-looking statements for any reason except as required by law. Also, on this call, we will be discussing our 2022 outlook. Joining me from Senseonics are Tim Goodknow, President and Chief Executive Officer, and Nick Tressler, Financial Officer. With that, I would like to turn the call over to Tim Goodknow, President and CEO . Tim?
Except as required by law also on this call we will be discussing our 2022 outlook.
Joining me from Cynthia Onyx, or Tim Goodnow, President and Chief Executive Officer, and Nick Tressler, Chief Financial Officer with that I'd like to turn the call over to Tim Goodnow, President and CEO Tim.
Thank you trip and thank you all for joining US this afternoon on.
On the call today will focus on our recent activity to support the ever sense E. Three product launch in the U S.
Thank you, Trip, and thank you all for joining us this afternoon.
On the call today, we'll focus on a recent activity to support the Eversense E3 product launch in the US.
Preparations are E three launching our European markets and progress advancing our technology pipeline nickel.
preparations for E3 launch in our European markets, and progress advancing our technology pipeline.
Nick will then discuss our second quarter financials in detail and then we'll open up the call for questions.
Nick will then discuss the second quarter financials in detail, and then we'll open up the call for questions.
Since the Onyx was founded with the vision to advanced highly differentiated cutting edge technologies by providing people with diabetes implantable sensors that extend the boundaries for sensor duration.
Sensionics was founded with a vision to advance highly differentiated, cutting edge technologies by providing people with diabetes implantable sensors that extend the boundaries for sensor duration.
In that spirit, we continued today designing developing and manufacturing the most innovative continuous glucose monitoring products in the market.
In that spirit, we continue today designing, developing, and manufacturing the most innovative, continuous glucose monitoring products in the market.
Over the first half of 2022 in the United States since the Onyx and our commercial partner of Cynthia diabetes care have led patients and health care providers through a successful transition into the next generation of long term implantable CGM with the approval and launch of the six month ever since.
Over the first half of 2022 in the United States, Senseonics and our commercial partner, Asensia Diabetes Care, have led patients and healthcare providers through a successful transition into the next generation of long-term implantable CGM with the approval and launch of the six-month Eversense E3.
Three.
We are confident the unique features of ever sense can compellingly address patient needs and that a six months sensor.
We are confident the unique features of Eversense can compellingly address patient needs and that a 6-month sensor can offer unrivaled convenience for people with diabetes.
Can offer unrivaled convenience for people with diabetes.
Currently we are focus together with our partner on executing the launch plan to introduce more doctors and patients to E. Three.
Currently, we are focused together with our partner on executing the launch plan to introduce more doctors and patients to E3 and on ensuring that we have the structure and support in place to successfully grow our product.
And on ensuring that we have the structure and support in place to successfully grow our product.
We are now four months into our new product launch that represents a fundamental advancement in diabetes management and one that requires a new workflow and clinics given the implanted nature of our unique technology.
We are now four months into a new product launch that represents a fundamental advancement in diabetes management and one that requires a new workflow in clinics given the implanted nature of our unique technology.
While we made meaningful headway with the 90 day ever since system, the provider and patient universe in the U S was only briefly exposed to a product before the beginning of the pandemic significantly limited our ability to go into physicians' offices and introduce providers to ever since.
while we made meaningful headway with the 90-day Eversense system.
The provider and patient universe in the US was only briefly exposed to our product before the beginning of the pandemic significantly limited our ability to go into physicians' offices and introduce providers to Eversense.
As a result, we substantially stepped back and adjusted the structure of our business.
As things have normalized we have brought new longer duration sensors onto the market.
As a result, we substantially stepped back and adjusted the structure of our business.
And we are newly positioned with our goal remains to deliver the greatest value to the greatest number of patients over the long term.
As things have normalized, we have brought new, longer duration sensors onto the market, and we are newly positioned with our goal remaining to deliver the greatest value to the greatest number of patients over the long term.
We believe that we are well positioned to work towards this goal through solid execution.
We believe that we are well positioned to work towards this goal through solid execution.
We have a committed partner the six month, where E. Three system globally available and the ability to be back in physicians offices.
We have a committed partner, the six month wear E3 system globally available, and the ability to be back in physicians offices.
Introduce people to ever since.
We're excited.
Initiated this process over the last four months of the U S launch, but know that there is still much more work to be done driving meaningful patient adoption.
Introduce people to Eversense.
We're excited to have initiated this process over the last four months of the US launch but know that there is still much more work to be done driving meaningful patient adoption.
With that said the second quarter was highly productive for since the Onyx and Cynthia.
