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What changed in Senseonics Holdings, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Senseonics Holdings, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+415 added−410 removedSource: 10-K (2025-03-03) vs 10-K (2024-03-01)

Top changes in Senseonics Holdings, Inc.'s 2024 10-K

415 paragraphs added · 410 removed · 320 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

109 edited+27 added−30 removed148 unchanged
Biggest changeAdditionally, as discussed above, we announced a collaboration with NPG designed to expand U.S. patient access the Eversense E3 System by providing additional convenient in-office and at-home sensor insertion options utilizing NPG’s broad network in over 30 states. ​ Our net revenues are derived from sales of the Eversense CGM system which is sold in two separate kits: the disposable Eversense Sensor Pack which includes the sensor, insertion tool, and adhesive patches, and the durable Eversense Smart Transmitter Pack which includes the transmitter and charger. ​ Collaboration and Commercialization Agreement with Ascensia Diabetes Care Holdings AG ​ On August 9, 2020, we entered into a Commercialization Agreement with Ascensia pursuant to which we have granted Ascensia the exclusive right to distribute the Company’s 90-day Eversense CGM system and our Eversense 180-day (XL) CGM system worldwide for use in people with diabetes, with the following initial exceptions: (1) until January 31, 2021, the territory did not include countries covered by our then existing distribution agreement with Roche Diagnostics International AG and Roche Diabetes Care GmbH (collectively “Roche”), which are the Europe, Middle East and Asia, excluding Scandinavia and Israel, and 17 additional countries, including Brazil, Russia, India and China, as well as select markets in the Asia Pacific and Latin American regions; (2) until September 13, 2021, the territory did not include countries covered by our current distribution agreement with Rubin Medical, which are Sweden, Norway and Denmark; and (3) until May 31, 2022, the territory did not include Israel.
Biggest changeAdditionally, as discussed above, we recently announced the acquisition of the insertion network assets of NPG to continue to expand U.S. patient access to the Eversense System by providing additional convenient in-office and at-home sensor insertion options utilizing the insertor network currently in approximately 30 states. ​ Our net revenues are derived from sales of the Eversense CGM system which includes the Eversense Sensor Pack containing the sensor, insertion tool, and adhesive patches, the Eversense Smart Transmitter Pack containing the transmitter and charger and in some cases the procedure revenue associated with insertions and removals. ​ Collaboration and Commercialization Agreement with Ascensia Diabetes Care Holdings AG ​ On August 9, 2020, we entered into a Commercialization Agreement with Ascensia pursuant to which we have granted Ascensia the exclusive right to distribute the Eversense CGM system worldwide for use in people with diabetes.
Manufacturers of medical devices may only benefit from the above extended transitional provisions deadlines if the following conditions are fulfilled: (i) the devices continue to comply with the requirements of the MDD or AIMD, (ii) there are no significant changes in the design and intended purpose, (iii) the devices do not present an unacceptable risk to the health or safety of patients, users or other persons, or to other aspects of the protection of public health, (iv) the manufacturer implements a quality management system by May 26, 2024 which complies with the requirements of the Medical Devices Regulation, (v) by May 26, 2024 an application is lodged with a Notified Body for conduct of the conformity assessment of the devices covered by the CE Certificate of Conformity, or the devices intended to substitute for such devices, in accordance with the Medical Device Regulation and a related written agreement is signed with the Notified Body by September 26, 2024, and (vi) from May 26, 2021, compliance with the Medical Device Regulation relating to post-market surveillance, market surveillance, vigilance, registration of economic operators and of devices is ensured in place of the corresponding requirements in the MDD or AIMD. ​ In addition, CE Certificates of Conformity issued by Notified Bodies in accordance with the MDD or the AIMD from May 25, 2017, which were valid on May 26, 2021 and have not been withdrawn since but which expired before March 20, 2023, will only continue to be valid in accordance with the extended transitional deadlines above if either (i) the manufacturer signed a written agreement with a Notified Body for the conformity assessment of the device covered by the expired CE Certificate of Conformity, or the device intended to substitute that device, in accordance with the Medical Device Regulation before the date of expiry of the CE Certificate of Conformity, or (ii) a competent authority of an EU Member State has granted a derogation from the application conformity assessment procedure in accordance with Article 59(1) or Article 97(1) of the Medical Device Regulation. ​ 17 Class III custom-made implantable medical devices may be placed on the market until May 26, 2026 without a CE Certificate of Conformity issued by Notified Body, provided that (i) by May 26, 2024, an application is lodged with a Notified Body for the conformity assessment of the devices, in accordance with the Medical Device Regulation and a related written agreement is signed with the Notified Body by September 26, 2024. ​ The advertising and promotion of medical devices in the EU is subject to the national laws of the individual EU Member States that implemented the MDD, the AIMD and that apply the Medical Device Regulation, Directive 2006/114/EC concerning misleading and comparative advertising, and Directive 2005/29/EC on unfair commercial practices, as well as other national legislation of individual EU Member States governing the advertising and promotion of medical devices.
Manufacturers of medical devices may only benefit from the above extended 17 ​ transitional provisions deadlines if the following conditions are fulfilled: (i) the devices continue to comply with the requirements of the MDD or AIMD, (ii) there are no significant changes in the design and intended purpose, (iii) the devices do not present an unacceptable risk to the health or safety of patients, users or other persons, or to other aspects of the protection of public health, (iv) the manufacturer implements a quality management system by May 26, 2024 which complies with the requirements of the Medical Devices Regulation, (v) by May 26, 2024 an application is lodged with a Notified Body for conduct of the conformity assessment of the devices covered by the CE Certificate of Conformity, or the devices intended to substitute for such devices, in accordance with the Medical Device Regulation and a related written agreement is signed with the Notified Body by September 26, 2024, and (vi) from May 26, 2021, compliance with the Medical Device Regulation relating to post-market surveillance, market surveillance, vigilance, registration of economic operators and of devices is ensured in place of the corresponding requirements in the MDD or AIMD. ​ In addition, CE Certificates of Conformity issued by Notified Bodies in accordance with the MDD or the AIMD from May 25, 2017, which were valid on May 26, 2021 and have not been withdrawn since but which expired before March 20, 2023, will only continue to be valid in accordance with the extended transitional deadlines above if either (i) the manufacturer signed a written agreement with a Notified Body for the conformity assessment of the device covered by the expired CE Certificate of Conformity, or the device intended to substitute that device, in accordance with the Medical Device Regulation before the date of expiry of the CE Certificate of Conformity, or (ii) a competent authority of an EU Member State has granted a derogation from the application conformity assessment procedure in accordance with Article 59(1) or Article 97(1) of the Medical Device Regulation. ​ Class III custom-made implantable medical devices may be placed on the market until May 26, 2026 without a CE Certificate of Conformity issued by Notified Body, provided that (i) by May 26, 2024, an application is lodged with a Notified Body for the conformity assessment of the devices, in accordance with the Medical Device Regulation and a related written agreement is signed with the Notified Body by September 26, 2024. ​ The advertising and promotion of medical devices in the EU is subject to the national laws of the individual EU Member States that implemented the MDD, the AIMD and that apply the Medical Device Regulation, Directive 2006/114/EC concerning misleading and comparative advertising, and Directive 2005/29/EC on unfair commercial practices, as well as other national legislation of individual EU Member States governing the advertising and promotion of medical devices.
Class I medical devices, for which the conformity assessment procedure in accordance with the MDD or the AIMD did not require the involvement of a Notified Body but will require the involvement of a Notified Body in accordance with the Medical Device Regulation and for which an EU Declaration of Conformity was issued in accordance with the MDD or the AIMD prior to May 26, 2021, can continue to be placed on the EEA market until December 31, 2028.
Class I medical devices, for which the conformity assessment procedure in accordance with the MDD or the AIMD did not require the involvement of a Notified Body but will require the involvement of a Notified Body in accordance with the Medical Device Regulation and for which an EU Declaration of Conformity was issued in accordance with the MDD or the AIMD prior to May 26, 2021, can continue to be placed on the EEA market until December 31, 2028.
These include, but are not limited to: ​ ● establishment registration and device listing; ● QSR, which requires manufacturers, including third party manufacturers, to follow stringent design, testing, production, control, supplier/contractor selection, complaint handling, documentation and other quality assurance procedures during all aspects of the manufacturing process; ● MDR regulations, which require that manufacturers report to the FDA, competent authorities of the EEA countries and Notified Bodies, and foreign regulatory authorities, when applicable, if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur; ● voluntary and mandatory device recalls addressing problems when a device is defective and could be a risk to health; and ● corrections and removals reporting regulations, which require that manufacturers report to the FDA, competent authorities of the EEA countries and Notified Bodies, and foreign regulatory authorities, when applicable, field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health. ​ Also, the FDA requires us to conduct Post Approval Studies (post-market surveillance studies) and establish and maintain a system for tracking our products through the chain of distribution to the patient level.
These include, but are not limited to: ​ ● establishment registration and device listing; ● QSR, which requires manufacturers, including third party manufacturers, to follow stringent design, testing, production, control, supplier/contractor selection, complaint handling, documentation and other quality assurance procedures during all aspects of the manufacturing process; ● MDR regulations, which require that manufacturers report to the FDA, competent authorities of the EEA countries and Notified Bodies, and foreign regulatory authorities, when applicable, if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur; ● voluntary and mandatory device recalls addressing problems when a device is defective and could be a risk to health; and ● corrections and removals reporting regulations, which require that manufacturers report to the FDA, competent authorities of the EEA countries and Notified Bodies, and foreign regulatory authorities, when applicable, field 18 ​ corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health. ​ Also, the FDA requires us to conduct Post Approval Studies (post-market surveillance studies) and establish and maintain a system for tracking our products through the chain of distribution to the patient level.
Qui tam actions have increased significantly in recent years, causing greater numbers of healthcare companies to have to defend a false claim action, pay fines, be excluded from Medicare, Medicaid or other federal or state healthcare programs, or be subject to integrity oversight and reporting obligations to resolve allegations of non-compliance, as a result of an investigation arising out of such action. ​ There are other federal anti-fraud laws that that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. ​ Additionally, HIPAA established two federal crimes for healthcare fraud and false statements relating to healthcare matters.
Qui tam actions have increased significantly in recent years, causing greater numbers of healthcare companies to have to defend a false claim action, pay fines, be excluded from Medicare, Medicaid or other federal or state healthcare programs, or be subject to integrity oversight and reporting obligations to resolve allegations of non-compliance, as a result of an investigation arising out of such action. ​ There are other federal anti-fraud laws that that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a 21 ​ material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. ​ Additionally, HIPAA established two federal crimes for healthcare fraud and false statements relating to healthcare matters.
Several courts have interpreted the statute's intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of (or purchases, or recommendations related to) federal healthcare covered business, the federal Anti-Kickback Statute has been implicated and potentially violated. ​ The penalties for violating the federal Anti-Kickback Statute include imprisonment for up to ten years, criminal fines of up to $100,000 per violation, possible exclusion from federal healthcare programs such as Medicare and Medicaid and other penalties, including significant civil monetary penalties and integrity oversight and reporting obligations to resolve allegations of non-compliance.
Several courts 20 ​ have interpreted the statute's intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of (or purchases, or recommendations related to) federal healthcare covered business, the federal Anti-Kickback Statute has been implicated and potentially violated. ​ The penalties for violating the federal Anti-Kickback Statute include imprisonment for up to ten years, criminal fines of up to $100,000 per violation, possible exclusion from federal healthcare programs such as Medicare and Medicaid and other penalties, including significant civil monetary penalties and integrity oversight and reporting obligations to resolve allegations of non-compliance.
These may include, among other things, any of the following sanctions or consequences: ​ ● warning letters or untitled letters that require corrective action; ● fines and civil penalties; ● unanticipated expenditures; ● delays in approving or refusal to approve future products; ● FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries; ● suspension or withdrawal of FDA clearance or approval; ● product recall or seizure; ● interruption of production; ● operating restrictions; ● injunctions; and 19 ● criminal prosecution. ​ In the EEA, similar regulatory requirements apply once a device has been CE marked and placed on the EEA Market.
These may include, among other things, any of the following sanctions or consequences: ​ ● warning letters or untitled letters that require corrective action; ● fines and civil penalties; ● unanticipated expenditures; ● delays in approving or refusal to approve future products; ● FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries; ● suspension or withdrawal of FDA clearance or approval; ● product recall or seizure; ● interruption of production; ● operating restrictions; ● injunctions; and ● criminal prosecution. ​ In the EEA, similar regulatory requirements apply once a device has been CE marked and placed on the EEA Market.
Activities that violate the FCPA, even if they occur wholly outside the United States, can result in criminal and civil fines, imprisonment, disgorgement, oversight, and debarment from government contracts. ​ 24 UK Bribery Act and other anti-corruption laws ​ The UK Bribery Act 2010 and other applicable foreign anti-corruption laws that apply in countries where we do business, generally prohibit us and our employees and intermediaries from authorizing, promising, offering, or providing, directly or indirectly, improper or prohibited payments, or anything else of value, to government officials or other persons to obtain or retain business or gain some other business advantage.
Activities that violate the FCPA, even if they occur wholly outside the United States, can result in criminal and civil fines, imprisonment, disgorgement, oversight, and debarment from government contracts. ​ UK Bribery Act and other anti-corruption laws ​ The UK Bribery Act 2010 and other applicable foreign anti-corruption laws that apply in countries where we do business, generally prohibit us and our employees and intermediaries from authorizing, promising, offering, or providing, directly or indirectly, improper or prohibited payments, or anything else of value, to government officials or other persons to obtain or retain business or gain some other business advantage.
In addition, because patent applications can take many years to issue, there may be patent applications that are currently pending and unknown to us, which may later result in issued patents that third parties could assert against us and materially and adversely affect our business. ​ 14 Any adverse determination in litigations, post grant trial proceedings, including interference proceedings, at the Patent Office relating to intellectual property to which we are or may become a party could subject us to significant liabilities to third parties or require us to seek licenses from third parties, and result in the cancellation and/or invalidation of our intellectual property.
