Q1 2025 Senseonics Holdings Inc Earnings Call
Please standby your program is about to begin.
Speaker Change: Good day, everyone and welcome to the <unk> first quarter 2025 earnings call.
Speaker Change: At this time all participants are in a listen only mode. Later, you will have the opportunity to ask questions. During the question and answer session.
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Speaker Change: Please note. This call is being recorded and I will be sending by should you need any assistance.
Speaker Change: It is now my pleasure to turn the conference over to Jeremy Feffer from life.
Jeremy Feffer: Life Science Advisors. Please go ahead.
Jeremy Feffer: Thank you. This is Jeremy Feffer from life Science Visors before we begin today, let me remind you that the Companys remarks include forward looking statements. These statements reflect management's expectations about future events operating plans regulatory matters product enhancements company performance and other matters.
Jeremy Feffer: And speak only as of the date hereof.
Jeremy Feffer: These forward looking statements involve a number of risks and uncertainties a list of the factors that could cause actual results to be materially different from those expressed or implied by any of these forward looking statements.
Jeremy Feffer: Detailed under risk factors and elsewhere in our annual report on Form 10-K for the year ended December 31, 2024, and our 10-Qs and our other reports filed with the SEC.
Jeremy Feffer: These documents are available on the Investor Relations section 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, except as required by law.
Speaker Change: Joining me today from <unk> are Tim Good now President and Chief Executive Officer, and Rick Sullivan, Chief Financial Officer.
Tim Goodnow: I'll now turn the call over to Tim Goodnow, President and CEO Tim.
Tim Goodnow: Thanks, Jeremy and thank you to everyone on the call for joining us.
Tim Goodnow: Today, I'm happy to add detail about our latest step in transforming diabetes care the integration of our ever since 365 continuous glucose monitor with sequels twist automated insulin delivery system.
Tim Goodnow: I'll also provide an update on our recent CE Mark submission.
Tim Goodnow: Our European launch planning, our pipeline programs and our ongoing initiatives for practice and health care systems integration.
Tim Goodnow: After that Rick will run you through the numbers and then we'll take your questions.
Tim Goodnow: We announced on April 29th our first AI D integration I've ever since 365 with a twist automated insulin delivery system.
Tim Goodnow: This partnership enables real time readings from our CGM to be received by the twist pump.
Tim Goodnow: Which are then used in the loop algorithm to automatically adjust insulin delivery and predict future glucose levels were.
Tim Goodnow: We're excited about this collaboration particularly joining the most technologically advanced innovations and pump CGM and algorithm technologies and we see this as a significant step forward for both companies towards improving personalization choice and improved health outcomes for patients with diabetes.
Tim Goodnow: We believe this compatibility will enhance the patient's experience through simplification of insulin delivery.
Tim Goodnow: And with only one CGM required over the course of a year patients will experienced significantly less complexity in managing their diabetes.
Tim Goodnow: The teams are working on the systems integration and we look forward to jointly launching our combined products in the coming quarter.
Tim Goodnow: The other collaboration we established during the quarter is with sweet spot, which enables endocrinology practices to provide virtual CGM monitoring and enhanced patient care.
By receiving real time, CGM data from our patients ever since 365 through sweet spot technology platform.
Tim Goodnow: Providers can assess and make treatment decisions between patient appointments and keep patients more connected to their care teams.
Speaker Change: Andrew Chronologist practices can utilize sweet spots platform to capture a reimbursable care events, improving efficiency and streamlining the totality of patient care.
Tim Goodnow: We believe this benefit will be particularly useful for accountable care organizations and health systems looking to improve network wide health outcomes that decrease costs.
Tim Goodnow: Our key accounts teams continue to work with health systems to include ever since $3 65, and their standard offering for patients with diabetes.
Speaker Change: To monitor and improve overall like seem to control and reduce the frequency and cost of long term complications due to diabetes.
Tim Goodnow: We are engaged in a series of discussions to that end.
Speaker Change: At the same time Mercy health systems in St. Louis has recently undergone a significant executive level restructuring, which.
Speaker Change: Which has caused them to pause many new initiatives as they evaluate programs within this new structure.
Speaker Change: While this was a broader action that does not reflect that ever since it does mean that the ongoing work to drive our ever since with remote patient monitoring offering forward at Mercy is currently on hold and.
Speaker Change: And we do not yet have an estimate as to when the project will be restarted.
Speaker Change: Progress on the program to date has given us valuable insights about such an integration and the RPM element of the program and we expect this to benefit us as we move forward with other health system initiatives.
Speaker Change: As the program has expanded we had planned to see mercy impact the back half of the year.