With that said, the second quarter was highly productive for Senseonics and Essentia.
Highlights include the successful commercial launch of <unk> in the U S receiving a CE mark for <unk> in Europe .
Highlights include successful commercial launch of E3 in the US, receiving a CE mark for E3 in Europe , the expansion of the dedicated US CGM team at Essentia, and the development of the E3 in Europe .
Spansion of the dedicated use CGM team it is Cynthia integration.
Integration with distributors, including the implementation of the patient assistance program.
Ramping DTC advertising and progress with payer policy conversions, including receipt of G codes from CMS as well as meaningful new additions in commercial payer covered lives.
integration with distributors including the implementation of the patient assistance program
ramping DTC advertising, and progress with payer policy conversions.
including receipt of G codes from CMS, as well as meaningful new additions and commercial payer-covered lives.
We are pleased with these accomplishments as we work to execute our launch plan and deliver on our expectations.
We are pleased with these accomplishments as we work to execute our launch plan and deliver on our expectations.
Together, we believe our collaboration with SMT is positioned to drive growth and patient adoption over time.
Together, we believe our collaboration with Essentia is positioned to drive growth and patient adoption over time.
As a reminder, in our collaboration since the Onyx is responsible for R&D clinical development regulatory approvals as well as manufacturing Assembly.
As a reminder, in our collaboration, Senseonics is responsible for R&D, clinical development, regulatory approvals, as well as manufacturing.
Cynthia is responsible for sales marketing and sales operation.
We collaborate closely on driving the business forward.
Asensia is responsible for sales, marketing, and sales operation.
As we advance our launch Cynthia Onyx priorities include focusing on operational and manufacturing efficiency to support our Cynthia and distributors, while advancing our pipeline towards our implantable one year CGM technology.
We collaborate closely on driving the business forward.
As we advance our launch, Senseonics' priorities include focusing on operational and manufacturing efficiency to support Essentia and distributors, while advancing our pipeline towards our implantable one-year CGM technology.
Our partner is actively engaging the diabetes community to introduce the <unk> system and increase product awareness, while ensuring patient access to the technology through positive coverage policies from health insurance providers.
Our partner is actively engaging the diabetes community to introduce the E3 system and increase product awareness.
while ensuring patient access to the technology through positive coverage policies from health insurance providers.
Together, we are excited about the opportunity to drive meaningful patient adoption.
And they are both making investments to support our growth together.
Together, we are excited about the opportunity to drive meaningful patient adoption.
The second quarter, which included the initiation of the U S launch of <unk>, Cynthia Onyx generated total revenue of $3 $7 million.
and are both making investments to support our growth together.
The second quarter, which included the initiation of the U.S. launch of E3, Senseonics generated total revenue of $3.7 million.
Between $1 2 million from the U S and $2 5 million from outside the United States.
split between 1.2 million from the US and 2.5 million from outside the United States.
With our commercial launch in the U S underway distributional logistics have been finalized channel partners are holding inventory in Acp's are receiving systems. We are now only shipping <unk> sensors and our current commercial base.
With our commercial launch in the US underway, distribution logistics have been finalized.
Channel partners are holding inventory and ACPs are receiving systems.
Has been completely transitioned to the six month product.
We are now only shipping E3 sensors and our current commercial base.
On the demand generation side as Cynthia continues to make progress in increasing patient and HCP awareness in their key regions with sales coverage.
has been completely transitioned to the six-month product.
On the demand generation side, Asensia continues to make progress in increasing patient and HCP awareness in their key regions with sales coverage.
This progress is being spearheaded by their new dedicated CGM business unit and sales force in the U S.
This progress is being spearheaded by their new dedicated CGM business unit and Salesforce in the US.
This point they have built out the initial customer facing roles sales management territory managers and inside sales professionals.
At this point, they have built out the initial customer-facing roles, sales management, territory managers, and inside sales professionals.
The new hires have been on boarded and trained and are in the field, calling on current and potential ever since prescribers.
The new hires have been onboarded and trained and are in the field calling on current and potential Eversense prescribers.
Product excitement and interest is clear at the Ada conference in June engaging with HCP and diabetes educators was strong at the SNCF ever since booth as well as the product theater in the presentations featuring E E III.
Product excitement and interest was clear at the ADA conference in June .
Engagement with HCPs and diabetes educators are strong at the Essentia EverSense booth, as well as the product theater and the presentations featuring E3.
We received positive feedback on the product and insertion demonstrations.
From the patient demand side by utilizing social media platforms for direct to consumer digital advertising campaigns.
We received positive feedback on the product and insertion demonstrations.
