Senseonics Holdings, Inc.

Good evening and welcome to the Censionix fourth quarter and full year 2023 earnings release and conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Tripp Taylor from the Gilmartin Group. Please go ahead.

Thank you. This is Tripp Taylor from the Gilmartin Group. Before we begin today, let me remind you that the company's remarks include forward-looking statements. These statements reflect management's expectations about future events, operating plans, regulatory matters, product enhancements, company performance, and other matters, and speak only as of the date hereof. These forward-looking statements involve a number of risks and uncertainties. A list of the factors that could cause actual results to be materially different from those expressed or implied by any of these forward-looking statements is detailed under Risk Factors and Elsewhere, and our annual report on Form 10-K for the year ended December 31, 2023, and our other reports filed with the SEC. These documents are available in the investor relations section of our website at www.senseonics.com. We undertake no obligation to update publicly or revise these forward-looking statements for any reason except as required by law. Joining me from Senseonics are Tim Goodenough, President and Chief Executive Officer, and Rick Sullivan, Chief Financial Officer. With that, I'd like to turn the call over to Tim Goodenough, President and CEO.

Tim? Thank you, Tripp, and thank you all for joining us this afternoon. Today's call will start by providing some highlights of our 2023 performance, followed by an update on Senseonics' strategic initiatives, including ongoing measures to support Essentia in strengthening Eversense's commercial performance. I'll also provide an update on Senseonics' development programs to advance our product pipeline. Then our Chief Financial Officer, Rick Sullivan, will discuss the fourth quarter financials in detail. And we'll then open up the call for questions. 2023 was a successful year across the business for Senseonics as we made solid progress on each of our strategic growth initiatives. On the clinical and regulatory front, we completed our enhanced clinical trial and subsequent data analysis supporting our imminent submission for the 365-day system. And we filed the FDA submission for the ICGM designation. We expanded market awareness notably with an increase of over 300% in website impressions as a result of ADC's direct-to-consumer advertising campaign, and we expanded access to Eversense for millions of patients by securing coverage from UnitedHealthcare and Medicare. We also gained expansion through the basal-only and hypoglycemic indications across a significant number of commercial payers. Financially, we achieved our full year revenue guidance and strengthened our balance sheet by reducing our debt and increasing our liquidity position. We see 2024 as another year of key catalysts as we work towards delivering our plan for development milestones, regulatory approvals, patient expansion, and progress across other strategic growth initiatives. For 2023, we achieved our revenue guidance as Syncyonix generated total revenue of $8 million for the fourth quarter, representing 44% growth compared to the prior year period, and generated total revenue of $22.4 million for the full year 2023, representing 37% growth compared to the prior year period. In the U.S., fourth quarter sales totaled $6.1 million, and sales outside the U.S. totaled $1.9 million. Through our collaboration agreement, Ascensia has responsibility to drive awareness and access and to increase adoption of Eversense in the market. While both awareness of Eversense and access to the product notably improved in 2023, new patient insertions fell short of Ascensia's and our expectations. In 2023, the patient base did increase nearly 40% to approximately 4,500, and US users increased more than 50% year over year. However, we believe Eversense holds the potential for greater growth and recognize, together with Essentia, the importance of further strengthening the commercial support Eversense receives in order to drive stronger results. We believe a set of positive dynamics will improve this commercial performance. Most importantly, having key payer wins from 2023 in place for the full year, such as UnitedHealthcare, the establishment of a broader Inserter network to make access easier, Ascensia's CGM-focused organizational changes and hires, together with a further build out of their commercial team. Our view that this positions them more strongly to take advantage of the demand and potential for Eversense adoption. Encouragingly, Eversense user retention remains high. In many of our key geographies, we are seeing patient retention rates in the mid-80% range, and those rates continue to improve with each subsequent sensor insertion. We know the features and benefits of Eversense, the longest lasting CGM available, exceptional accuracy, removable transmitter, and predictive on-body alerts are resonating with patients. Not only is this supported by the patient retention figures, but also by the success of the direct-to-consumer marketing campaign that was launched in October. It highlights Eversense's unique benefits. With that campaign, the number of leads increased by three times, which we see as validation of strong interest in the benefits of the product. As we discussed on the last quarterly call, ADC launched this new integrated campaign that included television commercials, expanded social media, and new ad created to build awareness among patients and healthcare professionals. This was a meaningful investment in direct-to-consumer marketing for Eversense. With the increase in leads, patient enthusiasm was stronger than expected, and we are very pleased to see the patient response to a campaign that better articulated the unique benefits of Eversense. While the increase in lead generation clearly demonstrated and further validated the demand for our implantable CGM, Significant influx of leads stressed EDC's inside sales infrastructure and processes, limiting their ability to effectively