In addition, because patent applications can take many years to issue, there may be patent applications that are currently pending and unknown to us, which may later result in issued patents that third parties could assert against us and materially and adversely affect our business. ​ Any adverse determination in litigations, post grant trial proceedings, including interference proceedings, at the Patent Office relating to intellectual property to which we are or may become a party could subject us to significant liabilities to third parties or require us to seek licenses from third parties, and result in the cancellation and/or invalidation of our intellectual property.
As a 21 result, our provider and training arrangements may ultimately be found to be not in compliance with applicable federal law. ​ Federal False Claims Act & HIPAA ​ The federal False Claims Act provides, in part, that the federal government may bring a lawsuit against any person whom it believes has knowingly presented, or caused to be presented, a false or fraudulent request for payment from the federal government, or who has made a false statement or used a false record to get a claim approved.
As a result, our provider and training arrangements may ultimately be found to be not in compliance with applicable federal law. ​ Federal False Claims Act & HIPAA ​ The federal False Claims Act provides, in part, that the federal government may bring a lawsuit against any person whom it believes has knowingly presented, or caused to be presented, a false or fraudulent request for payment from the federal government, or who has made a false statement or used a false record to get a claim approved.
Apart from low risk medical devices (Class I with no measuring function and which are not sterile), 16 in relation to which the manufacturer may issue an EC Declaration of Conformity based on a self-assessment of the conformity of its products with the GSPRs, a conformity assessment procedure requires the intervention of a Notified Body, which is an organization designated by a Competent Authority of an EEA country to conduct conformity assessments.
Apart from low risk medical devices (Class I with no measuring function and which are not sterile), in relation to which the manufacturer may issue an EC Declaration of Conformity based on a self-assessment of the conformity of its products with the GSPRs, a conformity assessment procedure requires the intervention of a Notified Body, which is an organization designated by a Competent Authority of an EEA country to conduct conformity assessments.
The disease is caused by the body's inability to produce or effectively utilize the hormone insulin, which prevents the body from adequately 5 regulating blood glucose levels. If diabetes is not managed properly, it can lead to serious health conditions and complications, including heart disease, limb amputations, loss of kidney function, blindness, seizures, coma and even death.
The disease is caused by the body's inability to produce or effectively utilize the hormone insulin, which prevents the body from adequately regulating blood glucose levels. If diabetes is not managed properly, it can lead to serious health conditions and complications, including heart disease, limb amputations, loss of kidney function, blindness, seizures, coma and even death.
Three companies currently account for a substantial share of the worldwide sales of SMBG systems: Roche Diabetes Care, a division of Roche Diagnostics; Abbott; and Ascensia. ​ We may also compete with companies who are developing real-time intermittent sensing devices, low cost transcutaneous CGM systems, fully implantable CGM devices and non-invasive CGM system to measure a user's 13 glucose level.
Three companies currently account for a substantial share of the worldwide sales of SMBG systems: Roche Diabetes Care, a division of Roche Diagnostics; Abbott; and Ascensia. ​ We may also compete with companies who are developing real-time intermittent sensing devices, low cost transcutaneous CGM systems, fully implantable CGM devices and non-invasive CGM system to measure a user's glucose level.
Failure to comply with the UK’s Bribery Act, and other anti-corruption laws and trade control laws could subject us to criminal and civil penalties, disgorgement and other sanctions and remedial measures, and legal expenses. ​ Environmental Health and Safety Regulations ​ We are also subject to various environmental health and safety rules and regulations both within the U.S. and internationally relating to pollution or protection of human health and the environment.
Failure to comply with the UK’s Bribery Act, and other anti-corruption laws and trade control laws could subject us to criminal and civil penalties, disgorgement and other sanctions and remedial measures, and legal expenses. ​ ​ 24 ​ ​ ​ Environmental Health and Safety Regulations ​ We are also subject to various environmental health and safety rules and regulations both within the U.S. and internationally relating to pollution or protection of human health and the environment.
In addition, voluntary EU and national industry Codes of Conduct 18 provide guidelines on the advertising and promotion of our products to the general public and may impose limitations on our promotional activities with healthcare professionals. ​ ​ Other Regulatory Requirements ​ Even after a device receives clearance, certification or approval and is placed in commercial distribution, numerous regulatory requirements apply.
In addition, voluntary EU and national industry Codes of Conduct provide guidelines on the advertising and promotion of our products to the general public and may impose limitations on our promotional activities with healthcare professionals. ​ ​ Other Regulatory Requirements ​ Even after a device receives clearance, certification or approval and is placed in commercial distribution, numerous regulatory requirements apply.
We disagree with this position as the CGM class has already proven to improve health outcomes and Eversense is another product that fits into the class. Additionally, in 2019 we published several sets of real-world data, which show Eversense provides the same clinical benefits as other CGM systems and has a favorable safety profile.
We disagree with this 11 ​ position as the CGM class has already proven to improve health outcomes and Eversense is another product that fits into the class. Additionally, in 2019 we published several sets of real-world data, which show Eversense provides the same clinical benefits as other CGM systems and has a favorable safety profile.
Additionally, in January 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, reduced Medicare payments to several providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. ​ It is uncertain whether and how future legislation could affect prospects for our product candidates or what actions federal, state, or private payors for healthcare treatment and services may take in response to any such healthcare reform proposals or legislation. ​ ​ ​ 23 Brexit and the Regulatory Framework in the United Kingdom ​ Following the result of a referendum in 2016, the United Kingdom left the European Union on January 31, 2020, commonly referred to as Brexit.
Additionally, in January 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, reduced Medicare payments to several providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. ​ It is uncertain whether and how future legislation could affect prospects for our product candidates or what actions federal, state, or private payors for healthcare treatment and services may take in response to any such healthcare reform proposals or legislation. ​ Brexit and the Regulatory Framework in the United Kingdom ​ Following the result of a referendum in 2016, the UK left the European Union on January 31, 2020, commonly referred to as Brexit.
We compete with well-capitalized companies, some of which are publicly traded, that manufacture CGM systems including Dexcom, Medtronic and Abbott. Each of these companies has received FDA approval, CE Certificates of Conformity and CE Marked their products, permitting them to market their respective CGM systems across the United States and EEA.
We compete with well-capitalized companies, some of which are publicly traded, that manufacture CGM systems including Dexcom, Medtronic and Abbott. Each of these companies has received FDA approval, CE Certificates of Conformity and CE Marked their products, permitting them to market their respective CGM 12 ​ systems across the United States and EEA.
Our values define the behaviors of our existing employees, and the new hires that we welcomed to our organization during 2023: ​ ● Customer Inspired emphasizes how we put the customer first while we use our talents, passion, empathy, and hard work to build technology solutions for the unmet needs of our customers. ​ ● Game-Changing Innovation affects everything we do from how we think, design, and manufacture advanced technology that makes a difference. ​ ● Learn Fast highlights our respect for the process of discovery and supports intelligent risk-taking knowing that all outcomes are learning opportunities to iterate and improve. ​ 25 ● Thrive Together reflects the deep respect and trust in the diversity of our backgrounds, knowledge, skills, ideas and capabilities and our belief in each other and our partners to drive success. ​ ● Get It Done represents working with a sense of urgency to go above and beyond to get the job done right through quality, compliance, and timeliness. ​ We utilize a human resource software which collects weekly employee feedback on work experience, culture, communications, interaction with their managers and other topics enabling us to react and address real time feedback.
Our values define the behaviors of our existing employees, and the new hires that we welcomed to our organization during 2024: ​ ● Customer Inspired emphasizes how we put the customer first while we use our talents, passion, empathy, and hard work to build technology solutions for the unmet needs of our customers. ​ ● Game-Changing Innovation affects everything we do from how we think, design, and manufacture advanced technology that makes a difference. ​ ● Learn Fast highlights our respect for the process of discovery and supports intelligent risk-taking knowing that all outcomes are learning opportunities to iterate and improve. ​ ● Thrive Together reflects the deep respect and trust in the diversity of our backgrounds, knowledge, skills, ideas and capabilities and our belief in each other and our partners to drive success. ​ ● Get It Done represents working with a sense of urgency to go above and beyond to get the job done right through quality, compliance, and timeliness. ​ We utilize a human resource software which collects weekly employee feedback on work experience, culture, communications, interaction with their managers and other topics enabling us to react and address real time feedback.
We seek to protect such intellectual property and proprietary information by generally requiring our employees, consultants, contractors, scientific collaborators and other advisors to execute non-disclosure and assignment of invention agreements upon the commencement of their employment or engagement as the case may be.
We seek to protect such intellectual property and proprietary information by generally requiring our employees, consultants, contractors, scientific collaborators and other advisors to execute non-disclosure and 14 ​ assignment of invention agreements upon the commencement of their employment or engagement as the case may be.
Our transmitter is functional for at least 24 hours following a full charge and can be fully charged in fifteen minutes. ​ Mobile App ​ Our mobile app is a software application that runs on both platforms; iOS mobile devices, including iPhones, iPads and Apple Watches, and Android mobile devices.
Our transmitter is functional for at least 24 hours following a full charge and can be fully charged in approximately fifteen minutes. ​ ​ Mobile App ​ Our mobile app is a software application that runs on both platforms; iOS mobile devices, including iPhones, iPads and Apple Watches, and Android mobile devices.
The mobile app receives information from the transmitter via 10 BLE and displays that information discreetly to the user. This user-friendly, intuitive app provides real-time glucose readings, alerts, trends, and graphs. Within the mobile app, users can set alerts based on, among other things, glucose levels.
The mobile app receives information from the transmitter via BLE and displays that information discreetly to the user. This user-friendly, intuitive app provides real-time glucose readings, alerts, trends, and graphs. Within the mobile app, users can set alerts based on, among other things, glucose levels.
Northern Ireland will continue to follow many aspects of the European Union regulatory rules, particularly in relation to trade in goods, including the Medical Device Regulation. ​ On May 26, 2021, the Medical Device Regulation entered into application in the EU. However, the Medical Device Regulation is not applicable in the UK.
Northern Ireland will continue to follow many aspects of the European Union regulatory rules, particularly in relation to trade in goods, including the Medical Device Regulation. ​ 23 ​ On May 26, 2021, the Medical Device Regulation entered into application in the EU. However, the Medical Device Regulation is not applicable in the UK.
Two photodiodes within the optical system of the sensor measure the degree of fluorescence of the hydrogel, which is proportional to the level of glucose present in the interstitial fluid. The sensor then communicates the amount of fluorescence via a near field communication (“NFC”) interface to the transmitter.
Two photodiodes within the optical system of the sensor measure the degree of fluorescence of the hydrogel, which is proportional to the level of glucose present in the interstitial fluid. The sensor then communicates the amount of 9 ​ fluorescence via a near field communication (“NFC”) interface to the transmitter.
These may include the requirement of prior authorization by the Competent Authorities of the country in which the study takes place and the requirement to obtain a positive opinion from a competent Ethics Committee. This process can be expensive and time-consuming.
These may include the requirement of prior authorization by the Competent Authorities of the country in which the study takes place and the requirement to obtain a positive opinion from a 16 ​ competent Ethics Committee. This process can be expensive and time-consuming.
Beginning in 2010, the company narrowed its focus to designing, developing and refining a commercially viable glucose monitoring system. ​ In connection with the acquisition of Senseonics, Incorporated, we reincorporated in Delaware and changed our name to Senseonics Holdings, Inc.
Beginning in 2010, the company narrowed its focus to designing, developing and refining a commercially viable glucose monitoring system. ​ In connection with the acquisition of Senseonics, Incorporated, we reincorporated in Delaware and changed our name to Senseonics Holdings, Inc. in 1996.
A violation of either of these statutes is a felony and may result in fines, imprisonment, exclusion from Medicare, Medicaid or other federal or state healthcare programs, or integrity oversight and reporting obligations to resolve allegations of non-compliance. ​ Civil Monetary Penalties Law ​ In addition to the federal Anti-Kickback Statute and the civil and criminal false claims laws, including the federal False Claims Act, the federal government has the authority to seek civil monetary penalties, or CMPs, assessments, and exclusion against an individual or entity based on a wide variety of prohibited conduct.
A violation of either of these statutes is a felony and may result in fines, imprisonment, exclusion from Medicare, Medicaid or other federal or state healthcare programs, or integrity oversight and reporting obligations to resolve allegations of non-compliance. ​ Civil Monetary Penalties Law ​ In addition to the federal Anti-Kickback Statute and the civil and criminal false claims laws, including the federal False Claims Act, the federal government has the authority to seek civil monetary penalties (“CMPs”) assessments, and exclusion against an individual or entity based on a wide variety of prohibited conduct.
A PMA application must be supported by valid scientific evidence that typically includes extensive technical, preclinical, clinical, manufacturing and 15 labeling data, to demonstrate to the FDA's satisfaction the safety and efficacy of the device.
A PMA application must be supported by valid scientific evidence that typically includes extensive technical, preclinical, clinical, manufacturing and labeling data, to demonstrate to the FDA's satisfaction the safety and efficacy of the device.
Coverage systems in international markets vary significantly by country and, within some countries, by region. Coverage approvals 12 must be obtained on a country-by-country, region-by-region or, in some instances, a case-by case basis.
Coverage systems in international markets vary significantly by country and, within some countries, by region. Coverage approvals must be obtained on a country-by-country, region-by-region or, in some instances, a case-by case basis.
All employees are issued stock options and/or restricted stock units under our broad-based stock incentive programs. We offer an employee stock purchase program to all employees.
All employees are issued stock options and/or restricted stock units under our broad-based stock incentive programs. We 26 ​ offer an employee stock purchase program to all employees.
To date, approximately 300 million people in the United States may have coverage and access to the Eversense E3 product via commercial (for example, UnitedHealthcare) or government (for example, Medicare) payors. ​ Some commercial payors have denied coverage deeming Eversense as an “experimental and investigational” technology electing to wait for further clinical evidence, more safety data, or time in market.