Speaker Change: However, with the progress we're seeing with the 365 launch the expected European launch in additional marketing initiatives planned.
Speaker Change: We reiterate the 2025 revenue guidance, we've previously issued.
Speaker Change: These complicated collaborations do take several quarters to implement but we continue to expect these types of partnerships to be an important part of our growth strategy in the coming years.
Speaker Change: Looking at these ever since $3 65 expansion opportunities, we filed our CE Mark application with the notified body in the first quarter.
Speaker Change: The review appears to be progressing as expected and subject to receiving the anticipated approval. We remain on track for a European launch in the second half of this year.
Speaker Change: Our commercial partner of Cynthia diabetes care has initiated the planning and preparation for this launch.
Speaker Change: We look forward to users in our European markets being able to experience the convenience of a one year C. G M and our current expectation is that this ever since $3 65.
Speaker Change: Our single product offering by the end of 'twenty twenty-five offering meaningful global supply chain synergies and cost of goods improvements.
Speaker Change: Our commercial accomplishments in Q1 were all made possible by delivering on our promise of one year one C. G M.
Speaker Change: We continue to make good on our progress on our work with U S payers to transition reimbursement from 180 to 365 days for ever since.
Speaker Change: With many payers having already transitioned their coverage.
Speaker Change: Specifically on the Medicare front last month, we were happy to see that the 20th twenty-five physician fee schedule was updated to provide payment for our full year I've ever since with effectiveness retroactive back to January 1st.
Speaker Change: We see many patients and providers enthusiastically embracing ever sent $3 65, and we continue to hear feedback on its convenient Sabine views.
Speaker Change: We look forward to continuing to build more awareness and adoption of the product throughout the year.
Speaker Change: I'd also like to highlight the importance of our continued work on our pipeline products Gemini and freedom as our development team worked diligently to continuously improve the patient experience with ever since.
We remain on track to submit an IDE for a pivotal study by year end for Gemini at using the data. We are currently collecting in our human feasibility studies.
Speaker Change: The Gemini product includes a one year sensor with a built in battery that allows for both continuous as well as optional swipe testing, providing for more flexibility and choice for patients who decide when and where they want to wear something on body.
Speaker Change: Our freedom system, which incorporates Bluetooth within the sensor to eliminate the need for any on body transmitter is right behind it is built on the same Cynthia chemistry as the ever sent $3 65, and the ever since Gemini.
Speaker Change: Freedom is designed to communicate directly with the user's phone to create the world's first and only invisible C. G M.
Speaker Change: This offers the benefits of being able to monitor their glucose levels for an entire year without any on body device or adhesive.
Speaker Change: It's easy to understand why we call this project freedom.
Speaker Change: And our team is driving hard to advance its development.
Speaker Change: Over the next few quarters, we expect to share more collaborations partnerships and development advances with you all.
Speaker Change: Our goal remains to transform the lives in the global diabetes community through technologically differentiated long term implantable glucose monitoring.
Speaker Change: And with each new collaboration each technology interface and device integration.
Speaker Change: And with each development milestone, we moved one step closer to that goal.
Speaker Change: Now I'll turn it over to Rick to walk you through the financials from the quarter.
Rick Sullivan: Thank you Kim and thanks to everyone joining us this afternoon.
Rick Sullivan: In the first quarter of 2025, net revenue grew 24% to $6 3 million compared to $5 million in the prior year period.
Rick Sullivan: U S revenue for the first quarter was $4 5 million and revenue outside the U S was $1 8 million.
Speaker Change: As always a quick reminder, regarding our revenue recognition.
Speaker Change: Our collaboration agreement with <unk> for revenue sharing with the percentage of revenue to ascent Fiat increasing based on duration of the contract and annual revenue levels.
Speaker Change: We're most sales we recognized our portion of revenue when shipments are delivered to a sense yet.
Speaker Change: This begins to distribution to patients via Cynthia and their distributors.
Speaker Change: We manage our manufacturing based on patient demand generated from commercial activities targeting 60 to 90 days of inventory across the various channels.
Speaker Change: Therefore, our shipments to associate during the quarter are largely intended to support future demand for ever sets.
Speaker Change: Following the launch of ever since 365, we are still increasing inventory levels and continue to expect to reach target levels by the end of Q2 2025.
Speaker Change: We also sell products through an office consignment program and continue to see strong utilization in Q1 with approximately 13% of our revenue flowing through this channel.
Speaker Change: We have well over 100 health care providers participating in the consignment program.
Speaker Change: Which enables the physician to have the product on the shelves.
