CG MEDTECH, DIAGNOSTICS AND DIGITAL HEALTH & SERVICES FORUM - SENSEONICS HOLDINGS INC

Great. Good morning. My name is Bill Pavelnik. I'm a senior medical device analyst here. Welcome to the Canaccord Genuity MedTech Diagnostics and Health Services Forum. With us next is Tim Goodenow. Tim is president and CEO of Senseonics. With that, I'll hand it over to Tim. Great. Thank you, Bill. Appreciate the opportunity to speak today. Senseonics is a technology company in the med tech space, obviously in continuous glucose monitoring, many of you are familiar. It is a significant space that's evolved over the last 15 years with a couple of large players. Senseonix has a new and differentiated technology, and we're happy to report some good success here of late as we've transitioned the organization over the past year or so. Technology is very different. The CGMs that are out there today have evolved to somewhat similar. They're transcutaneous devices that measure glucose every five minutes. Since the Onyx approach is different, we've gone for a long-term solution. So we have a sensor that's inserted in a doctor's office just under the skin, and it stays resident for an entire year, so bringing folks kind of a freedom or ease of use, which is different from the replaceable products that happens about on a two-week basis. We've transitioned the business pretty significantly. We had a partnership with Essentia Diabetes Care, a traditional strip-and-meter business, in 2025 that we transitioned and started January 1st of 2026. So results that we're now showing are for this standalone business, which has had some encouraging results, not only from a control and a destiny perspective, but also from a financial consolidation. We're very, very focused on the space. as you can imagine, the diabetes glucose market is huge, $15 billion this year. But for us, it's really about the commercial growth, which we've shown good success. We've announced essentially a doubling of sales this year, and we're on track to approach that for 2027, as well as an innovation pipeline that's highly differentiated and leverages the full implant capability of the sensor. Strong commercial momentum. We announced the other night 140% growth year-over-year as well as strong growth quarter-over quarter and as I said with a with a quite differentiated roadmap if one looks at the market growth has been a kegger of high double digits we anticipate that will be about 15 billion dollars this year there's 11 million people on CGM and that's evolved pretty significantly over the last few years. As I said, we are the long-term sensor. The positive, of course, is that long- term duration. Put the sensor in to forget about it. The negative is you do need to go to the doctor's office to do the procedure. So we've worked hard to facilitate that as much as we can and give people that 365 days of freedom. As a result of it being obviously a long-terms implant, there's very, very low threshold for failures. So, we've designed the product to be very, very stable. It is very accurate. There are three what's designated as ICGMs on the market. Those are the pump, those are the sensors that can be interchangeable with the pump connectivity and Eversense is one of the three along with the Dexcom and the Abbott product. And that's really allowed us to not only brand the product but develop a well-earned reputation for a a high-quality product. And one of that aspects is, as we'll see, is to get away from some of the short-term sensor replacements that happen with those transcutaneous sensors. And because we don't have to have a skin adhesive that locks the sensor in place for a long term, we've really minimized the skin irritations, which is one of the points of frustrations and one of the reasons that we are able to move the product that we're able to do it. And also, especially important in the AID or the automated insulin delivery is we've eliminated the compression lows, which is a false low that happens when you roll over and sleep on one of the transcontinuous sensors. And in a combined pump, it'll actually give you an alarm for hypoglycemia, but it also turns the pump off. So it's a pretty significant nuisance for the real world living with an integrated product. What we are noting is that the vast majority, 90% of our patients, are all switching from one of the other cgms and why is that it really comes from the sensor survivability if you look at the competing transcutaneous products the reality is about 15 to 20 percent of the sensors don't go to the full 15 days so that creates a hassle of having to replace the product you know if you're at the office and it comes off or it terminates it's really a pain in the neck to do it so when a lot of people get frustrated with that is when they'll come and look for another alternative and we offer a good solution to that so as I said about 90% are coming from one of the other products is a pretty equal split split between the Dexcom g7 or the Abbott Libre 3 10% are new those are folks that are looking for a solution and I have identified you know the long-term plan as being something that can work for them. So importantly, as I mentioned, is the AID integration for people with type 1 diabetes that are pumping. There's a couple of million folks that actually pump, and tying it to a CGM gives that autonomous or that ability, like the thermostat on your wall, to control the temperature and keep it in range. We do the same thing. You give insulin when you're high blood sugar, and you stop that insulin delivery when you're low. We've partnered with two, we've had a great year with Twist, SQL MedTech, delivered a new pump at the beginning of the year that we've partnered with, and it's really been strong performance for us. The acceptance of the product was encouraging and higher than we had anticipated. And we're also excited to announce that we have also partnered with Beta Bionics, and we'll actually be launching that product in about the next week so we'll be pretty significantly extending the capability of a idea integration I said this is predominantly type 1 diabetes there is a little bit of pumping in type 2 but for people that have the autoimmune disease this is a great solution and ever since it's worked out extremely well for them and that's demonstrated by here are our early results if one looks putting people on on ever since and this is real-world experience