To date, approximately 300 million people in the United States may have coverage and access to Eversense via commercial (for example, UnitedHealthcare) or government (for example, Medicare) payors. ​ Some commercial payors have denied coverage deeming Eversense as an “experimental and investigational” technology electing to wait for further clinical evidence, more safety data, or time in market.
The trial is a prospective, single-arm, multi-center trial designed to evaluate the accuracy and safety of the Eversense system up to one year using the methods described above for the 90-day and 180-day systems. Over 165 subjects were inserted with Eversense systems in four centers across the United States.
The trial is a prospective, single-arm, multi-center trial designed to evaluate the accuracy and safety of the Eversense system up to one year using the methods 8 ​ described above for the 90-day and 180-day systems. Over 165 adult subjects were inserted with Eversense systems in four centers across the United States.
None of our employees are represented by a labor union or covered by a collective bargaining agreement. We consider our relationship with our employees to be good. ​ Culture ​ Employee engagement is always important to us, and improving our employee engagement with a remote, in-person and hybrid workforce remained a strategic imperative for us in 2023.
None of our employees are represented by a labor union or covered by a collective bargaining agreement. We consider our relationship with our employees to be good. ​ Culture ​ Employee engagement is always important to us, and improving our employee engagement with a remote, in-person and hybrid workforce remained a strategic imperative for us in 2024.
Medical devices must comply with the General Safety and Performance Requirements, or GSPRs, set out in Annex I of the Medical Device Regulation. Compliance with these requirements is a prerequisite to be able to affix the CE mark to devices, without which they cannot be marketed or sold in the EEA.
Medical devices must comply with the General Safety and Performance Requirements, (“GSPRs”) set out in Annex I of the Medical Device Regulation. Compliance with these requirements is a prerequisite to be able to affix the CE mark to devices, without which they cannot be marketed or sold in the EEA.
Foreign Corrupt Practices Act, or FCPA, prohibits U.S. corporations and their representatives from offering, promising, authorizing or making corrupt payments, gifts or transfers to any foreign government official, government staff member, political party or political candidate in an attempt to obtain or retain business abroad.
Foreign Corrupt Practices Act (“FCPA”) prohibits U.S. corporations and their representatives from offering, promising, authorizing or making corrupt payments, gifts or transfers to any foreign government official, government staff member, political party or political candidate in an attempt to obtain or retain business abroad.
This non-adjunctive indication also enabled our pathway to access patients on Medicare. ​ In November 2019, the Eversense CGM system became the first CGM technology to be reimbursed through the Part B Medical Services benefit for Medicare beneficiaries and expands access to our product.
This non-adjunctive indication also enabled our pathway to access patients on Medicare. ​ In November 2019, the Eversense CGM system became the first CGM technology to be reimbursed through the Part B Medical Services benefit for Medicare beneficiaries and expanded access to our product.
In November 2022, the Centers for Medicare and Medicaid Services (“CMS”) released its Calendar Year 2023 Medicare Physician Fee Schedule Proposed Rule that updates the payment amounts for the three CPT© Category III codes to account for the longer 6-month sensor.
In November 2022, the Centers for Medicare and Medicaid Services (“CMS”) released its Calendar Year 2023 Medicare Physician Fee Schedule Proposed Rule that updated the payment amounts for the three CPT© Category III codes to account for the longer 6- 6 ​ month sensor.
Item 1. Business ​ Overview ​ We are a medical technology company focused on the development and manufacturing of glucose monitoring products designed to transform lives in the global diabetes community with differentiated, long-term implantable glucose management technology.
Item 1. Business ​ Overview ​ We are a commercial-stage medical technology company focused on the development and manufacturing of glucose monitoring products designed to transform lives in the global diabetes community with differentiated, long-term implantable glucose management technology.
Ascensia receives a portion of net revenue at specified tiered percentages ranging from the mid-teens to the mid-forty’s based on levels of global net revenues. Ascensia is obligated to achieve specified minimum annual revenue targets and meet specified levels of sales and marketing spend.
Ascensia receives a portion of net revenue at specified tiered percentages ranging from the mid-teens to the mid-forties based on levels of global net revenues. Ascensia is obligated to achieve specified minimum annual revenue targets and meet specified levels of sales and marketing spend.
If the FDA believes that any of our contract manufacturers or regulated suppliers are not in compliance with these requirements, it can shut down such manufacturing operations, require recall of our products, refuse to approve new marketing applications, institute legal proceedings to detain or seize products, enjoin future violations or assess civil and criminal penalties against us or our officers or other employees. ​ Health Insurance Portability and Accountability Act of 1996 and Other Foreign and State Laws and Regulations Affecting the Transmission, Security and Privacy of Personal Information ​ We may also be subject to data privacy and security regulation by both the federal government and the states in which we conduct our business.
If the FDA believes that any of our contract manufacturers or regulated suppliers are not in compliance with these requirements, it can shut down such manufacturing operations, require recall of our products, refuse to approve new marketing applications, institute legal proceedings to detain or seize products, enjoin future violations or assess civil and criminal penalties against us or our officers or other employees. ​ 19 ​ ​ ​ Health Insurance Portability and Accountability Act of 1996 and Other Foreign and State Laws and Regulations Affecting the Transmission, Security and Privacy of Personal Information ​ We are subject to certain data privacy and security regulation by both the federal government and the states in which we conduct our business.
Our 20 relationships with healthcare providers and other third parties are subject to scrutiny under these laws.
Our relationships with healthcare providers and other third parties are subject to scrutiny under these laws.
Ascensia will purchase Eversense products from us at prices which have been negotiated based on parameters set forth in the commercialization agreement. We are responsible for product development and manufacturing, including regulatory submissions, approvals, certifications and registrations and second level customer support, and Ascensia is responsible for sales, marketing, market access, patient and provider onboarding and level one customer support.
Ascensia purchases Eversense products from us at prices which have been negotiated based on parameters set forth in the commercialization agreement. We are responsible for product development and manufacturing, including regulatory submissions, approvals, certifications and registrations and second level customer support, and Ascensia is responsible for sales, marketing, market access, patient and provider onboarding and level one customer support.
We believe that our design, manufacturing and quality control procedures are in compliance with the FDA’s regulatory requirements. ​ We must also comply with post-market surveillance regulations, including medical device reporting, or MDR, requirements which require that we review and report to the FDA any incident in which our products may have caused or contributed to a death or serious injury.
We believe that our design, manufacturing and quality control procedures are in compliance with the FDA’s regulatory requirements. 15 ​ ​ We must also comply with post-market surveillance regulations, including medical device reporting (“MDR”) requirements which require that we review and report to the FDA any incident in which our products may have caused or contributed to a death or serious injury.
Pursuant to the formal withdrawal arrangements agreed between the United Kingdom and the European Union, the United Kingdom, or the UK, was subject to a transition period until December 31, 2020, or the Transition Period, during which European Union rules continued to apply.
Pursuant to the formal withdrawal arrangements agreed between the UK and the European Union, the UK was subject to a transition period until December 31, 2020, or the Transition Period, during which European Union rules continued to apply.
As of December 31, 2023, we had 132 full-time employees, of whom over half hold Ph.D., M.D., master’s degree, or other post graduate degrees, and all of whom are in the United States. Most employees are in Operations and Research and Development positions aligned with our corporate focus of designing, developing and manufacturing glucose monitoring products.
As of December 31, 2024, we had 117 full-time employees, of whom over half hold Ph.D., M.D., master’s degree, or other post-graduate degrees, and all of whom are in the United States. Most employees are in Operations and Research and Development positions aligned with our corporate focus of designing, developing and manufacturing glucose monitoring products.
We have designed the sensor to last up to six months, as compared to other currently available CGM sensors labeled for use for between seven and 14 days. ​ The sensor consists of an optical system, known as a micro-fluorometer, encased in a rigid, translucent polymer capsule, which is 3.3 mm in diameter and 15 mm in length.
We have designed the sensor to last up to one year, as compared to other currently available CGM sensors labeled for use for between seven and 14 days. ​ The sensor consists of an optical system, known as a micro-fluorometer, encased in a rigid, translucent polymer capsule, which is 3.3 mm in diameter and 15 mm in length.
If patents are issued on our pending patent applications, the resulting patents are projected to expire on dates ranging from 2032 to 2043, subject to any patent term extensions or adjustments that may be available for such patents. ​ Our patents and patent applications cover certain aspects of our core sensor technologies and our product concepts for CGM systems.
If patents are issued on our pending patent applications, the resulting patents are projected to expire on dates ranging from 2033 to 2044, subject to any patent term extensions or adjustments that may be available for such patents. ​ Our patents and patent applications cover certain aspects of our core sensor technologies and our product concepts for CGM systems.
We are also developing our “Gemini” product variation to allow for a 2-in-1 glucose monitoring system combining the functionality of CGM and Flash Glucose Monitoring, in an implantable sensor with battery that may be utilized with a smart transmitter to get continuous glucose readings and alerts, or be utilized through a swipe over the sensor with a smart phone to get on-demand glucose reading without a smart transmitter.
We are performing feasibility studies with our “Gemini” product variation to allow for a 2-in-1 glucose monitoring system combining the functionality of CGM and Flash Glucose Monitoring, in an implantable sensor with battery that may be utilized with a smart transmitter to get continuous glucose readings and alerts, or be utilized through a swipe over the sensor with a smart phone to get on-demand glucose reading without a smart transmitter.
It is unclear how such challenges and the healthcare reform measures of the Biden administration will impact the PPACA. ​ In addition, other legislative changes have been proposed and adopted since the PPACA was enacted.
It is unclear how such challenges and the healthcare reform measures of the second Trump administration will impact the PPACA. ​ In addition, other legislative changes have been proposed and adopted since the PPACA was enacted.
We provide our employees with market competitive pay and bonuses. In 2021, we implemented a year-end market adjustment review process to ensure we maintain our competitive pay and pay equity between active employees and new hires and to align to the highly competitive labor market.
In 2021, we implemented a year-end market adjustment review process to ensure we maintain our competitive pay and pay equity between active employees and new hires and to align to the highly competitive labor market.
We also conduct quarterly employee engagement events to recognize the value of our employees and their contributions. ​ Employee Health & Wellbeing ​ We are committed to the health and safety of our employees and have safety training programs that ensure our workforce knows how to do their jobs safely and in compliance with laws and regulations.
In addition, we conduct regular employee engagement events to recognize the value of our employees and their contributions. ​ Employee Health & Wellbeing ​ We are committed to the health and safety of our employees and have safety training programs that ensure our workforce knows how to do their jobs safely and in compliance with laws and regulations.
Our implantable CGM (“Eversense”), including the Eversense E3 continuous glucose monitoring (“CGM”) system version is designed to continually and accurately measure glucose levels in people with diabetes via an under-the-skin sensor, a removable and rechargeable smart transmitter, and a convenient app for real-time diabetes monitoring and management for a period of up to six months as compared to seven to 14 days for non-implantable CGM systems.
Our implantable continuous glucose monitoring (“CGM”) system (“Eversense”), including Eversense E3 and Eversense 365 CGM systems are designed to continually and accurately measure glucose levels in people with diabetes via an under-the-skin sensor, a removable and rechargeable smart transmitter, and a convenient app for real-time diabetes monitoring and management for a period of up to twelve months in the case of Eversense 365 and six months in the case of Eversense E3, as compared to seven to 14 days for non-implantable CGM systems.
We rely on a combination of patents, trademarks, copyrights, trade secrets as well as nondisclosure and assignment of invention agreements, material transfer agreements, confidentiality agreements and other measures to protect our intellectual property and other proprietary rights. ​ Patents ​ As of December 31, 2023, we held a total of approximately 508 issued patents and pending patent applications that relate to our CGM system.
We rely on a combination of patents, trademarks, copyrights, trade secrets as well as nondisclosure and assignment of invention agreements, material transfer agreements, confidentiality agreements and other measures to protect our intellectual property and other proprietary rights. 13 ​ ​ Patents ​ As of December 31, 2024, we held a total of approximately 482 issued patents and pending patent applications that relate to our CGM system.
The United Kingdom and the European Union have signed an EU-UK Trade and Cooperation Agreement, or TCA, which became provisionally applicable on January 1, 2021 and entered into force on May 1, 2021. This agreement provides details on how some aspects of the United Kingdom and European Union’s relationship will operate going forwards however there are still many uncertainties.
The UK and the European Union have signed an EU-UK Trade and Cooperation Agreement (“TCA”), which became provisionally applicable on January 1, 2021 and entered into force on May 1, 2021. This agreement provides details on how some aspects of the UK and European Union’s relationship will operate going forwards however there are still many uncertainties.
With this approval, the Eversense system can be used as a therapeutic CGM to replace fingerstick blood glucose measurement for dosing decisions and was launched in December 2019. ​ We believe our implantable CGM system offers the following advantages to support the management of diabetes: ​ ● Accuracy: Exceptional accuracy particularly in the low glucose range throughout the sensor life. ● Duration: Longest available sensor duration at up to six months. ● Convenience: Our Eversense CGM system supports the patient’s lifestyle; the smart transmitter is water resistant, rechargeable and can be removed and replaced without disturbing the sensor, strong but gentle-on-skin adhesive patches, wireless communication to patient’s mobile device or Apple Watch ®, including readings every five minutes whether the patient has their mobile device or not, remote monitoring that can be shared with up to five people, including health care providers, and tracking of meals and workouts for further diabetes treatment management. 9 ● Vibe Alerts: Added safety of an on-body vibration alert when low or high glucose threshold is reached, or importantly before low or high threshold is reached, even when the mobile device is not nearby. ● Continuous Support: Patient and healthcare provider hotline support 24/7. ​ ​ Sensor ​ The sensor is approved and CE marked to be inserted under the skin, in the upper arm, and measures the glucose in the interstitial fluid.
