Memorandum

Senseonics launches Eversense Bridge Program offering Eversense at $99 upfront to accelerate access – March 22, 2019

Executive Highlights

  • Senseonics today announced the launch of its Eversense Bridge Program, offering eligible patients the 90-day Eversense CGM for just $99 to start. For those who are deemed eligible, the program will provide financial assistance for up to two sensors – a great access move as Senseonics seeks to expand reimbursement in the US. The $99 fee does not include the cost of the sensor insertion/removal procedures, which remain the patient’s responsibility and typically run in the range of $200-$300 on average. The program will also assist in confirming patients’ insurance benefits, obtaining pre-authorizations prior to sensor placement, and helping healthcare providers with appeals of denied claims.

  • Per comments during the 4Q18 call, the Bridge Program is expected to “impact revenue recognition and introduce some uncertainty in timing.” To this end, the press release mentioned the program does not introduce any changes to Senseonics’ 2018 financials or its 10-K filing, which included an audit opinion from its independent registered public accounting firm regarding cash on hand. According to the 10-K, Senseonics does not believe it has sufficient cash to fund operations through March 2020 (i.e., 12 months from now) without additional financing – this is not surprising. The company ended 2018 with $137 million in cash at a quarterly burn rate of $26 million – i.e., ~five quarter of cash remaining. Assuming 2019 goes as planned, we’d expect a healthy fundraise to put more cash in the bank.

Senseonics today announced the launch of its Eversense Bridge Program, which provides patients with access to the 90-day Eversense CGM for just $99, not including the cost of the sensor insertion and removal procedures, which typicall cost $200-$300 on average. The Eversense Bridge Program, first discussed during the company’s 4Q18 call, is an access program to help patients get on Eversense seamlessly – and at low out-of-pocket cost – as the company works through insurance benefits, obtains pre-authorizations prior to sensor placement, and works with healthcare providers to appeal denied claims. For those who are deemed eligible, the program will provide financial assistance for up to two sensors. To be eligible for the program, patients must:

  • Be 18+ years and have a valid prescription for Eversense;

  • Have a commercial or private insurance plan that does not cover the full costs of the Eversense System;

  • Not be enrolled in any state or federally funded insurance program (which includes Medicare, Medicaid, Medicare Advantage, any Medicaid managed care plan, Veterans Affairs (VA), Department of Defense (DOD) programs or TRICARE);

  • Not be a resident of Massachusetts.

Insurance coverage for Eversense is a work in progress – the company currently has ~25% of US covered lives – and this program is a great interim step to get non-covered patients onto Eversense at a minimal out-of-pocket startup cost. Ideally, Senseonics will be able to show strong user base growth as it works to expand coverage in 2019.

We think many non-covered patients will find the $99 pricing (plus insertion/removal cost) attractive, as it puts Eversense closer to coinsurance/copay startup costs for better-reimbursed CGMs. The 14-day FreeStyle Libre still has the lowest startup cost on the US market, as users can purchase one sensor in-pharmacy for ~$60 cash and use the free FreeStyle LibreLink smartphone app. Dexcom and Medtronic still requiring buying at least sensor and the transmitter. We’d assume the cost of the Eversense insertion/removal procedure is at least $100 (on top of the $99), and there is obviously the need to visit a healthcare provider too. Still, we’re optimistic that the program will boost Eversense new patient pipeline, which will be critical in 2019 as Senseonics looks to raise more cash.

  • The fine print on the Eversense Bridge Program website suggests some patients may actually be charged more than $99 for Eversense. It appears that the $99 is an upfront fee, after which patients will be eligible towards receiving assistance “up to the program maximum”; the latter is not specified. We wonder how the pricing specifics will actually play out. See below for the exact language:

    • “The Eversense Bridge Program (“Program”) offers monetary assistance to obtain the Eversense CGM System, to patients who meet the Eligibility Requirements and make an initial $99 payment towards purchasing Eversense product(s). Eligible patients may receive assistance up to the Program maximum in two (2) separate instances of purchasing Eversense product(s), payable to the supplier/distributor furnishing the Eversense product(s).”

Senseonics’ 10K, Cash, and “Ability to Continue”

  • On the 4Q18 call, management admitted that the Eversense Bridge Program is anticipated to “impact revenue recognition and cause some uncertainty in timing,” but will hopefully pay dividends “in 2020 and beyond.” To this end, the press release mentioned that the program does not introduce any changes to Senseonics’ 2018 financials or to its annual 10-K filing, which included an audit opinion from its independent registered public accounting firm related to Senseonics’ ability to continue operating. The Form 10-K acknowledges that Senseonics lacks sufficient cash to fund operations through March 2020 (i.e., 12 months from now) without additional financing. Given that Senseonics ended 2018 with $137 million in cash, reflecting a quarterly cash burn of $26 million, it’s not too surprising that the company forecasts roughly five more quarters of cash on hand (our estimate at the time). Assuming Senseonics can show a nice ramp in sales and user base in 2019, we expect a healthy fundraise to continue supporting this innovative company in a growing market. It took Dexcom and Insulet many years after launching their first products to get to cash-flow positive operations; we’d expect a similar trajectory for Senseonics (or perhaps slightly faster, since the category is more developed now). Certainly there is lot of investment required to propel Senseonics’ pipeline and business efforts in the next 12 months: ramping US marketing and payer access, multiple PMA supplements for the 90-day Eversense (non-adjunctive, calibration reduction), the 180-day US clinical trial and iCGM submission, and the future “Swipe” version that eliminates the transmitter. Read more in our recent interview with CEO Tim Goodnow and CMO Dr. Fran Kaufman.

 

--by Maeve Serino, Adam Brown, and Kelly Close