Speaker Change: <unk> convenience to health care providers and patients facilitating faster and even same day assertions.
Speaker Change: In the consignment program, we recognize revenue at the time of the procedure. We also record a sales commission expense for a sense your support with sales and marketing efforts on the revenues through this channel.
Speaker Change: In Q1 2025 gross profit was $1 5 million an increase from a gross profit of <unk> 3 million in the prior year period.
This increase in gross profit was primarily driven by increased margins on the 365 day product, but also includes the positive impact of approximately <unk> <unk>.
Speaker Change: $4 million in manufacturing costs previously Expensed to research and development prior to FDA approval of ever since $3 65.
When we include these costs in our gross profit margin calculation, we would see margins of approximately 18%.
Speaker Change: This is very encouraging considering that we still have limited manufacturing scale with it being so early in the product lifecycle and that European sales continue to be the lower margin 180 day product.
Speaker Change: Also seasonality with our business because of higher utilization of our patient assistance programs to offset patient deductibles early in the year reduce our asps.
Speaker Change: And therefore our margins.
Speaker Change: Research and development expenses in Q1, 2025, or $7 3 million, a decrease of $3 1 million compared to the prior year period.
Speaker Change: The decrease was primarily due to a reduction in clinical studies spend and consultant costs due to the completion of the 365 day product trials.
Speaker Change: First quarter 2025, selling general and administrative expenses were $7 7 million a decrease of <unk> 4 million compared to $8 1 million in the prior year period.
Speaker Change: Primarily driven by favorable personnel costs consulting fees and legal expenses.
Speaker Change: Net loss was $14 3 million or a <unk> loss per share in the first quarter of 2025 compared to a net loss of $18 9 million or <unk> <unk> loss per share in the first quarter of 2024.
Speaker Change: Net loss decreased by $4 6 million, primarily due to improved gross profit margins of ever since 365, and reduced research and development costs.
Speaker Change: As of March 31, 2025, cash restricted cash and cash equivalents totaled $64 6 million and debt and accrued interest was $35 3 million.
Speaker Change: In January the remaining outstanding 2025 convertible notes in the principal amount of $20 4 million were repaid reducing the total principal debt outstanding to $35 million.
Additionally, in Q1, all preferred stock was converted into shares of common stock.
Speaker Change: <unk> thousand shares of series B preferred stock were converted into about 34 million shares of common stock at the end of January the.
Speaker Change: The common shares issued have been included in our diluted earnings per share calculation since the preferred shares were issued.
Speaker Change: Finally in Q1, we received gross proceeds of approximately $27 million from the sale of common stock by utilizing our at the market facility, which we expect will extend our cash runway into mid 2026 based on our current operating plans.
Speaker Change: Reiterating our outlook for 2025, we expect full year 2025, global net revenue to be approximately $34 million to $38 million as we progress the launch of ever since $3 65.
Speaker Change: This financial outlook takes into consideration several factors.
Speaker Change: Timeline for the regulatory approval and planned commercial launch of ever since 365 outside the United States.
Speaker Change: Continuing work to transition U S reimbursement from ever since he's III to ever since $3 65.
Speaker Change: Plans with respect to spending on the U S direct to consumer marketing campaigns to generate leads and the status of other sales and marketing initiatives.
Speaker Change: The full year 2025 financial outlook assumes approximately doubling the global patient base in 2025 compared to 2024 with patients growing steadily throughout the year.
Speaker Change: We expect our revenue to be approximately one third in the first half with the remaining two thirds in the second half as a result of the steady increase to patients and the ASP impact due to the seasonality of our business from program discounts previously described.
Speaker Change: We are following the evolving tariff situation closely and monitoring how they could impact our gross profit margins.
Speaker Change: We have a global supply chain and utilized contract manufacturers for several manufacturing processes in Europe.
Speaker Change: And we obtained components and sub components from around the world, including a very small percentage from China, which could lead to a low single digit impact to our gross profit margins.
Speaker Change: Between the European piece of our business being largely sheltered from terrorists utilization of industry exemptions and some of the operational changes our supply chain has begun to implement we expect to be able to mitigate any negative impacts from tariffs to our gross profit margins. We continue to expect gross profit.
Speaker Change: <unk> to steadily increase each quarter in 2025 with full year gross margin is projected to be between 25 and 30%.
Speaker Change: We will continue to evaluate our supply chain and assess whether any aspects of our manufacturing processes could be performed efficiently in the U S. S tariffs become clear in the U S represents a larger piece of our business.
Speaker Change: We're also seeing the results of our expense management through lower operating expenses, which we continue to expect to translate into cash utilization between 50 and $60 million in 2025.