With this approval, the Eversense system can be used as a therapeutic CGM to replace fingerstick blood glucose measurement for dosing decisions. ​ We believe our implantable CGM system offers the following advantages to support the management of diabetes: ​ ● Duration: Longest available sensor duration at up to one year. ● Convenience: Our Eversense CGM system supports the patient’s lifestyle; the smart transmitter can be removed and replaced without disturbing the sensor, strong but gentle-on-skin adhesive patches, wireless communication to patient’s mobile device or Apple Watch ®, including readings every five minutes whether the patient has their mobile device or not, remote monitoring that can be shared friends, family, and health care providers, and tracking of meals and workouts for further diabetes treatment management. ● Accuracy: Exceptional accuracy particularly in the low glucose range throughout the sensor life. ● Vibe Alerts: Added safety of an on-body vibration alert when low or high glucose threshold is reached, or importantly before low or high threshold is reached, even when the mobile device is not nearby. ● Continuous Support: Patient and healthcare provider hotline support 24/7. ​ ​ Sensor ​ The sensor is approved and CE marked to be inserted under the skin, in the upper arm, and measures the glucose in the interstitial fluid.
In efforts to address these priorities, Ascensia, in consultation with us, initiated the Patient Assistance and Simple Savings (PASS) program to provide financial assistance for patients adopting Eversense E3.
In efforts to address these priorities, Ascensia, in consultation with us, initiated the Patient Assistance and Simple Savings (“PASS”) program to provide financial assistance for patients adopting Eversense.
In June 2019, we received FDA approval for the non-adjunctive indication for the 90-day Eversense system.
In June 2019, we received FDA approval for the non-adjunctive indication (dosing claim) for the 90-day Eversense system.
Our European experience and our feedback in the United States indicates healthcare providers highly value the accuracy and sensor duration of our CGM system and the majority of physicians surveyed considered the insertion process to be fairly simple or feasible.
Our United States and European experience indicate healthcare providers highly value the accuracy and sensor duration of our CGM system and the majority of physicians surveyed considered the insertion process to be fairly simple or feasible.
While Ascensia is responsible for sales, marketing, market access, patient and provider onboarding and first level customer support, we remain responsible for product development and manufacturing, including regulatory submissions, approvals, conformity assessment and requests for CE Certificates of Conformity and registrations and second level customer support. ​ Significant Recent Developments ​ Global Commercialization of Eversense E3 CGM System ​ In February 2022, the FDA approved the Eversense E3 CGM system for marketing and sale in the U.S.
While Ascensia is responsible for sales, marketing, market access, patient and provider onboarding and first level customer support, we remain responsible for product development and manufacturing, including regulatory submissions, approvals, conformity assessment and requests for CE Certificates of Conformity and registrations and second level customer support. ​ Significant Recent Developments ​ Global Commercialization of Eversense CGM Systems ​ In September 2024, the FDA approved the Eversense 365 CGM system for marketing and sale in the U.S.
The company’s technology also has potential applications measuring analytes other than glucose, such as oxygen, and the company may consider opportunities for the development or out-licensing of such applications. ​ ​ Sales and Marketing ​ We are in the early commercialization stages of Eversense and are focused on driving awareness and adoption of our CGM system amongst intensively managed patients and their healthcare providers with our commercial partner Ascensia. ​ We are party to a commercialization agreement with Ascensia, pursuant to which we have granted Ascensia the exclusive right to distribute our prior 90-day Eversense CGM system and our current six-month Eversense CGM system worldwide for use in people with diabetes, with certain exceptions.
The company’s technology also has potential applications measuring analytes other than glucose, such as oxygen, and the company may consider opportunities for the development or out-licensing of such applications. ​ ​ Sales and Marketing ​ We are in the early commercialization stages of Eversense and are focused on driving awareness and adoption of our CGM system amongst people with diabetes and their healthcare providers with our commercial partner Ascensia. ​ As described above, we are party to a commercialization agreement with Ascensia, pursuant to which we have granted Ascensia the exclusive right to distribute our Eversense CGM system worldwide for use in people with diabetes, 10 ​ with certain exceptions.
Adverse determinations in a judicial or administrative proceeding or failure to obtain necessary licenses could prevent us from manufacturing and selling our products, which could have a significant adverse impact on our business. ​ Trademarks ​ We have two pending U.S. trademark applications and five pending foreign trademark applications, as well as 12 U.S. trademark registrations and 129 foreign trademark registrations. ​ Trade Secrets ​ We also rely on trade secrets, technical know-how and continuing innovation to develop and maintain our competitive position.
Adverse determinations in a judicial or administrative proceeding or failure to obtain necessary licenses could prevent us from manufacturing and selling our products, which could have a significant adverse impact on our business. ​ Trademarks ​ We have 14 U.S. trademark registrations and 133 foreign trademark registrations, as well as one pending foreign trademark application. ​ Trade Secrets ​ We also rely on trade secrets, technical know-how and continuing innovation to develop and maintain our competitive position.
All of these components work together to provide sensor glucose values, trends and alerts to a user's mobile device within 20 milliseconds. We have designed this reliable, long-term and implantable CGM system to continually and accurately measure a person's glucose levels for up to six months. Eversense requires once daily fingerstick calibrations after day 21.
All of these components work together to provide sensor glucose values, trends and alerts to a user's mobile device within 20 milliseconds. We have designed this reliable, long-term and implantable CGM system to continually and accurately measure a person's glucose levels for up to one year. Eversense 365 requires once weekly fingerstick calibrations after day 13.
Ascensia is leveraging and targeting regions where we have coverage decisions for patient device use and provider insertion and removal procedure payment. ​ Addressing reimbursement and access barriers has been a top priority for us and during 2023, we reached approximately 300 million covered lives in the U.S. through positive insurance payor coverage decisions including UnitedHealthcare, the largest healthcare insurance company in the U.S.
We prioritize and target regions where we have coverage decisions for patient device use and provider insertion and removal procedure payment. ​ Addressing reimbursement and access barriers is a top priority for us. We have reached approximately 300 million covered lives in the U.S. through positive insurance payor coverage decisions including UnitedHealthcare, the largest healthcare insurance company in the U.S.
We are required to adhere to applicable regulations setting forth detailed cGMP requirements, as set forth in the QSR, which require, manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all phases of the design and manufacturing process.
We are required to adhere to applicable regulations setting forth detailed Current Good Manufacturing Practice (“cGMP”) requirements, as set forth in the Quality System Regulation, or QSR, which require, manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all phases of the design and manufacturing process.
In 2022, we submitted and received approval for an investigational device exemption (“IDE”) for an extension of the trial to allow for pediatric patients and we began enrolling patients in the first half of 2023.
In 2022, we submitted and received approval for an IDE for an extension of the trial to allow for pediatric patients and we began enrolling patients in the first half of 2023.
New legislation is also anticipated to bring into force strengthened post-market surveillance requirements ahead of the wider future regulatory regime. These post-market surveillance requirements are expected to apply from mid-2024. ​ U.S. Foreign Corrupt Practices Act ​ The U.S.
New legislation is also anticipated to bring into force strengthened post-market surveillance requirements ahead of the wider future regulatory regime. These post-market surveillance requirements are expected to apply from mid-2025, following a six-month implementation period. ​ U.S. Foreign Corrupt Practices Act ​ The U.S.
We celebrated our revised technical leadership pathway with a formal awards program to recognize and reward our 2023 patent inventors. We continue to encourage professional certification and continuing education by reimbursement for professional certification classes, testing, maintenance, and tuition reimbursement of up to $5,250 annually.
We continued to celebrate our revised technical leadership pathway with an awards program to recognize and reward our 2024 patent inventors. We continue to encourage professional certification and continuing education by reimbursement for professional certification classes, testing, maintenance, and tuition reimbursement of up to $5,250 annually.
We deliver training and engage in development conversations with our managers and directors regularly to reinforce best practices and ensure effective performance management. ​ Diversity, Equity, and Inclusion ​ As stated in our company values, our success thrives on the diversity of backgrounds, knowledge, skills, ideas, and capabilities within our workforce.
We regularly engage in development conversations with our managers and directors regularly to reinforce best practices and ensure effective performance management. ​ Inclusion in the Workplace ​ As stated in our company values, our success thrives on the diversity of backgrounds, knowledge, skills, ideas, and capabilities within our workforce. We deeply respect each other and trust the diversity we have.
Our intellectual property portfolio includes 105 issued United States patents, 204 patents issued in countries outside the United States and 199 pending patent applications worldwide. Our patents expire between 2024 and 2042, subject to any patent term extensions or adjustments that may be available for such patents.
Our intellectual property portfolio includes 111 issued United States patents, 194 patents issued in countries outside the United States and 177 pending patent applications worldwide. Our patents expire between 2025 and 2043, subject to any patent term extensions or adjustments that may be available for such patents.
The trial is a prospective, single-arm, multi-center trial designed to evaluate the accuracy and safety of the Eversense system up to six months using the methods described above for the 90-day system. Over 180 subjects were enrolled in eight centers across the United States.
The trial is a prospective, single-arm, multi-center trial designed to evaluate the accuracy and safety of the Eversense system up to six months using the methods described above for the 90-day system.
These sensor measurements were continued through the earlier of the failure of the sensor or 90 days post-insertion. ​ The purpose of this clinical trial was to evaluate the accuracy of Eversense measurements, measured by the mean absolute relative difference (“MARD”), when compared with bed-side blood glucose measurements obtained using the YSI glucose analyzer over successive periods of 30 days through 90 days, as well as to assess the safety of Eversense.
Ninety subjects were enrolled in eight centers across the United States. ​ The purpose of this clinical trial was to evaluate the accuracy of Eversense measurements, measured by the mean absolute relative difference (“MARD”), when compared with bed-side blood glucose measurements obtained using the YSI glucose analyzer over successive periods of 30 days through 90 days, as well as to assess the safety of Eversense.
With this approval and the availability of a new app in December 2019, the Eversense system can now be used as a therapeutic CGM in the United States to replace fingerstick blood glucose measurement to make treatment decisions, including insulin dosing.
With this approval and the availability of a new app in December 2019, the Eversense system can now be used as a therapeutic CGM in the United States to replace fingerstick blood glucose measurement to make treatment decisions, including insulin dosing. ​ We are in the early commercialization stages of the Eversense brand and are focused on driving awareness of our CGM system amongst people with diabetes and their healthcare providers.
In 2022, we announced a collaboration with NPG designed to expand U.S. patient access to the Eversense E3 System by providing additional convenient in-office and at-home sensor insertion options utilizing NPG’s broad network in over 30 states.
In 2022, we announced a collaboration with NPG designed to expand U.S. patient access to Eversense by providing additional convenient in-office and at-home sensor insertion options utilizing NPG’s broad network in approximately 30 states. In October 2024, we acquired the sensor insertion network assets of NPG to begin transitioning nurse practitioners to our Eon Care subsidiaries.
Under the agreement between Senseonics and NPG, NPG providers will be certified to perform Eversense procedures in the specified geographies and will offer its services for patients who have been prescribed Eversense.
Under the agreement between Senseonics and NPG, NPG providers will be certified to perform Eversense procedures in the specified geographies and will offer its services for patients who have been prescribed Eversense. During 2023, we expanded the inserter network by setting up Eversense procedure capabilities in additional select geographic areas.
The trial was a prospective, single-arm, multi-center trial designed to determine the accuracy and safety of the Eversense system. Ninety subjects were enrolled in eight centers across the United States.
The trial was a prospective, single-arm, multi-center trial designed to determine the accuracy and safety of the Eversense system.
We expect these product development initiatives to include system modifications and next generation enhancements that we believe will further increase the convenience and appeal of our products to the diabetes community. ​ We are focusing our future development efforts on enhancing current product offerings by reducing calibrations towards a once per week calibration.
We expect these product development initiatives to include system modifications and next generation enhancements that we believe will further increase the convenience and appeal of our products to the diabetes community. ​ We are focusing our future development efforts on enhancing current product offerings by incorporating first a power source and then Bluetooth in the sensor to remove the need for an on-body component of our system.
Abbott also received an iCGM indication for their Freestyle Libre 2 and 3 products and we expect all other CGM companies besides Dexcom to pursue an iCGM indication including Medtronic. ​ In addition to CGM providers, we also compete with providers of SMBG systems.
As the industry evolves, we anticipate encountering increasing competition from companies that integrate CGM with insulin pumps. Abbott has also received an iCGM indication for its Freestyle Libre 2 and 3 products and we expect all other CGM companies to pursue an iCGM indication including Medtronic. ​ In addition to CGM providers, we also compete with providers of SMBG systems.
Similar laws have been enacted or are under consideration in many states and foreign jurisdictions. ​ Outside the United States, interactions between medical device companies and health care professionals are also governed by strict laws, such as national anti-bribery laws of European countries, national sunshine rules, regulations, industry self-regulation codes of conduct and physicians’ codes of professional conduct. ​ Healthcare and Regulatory Reform ​ Federal and state governments continue to propose and pass new legislation and regulations designed to contain or reduce the cost of healthcare.
In addition, any physician who participates in an arrangement that violates a state’s corporate practice of medicine prohibition may be punished for aiding and abetting a lay entity in the unlawful practice of medicine. ​ Outside the United States, interactions between medical device companies and health care professionals are also governed by strict laws, such as national anti-bribery laws of European countries, national sunshine rules, regulations, industry self-regulation codes of conduct and physicians’ codes of professional conduct. ​ Healthcare and Regulatory Reform ​ Federal and state governments continue to propose and pass new legislation and regulations designed to contain or reduce the cost of healthcare.