From the patient demand side by utilizing social media platforms for direct-to-consumers digital advertising campaigns.
<unk> is targeting the diabetes community in specific geographies tied to their sales coverage.
ABC is targeting the diabetes community in specific geographies tied to their sales coverage.
The campaign has proven to effectively increase brand awareness.
And measured on a cost per lead basis is making progress. We are pleased with the lead generation and a growing funnel of potential users.
The campaign has proven to effectively increase brand awareness and, measured on a cost-per-lead basis, is making progress.
Recent insertions and leads represents a patient mix of upgrading existing ever since users patients.
We are pleased with the lead generation and the growing funnel of potential users.
Recent insertions and leads represent a patient mix of upgrading existing EverSense users.
Patients transitioning from other CGM and patients new to CGM. We view this as an encouraging early sign with a goal being to take market share and help grow the overall market.
patients transitioning from other CGMs, and patients new to CGMs.
We view this as an encouraging early sign with our goal being to take market share and help grow the overall market.
Our partner is now focused on converting these interested leads into an increasing number of users.
Successful execution on this will be key for ever since growth.
Our partner is now focused on converting these interested leads into an increasing number of users.
And the patient access front payer policy transitioned to six months coverage have progressed and we continue to expect that over the coming quarters, most payers will transition to the six month product coverage.
Successful execution on this will be key for EverSense growth.
On the patient access front, payer policy transitions to six-month coverage have progressed, and we continue to expect that over the coming quarters most payers will transition to the six-month product coverage.
And then a very important development CMS issued G codes, which became effective this past July one.
And in a very important development, CMS issued G codes, which became effective this past July 1st, providing access to E3 for all eligible Medicare beneficiaries.
Providing access to E. Three for all eligible Medicare beneficiaries.
With these codes in place as Cynthia is now turning their attention to working with Max to ensure all eligible beneficiaries.
With these codes in place, Ascentia is now turning their attention to working with MAX to ensure all eligible beneficiaries have access to a product under these codes.
Access to our products under these codes.
In another validation of the value of ever since.
We provide to our patients the second largest health insurance provider in the U S is now covering <unk>.
In another validation of the value of Eversense,
that we provide to our patients. The second largest health insurance provider in the US is now covering E3.
<unk> adds over 45 million covered lives, bringing our total to approximately 250 million covered lives for <unk>, representing a large majority of the U S adult population.
Anthem adds over 45 million covered lives, bringing our total to approximately 250 million covered lives for E3, representing a large majority of the US adult population.
We're excited to see the progress in increasing the covered lives that can benefit from ever sent and look forward to working with anthem as they implement this policy decision in their system over roughly the next quarter.
We are excited to see the progress in increasing the covered lives that can benefit from ever since and look forward to working with Anthem as they implement this policy decision in their system over roughly the next quarter.
As the organizations work together to build out our launch and capabilities. We are also working to establish a series of programs targeted and making ever since more accessible.
As the organizations work together to build out our launch and capabilities, we are also working to establish a series of programs targeted at making EverSense more accessible.
We have identified various opportunities as we engage with hcp's and patients about our product and its workflow considerations as we learn more from introducing our product to new people and new environments.
We have identified various opportunities as we engage with HCPs and patients about our product and its workflow considerations as we learn more from introducing our product to new people and new environments.
These include.
Approaches to expand the pool of options for users to have their assertion is done.
These include.
Such as the UC to go pilot program as we mentioned previously as well as other potential collaborations for insertion options.
approaches to expand the pool of options for users to have their insertions done.
such as the UC2GO pilot program as we mentioned previously, as well as other potential collaborations for insertion options.
Urgent care to go or you see to go is a regional mobile urgent care business in many areas within Texas.
Urgent Care to Go, or UC to Go, is a regional mobile urgent care business in many areas within Texas.
You see that goes business model provide safe quality medical practice and regional medical clinics.
UC2GO's business model provides safe, quality medical practice in regional medical clinics.
And in the home setting.
Do you see to go provides mobile clinics, which go to the patient's home by a convenient appointment.
and in the home setting.
UC2GO provides mobile clinics...
To provide medical care and medical procedure support.
which go to the patient's home by a convenient appointment.
Through the commercial partnership UC to go is accomplished multiple ever since assertions and their local clinics and importantly has now completed their first in home insertion.
to provide medical care and medical procedure support.
Through the commercial partnership, UC2GO has accomplished multiple Eversense insertions.
We see this as an effective convenient and scalable approach to meet patient and physician needs for products insertions.
their local clinics and importantly has now completed their first in-home insertion.
We see this as an effective, convenient, and scalable approach to meet patient and physician needs for product insertions.