Tim: With that I'll turn it back to Tim.
Tim Goodnow: Thanks, Rick.
Speaker Change: We've had a busy start to the year at Cynthia on X and we only expect to see the momentum continue with new announcements, new technical advances new collaborations and new customers.
Speaker Change: As the world's first and only one year CGM ever since $3 65 is making a difference in patients' lives through simplification and peace of mind.
Speaker Change: The promise of one year one CGM.
Speaker Change: Our launch metrics and revenue numbers give me confidence that we're on the right track with this value proposition to catalyzing growth for the company.
Speaker Change: From securing positive CMS reimbursement effective to January one.
Speaker Change: Two announcing the agreement for our first pump integration with sequels twist.
Speaker Change: And announcing that collaboration with sweet spot, we've made important progress to support ever since 365 access and adoption.
Speaker Change: Further we plan to launch ever since $3 65 in Europe. This year to bring their one year, one CGM promise the people with diabetes in Europe and.
Speaker Change: And we continue to build on our platform to deliver the further advances of Gemini and freedom to users in the upcoming years.
Speaker Change: We hope you share our optimism and excitement and one of the fastest growing segments in the medical device landscape.
Speaker Change: Thank you all once again for your time today.
Speaker Change: Operator, let's go ahead and open up the call for questions.
Speaker Change: Thank you at this time, if you would like to ask a question. Please press the star and one on your telephone keypad.
Speaker Change: We draw your question by pressing Star Q.
Speaker Change: Once again to ask a question. Please press star one on your telephone keypad.
Speaker Change: We'll take our first question from Anthony Petrone with Mizuho. Please go ahead. Your line is open.
Anthony Petrone: Hi, Thanks, and congrats again on the <unk> hundred 65 launch and a good start to the year here.
Speaker Change: Overall.
Speaker Change: I think I want to maybe Tim start on the guidance kind of intrigued there that.
Speaker Change: Actually raising the outlook despite the.
Speaker Change: You know that pause on them on the mercy contract and initiatives.
Speaker Change: And you mentioned sort of you know the U S trajectory.
Speaker Change: One driver, but also O U S. So maybe kind of break those three buckets out a little bit what were the initial expectations for mercy that were baked in.
And if he is split between your early views here on trajectory of U S versus O U S.
Speaker Change: Put it placing the offsets in those two buckets, how do we quantify those two and then I'll have a follow up.
Anthony Petrone: Sure Anthony Thanks.
Speaker Change: Thanks for the time as well.
Speaker Change: Based on the early launch metrics that we've shared we continue to see a very exciting response for the ever since $3 65.
Speaker Change: We continue to have a good first quarter as you saw.
Speaker Change: And we're just excited about the conversion rates that we're seeing we're excited about the interest that we're seeing so all of the signals are certainly to the positive.
Speaker Change: I would say, yes, we did anticipate the ability to do more ramp with with mercy in the back half of the year.
Speaker Change: But that will certainly be.
Speaker Change: <unk> moderated and any risks that might have existed if we fully eliminated by the by the 365 launch.
Speaker Change: U S component will certainly add to that as well the progress that we're making with the with a review of our notified body BSI is right on schedule and we certainly anticipate having that in the second half of the year.
Speaker Change: Along the lines of what we've seen.
Speaker Change: While we previously communicated.
Speaker Change: A lot of excitement in the U S. We do expect to propagate outside the United States as well. So we're hoping that there's some good opportunity with that as well and then based on the metrics that we're seeing with the with the conversions, especially around DTC and the performance of the sales reps.
Speaker Change: We know that if we increase awareness, which we won't be doing we're going to drive more sensors in as well so.
Speaker Change: Net net all those together, we're actually very excited with.
Speaker Change: With the launch is going and if there is a little bit of a speed bump with the slowdown with mercy as they go through some internal reorganizations.
Speaker Change: Now blow right through that.
Speaker Change: Maybe a follow up would just be on the on the DTC you mentioned here.
Speaker Change: Obviously some of your competitors are out there.
Speaker Change: Pretty pretty.
Speaker Change: High profile and just in terms of their DTC efforts.
Speaker Change: So what did those look like for <unk>, what are the channels that you expect to.
Speaker Change: Sort of penetrated here on DTC.
Speaker Change: And then when you think about just conversion on that.
Speaker Change: At the physician level when you segment, just the target market for CGM.
Speaker Change: Are there specific populations within that broader adult type one type two patient backdrop that you really zoning in on here on for a 365 sensor thanks again and congrats.
Speaker Change: Sure.