The campaign demonstrates how Eversense E3 provides a differentiated CGM option, with unparalleled flexibility and long-term use that allows it to seamlessly integrate into real life. ​ The continued success of the commercial launch of the Eversense E3 product globally will continue to depend on several factors such as: (1) growing the installed base of users, (2) increasing patient awareness of Eversense above current levels in order to expand the population of Eversense users, through driving sales and marketing efforts on the Eversense E3 system, (3) increasing awareness and adoption of Eversense by healthcare providers, including high volume CGM prescribers, through expanded targeted marketing efforts, (4) educating patients and prescribers regarding the six-month and future generation products and its benefits relative to legacy products, (5) continuing to grow the base of the authorized inserters through geographically targeted efforts so that potential users locating a qualified inserter of Eversense is not an impediment to adoption, (6) timely establishing and maintaining favorable payor coverage for the product, including transitioning commercial payors from six month to one year coverage, (7) more effective tender participation outside the U.S. and (8) Ascensia’s continued organizational development of its sales and marketing capabilities relative to CGM. ​ In February 2024, we announced that Medicare coverage was expanded for Eversense E3 to include all people with diabetes using insulin and non-insulin users who have a history of problematic hypoglycemia providing access to millions of Medicare patients.
Following the launch of Eversense 365, the Company has experienced higher direct-to-consumer leads compared to pre-launch months, higher patient shipments in December 2024 compared to any previous month in company history, an increase in the number of new prescribers and prescriptions, and an increase in new patients. ​ The continued success of the commercial launch of the Eversense globally will continue to depend on several factors such as: (1) growing the installed base of users, (2) increasing patient awareness of Eversense above current levels in order to expand the population of Eversense users, through driving sales and marketing efforts on the Eversense system, (3) increasing awareness and adoption of Eversense by healthcare providers, including high volume CGM prescribers, through expanded targeted marketing efforts, (4) educating patients and prescribers regarding the product and its benefits relative to legacy products, (5) continuing to grow the base of the authorized inserters through geographically targeted efforts so that potential users locating a qualified inserter of Eversense is not an impediment to adoption, (6) timely establishing and maintaining favorable payor coverage for the product, including transitioning commercial payors from six month to one year coverage, (7) more effective tender participation outside the U.S. and (8) Ascensia’s continued organizational development of its sales and marketing capabilities related to CGM. ​ In July 2024, we began first-in-human testing for the Gemini system.
Pursuant to the Commercialization Agreement, in the United States, Ascensia began providing sales support for the 90-day Eversense product on October 1, 2020 and Ascensia ramped up sales activities and assumed commercial responsibilities for 90-day Eversense product during the second quarter of 2021.
Pursuant to the Commercialization Agreement, in the United States, Ascensia began providing sales support for Eversense on October 1, 2020 and Ascensia ramped up sales activities and assumed commercial responsibilities during the second quarter of 2021. ​ As a result of our strategic partnership, Ascensia is responsible for sales, marketing, market access, patient and provider onboarding and level one customer support.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe Loan and Security Agreement also contains customary events of default, after which borrowings under the Loan and Security Agreement will be due and payable immediately, including defaults related to payment compliance, material inaccuracy of representations and warranties, covenant compliance, material adverse changes, bankruptcy and insolvency proceedings, cross defaults to certain other agreements, judgments against the Company, change of control or delisting events, termination of any guaranty, governmental approvals, and lien priority. ​ In addition, the indentures related to the 2025 Notes contain, and any future indebtedness we incur may contain, various negative covenants that restrict, among other things, our ability to: ​ ● incur additional indebtedness, guarantee indebtedness or issue disqualified stock or, in the case of such subsidiaries, preferred stock; ● declare or pay dividends on, repurchase or make distributions in respect of, their capital stock or make other restricted payments; ● make investments or acquisitions; ● create liens; ● enter into agreements restricting certain subsidiaries' ability to pay dividends or make other intercompany transfers; ● consolidate, merge, sell or otherwise dispose of all or substantially all of our assets and the assets of our restricted subsidiaries; ● enter into transactions with affiliates; ● sell, transfer or otherwise convey certain assets; and ● prepay certain types of indebtedness. ​ As a result, we are limited in the manner in which we conduct our business and we may be unable to engage in favorable business activities, repurchase shares of our common stock or finance future operations or capital needs. ​ Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt. ​ Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.
Biggest changeThe Loan and Security Agreement also contains customary events of default, after which borrowings under the Loan and Security Agreement will be due and payable immediately, including defaults related to payment compliance, material inaccuracy of representations and warranties, covenant compliance, material adverse changes, bankruptcy and insolvency proceedings, cross defaults to certain other agreements, judgments against the Company, change of control or delisting events, termination of any guaranty, governmental approvals, and lien priority. ​ As a result, we are limited in the manner in which we conduct our business and we may be unable to engage in favorable business activities, repurchase shares of our common stock or finance future operations or capital needs. ​ ​ ​ 43 ​ Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt. ​ Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.
The success of Eversense or future versions of Eversense will depend on numerous factors, including our ability, and the ability of our commercial partners, to: 34 ​ ● identify the product features that people with diabetes, their caregivers and healthcare providers are seeking in a CGM system and successfully incorporate those features into our products; ● develop and introduce future generations of Eversense in a timely manner; ● offer products at a price that is competitive with other products then available; ● adequately protect our intellectual property and avoid infringing upon the intellectual property rights of third parties; ● demonstrate the accuracy and safety of Eversense or future versions of Eversense; ● obtain coverage and adequate reimbursement for Eversense or future versions of Eversense and the related insertion and removal procedures; and ● obtain the necessary regulatory approvals or certifications for Eversense and future versions of Eversense.
The success of Eversense or future versions of Eversense will depend on numerous factors, including our ability, and the ability of our commercial partners, to: ​ ● identify the product features that people with diabetes, their caregivers and healthcare providers are seeking in a CGM system and successfully incorporate those features into our products; ● develop and introduce future generations of Eversense in a timely manner; ● offer products at a price that is competitive with other products then available; ● adequately protect our intellectual property and avoid infringing upon the intellectual property rights of third parties; ● demonstrate the accuracy and safety of Eversense or future versions of Eversense; ● obtain coverage and adequate reimbursement for Eversense or future versions of Eversense and the related insertion and removal procedures; and 34 ​ ● obtain the necessary regulatory approvals or certifications for Eversense and future versions of Eversense.
There are also a number of academic and other institutions involved in various phases of our industry’s technology development. ​ Many of these competitors enjoy several advantages over us, including: ​ ● greater financial and human resources for sales and marketing, and product development; ● established relationships with healthcare providers and third-party payors; ● established reputation and name recognition among healthcare providers and other key opinion leaders in the diabetes industry; ● in some cases, an established base of long-time customers; ● products supported by long-term clinical data; ● larger and more established sales, marketing and distribution networks; 37 ● greater ability to cross-sell products or provide incentives to healthcare providers to use their products; and ● more experience in conducting research and development, manufacturing, clinical trials, and obtaining regulatory approval or clearance and certification. ​ In addition, mergers and acquisitions in the diabetes industry may result in even more resources being concentrated among a smaller number of our competitors.
There are also a number of academic and other institutions involved in various phases of our industry’s technology development. ​ Many of these competitors enjoy several advantages over us, including: ​ ● greater financial and human resources for sales and marketing, and product development; ● established relationships with healthcare providers and third-party payors; ● established reputation and name recognition among healthcare providers and other key opinion leaders in the diabetes industry; ● in some cases, an established base of long-time customers; ● products supported by long-term clinical data; ● larger and more established sales, marketing and distribution networks; ● greater ability to cross-sell products or provide incentives to healthcare providers to use their products; and ● more experience in conducting research and development, manufacturing, clinical trials, and obtaining regulatory approval or clearance and certification. ​ 37 ​ In addition, mergers and acquisitions in the diabetes industry may result in even more resources being concentrated among a smaller number of our competitors.
If the actual number of people with diabetes who would benefit from Eversense 38 and the size and future growth in the market for Eversense is smaller than we have estimated, it may impair our projected sales growth and have an adverse impact on our business. ​ Our ability to maintain and grow our revenue will depend on establishing a customer base and retaining a high percentage of our customer base. ​ A key to maintaining and growing our revenue will be establishing a customer base and retaining a high percentage of our customers due to the potentially significant revenue generated from ongoing purchases of disposable sensors.
If the actual number of people with diabetes who would benefit from Eversense and the size and future growth in the market for Eversense is smaller than we have estimated, it may impair our projected sales growth and have an adverse impact on our business. ​ ​ 38 ​ Our ability to maintain and grow our revenue will depend on establishing a customer base and retaining a high percentage of our customer base. ​ A key to maintaining and growing our revenue will be establishing a customer base and retaining a high percentage of our customers due to the potentially significant revenue generated from ongoing purchases of disposable sensors.
Some of these risks include: ​ ● failure to complete sterilization on time or in compliance with the required regulatory standards; ● transportation and import and export risk, particularly given the international nature of our supply and distribution chains; ● delays in analytical results or failure of analytical techniques that we will depend on for quality control and release of products; ● natural disasters, labor disputes, financial distress, raw material availability, issues with facilities and equipment (including through cyberattacks or other security incidents) or other forms of disruption to business operations affecting our manufacturers or suppliers; and ● latent defects that may become apparent after products have been released and that may result in a recall of such products. ​ If any of these risks were to materialize, our ability to provide our products to customers on a timely basis would be adversely impacted. ​ Potential complications from Eversense or future versions of Eversense may not be revealed by our clinical experience. ​ Based on our experience, complications from use of Eversense may include sensor errors, sensor failures or skin irritation under the adhesive dressing of the transmitter.
Some of these risks include: ​ ● failure to complete sterilization on time or in compliance with the required regulatory standards; ● transportation and import and export risk, particularly given the international nature of our supply and distribution chains; ● delays in analytical results or failure of analytical techniques that we will depend on for quality control and release of products; ● natural disasters, labor disputes, financial distress, raw material availability, issues with facilities and equipment (including through cyberattacks or other security incidents) or other forms of disruption to business operations affecting our manufacturers or suppliers; and ● latent defects that may become apparent after products have been released and that may result in a recall of such products. ​ If any of these risks were to materialize, our ability to provide our products to customers on a timely basis would be adversely impacted. ​ Potential complications from Eversense or future versions of Eversense may not be revealed by our clinical experience. ​ Based on our experience, complications from the use of Eversense may include sensor errors, sensor failures or skin irritation under the adhesive dressing of the transmitter.
Currently, several of our issued U.S. patents as well as various pending U.S. and foreign patent applications relate to the structure and operation of our CGM sensor and CGM systems, which are important to the functionality of our products.
Currently, several of our issued U.S. and foreign patents as well as various pending U.S. and foreign patent applications relate to the structure and operation of our CGM sensor and CGM systems, which are important to the functionality of our products.
Certain states also impose stricter requirements for processing certain personal data, including sensitive information, such as conducting data privacy impact assessments. These state laws allow for statutory fines for noncompliance. ​ The collection and use of personal health data in the EEA and UK is governed by the EU and UK GDPR (collectively, GDPR).
Certain states also impose stricter requirements for processing certain personal data, including sensitive information, such as conducting data privacy impact assessments. These state laws allow for statutory fines for noncompliance. ​ The collection and use of personal health data in the EEA and the UK is governed by the EU and UK GDPR (collectively, GDPR).
Our operating results, and the variability of these operating results, will be affected by numerous factors, including: ​ ● regulatory clearance, certification or approvals affecting our products or those of our competitors; ● Ascensia’s ability to increase sales of Eversense and to commercialize and sell our future products, and the number of our products sold in each quarter; ● Ascensia’s ability to establish and grow an effective sales and marketing infrastructure and third-party distribution network; ● acceptance of our products by people with diabetes, their caregivers, healthcare providers and third-party payors; ● the pricing of our products and competitive products, and the effect of third-party coverage and reimbursement policies; ● the amount of, and the timing of the payment for, insurance deductibles required to be paid by our customers and potential customers under their existing insurance plans; ● interruption in the manufacturing or distribution of our products; ● seasonality and other factors affecting the timing of purchases of Eversense; ● timing of new product offerings, acquisitions, licenses or other significant events by us or our competitors; ● results of clinical research and trials on our products in development; ● the ability of our suppliers to timely provide us with an adequate supply of components and CGM systems that meet our requirements; ● changes in the fair value of embedded derivative instruments in the terms of some of our financings, which are subject to potentially wide fluctuations from period to period as a result of changes in our stock price; and ● the timing of revenue recognition associated with our product sales pursuant to applicable accounting standards. ​ As a result of our lack of operating history as a commercial-stage company and Ascensia’s lack of experience selling CGM systems, and Eversense in particular, and due to the complexities of the industry and regulatory framework in which we operate, it will be difficult for us to forecast demand for our future products and to forecast our sales with any degree of certainty.
Our operating results, and the variability of these operating results, will be affected by numerous factors, including: ​ ● regulatory clearance, certification or approvals affecting our products or those of our competitors; ● Ascensia’s ability to increase sales of Eversense and to commercialize and sell our future products, and the number of our products sold in each quarter; ● Ascensia’s ability to establish and grow an effective sales and marketing infrastructure and third-party distribution network; ● acceptance of our products by people with diabetes, their caregivers, healthcare providers and third-party payors; ● the pricing of our products and competitive products, and the effect of third-party coverage and reimbursement policies; ● the amount of, and the timing of the payment for, insurance deductibles required to be paid by our customers and potential customers under their existing insurance plans; ● interruption in the manufacturing or distribution of our products; ● seasonality and other factors affecting the timing of purchases of Eversense; ● timing of new product offerings, acquisitions, licenses or other significant events by us or our competitors; ● results of clinical research and trials on our products in development; ● the ability of our suppliers to timely provide us with an adequate supply of components and CGM systems that meet our requirements; ● changes in the fair value of embedded derivative instruments in the terms of some of our financings, which are subject to potentially wide fluctuations from period to period as a result of changes in our stock price; and ● the timing of revenue recognition associated with our product sales pursuant to applicable accounting standards. 42 ​ ​ As a result of our lack of operating history as a commercial-stage company and Ascensia’s lack of experience selling CGM systems, and Eversense in particular, and due to the complexities of the industry and regulatory framework in which we operate, it will be difficult for us to forecast demand for our future products and to forecast our sales with any degree of certainty.