you'll see that if you put a population on EverSense, the bottom line is they'll increase their time and range to about 66%. So that's normal glycemic levels in about two-thirds of the patients. When you put them on an AID system, specifically with the SQL pump in EverSence, you see that jumps to 76%. So that is actually the highest published results of time and range of any of the combined integrated systems. So we are really encouraged that comes from the compliance of a one-year sensor. As I said, it doesn't come off every week, as well as the loop algorithm that's part of the SQL product is highly advanced and pretty differentiated. And I think that'll be the next area that people will start to peel the onion skin back on and take a look is in regards to the differences between the different treatment algorithms that are out there. So we're real excited to have that relationship, also excited about the opportunity to work with Betabiotics, which is also an easy-to-implement pump with their algorithm choice. You just enter the weight, and actually you can get patients started right away. So the loop algorithm is really for an advanced user that's looking for a lot of flexibility, a lot OF capability, whereas the Betabiodics is really one that you can put on especially folks that are newly diagnosed and help them come up to speed. So we're excited to be able to cover both of those aspects with ever since now. As I said, this is the growth trajectory. We've really expanded. The earlier data was with a partnership, so we shared the revenue in 2025. We ended that, and as I said. So we've been able to grow at essentially 100% or very near 100% here this year, both in revenue, and that's driven by the new patient growth of the folks that I described that are coming over from the other products we focused on significant increase in the number of people that are doing the insertion I'll talk about our Eon network as well as the prescribers have grown significantly as well so this is all a result of the focus work that we've done with our our high-capable commercial organization. And how have we done that? For us, it's really, as you can imagine, as the third real entrant into the standalone CGM space, it has been important for us to get a share of voice. So we focus very significantly on awareness and investment in digital marketing, which allows us to be very, very directed. And that's resulted in now about 60% of our new patients are actually coming from DTC so we'll put out predominantly on meta solicit interest and they'll come to us and we have an inside sales team that'll do the detailing education insurance adjudication and and move people towards it access has been another area of course that we focused on obviously you want to be able to make sure you've got all the reimbursement in place we've done a very good job with that not only with commercial pay but all through Medicare reimbursement, but also this EON network that I'll talk about. EON is our subsidiary. We have about 100 nurses that do the insertion for us, and our team has done a great job at not only expanding the breadth of the offices that we call on. There's also another 43 reps that call on the large diabetology clinics, endocrinology. We've gone deeper into the clinics, but we've also gone to more clinics as well. And then once you earn the patient, of course, being able to retain them and have them stay with you for sensor after sensor is important as well. And we've done a very good job at people staying on the product. Once they have it for an entire year, they get very comfortable with it. It becomes part of their life, and they're renewing at an exciting pace for us. So that's the razor blade part of the business model as well, How do we commercialize? As I said, about 60% of our patients are coming from the DTC channel. So they're coming into us based on that awareness that we're creating, all web-based at this point, social media. And then about 40% are coming from the HCP or the Healthcare Professional Channel. Those are the sales reps that are going out and calling on the doctors, and then they're recommending the product for their patients. So that's a traditional approach. They'll make a recommendation. There's a pretty high conversion rate when the doctor recommends the product. On the DTC channel, it's the typical solicitation that it expects. Somebody will submit a lead. It will follow up on it. We do need to filter those for what we call workable lead. That generally means people that are eligible for reimbursement, right? There's a lot of people today that have diabetes that are not yet on insulin. And if you're not on insulin, you're typically not reimbursed for the product. So it would have to be a cash pay. So we'll work with them, filter for that, understand what exactly type of insurance they have, where they're geolocated, how close they are to an insurgent site, and so forth. and then that that will convert them to an opportunity and then we will work from there to go to a shipment based on the economics whether that be through the the buy and build channel which is mostly Medicare patients or the DME channel which that 30 party entity that actually has the contracts with the private private payers and they provide the product as well so and then of course in both cases once you have that patient you want them have a good experience. You want to enjoy the product and get value out of it. So we work on a retention program to stimulate the reorders when they're up for the renewal a year later. That's the U.S. In Europe, it's quite a bit different. We're actually in four markets. Three of those are tender markets. So those are contracts with the hospitals or with the local region. We work to participate in those based on the features and benefits and capability of the product, and the sales teams will manage that. The fourth market is Germany. It's a larger market, one that we're excited to be growing in, and that is a little bit more like the U.S. There is DTC available, but not at the same level that exists. It is more of a traditional sale through the treatment clinic centers where they do the detailing and the education on the clinicians and nurses to make their recommendations over there. Our split today is about 85% of our Revenue is coming from the United States, and 15% is currently coming from Europe. EonCare, I mentioned, Eoncare is our network of nurses. We