convert the leads. Lead conversion is critical and relies on having the right commercial strategy, resources, and execution. Ascensia's new leadership is currently redesigning and bolstering their direct-to-consumer and lead conversion approach And we expect these efforts will enable them to take advantage of their latent demand for Eversense that the new campaign built. However, given that the increased demand was offset by lower conversion that was not projected when fourth quarter orders were placed, Ascensia has accumulated inventory that will impact their purchases from us in the first half of 2024. As Essentia continues to implement several commercial measures to strengthen these functions and enhance its CGM-dedicated commercial infrastructure, we expect to see improved conversions going forward. To strengthen Eversense growth, PHC has created a dedicated CGM business unit within Essentia, with independent resources directly reporting into PHC leadership and clearly separated from its blood glucose monitoring business. The leadership of the CGM business unit has now full responsibility for the performance of the CGM business. This is a very important and positive step, one we believe will provide additional focus and acceleration. To that point, we were thrilled to recently announce that industry veteran Brian Hanson will be leading these efforts. He was appointed president of this new CGM business unit and is a very valuable addition to our collaboration. Brian previously served as Chief Commercial Officer for Tandem Diabetes Care, where he helped transform the company into a worldwide leader, driving revenue tenfold in the highly competitive insulin pump market. He has built a reputation for successfully launching innovative products, driving revenue growth, and overcoming commercial challenges within the complex, durable medical equipment channel. We're excited to be working with him and look forward to his contributions. With this commercial leadership transition, an updated commercial plan for 2024 is being developed. After the current strategies are reviewed, we look forward to continuing to collaborate with Brian and leveraging his experience to improve the commercial strategy and execution going forward. Together, our top priority will be to ensure we are primed for the next phase of growth for Everson. as we advance towards the planned revolutionary launch of the 365-day system. We expect to submit to the FDA for review in the coming weeks and continue to plan for approval and launch of this new platform product this year. Considering Brian's recent appointment, the timing of ABC's fiscal year, which begins in April, the current patient base, inventory dynamics, conversion improvement initiatives, and the inherent uncertainty in the timing of the approval and launch of the 365-day product, today we are providing our first half outlook for the year, keeping in mind that Essentia purchases will be lower in the first half than their actual patient sales given the year-end conversion shortfall that they experienced. New patient starts are growing, and Essentia is on pace to exceed the total number of new patient sales in 2023 within just the first half of 2024, with new patient sales expected to grow over 150% year-over-year in the first half. As a result, we expect Syncyonics' first half of 2024 global net revenue to be approximately $10 million, representing growth of approximately 16% over the first half of 2023. We plan to provide the full year outlook in the second quarter, following a comprehensive analysis of our current commercial initiatives and a more refined view of our product launch timing and dynamics. Outside the U.S., in Q4, we ended the year as expected with sales of 1.9 million. Consistent with prior periods, growth in Italy and other geographies continued. In Germany, it appears that the user base has stabilized and Essentia can now turn its efforts to growing patient demand. In the future, as ADC further builds out the CGM channel in Europe, we expect them to continue to win new coverage and tenders to support future growth in the region. Now, I would like to provide updates on our strategic growth initiatives, particularly focused on our efforts to expand patient access and streamline healthcare provider experience. Our Eversense Inserter Network is a key component of this strategy, designed to provide more convenient sensor insertion options for patients and a more streamlined workflow for providers. The network, which consists of Eversense certified providers, is an instrumental in expanding access for our fastest growing segment, type 2 diabetes patients. As the vast majority of type 2 patients are treated outside of endocrinology offices, as opposed to type 1 diabetes, it's important that we expand insertion options for the increasing user base. It also allows the Essentia sales force to focus on educating healthcare providers on the clinical benefits of Eversense without the need for insertion training. Our strategic partnership with NPG has been a significant driver of the network's expansion, with 18% of users receiving their insertions to NPG in the fourth quarter. Improving the patient experience is via a two-pronged strategy that is well underway. Part one was to extend the longevity of the sensor, thereby reducing the number of insertions required per year. When we moved from the 90-day sensor to 180 days, we cut the number of insertions per year in half. We plan to do that again this year with the 365 sensor. In parallel, we are continuing to build the inserter network to make it easier than ever for patients to get Eversense. As the two arms converge, we are confident that patients will readily accept one local 10-minute office professional insertion procedure in lieu of having to manually self-remove and reinsert sensors over 30 times per year. Every day, we continue to make strong progress towards that end. Moving on to the access front, we are encouraged by the recognition from both commercial and government payers of the value that CGM brings to the broader range of patients than just those on multiple daily injections. We