The process of obtaining regulatory approvals or certifications to market a medical device can be costly and time-consuming, and we may not be able to obtain these approvals or certifications on a timely basis, or at all for our products. ​ If the FDA requires us to go through a more rigorous examination for future products or modifications to existing products than we had expected, our product introductions or modifications could be delayed or canceled, which could cause our sales to decline or to not increase in line with our expectations. ​ The FDA or comparable foreign regulatory authorities and Notified Bodies can delay, limit or deny approval or certification of a device for many reasons, including: ​ ● we may not be able to demonstrate that our products are safe and effective for their intended users; ● the data from our clinical trials may be insufficient to support approval or certification; and ● the manufacturing process or facilities we use may not meet applicable requirements. ​ In addition, the FDA or comparable foreign regulatory authorities may change approval or certification policies, adopt additional regulations or revise existing regulations, or take other actions which may prevent or delay approval or certification of our product modifications under development. ​ Any delay in, or failure to receive or maintain, approval or certifications for our products could prevent us from generating revenue from these products or achieving profitability. ​ If we or our third-party suppliers fail to comply with the FDA's or other foreign regulatory authorities’ good manufacturing practice regulations, this could impair our ability to market our products in a cost-effective and timely manner. ​ We and our third-party suppliers are required to comply with the FDA's QSR, which covers the methods and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage and shipping of our products.
The process of obtaining regulatory approvals or certifications to market a medical device can be costly and time-consuming, and we may not be able to obtain these approvals or certifications on a timely basis, or at all for our products. ​ If the FDA requires us to go through a more rigorous examination for future products or modifications to existing products than we had expected, our product introductions or modifications could be delayed or canceled, which could cause our sales to decline or to not increase in line with our expectations. ​ The FDA or comparable foreign regulatory authorities and Notified Bodies can delay, limit or deny approval or certification of a device for many reasons, including: ​ ● we may not be able to demonstrate that our products are safe and effective for their intended users; ● the data from our clinical trials may be insufficient to support approval or certification; and ● the manufacturing process or facilities we use may not meet applicable requirements. ​ In addition, the FDA or comparable foreign regulatory authorities may change approval or certification policies, adopt additional regulations or revise existing regulations, or take other actions which may prevent or delay approval or certification of our product modifications under development. ​ Any delay in, or failure to receive or maintain, approval or certifications for our products could prevent us from generating revenue from these products or achieving profitability. ​ If we or our third-party suppliers fail to comply with the FDA's or other foreign regulatory authorities’ good manufacturing practice regulations, this could impair our ability to market our products in a cost-effective and timely manner. ​ 52 ​ We and our third-party suppliers are required to comply with the FDA's QSR, which covers the methods and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage and shipping of our products.
Market acceptance and adoption of Eversense depends on educating people with diabetes, as well as their caregivers and healthcare providers, as to the distinct features, ease-of-use, positive lifestyle impact, and other perceived benefits of Eversense as compared to competitive products. ​ Achieving and maintaining market acceptance of Eversense could be negatively impacted by many factors, including: ​ ● the failure of Eversense to achieve wide acceptance among people with diabetes, their caregivers, healthcare providers, third-party payors and key opinion leaders in the diabetes treatment community; ● lack of evidence supporting the accuracy, duration, safety, ease-of-use or other perceived benefits of Eversense over competitive products or other currently available diabetes management therapies; ● perceived risks associated with the use of Eversense or similar products or technologies generally; ● the introduction of competitive products and the rate of acceptance of those products as compared to Eversense; ● adverse results of clinical trials relating to Eversense or similar competitive products; ● loss of regulatory approval or CE Certificates of Conformity for Eversense, adverse publicity or other adverse events including any product liability lawsuits; and ● any limitations in the ability of Ascensia to effectively communicate and promote product benefits. ​ 32 In addition, Eversense may be perceived by people with diabetes, their caregivers or healthcare providers to be more complicated or less effective than traditional monitoring methodologies, including SMBG or CGM systems which require less calibration, and people may be unwilling to change their current regimens. ​ Moreover, healthcare providers tend to be slow to change their medical treatment practices because of perceived liability risks arising from the use of new products and the uncertainty of third-party payor reimbursement.
Market acceptance and adoption of Eversense depends on educating people with diabetes, as well as their caregivers and healthcare providers, as to the distinct features, ease-of-use, positive lifestyle impact, and other perceived benefits of Eversense as compared to competitive products. ​ Achieving and maintaining market acceptance of Eversense could be negatively impacted by many factors, including: ​ ● the failure of Eversense to achieve wide acceptance among people with diabetes, their caregivers, healthcare providers, third-party payors and key opinion leaders in the diabetes treatment community; ● lack of evidence supporting the accuracy, duration, safety, ease-of-use or other perceived benefits of Eversense over competitive products or other currently available diabetes management therapies; ● perceived risks associated with the use of Eversense or similar products or technologies generally; ● the introduction of competitive products and the rate of acceptance of those products as compared to Eversense; ● adverse results of clinical trials relating to Eversense or similar competitive products; ● loss of regulatory approval or CE Certificates of Conformity for Eversense, adverse publicity or other adverse events including any product liability lawsuits; and ● any limitations in the ability of Ascensia to effectively communicate and promote product benefits. ​ In addition, Eversense may be perceived by people with diabetes, their caregivers or healthcare providers to be more complicated or less effective than traditional monitoring methodologies, including SMBG or CGM systems which may require less calibration, and people may be unwilling to change their current regimens. ​ Moreover, healthcare providers tend to be slow to change their medical treatment practices because of perceived liability risks arising from the use of new products and the uncertainty of third-party payor reimbursement.
The government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the false claims statutes; ● HIPAA, and its implementing regulations, which created federal criminal and civil statutes that prohibit, among other things, executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; ● HIPAA, as amended by HITECH, and their implementing regulations, which also imposes obligations on “covered entities,” including certain healthcare providers, health plans, and healthcare clearinghouses, as well as their respective “business associates” that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity and their subcontractors, regarding the privacy, security and transmission of such individually identifiable health information; ● federal "sunshine" requirements imposed by the PPACA, on device manufacturers regarding the annual reporting to CMS, of any "transfer of value" made or distributed to physicians (defined to include doctors, dentists, optometrists, podiatrists, and chiropractors), other healthcare professionals (such as physician assistants and nurse practitioners, and teaching hospitals, and ownership and investment interests held by physicians and their immediate family members.
The government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the false claims statutes; ● HIPAA, and its implementing regulations, which created federal criminal and civil statutes that prohibit, among other things, executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; ● HIPAA, as amended by HITECH, and their implementing regulations, which also imposes obligations on “covered entities,” including certain healthcare providers, health plans, and healthcare clearinghouses, as well as their respective “business associates” that create, receive, maintain or transmit individually identifiable health 54 ​ information for or on behalf of a covered entity and their subcontractors, regarding the privacy, security and transmission of such individually identifiable health information; ● federal "sunshine" requirements imposed by the PPACA, on device manufacturers regarding the annual reporting to CMS, of any "transfer of value" made or distributed to physicians (defined to include doctors, dentists, optometrists, podiatrists, and chiropractors), other healthcare professionals (such as physician assistants and nurse practitioners, and teaching hospitals, and ownership and investment interests held by physicians and their immediate family members.
These risks include our ability to: ​ ● obtain regulatory clearance, certification or approval to commercialize our products; ● perform clinical trials with respect to current Eversense or future versions of Eversense; ● implement and execute our business strategy; ● expand and improve the productivity of our sales and marketing infrastructure to grow sales of Eversense or future versions of Eversense; ● increase awareness of our brand and Eversense and build loyalty among people with diabetes, their caregivers and healthcare providers; ● manage expanding operations; ● manage and secure effective sales of our product through our new collaboration with Ascensia, including its establishment of required commercial infrastructure in the U.S. and elsewhere, and its adapting to a new product category in which it has limited experience; ● expand the capabilities and capacities of our third-party manufacturers, including increasing production of current products efficiently and having our vendors adapt their manufacturing facilities to the production of new products; ● respond effectively to competitive pressures and developments; ● enhance Eversense and develop future versions of Eversense; and ● attract, retain and motivate qualified personnel in various areas of our business. 30 ​ Due to our limited operating history as a commercial-stage company, we may not have the institutional knowledge or experience to be able to effectively address these and other risks that may face our business.
These risks include our ability to: ​ ● obtain regulatory clearance, certification or approval to commercialize our products; ● perform clinical trials with respect to current Eversense or future versions of Eversense; ● implement and execute our business strategy; ● expand and improve the productivity of our sales and marketing infrastructure to grow sales of Eversense or future versions of Eversense; ● increase awareness of our brand and Eversense and build loyalty among people with diabetes, their caregivers and healthcare providers; ● manage expanding operations; ● manage and secure effective sales of our product through our new collaboration with Ascensia, including its establishment of required commercial infrastructure in the U.S. and elsewhere, and its adapting to a new product category in which it has limited experience; ● expand the capabilities and capacities of our third-party manufacturers, including increasing production of current products efficiently and having our vendors adapt their manufacturing facilities to the production of new products; ● respond effectively to competitive pressures and developments; ● enhance Eversense and develop future versions of Eversense; and ● attract, retain and motivate qualified personnel in various areas of our business. ​ Due to our limited operating history as a commercial-stage company, we may not have the institutional knowledge or experience to be able to effectively address these and other risks that may face our business.
Some of these claims allow for the recovery of statutory damages on a per violation basis, and, if viable, carry the potential for monumental statutory damages, depending on the volume of data and the number of violations. ​ Any associated claims, inquiries, or investigations or other government actions could lead to unfavorable outcomes that have a material impact on our business including through significant penalties or fines, monetary judgments or settlements including criminal and civil liability for us and our officers and directors, increased compliance costs, delays or impediments in the development of new products, inability to process personal data or to operate in certain jurisdictions; negative publicity, increased operating costs, diversion of management time and attention, or other remedies that harm our business, including orders that we modify or cease existing business practices. ​ Moreover, governments and regulators in certain jurisdictions, including Europe, are increasingly seeking to regulate the use, transfer and other processing of non-personal information (for example, under the European Union’s Data Act).
Some of these claims allow for the recovery of statutory damages on a per violation basis, and, if viable, carry the potential for monumental statutory damages, depending on the volume of data and the number of violations. ​ Any associated claims, inquiries, or investigations or other government actions could lead to unfavorable outcomes that have a material impact on our business including through significant penalties or fines, monetary judgments or settlements including criminal and civil liability for us and our officers and directors, increased compliance 57 ​ costs, delays or impediments in the development of new products, inability to process personal data or to operate in certain jurisdictions; negative publicity, increased operating costs, diversion of management time and attention, or other remedies that harm our business, including orders that we modify or cease existing business practices. ​ Moreover, governments and regulators in certain jurisdictions, including Europe, are increasingly seeking to regulate the use, transfer and other processing of non-personal information (for example, under the European Union’s Data Act).
These provisions may also prevent changes in our management or limit the price that investors are willing to pay for our stock. ​ Our amended and restated certificate of incorporation and amended and restated bylaws provide that the Court of Chancery of the State of Delaware and the federal district courts of the United States of America will be the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees. ​ 65 Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: (1) any derivative action or proceeding brought on our behalf; (2) any action asserting a claim for breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders; (3) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws; or (4) any action asserting a claim governed by the internal affairs doctrine.
These provisions may also prevent changes in our management or limit the price that investors are willing to pay for our stock. ​ Our amended and restated certificate of incorporation and amended and restated bylaws provide that the Court of Chancery of the State of Delaware and the federal district courts of the United States of America will be the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees. ​ Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: (1) any derivative action or proceeding brought on our behalf; (2) any action asserting a claim for breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders; (3) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws; or (4) any action asserting a claim governed by the internal affairs doctrine.
On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, reduced Medicare payments to several providers, including hospitals, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. ​ At this time, we cannot predict which, if any, additional healthcare reform proposals will be adopted, when they may be adopted or what impact they, or the PPACA, may have on our business and operations, and any of these impacts may be adverse on our operating results and financial condition. ​ ​ 62 Risks Related to our Common Stock ​ Because our stock price has and will likely continue to be highly volatile, the market price of our common stock may be lower or more volatile than expected. ​ Our stock price has been highly volatile.
On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, reduced Medicare payments to several providers, including hospitals, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. ​ At this time, we cannot predict which, if any, additional healthcare reform proposals will be adopted, when they may be adopted or what impact they, or the PPACA, may have on our business and operations, and any of these impacts may be adverse on our operating results and financial condition. ​ Risks Related to our Common Stock ​ Because our stock price has and will likely continue to be highly volatile, the market price of our common stock may be lower or more volatile than expected. ​ Our stock price has been highly volatile.
If any such actions are instituted against us, and we are 47 not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant civil, criminal and administrative penalties, including, without limitation, damages, fines, disgorgement of profits, individual imprisonment, exclusion from participation in government healthcare programs, such as Medicare and Medicaid, integrity oversight and reporting obligations, and the curtailment or restructuring of our operations. ​ We may incur product liability losses, and insurance coverage may be inadequate or unavailable to cover these losses. ​ Our business exposes us to potential product liability claims that are inherent in the design, manufacture, testing and sale of medical devices.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant civil, criminal and administrative penalties, including, without limitation, damages, fines, disgorgement of profits, individual imprisonment, exclusion from participation in government healthcare programs, such as Medicare and Medicaid, integrity oversight and reporting obligations, and the curtailment or restructuring of our operations. ​ We may incur product liability losses, and insurance coverage may be inadequate or unavailable to cover these losses. ​ Our business exposes us to potential product liability claims that are inherent in the design, manufacture, testing and sale of medical devices.