Speaker Change: Yes, so the mediums that we focused on have been predominantly through the traditional social media. We've shown good success through Facebook, we've shown very good success through <unk>.
Speaker Change: As well as Instagram and Youtube frankly, so.
Speaker Change: We're able to very specifically geo target. So it helps with our individual sales reps and whatever success they may be having in their particular region.
Speaker Change: I would say that.
Speaker Change: Sure.
Speaker Change: That will continue to be our investment that conversion that we're seeing obviously, it's the people that are that are on insulin.
Speaker Change: We've seen especially good success of late in the Medicare population as you know now having the reimbursement schedule up and in place and being able to document that for all of the all of the providers is hugely valuable and takes any discussion in regards economics off the table from our sales reps because it's very.
Speaker Change: As you to see so I would say that that's frankly, probably been our best.
Speaker Change: Those are targeted at.
Speaker Change: Adverse events for that population are leading the pack for us.
Speaker Change: Much appreciate it thank you.
Speaker Change: Thank you. Our next question comes from Maria <unk> with BP.
Speaker Change: Please go ahead your line is open.
Speaker Change: Hey, good afternoon seminar Sam on for Marty Thanks for taking the questions and congrats to a nice start to the year maybe.
Speaker Change: Maybe I could start on on the twist integration congratulations on that announcement.
Speaker Change: How much integration work is needed or that's left on your part.
Speaker Change: So I guess meet that that Q3 timeline.
Speaker Change: And is this.
Speaker Change: Oh, we're essentially is going to be pushing at all or is it really coming from.
Speaker Change: From from twists on commercial team here.
Speaker Change: No I think youre going to see an exciting partnership it's going to come from both sides I think youll show at the Aea.
Speaker Change: Good interests of integration.
Speaker Change: And the teams are already working together as we speak just so happens that the sense. Your sales national sales meeting is next week.
Speaker Change: Good full participation from the staples in that meeting as well so there's a lot of joint programs are put together.
Speaker Change: Two of the newer entrees into place with best in class technology from both platforms. We're real excited about the story that we're going to be able to tell.
Speaker Change: Platelet sensor for a full year without loop algorithm.
Speaker Change: Highly differentiated.
Speaker Change: Pump.
Speaker Change: Is it going to be exciting to a lot of folks and we're excited to see what we can to see what we can do with that so.
Speaker Change: Yeah.
Speaker Change: Okay, Okay, and integration work that needed to be done alright.
Speaker Change: Yes. So we are actively working together the majority of the work still falls in verification and validation of the integrated system on the pump side.
Speaker Change: They are highly motivated to get that done and I know that they're committed to get that out here in the third quarter. So we've got just about a quarter a little bit more work that needs to be done.
And we're pretty excited about being able to keep that on schedule.
Speaker Change: Okay. That's helpful and then maybe moving to the reimbursement side of things congrats on the Medicare.
Speaker Change: Policy update.
Speaker Change: Update on how commercial plans are starting to convert over to 365 sensor.
Speaker Change: Sensor and any targets on where you are hoping to be maybe three.
Speaker Change: Three months from now and possibly by the end of the year.
Speaker Change: Yes, certainly.
Speaker Change: I'd fully expect by the end of the year, even by the third quarter to have the vast vast majority of all the plans covered over now quite frankly, a significant number half.
Speaker Change: We have seen one or two of the commercial payers go from.
Speaker Change: The <unk> channel to the buy and Bill channel that consignment program that Rick referred to so I think a little bit of consolidation towards what Medicare does.
Speaker Change: We may be seeing.
Speaker Change: Through that entire process. They are of course updating to the to the 365 so.
Speaker Change: I would say that were certainly more than halfway.
Speaker Change: And that the 180 365 conversion I would expect over the next quarter or so.
Speaker Change: That'll that'll be in the 90% range.
Speaker Change: Got it okay very good thanks for taking the questions.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Thank you and this concludes our Q&A session I will now turn the call over to Tim Goodnow for closing remarks.
Speaker Change: Great I'd like to thank everyone again for the time. This afternoon. It is an exciting quarter for us to be able to announce the partnership with sequel.
Speaker Change: It's work that has been going on for some time and we're excited to see it here in front of us.
Speaker Change: They are excited to launch their product.
Speaker Change: And to be able to offer that pump integration with our first partner is.
Speaker Change: Really exciting for us so look for us at the Ada I think you'll see a pretty good slash splash there.
Speaker Change: And we appreciate everybody's time this afternoon and look forward to updating you next quarter. So have a good day and thanks Paul.
Thank you and this does conclude today's program. Thank you for your participation you may disconnect at any time.
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