recently announced expanded Medicare coverage by three Medicare administrative contractors, Meridian, Palmetto, and NGS. These MACs have published final local coverage determinations that extend Medicare coverage plantable CGMs by removing the MDI restriction and including all individuals with diabetes who use insulin, as well as non-insulin-taking patients at risk of hypoglycemia. As is typically the case, we are also seeing commercial payers follow suit with CMS's expanded coverage policy. We estimate that these two new indications, basal insulin use and hypoglycemic risk, effectively double the total addressable market for Eversense. Given our product's unique advantages for the Medicare population, such as professional sensor placement, which eliminates the need for self-insertion, long sensor life, and on-body vibration alerts that serve as a secondary safety mechanism for patients, we anticipate strong adoption within this expanded Medicare population. Moreover, Eversense offers additional advantages for Type 2 patients, We typically prioritize simplicity, not having to replace sensors every 10 to 14 days, not having to worry about sensors frequently falling off, and the flexibility and convenience of being able to remove the transmitter as needed are key factors contributing to type 2s now being our fastest growing segment, representing over 60% of our new patient growth. These recent policy decisions further validate the need for an implantable CGM. Throughout 2024, we anticipate the remaining MAC and commercial payers will adopt similar policies, which we see further fueling awareness and penetration of EverSense. Looking ahead, we are actively engaging in discussions with large health systems and accountable care organizations. These organizations, which assume the risk of managing patient populations, recognize CGM as an effective means to improve patient outcomes while simultaneously reducing healthcare costs. There is a substantial opportunity for these health systems to leverage their influence over care pathways and directly integrate Eversense into their provider offices. Given the inherent long-term adherence that comes with an implanted product, compared to the high turnover of a weekly or biweekly transcutaneous sensors, health systems are beginning to recognize the potential for us to help their patients achieve improved outcomes while simultaneously providing the system with the important diabetes quality measures required by their value-based agreements and supporting a positive ROI from the reduced overall cost of care. Beyond Ascensia's ground-level commercial efforts, Ascensionics is working to prove out a scalable diabetes population health management model in 2024. This is being designed to showcase a comprehensive solution combining product, data intelligence, and services with the goal of offering a compelling value proposition to health systems and ACOs going forward. To close out the commercial discussion, Essentia has been making the moves in investments to support growth, as is evidenced by the announcement of Brian Hansen joining the team and their commitment to extending the payment assistance and simple savings program to unlimited systems. As the market opportunity continues to expand, effectively doubling with the expanded indications, we are aggressively working to address the challenges that come with being a market disruptor. all while laying the groundwork for growth in exciting new areas such as health systems. Together with Essentia, we still have a lot of commercial work to do, but we are energized by signals from patients, providers, payers, and health systems that long-term and plannable CGM has an essential role to play in improving diabetes care. Furthermore, as you are aware, Syncyonics' responsibilities and our collaboration with ADC are focused on the remaining business elements of research, development, and manufacture of the Eversense product. Advancing our pipeline through innovation and new products, of course, remains at the forefront of our strategy, and we continue to make important strides on our side of the partnership as we achieve more innovation milestones. starting with our ICGM designation for Eversense. The submission is in active review with the agency, and we believe that we have provided all the information necessary for them to make a decision. Integration with other diabetes technologies is essential, and the next steps for Senseonics' ICGM strategy are important for the company. We look forward to providing more updates here this year and more importantly, providing additional benefits to the approximately 1 million patients who are currently using automated insulin delivery devices. Looking slightly further out in the coming quarters, we continue to plan for approval for our next generation 365-day system in the fourth quarter. With the completion of the enhanced pivotal clinical study and the data review, we are in the final stages of preparing an FDA submission and plan to submit on a upon approval of the Eversense iCGM system. We anticipate the 365-day system will offer several differentiated benefits of an implantable CGM with a full year of protection from a single sensor and a significant reduction in calibration frequency. These differentiators are the basis for our belief that our 365-day system will represent a major advancement in diabetes management technology. inflection point for Eversense in the U.S. market. As we work with the FDA with the goal of securing approval for the planned one-year Eversense system approximately six months after the submission, we continue to target its launch in the fourth quarter of 2024. In addition, the 365-day system platform is also the basis for the development of the subsequent Generation Gemini and Freedom self-powered products with the ultimate goal of removing the need for any on-body transmitter. We are excited for the first in-human testing of Gemini in the second half of 2024. This vision for Gemini represents another massive step forward in CGM technology. With that, I'll now turn the call over to Rick for a review of our financials.