have an indication that a nurse practitioner or a PA can actually do the insertion. So as we've expanded and really grown the users, we're seeing a pretty significant influx of people with type two diabetes. Type two diabetes, as you're likely aware, is more treated with primary care. Right. So more distributed. The diabetology clinics have an interest. They may be doing the insertions themselves, but in primary care, they're not going to take the time to do that. So we've put together a network of 100 today, 1099 nurses. So they're contracted with us to do the insertion. So we'll do the training on it. We'll help them do the credentialing if they need to do any of that with any of the local insurance coverage in that area. And then we'll send the folks that we've created the opportunities for to them. and they'll do a white glove experience for us in regards to doing the insertion. The economics for that actually come from the CPT code. So we have three CPT codes for doing the insertions and removals, and that actually pays for those nurses to do the insertions. So it's attractive to us to do it. It's contributory. In some cases, the nurses will actually buy the product. In other cases, we'll actually provide it, and they will get an insertion fee from us from those CPT Codes for it. So it's an exciting area for her. But when I referred to reducing the access or increasing the access, reducing the barriers, this is a key area that we've invested in. Today, we have 100 nurses. We'll expand that probably to 120 here over the next couple of months. And I would anticipate we'll continue to make an investment. And this will be hundreds of nurses as we grow and expand the area, just covering the zip codes around the United States. Places that have worked extremely well for us, the med clinics aesthetic clinics right those types of nurses are looking for free for service type approaches so partnering with them they're very presentable environment and it's been a great alternative for us so this has been one of the big advancements that we've made in the last couple of years to really ease and advance the ability to do the insertion in expanding our market and as i said uh the primary domain that we're focused on of course is on the commercial execution, but the innovation pipeline is the second big primary focus for us. The focus right now with both of the two big competitors is they're looking to take their transmitter down in size to make it as minimally intrusive as they can. So if you follow either Dexcon or Rabbit, as you know, they're working to reduce the transmitter size on the outside. Everybody would like to eliminate that. We, of course, are not going to try to compete in the size reduction. we need to leapfrog that. So we're taking the approach of going to the full implant. Right now, the product that we commercialize is shown in the center. So there is an external component. The implantable sensor is tiny. It's 3 millimeters by 16. It is implanted in the doctor's office by those nurses we spoke of just under the skin. And then the surface mount transmitter does two things. It powers the sensor with near field. So every five minutes, you can generate the optical signal that generates the glucose but it also talks the Bluetooth to the to the outside world to the pump or to your to your phone we're internalizing both of those in the next generation we call it we call that product the freedom product so we're putting the power inside with an implant grade battery the same battery technology that using a cardiac pacemaker or a neurostimulation device that will power the incenser for entire year and it will also power the Bluetooth that's being incorporated as well the near field antenna will come out and the Bluetooth technology will go in we call that first step is the Gemini product it just has the the battery in it that's more targeted for type 2 but the freedom product as we announced just a few weeks ago that we've now done our first in man insertions on those which is the data that we collect to approve to generate and approve our ID trial for product authorization to to market commercialize it so we're really focused on a year-long sensor invisible full implant nothing on the skin that will be frankly a very revolutionary product for the space there's a lot of excitement it's the number one request that we hear is I don't want to show that I have diabetes can you make it invisible for me and we're very comfortable that we're going to be the first to be able to do a product said we announced the first in man trial that we initiated here about a a month ago. That data is the safety and effectiveness data that we'll need. We'll take to the agency and use that to support an IDE submission in the first half of 2027. That investigation device exemption will allow us to enroll probably 100 patients or so and initiate a pivotal trial that we will use for approval of the product in the middle of next year. Submit a 510k so as a icgm these are down regulated from a class 3 pma product to a class 2 510 k so we'll show equivalency from the full implant product who are currently approved 365 day ever since product and then we anticipate a 90 day review on that so mid mid 2028 we anticipate that we'd be on market with a freedom product so large large opportunity uh big big breakthrough product for us that we're pretty excited about so we do work extensively as I said this is for us it's all been about education and awareness that this is an alternative folks so a lot of social media support we really have increased the brand's presence and invisibility in the last year and that's resulted in the growth that we've talked about a hundred percent this year and we'll be close to that next year as well so pretty exciting times and space for us they said a couple of nights ago we announced 19.6 million in revenue for the quarter that's 140 percent growth year-over-year because it's a single consumable for an entire year it's very attractive gross margin so even in our current scale we've got a 62 percent gross margin for the quarter we have about 127 million of cash and restricted cash that's available to us and we did do a growth capital raise here earlier in 2026 to support all of these initiatives. Once again, for the third quarter in a row, because of the performance, we were able to raise guidance for the year. We're now anticipating being in the range of 