We look forward to updating you as we have news about some of these new programs and further developments.
We look forward to updating you as we have news about some of these new programs and further developments. We look forward to updating you as we have news about some of these new programs and
Now transitioning to Europe .
In June we achieved CE mark approval for EC with the important milestone our most advanced CGM system will soon be available in all markets service worldwide and the same generation product will available in all of our markets for the first time.
now transitioning to Europe .
In June , we achieved CE mark approval for EC with the important milestone our Most advanced CGM system will soon be available in all market service worldwide
This update which offers patients sustained exceptional accuracy and reduce calibration requirements.
and the same generation product will be available in all of our markets for the first time.
This update, which offers patients sustained exceptional accuracy and reduced calibration requirements.
Enables incremental supply chain manufacturing and operational efficiencies.
enables incremental supply chain manufacturing and operational efficiencies.
Patients had been actively contacted and have begun to schedule their E. Three appointments with first insertion as being just completed in Germany.
Patients have been actively contacted and have begun to schedule their E3 appointments, with first insertions being just completed in Germany.
The <unk> system will be launched in phases across Europe over the remainder of the year optimizing the inventory transition.
The E3 system will be launched in phases across Europe over the remainder of the year, optimizing the inventory transition.
Further in Germany as Cynthia continues to work on enhancing their go to market approach with the goal of improving uptake in this important market.
Further in Germany, Essentia continues to work on enhancing their go-to-market approach with the goal of improving uptake in this important market.
In other parts of Europe are Cynthia continues to work to expand access to ever sense by focusing on winning regional tenders.
In other parts of Europe , Asensia continues to work to expand access to Eversense by focusing on winning regional tenders
As they enhance their tender preparation process.
Arrangements for the launch of <unk> are well underway throughout Europe as each market training their sales force on the product features and benefits and new marketing campaigns and marketing collateral.
as they enhance their tender preparation process.
Arrangements for the launch of E3 are well underway throughout Europe as each market trains their sales force on the product features and benefits and new marketing campaigns and marketing collateral.
And our product pipeline, where our efforts are focused on the one year sensor ongoing pilot studies have provided valuable information chemistry developments that we can incorporate into our product design.
In our product pipeline, where our efforts are focused on the one-year sensor, ongoing pilot studies have provided valuable information in chemistry developments that we can incorporate into our product design.
Some of these results were shared at the Ada meeting in June .
We are excited about the recent advancement in these pilot studies and plan to start a pivotal clinical trial at the end of the year.
Some of these results were shared at the ADA meeting in June .
We are excited about the recent advancement in these pilot studies.
Furthermore, we are currently gathering additional data on our recently approved SBA configuration to support a planned IC GM filing early next year.
plan to start a pivotal clinical trial
Furthermore, we are currently gathering additional data on a recently approved SBA configuration to support a planned ICGM filing early next year.
We're excited about the potential for the patients to be able to integrate our long life ever set system with a wider variety of insulin delivery devices.
We're excited about the potential for the patients to be able to integrate our long-life EverScent system with a wider variety of insulin delivery devices.
In addition to the advances in the sensor longevity and ICBM, we're making improvements on the digital connectivity front as well.
In addition to the advances in the sensor longevity in ICGM, we are making improvements on the digital connectivity front as well.
During the quarter, we expanded data accessibility for patients to share in combined there ever since CGM data with other data sources, and 30 party integrated apps by making ever since information available through Apple health.
During the quarter, we expanded data accessibility for patients to share and combine their ever-sent CGM data with other data sources.
and third-party integrated apps by making Eversense information available through Apple Health.
This is a valuable step at the data sharing across.
Multiple apps allows patients to combine their ever since data with other data sources and helps patients and their providers identify correlations and gain greater insight and managing their diabetes.
This is a valuable step at the data sharing across...
Multiple apps allows patients to combine their Eversense data with other data sources and helps patients and their providers identify correlations and gain greater insight in managing their diabetes.
We believe the ability this year six months of CGM data on a single sensor provides significant value to patients and their providers and we will continue to advance our digital capabilities with additional partners in the coming quarters.
We believe the ability to share six months of CGM data on a single sensor provides significant value to patients and their providers and we will continue to advance our digital capabilities with additional partners in the coming quarters.
I'll now turn the call over to Nick to go over details of our second quarter financial results.
I'll now turn the call over to Nick to go over details of our second quarter financial results.
Thank you Tim and good afternoon, everyone. We appreciate the opportunity today to update you on our business in the second quarter of 2022 net revenue was $3 7 million compared to $3 3 million in the prior year period U S revenue for the second quarter was $1 2 million and revenue out.
