Business Context and Reporting Period
Company: Senseonics Holdings, Inc. (formerly ASN Technologies, Inc.)
Filing Type: Form 8-K (Current Report)
Date of Report: December 4, 2015 (Earliest event reported)
Closing Date: December 7, 2015
On December 7, 2015, the Company completed a reverse merger acquisition of Senseonics, Incorporated. ASN Technologies, Inc. reincorporated in Delaware, changed its name to Senseonics Holdings, Inc., and spun out its former mobile application business to its former president. The Company's sole business focus is now the design, development, and commercialization of the Eversense continuous glucose monitoring (CGM) system for people with diabetes.
Key Financial Metrics
Note: Financial data below reflects the historical results of Senseonics, Incorporated, which is treated as the accounting acquirer.
| Metric | Period | Amount (in thousands) |
|---|---|---|
| Revenue | Nine Months Ended Sept 30, 2015 | $38 |
| Net Loss | Nine Months Ended Sept 30, 2015 | $(21,463) |
| Accumulated Deficit | As of Sept 30, 2015 | $(152,378) |
| Cash and Cash Equivalents | As of Sept 30, 2015 | $12,234 |
| Working Capital | As of Sept 30, 2015 | $6,132 |
| Debt (Notes Payable) | As of Sept 30, 2015 | $9,872 |
Capital Structure Post-Acquisition:
- Common Stock Outstanding: 75,760,061 shares
- Options Outstanding: 9,251,164 shares
- Warrants Outstanding: 5,090,661 shares
Material Changes vs. Prior Period
- Corporate Structure: The Company transitioned from a shell company (ASN Technologies) to an operating medical technology company (Senseonics Holdings) via a reverse merger.
- Revenue: Revenue for the nine months ended September 30, 2015, was $38,000, primarily from a grant, compared to $0 for the same period in 2014.
- Operating Loss: Operating loss increased to $(20.6) million for the nine months ended September 30, 2015, from $(13.9) million in the prior year period, driven by increased R&D expenses ($13.5 million vs. $9.4 million) and administrative expenses ($7.1 million vs. $4.5 million).
- Debt Facilities: The Company entered into a new Note Purchase Agreement with Energy Capital, LLC for up to $10.0 million and amended its existing facility with Oxford Finance LLC to allow for an additional $5.0 million borrowing upon receipt of the CE mark.
Guidance, Outlook, and Risks
Outlook and Strategy:
- Regulatory: The Company expects to receive the CE mark for Eversense in the fourth quarter of 2015, enabling commercialization in select European markets (Sweden, Norway, Denmark) by early 2016 via a distributor (Rubin Medical).
- U.S. Launch: A pivotal clinical trial in the U.S. is planned for the first quarter of 2016. If successful, a Pre-Market Approval (PMA) application is targeted for the third quarter of 2016.
- Product: Eversense is an implantable CGM system designed for up to 90 days of use (potentially 180 days), offering longer duration than current 5-7 day systems.
Liquidity and Capital Needs:
- The Company had approximately $7.0 million in cash as of December 7, 2015.
- Management believes existing cash and the potential $5.0 million Oxford drawdown will fund operations only into the second quarter of 2016.
- Substantial additional funding is required to continue operations, commercialize the product, and fund the U.S. pivotal trial. The auditor has included an explanatory paragraph regarding substantial doubt about the Company's ability to continue as a going concern.
Key Risks:
- Regulatory Approval: Failure to obtain CE mark or FDA approval would prevent commercialization.
- Capital Shortfall: Inability to raise additional capital could force the Company to delay or cease operations.
- Reimbursement: Success depends on third-party payors covering the device and the insertion/removal procedures.
- Competition: Significant competition from established players (Dexcom, Medtronic, Abbott) with greater resources.
Investor Verification Checklist
- Going Concern Status: Verify the timeline and certainty of the next equity or debt financing required to fund operations beyond Q2 2016.
- CE Mark Approval: Confirm the receipt of the CE mark in Q4 2015 to trigger the European launch and the additional $5.0 million Oxford borrowing capacity.
- Debt Covenants: Review the specific triggers for the Energy Capital note (e.g., failure to raise $20 million in equity by Feb 29, 2016) and the repayment terms upon a future public offering.
- Clinical Data: Review the final 180-day accuracy and safety data from the European pivotal trial expected in Q1 2016.
- Reimbursement Codes: Monitor the status of Category III CPT codes for insertion/removal procedures, which are critical for U.S. commercialization.