Senseonics has secured a $20 million loan to buy itself some time to look for an acquirer and file to bring the 180-day version of its implantable continuous glucose monitor to market, the company said Wednesday.
The precariousness of Senseonics’ financial position became evident last month when the termination of a loan agreement led analysts at Stifel to estimate the company will end the first quarter with $15 million in the bank, enough to keep the lights on for another quarter “or so.”
Facing the prospect of running out of money before landing a deal to save the company, the management team at Senseonics has secured a loan from an existing shareholder. However, if Stifel's estimate is accurate, the $20 million loan will only extend the company's cash runway by a few months.
Senseonics looked set for a tough year at the time of its fourth quarter results last month. At that point, the CGM player shared the forecast impact of its revised deal with Roche, revealing that the new terms were likely to knock one third off ex-U.S. sales. Senseonics ended 2019 with $96 million in cash to ride out the tricky time.
Then COVID-19 roiled global finance and Senseonics’ attempt to get a waiver on a default under its loan agreement failed, forcing it to pay $48.5 million to terminate the funding deal. The hollowing out of Senseonics’ cash pile led the company to seek a buyer and stop selling its 90-day CGM to new patients.
With the end of its cash runway in sight, Senseonics has struck a deal with its shareholder Highbridge Capital Management for the money it needs to keep going. Funds managed by Highbridge are set to provide Senseonics with a $15 million loan, at a 12% annual rate, in the coming days. The agreement gives Senseonics an option to receive an additional $5 million at a later date.
The cash infusion could be enough to take Senseonics past some key milestones. Last month, the company said it was on track to receive FDA approval for a 180-day version of its CGM toward the end of 2020. Senseonics currently sells a 90-day version of the device. CEO Tim Goodnow sees the availability of a 180-day product as “an important inflection point” for the business, reflecting a belief that “as people evaluate an implantable sensor... longevity is what certainly matters.”
Goodnow contends the loan, coupled to efforts to cut costs, will fund Senseonics up to “submission to seek FDA approval for commercial distribution.” The money will also give the company more time to find a deal, potentially a buyout offer, that will provide a longer-term solution to its problems.
Senseonics’ share price has fallen more than 70% over the past year, giving potential acquirers the chance to buy the company for far less than at any time during its four years on public markets. Yet, the failure of Senseonics to carve out a slice of the market in the face of competition from rivals such as Abbott’s FreeStyle Libre could give suitors pause.