Thank you, Tim, and good afternoon everyone. We appreciate the opportunity today to update you on our business.
In the second quarter of 2022, net revenue was $3.7 million compared to $3.3 million in the prior year period. U.S. revenue for the second quarter was $1.2 million and revenue outside the U.S. was $2.5 million.
Side, the U S was $2 5 million.
Gross profit in the second quarter of 2022 was <unk> 8 million, an increase of <unk> 4 million from a gross profit of <unk> 4 million in the prior year period.
Gross profit in the second quarter of 2022 was $0.8 million, an increase of $0.4 million from a gross profit of $0.4 million in the prior year period.
Search and development expenses in the second quarter of 2022 for $9 3 million, an increase of $2 2 million compared to $7 1 million in the prior year period the.
Research and development expenses in the second quarter of 2022 were $9.3 million, an increase of $2.2 million compared to $7.1 million in the prior year period.
The increase was primarily due to investments in product development and clinical trials for next generation technologies.
The increase was primarily due to investments in product development and clinical trials for next generation technologies.
Second quarter 2020 to selling general and administrative expenses were $8 6 million a decrease of <unk> 6 million compared to $9 2 million in the prior year period. The decrease was primarily the result of reduced payroll expenses related to stock based compensation.
Second quarter 2022 selling, general, and administrative expenses were $8.6 million, a decrease of $0.6 million compared to $9.2 million in the prior year period. The decrease was primarily the result of reduced payroll expenses related to stock-based compensation.
For the three months ended June 32022, operating loss was $17 million compared to a loss of $15 9 million in the second quarter of 2021.
For the three months ended June 30, 2022, operating loss was 17 million compared to a loss of 15.9 million in the second quarter of 2021.
The decline in the company's share price at the end of the second quarter as compared to the company's share price at the end of the first quarter of 2022 led to significant noncash gains in Q2.
The decline in the company's share price at the end of the second quarter as compared to the company's share price at the end of the first quarter of 2022 led to significant non-cash gains in Q2. As a result, total other income increased by $285.7 million compared to the prior year period primarily related to non-cash charges resulting from the accounting for embedded derivatives and fair value adjustments related to the company's financing.
As a result total other income increased by $285 7 million compared to the prior year period, primarily related to noncash charges, resulting from the accounting for embedded derivatives and fair value adjustments related to the company's financings, including the 2023 and 2025 notes along with a ph.
The 2024 notes and the energy capital equity line of credit.
including the 2023 and 2025 notes, along with the PHC 2024 notes and the Energy Capital Equity line of credit.
As required by U S generally accepted accounting principles or GAAP, we mark the value of these instruments to market for each reporting period and the changes in these values are recorded as noncash charges to the income statement.
As required by U.S. Generally Accepted Accounting Principles, or GAP, we mark the value of these instruments to market for each reporting period, and the changes in these values are recorded as non-cash charges to the income statement.
Each quarter the value of these noncash gains or losses will vary based on the volatility in the company's share price. So generally share price increases, we incur a noncash loss and its share price decreases we recognized a noncash gain for.
Each quarter the value of these non-cash gains or losses will vary based on the volatility in the company's share price. So generally, as share price increases we incur a non-cash loss and as share price decreases we recognize a non-cash gain.
For the three months ended June 32022, total net income was $104 2 million or <unk> 22 per share compared to a net loss of $183 million or 42 cents loss per share in the second quarter of 2021.
For the three months ended June 30, 2022, total net income was $104.2 million, or 22 cents per share, compared to a net loss of $180.3 million, or 42 cents loss per share, in the second quarter of 2021.
Net income increased by $284 5 million due to the accounting for embedded derivatives and fair value adjustments previously mentioned, partially offset by <unk> 8 million increase in loss from operations as of June 32022, cash cash equivalents and short and long term investments totaled.
Net income increased by $284.5 million due to the accounting for embedded derivatives and fair value adjustments previously mentioned, partially offset by a $0.8 million increase in loss from operations.
As of June 30, 2022, cash, cash equipment and short and long-term investments totaled $150.5 million.
$155 million.
Turning to our outlook for 2022, we continue to expect our full year 2022 global net revenue to be in the range of 14 million to $18 million as communicated previously.
Turning to our outlook for 2022, we continue to expect our four-year 2022 global net revenue to be in the range of $14 million to $18 million as communicated previously.
For gross margins, we are raising our expectation of full year gross margin from approaching breakeven in the fourth quarter to now being positive for the fiscal year 2022.
