Memorandum

Senseonics submits implantable CGM for CE Marking; launch slated for Sweden and Norway by end of 2015 – August 26, 2015

Executive Highlights

  • Senseonics disclosed plans to launch its implantable CGM in Sweden and Norway by the end of 2015. The device has been submitted for a CE Mark, which is expected in “late fall.”
  • A US pivotal study is on-track to begin recruiting sometime in 2015. Conversations with the FDA are ongoing.
  • Management shared new details on sensor implant procedure (outpatient, local anesthesia, 5 minutes) and transmitter (bigger than Dexcom Gen 4 and Abbott’s FreeStyle Libre, not waterproof, requires daily adhesive).
  • Major outstanding questions for Senseonics include cost/pricing, manufacturing at scale, and incremental benefits relative to increasingly competitive options from Abbott, Dexcom, and Medtronic.

We spoke with Senseonics’ President Mr. Tim Goodnow and VP of Global Sales and Marketing Ms. Mirasol Panlilio following last week’s announcement that the company had raised $10 million in equity financing through ten unnamed investors. Our conversation revealed new details on the investors (New Enterprise Associates, Delphi Ventures) and technology design, but was headlined by new interim data from Senseonics’ EU pivotal trial (MARD of 11.4% over 90 days) and a never-before-heard timeline to launch the company’s implantable CGM by the end of the year in Sweden and Norway. As a reminder, Senseonics’ first-gen product consists of a 90-day implanted subcutaneous sensor, a body-worn transmitter with Bluetooth, and a mobile smartphone app for viewing the data (both Android and iOS). The system requires two fingerstick calibrations per day.

As we understand it, Senseonics submitted its sensor to an EU Notified Body four weeks ago and is optimistic that CE Marking will come by “late fall” (assuming a three-month review). The company has completed its EU pivotal trial to support the filing and 90-day data has been encouraging – MARD in a subset of patients (n=44) was 11.4% vs. YSI. Overall, the accuracy is encouraging for a first-gen product and in line with the company’s ADA 2014 pilot data (MARD of 11%). The accuracy is a bit worse than Dexcom’s G4 Platinum (MARD: 9.0% with updated software 505), numerically comparable to Abbott’s FreeStyle Libre (MARD:11.4%, though FreeStyle Libre is factory calibrated),  and better than Medtronic’s Enlite (MARD: 13.6-14.7%). Senseonics believes that a future sensor may achieve a sub-10% MARD. More detailed data from this trial will come at DTM 2015 in October. The ClinicalTrials.gov posting [Identifier: NCT02154126] has not been updated.

In the US, discussions with the FDA are ongoing and, if things move as planned, Senseonics could start enrollment in a 90-day pivotal study by the end of 2015; this is on par with previous expectations, and presumably puts a US commercialization in 2017 timeframe. Just as they have in the EU (with Rubin Medical), we assume Senseonics will find a partner in the US to commercialize the technology..

An implantable CGM is an important advance for glucose monitoring, though the question is how much it could expand the population of patients on CGM – it’s hard to know at this stage without more details, particularly on the cost front. There’s unquestionably plenty of room to build a spectacularly underpenetrated market (especially in the EU), and more options are a win for patients. A question mark is how patients will perceive the pros and cons of Senseonics’ composite product profile, which exceeds competitor CGMs in some dimensions (90-day wear, smartphone viewing, high/low vibration alerts on the body), but has opportunity for improvement on others (on-body transmitter size, accuracy, fingerstick calibrations). The market will decide, and certainly, competition breeds faster innovation, through which patients ultimately benefit! More details below, including our key questions.

