Memorandum

FDA approves Senseonics 90-day Eversense implantable CGM, On-Body Transmitter, and Mobile Apps on Android, iOS; launch in July – June 21, 2018

Executive Highlights

  • This afternoon, Senseonics and FDA announced approval of the 90-day implantable Eversense CGM, on-body transmitter, and mobile app after a longer-than-expected ~20-month review and unanimously positive March advisory committee. As expected, Eversense is approved for adult wear (18+ years) with two fingerstick calibrations per day, an adjunctive label, and both Android and iOS apps. It has no receiver (app-display only), and bears contraindications for sensor/transmitter interference with MRI, as well as mannitol intravenous and irrigation solutions – notably, not acetaminophen! 

  • Senseonics expects a launch in early 3Q18 and the first US patient insertions in late July. Management is confident that it has sufficient capacity to meet demand. The sales team ­– ~15 members strong as of last month – will begin by calling on a subset of the ~300 top CGM prescribing-endocrinologists in the US. During the 1Q18 call in May, management said that there would be “modest” US revenue in 2H18.

  • Management reiterated strong interest from payers, expressing expectations for “some coverage” in 2018, and “the majority” in the next two years. Payers are reportedly intrigued by (i) the CGM’s strong adherence profile and wear time in Europe; and (ii) the potential for a bundled CPT III code that would reimburse both the physician’s time and 90 days of supplies (transmitter, sensor, insertion tools, etc.). This is exciting new-business-model territory for CGM, and largely for endocrinology as well, but we could see the approach being well-liked by both payers and providers.

  • Management anticipates submitting supplements for “calibration reduction” and nonadjunctive labeling in the next few weeks. Fast! Dr. Goodnow also referred to the new 510(k) iCGM category as an opportunity. We agree that iCGM is well within Senseonics’ wheelhouse based on posted accuracy data.

  • As the first implantable CGM and the longest-duration CGM to be approved in the US by a long shot, we’re hopeful that Eversense help expand the CGM market, offering novel features that may give patients hesitant to use CGM a reason to start. Of course, competition is very tough with Dexcom’s no-calibration G6, Medtronic’s newly available Guardian Connect, and Abbott’s FreeStyle Libre. How will the market segment?

This afternoon, Senseonics and FDA announced approval of the 90-day implantable Eversense CGM, on-body transmitter, and iOS/Android mobile apps after a ~20-month review – just in time for ADA! The Eversense system is both the first implantable CGM and by far the longest-duration CGM to be approved for marketing in the US. This was a nail-biter for Senseonics, who had long optimistically hoped to have a US Eversense product to show at ADA – we expect that the sales team will be out in full force, both at the two exhibit floor booths and at Senseonics’ first ever product symposium on US soil (Saturday, June 23, at 10:15 AM!). Read on for highlights from the press release and the subsequent investor call.

We’re excited to see a fourth accurate standalone CGM with a unique form factor enter the US market – alongside Dexcom’s new G6, Abbott’s FreeStyle Libre, and Medtronic’s new Guardian Connect – offering individuals a different feature set and wear model. It’s another step toward establishing continuous glucose data as the standard of care!  

Top Seven Highlights

1. Eversense System Labeled for Ages 18+, Adjunctive Use, Two Calibrations/Day

As expected after the FDA Advisory Panel in March, the system was approved with conservative labeling for adjunctive use and two fingerstick calibrations per day. Currently, Eversense is only approved for adult wear (18+ years) and follows Medtronic’s Guardian Connect as the second receiverless CGM to be approved by FDA (smartphone only display). Per the Eversense CGM safety information page, the system only bears contraindications for sensor/transmitter interference with MRI procedures, as well as mannitol intravenous and irrigation solutions – no acetaminophen interference! Notably, the proposed contraindications/warnings for sorbitol and tetracyclines (both affect the fluorescent chemistry) raised at the Advisory Panel were not included in the label.