For gross margins, we are raising our expectation, a four-year gross margin, from approaching break-even in the fourth quarter to now being positive for the fiscal year 2022, which demonstrates an important progression of our business. Our operations team, in collaboration with our global commercial partner, Essentia, and our manufacturing suppliers, has done an outstanding job ensuring we are able to meet our inventory and production commitments while efficiently managing costs in the current economic environment. Thank you.
Which demonstrates an important progression of our business our operations team in collaboration with our global commercial partner I can see it in our manufacturing suppliers have done an outstanding job, ensuring we're able to meet our inventory and production commitments, while efficiently managing costs in the current economic environment.
For the full year 2022, we are improving projected expectations of net cash used in operations to be at the lower end of the range of 65 million to $70 million based on improved gross margin contribution and continued operating efficiencies. We expect the majority of expenses in 2022.
For the full year 2022, we are improving projected expectations of net cash used in operations to be at the lower end of the range of $65 million to $70 million, based on improved gross margin contribution and continued operating efficiencies.
For investment in research and development for ongoing feasibility and pivotal clinical trials for additional products and our product pipeline, including the anticipated start of the 365 day pivotal trial with that I will turn it back to Tim.
We expect the majority of expenses in 2022 to be for investment in research and development for ongoing feasibility and pivotal clinical trials for additional products in our product pipeline, including the anticipated start of the 3M65 day pivotal trial. With that, I will turn it back to Tim.
Thank you Nick the first half of the year was highly productive for Cynthia Onyx. The next generation six month <unk> system received FDA approval and the CE Mark.
Thank you, Nick. The first half of the year was highly productive for Senseonics. The next generation six month E3 system received FDA approval and a CE mark.
The U S. Commercial launch has begun with the transition of the patient base that <unk> and preparations for the launch in Europe are progressing.
The US commercial launch has begun with the transition of the patient base to E3 and preparations for the launch in Europe are progressing.
We have realized operational efficiencies as we prepare to have the same product generation available globally for the first time.
We have realized operational efficiency as we prepare to have the same product generation available globally for the first time.
We see this is translating into further improved positive gross margins, we continued to advance ever since patient access with CMS issued G codes and the positive coverage decision from anthem, providing access to eligible Medicare beneficiaries and $45 million additional commercial covered lives.
We see this as translating into further improved positive gross margins.
We continue to advance ever since patient access with CMS issued G codes and the positive coverage decision from ANTHEM providing access to eligible Medicare beneficiaries and 45 million additional commercial covered lives.
On the technology pipeline front, we continue to make progress on the development of our one year sensor and the expanded data accessibility for patients this year there ever since data across apps through Apple health.
On the technology pipeline front, we continue to make progress on the development of our one-year sensor and expanded data accessibility for patients to share their EverSense data across apps through Apple Health.
Looking forward, we remain focused on executing the <unk> launch with SNCF draw.
Driving the development of longer duration sensors, and continuously improving our manufacturing scale and margins.
Looking forward, we remain focused on executing the E3 launch with Asensia.
driving the development of longer duration sensors, and continuously improving our manufacturing scale and margins.
We believe that we are well positioned to grow our franchise and look forward to updating you on our progress as we execute our plans.
We believe that we are well positioned to grow our franchise and look forward to updating you on our progress as we execute our plans.
Thank you for your time today also joining us for questions as Mughal Jain our chief operating officer.
Thank you for your time today. Also joining us for questions is Mukul Jain, our Chief Operating Officer.
Officer, operator, let's now open up the call for questions.
Officer, Operator, let's now open up the call for questions.
Thank you we will now begin the question and answer session.
Last quick question you maintain star then one on your Touchtone phone.
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Hum.
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At this time, we will foster Magellan.
Sure.
At this time, we will pause momentarily to assemble our roster.
Our first question comes from Murray people with BP. Thank you. Please go ahead.
Our first question comes from Mary Pibble with BTIG. Please go ahead..
Hey, good afternoon, everyone. This is Sam I bear on for Murray I. Appreciate you, taking the questions and congrats on a nice quarter here.
Hey, good afternoon everyone. This is Sam Iber on for Marie. I appreciate you taking the questions and congrats on a nice quarter here. Maybe I can start here on some of the investments Asensia is making. I appreciate the color on the DTC efforts and the dedicated sales team. But sitting here now with products approved in both the US and Europe , and growing broad-based coverage here in the US is maybe now the right time. Thank you.
Maybe I can start here on some of the investments our sons. He is making you know I appreciate the color on the DTC effort and a dedicated sales team, but you know sitting here now with products approved in both the U S and Europe .
Growing broad based coverage here in the U S is maybe now the right time.
