Senseonics has made Ascensia Diabetes Care the exclusive global distributor of its Eversense implantable continuous glucose monitor and secured up to $80 million. Senseonics' stock jumped 16% in premarket trading Tuesday.
The deals, which Senseonics disclosed alongside second quarter results Monday, position the struggling CGM player to focus on development and manufacturing, relying on its larger partner for commercialization, and extend its cash runway out through 2021.
Senseonics has failed to make an impact on a market fought over by companies such as Abbott and Dexcom, despite having a product that is differentiated from its non-implantable rivals.
Senseonics braced investors for a tough year in March when it revealed changes to a deal with Roche would drive down sales. Later that month, Senseonics began exploring strategic alternatives and stopped sales of its 90-day Eversense CGM to new patients amid concerns that it lacked the money to survive for more than a quarter or two longer. A $20 million loan kept Senseonics from the brink, but it was still left in a vulnerable position.
During the most recent quarter, the company recorded a net loss of $7.5 million, an improvement over the $31.1 million loss a year prior. After temporarily suspending commercial operations in March, total net revenue was down more than 94% year over year to just $261,000.
Now, Senseonics has unveiled a clutch of agreements that could put it on the path to profitability. Having failed to make a commercial success of its 90-day Eversense CGM implant, Senseonics is set to hand responsibility for selling the upcoming 180-day variant to Ascensia.
Ascensia was established in 2016 through the acquisition of Bayer Diabetes Care by PHC Holdings, a company formed in 2013 through the spin-out of Panasonic’s healthcare assets and a transaction with investor KKR. Today, Ascensia is a 1,700-person business best known for its Contour range of blood glucose monitoring systems, with access to more than 10 million diabetes patients.
The deal with Senseonics gives Ascensia the exclusive right to market Eversense products for five years after the 180-day implant becomes available in the U.S., an event penciled in for early next year. Senseonics CEO Tim Goodnow told investors Ascensia will provide 30 direct sales staff in 2021 and grow its team to 80 people by the end of 2023. In return for its efforts, Ascensia will take a cut of global sales in the mid-teens to mid-40 percent range.
Eversense is currently a tiny player in a CGM market fought over by companies such as Abbott and Dexcom. With new sales on hold, Senseonics generated revenues of $261,000 in the second quarter. Yet, the prospect of Ascensia lending its commercial weight to a product that is set to benefit from changes to the Medicare Physician Fee Schedule has raised expectations.
“In 2021 and beyond, we believe the partnership with Ascensia — as well as the recently-established CPT codes which provide more of an incentive for implanting physicians — will drive ramping adoption, enabling Eversense implantable CGM to realize its full potential and become a more viable competitor in the multibillion dollar CGM market with a truly differentiated product,” analysts at SVB Leerink wrote in a note to investors.
Analysts at Stifel were similarly upbeat, saying the Ascensia agreements give Senseonics "an opportunity (and capital) to decouple from the challenges of commercial execution and focus on substantial portfolio evolution, including: a 180-day U.S. sensor in 2021; and perhaps by 2023/2024, a fully-implantable, 365-day sensor."
Senseonics disclosed the Ascensia deal alongside news of financing agreements that will give it up to $80 million. Goodnow said Senseonics will primarily use the money to fund manufacturing in support of the anticipated ramp up in demand for the 180-day Eversense implant. With annualized cash burn set to fall to $60 million following Senseonics’ retreat from commercial activity, the company said it has the money to see it through to the end of next year.