  • The 90-day implantable Eversense eliminates weekly/bi-weekly sensor insertions that many find burdensome, and the daily transmitter changes allows for less intense, and therefore less irritating, adhesives. The device requires a minimally-invasive <5-minute insertion procedure, which many endos have noted to be both fun and simple (Dr. Steve Russell among them). Following removal of the device, closure is performed with a steri-strip, so no sutures are needed.

  • As a reminder, the system set to launch is slightly different from that used in the 90-day US pivotal study (PRECISE II). It has four incremental design changes: a meaningfully smaller gen 2 transmitter, an improved software algorithm for hypoglycemia and early-post-insertion accuracy, an improved insertion/removal tool, and a sensor end cap. These modifications were big topics of discussion at the Advisory Panel meeting, reflecting the company’s continuous product improvement. The committee also felt that another of FDA’s chief concerns – accuracy data collected in the early wear period during studies – was sufficient to demonstrate the device’s accuracy. The Committee, featuring Drs. George Grunberger and NIH’s Dr. Andrew Bremer, voted unanimously in favor of approving the system: 8-0 for overall benefit:risk, 8-0 for safety, and 8-0 for effectiveness. 

2. First Insertions in Late July; Sufficient Capacity to Meet Demand at Launch

According to VP Mr. Mike Gill, a nationwide launch is expected to start early in the third quarter, with the first insertions in late July. In fact, there is already a web portal up and running through which HCPs can request Eversense for their patients. The one-month separating approval and launch is a strong turnaround for the young company, especially considering reps have to go into the field and teach endocrinologists a new procedure. Notably, CEO Mr. Tim Goodnow is confident that Senseonics is equipped with the capacity to meet demand out of the gate, as it has been “investing heavily” in manufacturing to support European expansion and US launch and growth. Still, there is likely to be a shallow ramp – on the 1Q18 call in May, management guided for “modest” revenue contributions from the US in 2H18, suggesting that the launch is likely to truly accelerate in 2019.

  • The sales team will begin by calling on a subset of the top ~300 CGM-prescribing providers in the country. As of last month, there were ~15 sales reps on the team (~20 prescribers per rep), and this number is likely to scale to ~30 by then end of the year. The sales, clinical, and customer care teams currently total 35 employees in aggregate.

  • Since the implantable sensors release small quantities of dexamethasone to reduce inflammation, Senseonics will enlist “strategic fulfillment agents” to fulfill orders from providers. Eversense systems will be shipped to these entities in the coming week. Mr. Gill said these “agents” are already in the CGM business, and therefore “very capable.” The term “strategic fulfillment agents” is new to us, but Mr. Gill suggested that they will be an asset for the company to establish 50-state distribution.

    • Notably, the strategic fulfillment agents are capable of executing on DME distribution and procedure code/bundling the system with the insertion and removal procedures. We’d assuming bundling is a simpler business model with less paperwork, but aren’t sure.

  • Management was eager to discuss the “Mobile Clinic” that will unveil at ADA and then travel across the country. In the clinic, physicians and patients can learn about the technology, and HCPs can receive hands-on proctoring for the insertion/removal procedures. Mr. Gill foreshadowed “a training experience like never before at the ADA.” We’re fairly intrigued as we think about what Senseonics could have up its sleeves – virtual reality? Mannequeins to practice insertions on?

  • Senseonics is also initiating a full awareness campaign geared “first and foremost at the healthcare provider community.” VP Ms. Mirasol Panlilio said the company would initiate a multi-pronged attack today, turning on its YouTube channel, Twitter Feed, and a US-specific Facebook account.

3. Some Coverage in 2018, “Majority” Over Two Years; Category III CPT Code, Priced on Par with Other CGMs in the US

Mr. Gill echoed previous sentiment, expressing confidence that payer feedback has been very positive, and that Senseonics will have “some coverage” within 2018 and “the majority” in the next two years. He noted that payers are very intrigued by (i) the strong adherence and wear time outside of the US and don’t mind the lack of an insulin-dosing claim. Payers are also reportedly very interested in having a wraparound, category III CPT code that can encompass both the supply cost as well as the physician time (we have to imagine “interventional” endocrinologists – Dr. Tim Bailey’s term – would be delighted to be reimbursed for the procedure as well). This is new territory for CGM, and endocrinology as a whole, for the most part. Mr. Gill reiterated that pricing for the procedure code + supplies (transmitter, sensor, insertion device, etc.) would be in line with other CGMs in the US – around ~$10/day or ~$3,600 per year. 