Maybe accelerate some of these investments and are you guys on line and then maybe how you're thinking about that.
to maybe accelerate some of these investments? And are you guys aligned on maybe how you're thinking about that?
Yes, we certainly have.
As have agreed right from the very beginning that commercial investment by by SNCF. It's significant it's important and as you suggest is certainly certainly ramping.
Yeah, we certainly, as have agreed right from the very beginning, that the commercial investment by Essentia is significant, is important, and as you suggest, is certainly ramping. The original contract, as we described, commits to about $250 million over the five-year horizon without initiating financial consequences of any financial301392 unforeseen mess cylindrical
The original contract as we've described.
<unk> to about $250 million over the five year horizon with wood that initiating here now with the 180 day product and obviously continuing to grow and ramp.
As the products get placed into the market.
here now with 180-day product and obviously continue to grow and ramp as the products get placed into the market and as we continue to do the innovation. So we certainly do expect that we'll continue to grow. As we said, we started off with a dedicated sales force of a technical ascended bots', Pierre Brouil.
And as we continue to do the innovation. So we certainly do expect that we'll continue to grow as we said we started off with.
A dedicated sales force of just about I think it's 19 sales reps today and that will grow significantly over the coming quarters and years.
of just about, I think it's 19 sales reps today, and that'll grow significantly over the coming quarters and years. And then there is a shared...
And then there is a shared.
Sales force outside the United States that frankly in all regions adds up to a couple of hundred folks. So it is a significant.
Sales force outside the United States that frankly, you know in all regions adds up to a couple hundred folks. So it is a significant Investment a sensei is committed to make that And we do expect there to be further growth in that investment
Investment since he is committed to make that.
And we do expect there to be further growth in that investment.
Great I appreciate some of the added color there and then maybe I can ask one more on the a 365 day system saw some of that encouraging data at Ada Yu.
Great, appreciate some of the added color there. And then maybe I can ask one more on the 365-day system. Saw some of that encouraging data at ADA earlier in June . I was wondering if the censored design is complete at this point or are there still modifications being made to it before you submit an IDE here?
Earlier in June I was wondering if the sensor design is complete at this point or are there still modifications are being made to it before you.
You submit an I D here.
Yes at this point, where we are continuing to make improvements.
Much of this is is dictated by clinical experience that we do get out of Europe . So those clinical trials are underway human trials and as we gain experience with those configurations.
At this point we are continuing to make improvements. Much of this is dictated by clinical experience that we do get out of Europe , so those clinical trials are underway, human trials. And as we gain experience with those configurations, we do anticipate making the final call here and...
We do anticipate making the final call here.
Within this quarter frankly.
So that we can be prepared to start the clinical trial at the end of the year.
within this quarter, frankly, so that we can be prepared to start the clinical trial at the end of the year.
Great. Thanks for taking questions.
Thank you.
Great, thanks for taking the questions.
As a reminder, if you have a question. Please press Star then one.
Thank you.
Wanted to be joined into the queue.
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Our next question comes from Alex.
Craig Hallum Capital. Please go ahead.
Our next question comes from Alex Malek with Craig Helen Capital Group. Please go ahead. You're welcome.
Great. Good afternoon, everyone and congrats on the anthem covers decision just want to confirm did you say it was 250 million lives are now covered for the 180 day sensor and if that's wrong. Just what is the current number and process data complete that transition from 90 days to 180 days at the payers.
Good afternoon, everyone, and congrats on the Anthem Covers decision. Just want to confirm, did you say it was 250 million lives were not covered for the 180-day sensor? If that's wrong, what is the current number and the process there to complete that transition from 90 days to 180 days at the Payers?
So we are completing the transition.
Alex as I said I wouldn't expect that that will continue to to happen between now and the end of the year. There are some administrative steps a number has already occurred as we mentioned we see CMS in their issuance of the G codes.
So we are completing the transition, Alex, as I said. I would expect that that will continue to happen between now and the end of the year. There are some administrative steps. A number has already occurred, as we mentioned, with CMS and their issuance of the G codes. Anthem specifically came right out with this new coverage from them for the E3 or 188 product.
<unk>, specifically came right out with this new coverage from them for the <unk> hundred to 180 <unk> product.
And many of the others have converted over not all yet, but the majority and we expect essentially every one to be completed certainly by the end of the year.
and many of the others have converted over, not all yet, but the majority and we expect essentially everyone to be completed certainly by the end of the year.
Okay understood and then maybe just an update on the inventory situation at a sense here just how much inventory is currently sitting out there and I think in the in the 10-Q that was filed it mentioned that a sense of your own some guidance about $4 3 million.