68 to 70 million in revenue. And we did up our full year gross margin to at least 60 percent. So excited about the potential profitability and ability to pay for this future investment going forward. That said, as we bring out that Freedom product and get some more larger economies of scales. We will be a 70% gross margin business. Again, that all comes back to that once a year consumable, which of course is leveraged over 365 days. EBITDA break-even and profitability right after that in the 2028 time period. And that gives us the ability to fund, of course, these continued investment that we're making in DTC, as well as the pipeline investment in R&D. So we spoke about the, currently we have two pump partnerships. I would anticipate by 2028, We'll have at least two more in place, so exciting times in regards to the Type 1 expansion as well as the Type 2 capability for this product as well. So with that, I want to thank you for the opportunity, and should there be any questions, I would be happy to answer. Great, since we have a little over four minutes for questions, I think your last statement was my first question, additional pump partnerships. I mean, first of all, congratulations, 10-year overnight success story. But I mean you're on your path to $100 million in revenues, which is impressive, and it's never linear and it'S never easy. You're getting to the scale now that I would imagine those other pump partners, especially considering your customers are coming from traditional CGM, have got to be more motivated than in the past to actually have discussions with you and push forward. You're saying 2028. Is this something we could see sooner than that? You know, I don't want to commit to anything sooner than that. I think the last commitment I made is that we would have our next partner by 2027. We actually were able to announce it about a quarter early. But the unfortunate side for the integration is all of the work is done on the pump side, right? If it were in the sensor side control, you'd actually see it a lot faster. They do need to fit it into their portfolio, into their R&D funding. There is very high interest in connecting with the Freedom product, which will certainly, of course, support with, you know, especially with our current partners, right? They'll have it first. The new guys that are coming in will need to get in line at that point. The best way to do it is to get it done during 2027 when we need it. So stay tuned. Obviously, we're supportive of it. We'd love to see it. And then I think it was interesting on the renewal rate. To me, that's a huge opportunity. Have you shared the metrics on what that looks like today? So what we've shared, our experience has been, and you'll recall, first years ago, now we commercialized a 90-day product. We extended the technology to 180. Now the last two years, we've been on 365. So we've been evolving the technology stabilizing it in vivo what we've pretty consistently seen is from the first sensor to the second sensor there's about a 75 retention rate right from the second to the third is about 85 and then by the time you're in your third or more it's over 90 retention so what happens is people you know they build into their life they get comfortable with it and they just keep coming back we first launch this product under a ce mark we have customers today they're on a 30th sensor right so there's a there's a long history now they were on a 90 days so they got to you know they got to go through a little bit faster but they work extremely hard we've had europeans before the one-year product was available in europe they would actually fly to the us to have the one year product inserted so they'll they'll do a lot to stay on it so we're pretty encouraged with the aggregate retention that we see see if there's any Because we are a medical benefit, CMS clearly gave us CPT codes, and it is about 40% to 50% higher CMS gave us. They much prefer the product to come out of the medical benefit so the doctor owns the prescription, not the DME channel. So, yes, the reimbursement is better for Medicare patients and for those that are on what we call the bundled pay, and they reimburse it as a bundle, the procedure plus the product. That does allow us about 60% of our product is through that bundled pace or economics are are a little bit more attractive than the DME channel. And it's not only that reimbursement is better, but also there's no DME distributor margin. Right. So and then we also because it's in a plannable, we do not participate in the in the pharmacy benefit. So there's no haircut associated with that as well. On the CMS, with the decision pending on the non-insulin patients for type 2, how do you think about that? What do you thing timing is for that? And then that sounds like that's something that can make the DTC channel even more efficient. if you're having to qualify patients, if all of a sudden that becomes much bigger, that makes that channel more efficient. Yeah, and obviously, clinically it makes sense. Anybody that especially type 2 that's not yet on insulin, they're fighting hyperglycemia. So knowing where that is all the time, it makes a lot of sense. That's why you will get a clinical benefit. That's Why Reimbursement Does Make Sense. I think there's probably two things that are going on. I think, one, they are looking to bundle that decision close to when they're ready to make decisions on the competitive bidding. If they're going to open up the floodgates for a lot more people, they want to make sure that they can manage the economics as well. So my feeling is those may be somewhat timed together. I do think it's very exciting. And for a one-year product, one of the top reasons when I say that we qualify somebody for access that we can't qualify them today is because they're not on insulin. And if that limitation goes away, we're now going to be able to qualify those. So our biggest issue when we go broad-based DTC advertising, like when we tested running television commercials, is everybody comes in more than just the people with insulin. So we had to turn a lot away that I'm excited in the future we may not have to be able to. Yeah, we saw the same thing happen in the pump market when they added type 2 labeling. Right. Just makes DTC that much more efficient. Right, exactly. Any other questions from the audience? Running over. Nope. Great, appreciate it. Thank you. Thank you, sir.