  • Senseonics hopes to launch its CGM by the end of 2015 in Sweden and Norway. The company expects to be able to support all customers upon roll out and will launch in additional markets as experience grows (no timeline revealed). As a reminder, the partnership with Rubin Medical extends to Denmark (in addition to Sweden and Norway), so we assume a launch there is likely to follow.
  • Senseonics has seen a very encouraging MARD of 11.4% vs. YSI in its 90-day EU pivotal study (n=44). The company’s experience has been similar to other CGMs in that day one performance is not as good as other days. It’s a plus that patients will only have to experience “day one” once in a 90-day period!
  • As we have detailed previously, the Senseonics CGM system has three main components: a very tiny subcutaneous implantable sensor (3 x 15 mm) inserted into the upper arm, a body worn transmitter (~1.5 inches long x ~1.5 inches wide x ~0.5 inches thick), and an Android/Apple iOS mobile app. Once the sensor is implanted, the only thing a user deals with is the body worn transmitter and the mobile app. The on-body transmitter powers the sensor through near-field communication and relays sensor glucose information to the smartphone app through a Bluetooth LE link.
  • The mobile app for viewing data will notably launch with both Android and Apple iOS compatibility. This is critical in Europe, where Android is the primary platform. The app provides full access to glycemic levels, allows event logging, and permits cloud communication with care providers.
    • The simultaneous Android and Apple launch has not been seen in CGM to date; Dexcom and Medtronic, by contrast, will launch G5 and MiniMed Connect (respectively) with Apple iOS compatibility to start – both are developing Android systems for primary display of the data, but these will come later.
  • The sensor will be implanted during a roughly 5-minute outpatient procedure that requires only local anesthetic. According to management, endocrinologist and diabetologists will be trained to perform the insertion during routine clinical visits. Considering the time that goes into CGM training and coaching, this sounds like it could be less of a “hassle” for providers over the long-term (once they become comfortable with insertions).
    • Following insertion, the sensor must be worn 24 hours prior to calibration to allow the sensor to “adjust” to the body. This buffer period allows the foreign body response to subside and glucose readings to stabilize. Following the first calibration, the warm-up period is two hours and the sensor will be indicated for calibration with two SMBGs per day. We wonder if the system will force a calibration (like Medtronic’s Enlite), or if it will continue reading glucose even if a fingerstick is not entered (like Dexcom’s G4).
    • The sensor will stop working after 90 days. Patients will receive reminders via the mobile app to replace the sensor far in advance, though as we understand it, patients will not be able to receive data from the sensor “off-label” following the 90-day wear time.  This is certainly smart from a business model perspective. Eventually, the hope is to have a 180-day indication for the system.
  • The on-body transmitter is the central “hub” for the Senseonics system that will contain the analytics engine. It lasts for one year. The pros of this setup are that the transmitter will store data when the app is out of range and, as noted earlier, will be able to vibrate when a hypoglycemic or hyperglycemic threshold is reached. The tradeoff is the size of the transmitter (~1.5 inches long x ~1.5 inches wide x ~0.5 inches thick; about the size of the second-gen OmniPod; see image below), which will be bigger than Dexcom’s G4 and Medtronic’s Enlite, and far larger than Abbott’s FreeStyle Libre. We wonder how this will impact the perceived “discretion factor” of the implantable design.
    • In the first cohort of patients in the pivotal trial, the median sensor wear time was an impressive 23.5 hours per day – this suggests that among those in the trial (75% of whom are not on CGM), the transmitter size is not too big of an issue.
    • The transmitter’s vibration capabilities are a differentiator from other systems. Patients in the clinical trial have reportedly appreciated this discretion, which comes in handy when a smartphone battery dies, during a meeting, etc. The transmitter can be taken off at any time and put back on without doing anything on the app.
    • As we understand it, Senseonics hopes to develop a second-gen transmitter that is much smaller than the first-gen iteration. This would certainly be a plus for patients as Dexcom and Abbott move to smaller on-body components.  
    • The adhesive for the on-body transmitter will need to be reapplied daily. It’s hard to know how patients will perceive the advantages and disadvantages of this, though anecdotally the company has shared that fresh daily adhesive was seen as more a positive than a negative in the clinical trial (e.g., cleaner, more comfortable, hygienic).
    • The transmitter will not be waterproof, as it has a USB port used for charging. The adhesive will need to be removed and reapplied after every shower, though this does provide an ideal time to charge the transmitter (which takes ~15 minutes).
    • An arm band will be available to “protect” the transmitter during high-contact activities but will not need to be worn day-to-day. The adhesive will be the primary method of attaching the transmitter to the body.
  • We look forward to seeing how patients perceive the pros (e.g., three-month implant, smartphone viewing) and cons (e.g., procedure, large on-body transmitter, cost?) relative to an increasingly competitive CGM marketplace. Abbott’s FreeStyle Libre and Dexcom’s Gen 5 are very important current/near-term competition, and medium term, Dexcom/Google’s goal for a low-cost, bandage-like CGM could make the incremental advantage of an implant far less compelling. Still, Senseonics continues to raise funding and push ahead, and there is unquestionably tons of room for many companies to compete effectively in this market.
  • Management did not comment on cost, though our sense is that Senseonics’ product will run closer to CGM’s price point than FreeStyle Libre’s. This is not really a surprise considering the nuances of implantable manufacturing. It will be interesting to see how reimbursement-friendly, northern European countries will receive the commercial product.
  • In terms of funding, we learned that last week’s $10 million round was raised through insider investors only. New Enterprise Associates was the leading contributor, though Delphi Ventures also contributed significantly. Other returning investors played a more minor role. We believe the company is still seeking an additional ~$2 million to close out the round.
    • For context, we estimate (from past press releases) that the company has raised upwards of $100 million to date.

Close Concerns Questions

How will patients weigh the pros (e.g., three-month implant, smartphone viewing) and cons (e.g., procedure, large transmitter, potentially higher cost) of this system?

How will patients weigh Senseonics vs. an increasingly competitive CGM marketplace (Abbott’s FreeStyle Libre, Dexcom’s Gen 5, Dexcom/Google, Medtronic)?

How will the regulatory pathway shake out in the EU and US?

How expensive is manufacturing? Can Senseonics maintain accuracy and reliability at scale?

What will this system cost? How well will it be reimbursed relative to other CGMs?

Appendix – Images of the Sensor and Transmitter

The Sensor

The Transmitter

 

SmartPhone App

-- by Varun Iyengar, Adam Brown, and Kelly Close