Okay, understood. And then maybe just an update on the inventory situation at Asensio, just how much inventory is currently sitting out there. And I think in the 10Q that was filed, it mentioned that Asensio owes Senseonics about $4.3 million. That was at the end of this quarter. Just what's the best way to think about that number? Is that a three-month forward look of revenue? Or how does it get paid down to Senseonics?
And that was at the end of this quarter just what's the best way to think about that number is that a three month forward look of revenue or how does that get paid out.
Alex.
Yes, so on the on the inventory.
Our plan our joint plan is to keep just about six weeks of.
Yeah, so on the inventory, our plan, our joint plan is to keep just about six weeks of...
Inventory and we've generally done a pretty good job of that sometimes there are markets.
Where because of dynamics, you'll have a little bit more a little bit less but the the joint goal that we're working to and have generally been successful as that.
inventory and we've generally done a pretty good job of that. Sometimes there are markets where because of dynamics you'll have a little bit more a little bit less but the the joint goal that we're working to and have generally been successful is that
Is that suite that six week time period, so Nick I'll, let you I'll, let you speak to anything in the in the queue.
is that six-week time period. So Nick, I'll let you speak to anything in the queue.
Yes, no you've captured it correctly Tim.
So the $4 three is over the next six weeks.
Yeah, no, you captured it correctly, Tim.
Or how is therefore 3 million recognized on revenue.
So the 4.3 is over the next six weeks then?
Yeah. So the way we are recognizing revenue is that there is a recognition of revenue at the point of shipment when we ship to a sense here.
Or how is that 443 million recognized and then just lastly it looked like in the 10Q this was with regards to a lawsuit that happened I think last year that was dismissed and then a summary of what the new complaint is referring to.
Also additional revenue based on because of our contract being a shared revenue arrangement once that revenue is.
Same community.
Does that require any modifications to the existing E3 sensor?
Done by essentially are taken by a sense here then we get our portion of that so based on just uncertainties around timing as well as the economics, we make sure that were clear and can recognize that revenue before it's taken.
IPGM. Yeah, simply it is on-page. It is the same E3. Your lead entry number has been confirmed. You will now be joined to the conference. Please note that an operator will pick up your line to collect your information privately.
Okay understood and then just lastly, it looks like in the 10-Q and this was with regards to a lawsuit could happen.
Last year, but it looks like there was another filing against the federal false claims act maybe details on the first complaint there that was the Smiths and then a summary of what the new complaints referring to.
Yeah.
Complain I think it was dismissed from what I understand I don't have a lot of direct details.
That are more than there, but that's the same I think.
Although although dismissed and the law firm start, but I think the.
The individual refiled with the different law firms so.
Okay understood. Thank you.
The next question comes from Jayson Bedford.
I mean, James Please go ahead.
Hi, This is Ravi on for Jason.
Quick question about di D. G M.
Does that require any modifications to the existing E. Denser and also if you guys could provide an update on what that next steps are and any updates to the timing of the filing is it still on pace for it.
First half next year or how should we think about the timing for that yet.
Yes simply it is on pace. It is the same E. Three recall that the agency did get us approval on the <unk> III configuration, where they would they are 43 patient sample set so we do need to collect additional clinical data, which is actively underway right now.
Great. Thank you and if I can ask one more quick one about the macro condition coming.
Some of the other players in the diabetes have mentioned macro weighing on sales have you guys noticed any of that with their own patient base has there been any reluctance to commit to a longer.
Longer duration sensor.
Or have you guys been mostly free of any kind of recession worry.
No.
Yes, I certainly wouldn't say, we have been free of it but we have been actively managing upsides and downsides.
Nick anything else that you want to add too.
You know macro dynamics.
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No just certainly as we think about foreign exchange rates the euro to the dollar as that has weakened.
Those dynamics certainly as.
As we think about inflation, how that has affected the broader economy.
We've been able to absorb that from an efficiency standpoint. So there's just some of the macro dynamics.
Obviously, where our revenue is that it's continued to grow based on the progress with SNCF in the marketplace.
Great. Thank you very much.
Hey, Ken I filter Minder.
Next question. Please press Star then one can be done with it.
We have no questions at this time. This concludes our question and answer session I would like to turn the conference back over to Dave.
Now Frank.
Hi.
Well.
I'd like to thank I'd like to thank everybody for their participation and interest today, we certainly look forward to updating you in the coming quarters on future progress.
With that I will wish everyone. A good afternoon and thank you for your support good day.
Yeah.
The conference has now concluded thank you for attending today.
Presentation.
Right.
Okay.