You should review and consider carefully the risks and uncertainties described in the “Risk Factors” section of this Annual Report on Form 10-K, which includes a more complete discussion of the risks summarized below as well as a discussion of other risks related to our business and an investment in our common stock, as well as our other public filings with the Securities and Exchange Commission, or SEC. ​ Any of the following risks could have a material adverse effect on our business, financial condition, results of operations and prospects and cause the trading price of our common stock to decline: ​ ● We have incurred significant operating losses since inception and cannot assure you that we will ever achieve or sustain profitability.
You should review and consider carefully the risks and uncertainties described in the “Risk Factors” section of this Annual Report on Form 10-K, which includes a more complete discussion of the risks 27 ​ summarized below as well as a discussion of other risks related to our business and an investment in our common stock, as well as our other public filings with the Securities and Exchange Commission, or SEC. ​ Any of the following risks could have a material adverse effect on our business, financial condition, results of operations and prospects and cause the trading price of our common stock to decline: ​ ● We have incurred significant operating losses since inception and cannot assure you that we will ever achieve or sustain profitability.
Accordingly, healthcare providers may not recommend Eversense unless and until there is sufficient evidence to convince them to alter the treatment methods they typically recommend, such as receiving recommendations from prominent healthcare providers or other key opinion leaders in the diabetes treatment community. ​ If we are not successful in educating people with diabetes of the benefits of Eversense, or if we are unable to achieve the support of caregivers and healthcare providers or widespread market acceptance for Eversense, then our sales potential, strategic objectives and profitability could be negatively impacted, which would adversely affect our business, financial condition and operating results. ​ We contract with third parties for the manufacture of Eversense.
Accordingly, healthcare providers may not recommend Eversense unless and until there is sufficient evidence to convince them to alter the treatment methods they typically recommend, such as receiving recommendations from prominent healthcare providers or other key opinion leaders in the diabetes treatment community. ​ If we are not successful in educating people with diabetes of the benefits of Eversense, or if we are unable to achieve the support of caregivers and healthcare providers or widespread market acceptance for Eversense, then our sales 32 ​ potential, strategic objectives and profitability could be negatively impacted, which would adversely affect our business, financial condition and operating results. ​ We contract with third parties for the manufacture of Eversense.
If we or our licensors or collaboration partners fail to maintain the patents and patent applications covering our proprietary technologies, our competitors might be able to enter the market earlier with similar products or technology, which would have an adverse effect on our business. 49 ​ The medical device industry is characterized by patent litigation, and we could become subject to litigation that could be costly, result in the diversion of management's time and efforts, stop our development and commercialization measures, harm our reputation or require us to pay damages. ​ Our success will depend in part on not infringing the patents or violating the other proprietary rights of third parties.
If we or our licensors or collaboration partners fail to maintain the patents and patent applications covering our proprietary technologies, our competitors might be able to enter the market earlier with similar products or technology, which would have an adverse effect on our business. ​ The medical device industry is characterized by patent litigation, and we could become subject to litigation that could be costly, result in the diversion of management's time and efforts, stop our development and commercialization measures, harm our reputation or require us to pay damages. ​ Our success will depend in part on not infringing the patents or violating the other proprietary rights of third parties.
Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects. ​ We are subject to the patent laws of countries other than the United States, which may not offer the same level of patent protection and whose rules could seriously affect how we draft, file, prosecute and maintain patents, trademarks and patent and trademark applications. ​ Many countries, including certain countries in Europe, have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties (for example, the patent owner has failed to "work" the invention in that country, or the third party has patented improvements).
Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects. ​ 50 ​ We are subject to the patent laws of countries other than the United States, which may not offer the same level of patent protection and whose rules could seriously affect how we draft, file, prosecute and maintain patents, trademarks and patent and trademark applications. ​ Many countries, including certain countries in Europe, have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties (for example, the patent owner has failed to "work" the invention in that country, or the third party has patented improvements).
Moreover, clinical data is often susceptible to varying interpretations and analyses, and many companies that have believed their products performed satisfactorily in clinical trials have nonetheless failed to obtain marketing approval or certification. ​ If we are unable to successfully complete clinical trials of Eversense or other testing, if the results of these trials or tests are not favorable or if there are safety concerns, we may: ​ ● not obtain marketing approval or certification for such modifications; ● be delayed in obtaining marketing approval or certification for such modifications; ● be subject to additional post-marketing testing requirements; or ● have Eversense removed from the market after obtaining marketing approval. ​ Our development costs will also increase if we experience delays in testing, marketing approvals, or certification.
Moreover, clinical data is often susceptible to varying interpretations and analyses, and many companies that have believed their products performed satisfactorily in clinical trials have nonetheless failed to obtain marketing approval or certification. ​ If we are unable to successfully complete clinical trials of Eversense or other testing, if the results of these trials or tests are not favorable or if there are safety concerns, we may: ​ ● not obtain marketing approval or certification for such modifications; ● be delayed in obtaining marketing approval or certification for such modifications; ● be subject to additional post-marketing testing requirements; or ● have Eversense removed from the market after obtaining marketing approval. 45 ​ ​ Our development costs will also increase if we experience delays in testing, marketing approvals, or certification.
You may not receive a gain on your investment when you sell shares and you may lose the entire amount of the investment. ​ Provisions in our corporate charter documents and under Delaware law may prevent or frustrate attempts by our stockholders to change our management and hinder efforts to acquire a controlling interest in us, and the market price of our common stock may be lower as a result. ​ There are provisions in our certificate of incorporation and bylaws that may make it difficult for a third party to acquire, or attempt to acquire, control of our company, even if a change of control was considered favorable by some or all of our stockholders.
You may not receive a gain on your investment when you sell shares and you may lose the entire amount of the investment. ​ 63 ​ Provisions in our corporate charter documents and under Delaware law may prevent or frustrate attempts by our stockholders to change our management and hinder efforts to acquire a controlling interest in us, and the market price of our common stock may be lower as a result. ​ There are provisions in our certificate of incorporation and bylaws that may make it difficult for a third party to acquire, or attempt to acquire, control of our company, even if a change of control was considered favorable by some or all of our stockholders.
Our operating results may be adversely impacted if we are unable to obtain successful appeals or favorable coverage decisions by insurance providers, or if there are not effective patient access programs in place. ​ If important assumptions we have made about what people with intensively managed diabetes are seeking in a CGM system are inaccurate, our business and operating results may be adversely affected. ​ Our business strategy was developed based on a number of important assumptions about the diabetes industry in general, and the diabetes market for CGM in particular, any one or more of which may prove to be inaccurate.
Our operating results may be adversely impacted if we are unable to obtain successful appeals or favorable coverage decisions by insurance providers, or if there are not effective patient access programs in place. ​ ​ ​ ​ 36 ​ If important assumptions we have made about what people with intensively managed diabetes are seeking in a CGM system are inaccurate, our business and operating results may be adversely affected. ​ Our business strategy was developed based on a number of important assumptions about the diabetes industry in general, and the diabetes market for CGM in particular, any one or more of which may prove to be inaccurate.
Also, if there should be widespread off-label use of our system by patients, and resulting adverse medical events, the 60 FDA, competent authorities of the EEA countries or other foreign regulatory bodies might require us, to implement additional measures to reduce off-label use, which could be costly or reduce adoption of Eversense. ​ Legislative or regulatory healthcare reforms may make it more difficult and costly for us to obtain regulatory clearance, certification or approval of our products. ​ Recent political, economic and regulatory influences are subjecting the healthcare industry to fundamental changes.
Also, if there should be widespread off-label use of our system by patients, and resulting adverse medical events, the FDA, competent authorities of the EEA countries or other foreign regulatory bodies might require us to implement additional measures to reduce off-label use, which could be costly or reduce adoption of Eversense. ​ Legislative or regulatory healthcare reforms may make it more difficult and costly for us to obtain regulatory clearance, certification or approval of our products. ​ Recent political, economic and regulatory influences are subjecting the healthcare industry to fundamental changes.
The occurrence of any of these events may harm our business, financial condition and operating results. ​ Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by government patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements. ​ Periodic maintenance fees, renewal fees, annuity fees, and various other government fees on patents and applications will be due to be paid to the United States Patent and Trademark Office (“USPTO”) the European Patent Office (“EPO”), and other foreign patent agencies over the lifetime of our owned patents and applications.
The occurrence of any of these events may harm our business, financial condition and operating results. ​ 48 ​ Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by government patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements. ​ Periodic maintenance fees, renewal fees, annuity fees, and various other government fees on patents and applications will be due to be paid to the United States Patent and Trademark Office (“USPTO”) the European Patent Office (“EPO”), and other foreign patent agencies over the lifetime of our owned patents and applications.
These governmental authorities enforce laws and regulations that are meant to assure product safety and effectiveness, including the regulation of, among other things: ​ ● product design and development; ● preclinical studies and clinical trials; ● product safety; ● establishment registration and product listing; ● labeling and storage; ● marketing, manufacturing, sales and distribution; ● pre-market clearance, certification or approval; ● servicing and post-market surveillance; ● advertising and promotion; and ● recalls and field safety corrective actions. ​ The regulations to which we are subject are complex and have tended to become more stringent over time.
These governmental authorities enforce laws and regulations that are meant to assure product safety and effectiveness, including the regulation of, among other things: ​ ● product design and development; 51 ​ ● preclinical studies and clinical trials; ● product safety; ● establishment registration and product listing; ● labeling and storage; ● marketing, manufacturing, sales and distribution; ● pre-market clearance, certification or approval; ● servicing and post-market surveillance; ● advertising and promotion; and ● recalls and field safety corrective actions. ​ The regulations to which we are subject are complex and have tended to become more stringent over time.
In particular, these collaborations may not result in the development of products that achieve commercial success or result in significant revenues and could be terminated prior to developing any products. ​ 40 Additionally, we may not be in a position to exercise sole decision-making authority regarding the transaction or arrangement, which could create the potential risk of creating impasses on decisions, and our future collaborators may have economic or business interests or goals that are, or that may become, inconsistent with our business interests or goals.
In particular, these collaborations may not result in the development of products that achieve commercial success or result in significant revenues and could be terminated prior to developing any products. ​ Additionally, we may not be in a position to exercise sole decision-making authority regarding the transaction or arrangement, which could create the potential risk of creating impasses on decisions, and our future collaborators may have economic or business interests or goals that are, or that may become, inconsistent with our business interests or goals.
Further, as the number of participants in the diabetes market increases, the possibility of intellectual property infringement claims against us increases. ​ 50 We may be subject to damages resulting from claims that we, or our employees, have wrongfully used or disclosed alleged trade secrets of our competitors or are in breach of non-competition or non-solicitation agreements with our competitors. ​ Many of our employees were previously employed at other medical device companies, including those that are our direct competitors or could potentially be our direct competitors.
Further, as the number of participants in the diabetes market increases, the possibility of intellectual property infringement claims against us increases. ​ We may be subject to damages resulting from claims that we, or our employees, have wrongfully used or disclosed alleged trade secrets of our competitors or are in breach of non-competition or non-solicitation agreements with our competitors. ​ Many of our employees were previously employed at other medical device companies, including those that are our direct competitors or could potentially be our direct competitors.
It may have further negative impacts, such as (a) a global or U.S. recession or other economic crisis; (b) credit and capital markets volatility (and access to these markets, including by our suppliers and customers); (c) manufacturing supply disruption due to travel restrictions or other government actions; (d) disruptions in raw material 42 supply, our manufacturing operations, or in our distribution and supply chain; and (e) our ability to conduct planned clinical trials and commercialization activities.
It may have further negative impacts, such as (a) a global or U.S. recession or other economic crisis; (b) credit and capital markets volatility (and access to these markets, including by our suppliers and customers); (c) manufacturing supply disruption due to travel restrictions or other government actions; (d) disruptions in raw material supply, our manufacturing operations, or in our distribution and supply chain; and (e) our ability to conduct planned clinical trials and commercialization activities.
If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our common stock could 66 decline, and we could be subject to sanctions or investigations by the NYSE American, the SEC or other regulatory authorities.
If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by the NYSE American, the SEC or other regulatory authorities.
We cannot assure you, however, that our policies and procedures will be 54 sufficient or that directors, officers, employees, representatives, third-party distributors, consultants and agents have not engaged and will not engage in conduct for which we may be held responsible, nor can we assure you that our business partners have not engaged and will not engage in conduct that could materially affect their ability to perform their contractual obligations to us or even result in our being held liable for such conduct.
We cannot assure you, however, that our policies and procedures will be sufficient or that directors, officers, employees, representatives, third-party distributors, consultants and agents have not engaged and will not engage in conduct for which we may be held responsible, nor can we assure you that our business partners have not engaged and will not engage in conduct that could materially affect their ability to perform their contractual obligations to us or even result in our being held liable for such conduct.
Such healthcare laws potentially applicable to our operations include: ​ ● the federal Anti-Kickback Statute, which will apply to our marketing practices, educational programs, pricing policies and relationships with healthcare providers, by prohibiting, among other things, soliciting, receiving, offering or providing remuneration intended to induce the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare or Medicaid programs.
Such healthcare laws applicable to our operations include: ​ ● the federal Anti-Kickback Statute, which will apply to our marketing practices, educational programs, pricing policies and relationships with healthcare providers, by prohibiting, among other things, soliciting, receiving, offering or providing remuneration intended to induce the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare or Medicaid programs.
The changes to the regulatory system implemented in the EU by the Medical Device Regulation include stricter requirements for clinical evidence and pre-market assessment of safety and performance, new classifications to indicate risk levels, requirements for third party testing by Notified Bodies, tightened and streamlined quality management system assessment procedures and additional requirements for the quality management system, additional requirements for traceability of products and transparency as well a refined responsibility of economic operators.
The changes to the regulatory system implemented in the EU by the Medical Device Regulation include stricter requirements for clinical evidence and pre-market assessment of safety and performance, new classifications to 60 ​ indicate risk levels, requirements for third party testing by Notified Bodies, tightened and streamlined quality management system assessment procedures and additional requirements for the quality management system, additional requirements for traceability of products and transparency as well as a refined responsibility of economic operators.