4. “Calibration reduction” + Non-adjunctive Labeling Supplements to be Submitted in “Next Few Weeks”; iCGM an Opportunity

In his prepared remarks, Dr. Goodnow mentioned that Senseonics is “highly committed to incorporating calibration reduction and nonadjunctive labeling to the Eversense system” and that these will be “the first of a few supplements” to be filed with the FDA in the “next few weeks.” He also noted that iCGM is an opportunity for Eversense, and the sensor could get the designation “pretty quickly.” We think based on its accuracy, Senseonics meets the bar for iCGM. Tandem’s Basal-IQ was approved today for iCGM compatibility, which begs the question – if Senseonics gets an iCGM indication, will Tandem be able to integrate it automatically? Will it need a new submission or any deal with Senseonics, or will Tandem users be able to swap Senseonics in if they choose to?

  • Senseonics’ primary US clinical studies demonstrated very strong accuracy over 90 days (2 fingersticks/day), with 85%-87% of sensor readings within 15 mg/dl or 15% of YSI reference. MARD was a very strong 8.5% in the US pivotal (PRECISE II, n=90) using the improved algorithm, slightly ahead of Dexcom’s G6, Abbott’s FreeStyle Libre, and Medtronic’s Guardian Sensor 3. Our read suggests that a non-adjunctive label (like G6 and FreeStyle Libre) as well as an iCGM indication (like G6) are very possible.

5. Guidance for $18-$20 Million in FY18 Revenue Maintained

Management continues to forecast $18-$20 million in revenue for the year. Said Dr. Goodnow, “Anything more than that, I think would be a little too aggressive from where we sit today, we certainly don’t expect to do anything less than that.” 1Q18 revenue came in at $2.9 million, implying a pretty meaningful uptick in the back half of the year, largely from the EU against the backdrop of “modest” US contributions in 2H18.

  • In early May, we estimated that there were <2,800 in the 13 European countries + South Africa. At the time, CEO Mr. Tim Goodnow estimated the majority (~75%) of users had switched from flash glucose monitoring (40%-50%) or traditional sensors (20%-35%). He expects to see a similar breakdown in the US. We think long-term this will be interesting to follow, since it implies Senseonics is stealing more share than growing the market. Will that continue? 

6. IDCL AID Trial with Roche/Senseonics/TypeZero to Begin in 3Q18

Dr. Goodnow shared that EU pivotal trial of the Roche-Senseonics-TypeZero 180-day hybrid closed loop system will “begin testing patients” in 3Q18. This is right on par with 4Q17 guidance for the study to begin in 2H18. Dr. Goodnow also touched on the freshly signed Beta Bionics CGM development agreement, but didn’t provide any details.

7. 180-Day XL Eversense Available in All OUS Markets Beside South Africa; US XL Trial to Begin Enrolling in Summer

In a call earlier this week, Senseonics management shared with us that the 180-day Eversense XL is currently available in all OUS markets beside South Africa. Swedish Eversense patients have fully converted to the XL sensor, and the remaining EU countries have started shipping in May-June, in line with the early May goal to achieve widespread XL availability across all 14 countries in 2Q18. Management aims for all OUS patients to have converted to the XL system by the end of 2018. Following the complete transition, the 90-day sensor will be retired in markets outside the US, putting even more urgency to obtain XL approval from the FDA.

  • Management confirmed previous 4Q17 timing regarding a US clinical trial for the 180-day Eversense XL sensor with “reduced calibration” to begin enrollment this summer. The company expects to recruit several clinic sites for the trial in a “highly targeted approach” and anticipates study completion by 2Q19 – a year from now sounds like ages in the CGM world, but obviously a 180-day study will take a while to do, Reduced calibration presumably refers to one per-day, though we’re not sure.

 

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