We may be forced to abandon specific patents due to a lack of financial resources. ​ 51 Our intellectual property rights do not necessarily address all potential competitive threats or confer meaningful competitive benefits. ​ The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business, or permit us to maintain any competitive advantage.
We may be forced to abandon specific patents due to a lack of financial resources. ​ Our intellectual property rights do not necessarily address all potential competitive threats or confer meaningful competitive benefits. ​ The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business, or permit us to maintain any competitive advantage.
For example, many of the products we will seek to develop and introduce in the future will require regulatory approval, certification or clearance and import licenses before we can sell such products and given that 43 the timing of such approvals, certification, clearances or licenses may be uncertain, it will be difficult for us to predict sales projections for these products with any degree of certainty before such approvals, certifications, clearances or licenses are obtained.
For example, many of the products we will seek to develop and introduce in the future will require regulatory approval, certification or clearance and import licenses before we can sell such products and given that the timing of such approvals, certification, clearances or licenses may be uncertain, it will be difficult for us to predict sales projections for these products with any degree of certainty before such approvals, certifications, clearances or licenses are obtained.
These actions could disrupt the employee base, our ability to attract and retain qualified personnel, or cause other operational and administrative inefficiencies. ​ Our employees, independent contractors, consultants, manufacturers and distributors may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements. ​ We are exposed to the risk that our employees, independent contractors, consultants, manufacturers and distributors may engage in fraudulent conduct or other illegal activity.
These actions could disrupt the employee base, our ability to attract and retain qualified personnel, or cause other operational and administrative inefficiencies. 46 ​ Our employees, independent contractors, consultants, manufacturers and distributors may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements. ​ We are exposed to the risk that our employees, independent contractors, consultants, manufacturers and distributors may engage in fraudulent conduct or other illegal activity.
Departments of Justice, Commerce, State and Treasury and other federal agencies and authorities have a broad range of civil and criminal penalties they may seek to impose against corporations and individuals for violations of economic sanctions laws, export control laws, the Foreign Corrupt Practices Act (“FCPA”) and other federal statutes and regulations, including those established by the Office of Foreign Assets Control (“OFAC”).
Departments of Justice, Commerce, State and Treasury and other federal agencies and authorities have a broad range of civil and 53 ​ criminal penalties they may seek to impose against corporations and individuals for violations of economic sanctions laws, export control laws, the Foreign Corrupt Practices Act (“FCPA”) and other federal statutes and regulations, including those established by the Office of Foreign Assets Control (“OFAC”).
Data Privacy Framework and the UK extension thereto (which allows for transfers to relevant U.S.-based organizations who self-certify compliance and participate in the Framework, these mechanisms are subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer personal data to the United States.
Data Privacy Framework and the UK extension thereto (which allows for transfers to relevant U.S.-based organizations who self-certify compliance and participate in the Framework, these mechanisms are subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer 56 ​ personal data to the United States.
Although we intend to train our marketing and direct sales force to not promote our products for uses outside of their cleared uses and our policy will be to refrain from statements that could be considered off-label promotion of our products, the FDA competent authorities of the EEA countries, or another regulatory agency could disagree and conclude that we have engaged in off-label promotion.
Although we intend to train our marketing and direct sales force to not promote our 59 ​ products for uses outside of their cleared uses and our policy will be to refrain from statements that could be considered off-label promotion of our products, the FDA competent authorities of the EEA countries, or another regulatory agency could disagree and conclude that we have engaged in off-label promotion.
If we do not achieve one or more of these approvals, or certifications in a timely manner or at all, we could experience significant delays or an inability to fully commercialize Eversense and achieve profitability. ​ 31 Both before and after a product is commercially released, we will have ongoing responsibilities under U.S. and EU regulations.
If we do not achieve one or more of these approvals, or certifications in a timely manner or at all, we could experience significant delays or an inability to fully commercialize Eversense and achieve profitability. ​ Both before and after a product is commercially released, we will have ongoing responsibilities under U.S. and EU regulations.
Net prices for products may be 35 reduced by mandatory discounts or rebates required by government healthcare programs or third-party payors and by any future relaxation of laws that presently restrict imports of products from countries where they may be sold at lower prices. ​ Private insurance companies and other private, third-party payors set payor-specific reimbursement policies.
Net prices for products may be reduced by mandatory discounts or rebates required by government healthcare programs or third-party payors and by any future relaxation of laws that presently restrict imports of products from countries where they may be sold at lower prices. ​ Private insurance companies and other private third-party payors set payor-specific reimbursement policies.
If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial 44 condition at such time.
If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time.
In addition, those third-party payors that cover CGM products may and have included limitations as to the patient conditions and characteristics eligible for coverage and may adopt different coverage and reimbursement policies for our products, which could also diminish payments for Eversense. It is possible that some third-party payors will not offer any coverage for our products.
In addition, 35 ​ those third-party payors that cover CGM products may and have included limitations as to the patient conditions and characteristics eligible for coverage and may adopt different coverage and reimbursement policies for our products, which could also diminish payments for Eversense. It is possible that some third-party payors will not offer any coverage for our products.
We cannot assure you that long-term use would not result in unanticipated complications, even after the device is removed. ​ 39 Undetected errors or defects in Eversense or future versions of Eversense could harm our reputation, decrease the market acceptance of Eversense or expose us to product liability claims. ​ Eversense or future versions of Eversense may contain undetected errors or defects.
We cannot assure you that long-term use would not result in unanticipated complications, even after the device is removed. ​ Undetected errors or defects in Eversense or future versions of Eversense could harm our reputation, decrease the market acceptance of Eversense or expose us to product liability claims. ​ Eversense or future versions of Eversense may contain undetected errors or defects.
The IRA also eliminates the "donut hole" under the Medicare Part D program beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost and creating a new manufacturer discount program. It is possible that the PPACA will be subject to judicial or Congressional challenges in the future.
The IRA also eliminates the "donut hole" under the Medicare Part D program beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost and creating a new manufacturer discount program. It is possible that the 61 ​ PPACA will be subject to judicial or Congressional challenges in the future.
In addition, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties’ infrastructure in our supply chain or our third-party partners’ supply chains have not been compromised. ​ While we have implemented security measures designed to protect against security incidents, there can be no assurance that these measures will be effective.
In addition, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties’ infrastructure in our supply chain or our third-party partners’ supply chains have not been compromised. ​ 58 ​ While we have implemented security measures designed to protect against security incidents, there can be no assurance that these measures will be effective.
Penalties for a company's noncompliance with foreign governmental regulation could be severe, including revocation or suspension of a company's business license and civil or criminal sanctions. In some jurisdictions, such as Germany, any violation of a law related to medical devices is also considered to be a violation of unfair competition law.
Penalties for a company's noncompliance with foreign governmental regulation could be severe, including revocation or suspension of a company's business license and civil or criminal sanctions. In some jurisdictions, such as Germany, any violation of a law related to medical devices is also considered to be a violation of the unfair competition law.
Additionally, our suppliers may encounter problems that limit their ability to supply components or manufacture products for us, including financial difficulties, damage to their manufacturing equipment or facilities, or product discontinuations. As a result, there is a risk that certain components could be discontinued and no longer available to us.
Additionally, our suppliers may encounter problems that limit their ability to supply components or manufacture products for us, 33 ​ including financial difficulties, damage to their manufacturing equipment or facilities, or product discontinuations. As a result, there is a risk that certain components could be discontinued and no longer available to us.
We base our estimates on historical experience and on various other assumptions that we believe to 64 be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenue and expenses that are not readily apparent from other sources.
We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenue and expenses that are not readily apparent from other sources.
Future increases in sales of Eversense, whether 33 expected or unanticipated, could strain the ability of our suppliers to deliver an increasingly large supply of components and Eversense systems in a manner that meets these various requirements. ​ We generally use a small number of suppliers of components for our products.
Future increases in sales of Eversense, whether expected or unanticipated, could strain the ability of our suppliers to deliver an increasingly large supply of components and Eversense systems in a manner that meets these various requirements. ​ We generally use a small number of suppliers of components for our products.
We may also be subject to increased warranty and liability claims for damages related to errors or defects in Eversense or future versions of Eversense. A material liability claim or other occurrence that harms our reputation or decreases market acceptance of Eversense could harm our business and operating results.
We may 39 ​ also be subject to increased warranty and liability claims for damages related to errors or defects in Eversense or future versions of Eversense. A material liability claim or other occurrence that harms our reputation or decreases market acceptance of Eversense could harm our business and operating results.
If any of the following events actually occur or risks actually materialize, it could have a material adverse effect on our business, operating results and financial condition and cause the trading price of our common stock to decline. ​ 27 Summary of Risks Affecting Our Business ​ Our business is subject to numerous risks.
If any of the following events actually occur or risks actually materialize, it could have a material adverse effect on our business, operating results and financial condition and cause the trading price of our common stock to decline. ​ Summary of Risks Affecting Our Business ​ Our business is subject to numerous risks.
Failure to comply with applicable laws and regulations should harm our business and we may incur significant expenditures related to compliance efforts. ● Failure or perceived failure to comply with existing or future laws, regulations, contracts, self-regulatory schemes, standards, and other obligations related to data privacy and security (including security incidents) could harm our business.
Failure to comply 28 ​ with applicable laws and regulations should harm our business and we may incur significant expenditures related to compliance efforts. ● Failure or perceived failure to comply with existing or future laws, regulations, contracts, self-regulatory schemes, standards, and other obligations related to data privacy and security (including security incidents) could harm our business.
The GDPR also imposes strict rules on the transfer of personal data outside of the EEA and UK to countries that do not ensure an adequate level of protection, like the United States. In the ordinary course of business, we may transfer personal data from the EEA and UK or other jurisdictions to the United States or other countries.
The GDPR also imposes strict rules on the transfer of personal data outside of the EEA and UK to countries that do not ensure an adequate level of protection, like the United States. In the ordinary course of business, we transfer personal data from the EEA and UK or other jurisdictions to the United States or other countries.
For example, some of our data processing practices may be challenged under wiretapping laws, if we obtain consumer information from third parties through various methods, including chatbot providers. These practices may be subject to increased challenges by class action plaintiffs.
For example, some of our data processing practices may be challenged under wiretapping laws, if we obtain consumer information from third parties through various methods, including chatbot providers. These practices are subject to increased challenges by class action plaintiffs.
In addition, the competent 61 authorities of individual EEA countries have powers to suspend the marketing and use, or demand the recall, of unsafe or non-compliant devices. They also have the power to bring enforcement action against companies or individuals for breaches of the device rules.
In addition, the competent authorities of individual EEA countries have powers to suspend the marketing and use, or demand the recall, of unsafe or non-compliant devices. They also have the power to bring enforcement action against companies or individuals for breaches of the device rules.
In addition, although we expect some of our future versions of Eversense to share product features and components with our current Eversense E3 product, manufacturing future versions of Eversense may require the modification of production lines, the identification of new manufacturers for specific components, or the development of new manufacturing technologies.
In addition, although we expect some of our future versions of Eversense to share product features and components with our current Eversense versions, manufacturing future versions of Eversense may require the modification of production lines, the identification of new manufacturers for specific components, or the development of new manufacturing technologies.
Additionally, if we settle an investigation with law enforcement or other regulatory agencies, we may be forced to agree to additional onerous compliance and reporting requirements as part of a consent decree or corporate integrity agreement.
Additionally, if we settle an investigation with law enforcement or other regulatory agencies, we may be forced to agree to additional onerous 55 ​ compliance and reporting requirements as part of a consent decree or corporate integrity agreement.
If Ascensia fails to perform satisfactorily under this agreement, including among other things if they are delayed or unsuccessful in growing the adoption of our product, our commercialization efforts and financial results would be directly and adversely affected. ● The markets in which we participate are highly competitive, and our primary competitors, as well as a number of other companies, medical researcher and existing medical device companies, are pursuing new delivery devices, delivery technologies, sensing technologies, procedures, drugs and other therapies for the monitoring, treatment and prevention of diabetes.
If Ascensia fails to perform satisfactorily under this agreement, including among other things if they are delayed or unsuccessful in growing the adoption of our product, our commercialization efforts and financial results would be directly and adversely affected. ● The markets in which we participate are highly competitive, and our primary competitors, as well as a number of other companies, medical researchers and existing medical device companies, are pursuing new delivery devices, delivery technologies, sensing technologies, procedures, drugs and other therapies for the monitoring, treatment and prevention of diabetes.
If we determine that an ownership change has occurred and our ability to use our historical NOL and tax credit carryforwards is materially limited, it would harm our future operating results by effectively increasing our future tax obligations. ​ Changes in tax laws or regulations that are applied adversely to us or our customers may have a material adverse effect on our business, cash flow, financial condition, or results of operations . ​ New tax laws, statutes, rules, regulations, or ordinances could be enacted at any time.
If we determine that an ownership change has occurred and our ability to use our historical NOL and tax credit carryforwards is significantly limited, it would harm our future operating results by effectively increasing our future tax obligations. ​ Changes in tax laws or regulations that are applied adversely to us or our customers may have a material adverse effect on our business, cash flow, financial condition, or results of operations . ​ New tax laws, statutes, rules, regulations, or ordinances could be enacted at any time.
Discovery of previously unknown problems with our product's design or manufacture may result in restrictions on the use of Eversense, restrictions placed on us or our suppliers, or withdrawal or variation of an existing regulatory clearance or CE Certificate of Conformity for Eversense.
Discovery of previously unknown problems with our product's design or manufacture may result in restrictions on the use of Eversense, restrictions placed on us or our suppliers, or withdrawal or variation of an existing regulatory clearance 31 ​ or CE Certificate of Conformity for Eversense.
The amount of time required to obtain favorable coverage and reimbursement 36 decisions, including navigating the appeals process with third-party payors, is uncertain, and we may see increased product utilization without corresponding recognized revenue.
The amount of time required to obtain favorable coverage and reimbursement decisions, including navigating the appeals process with third-party payors, is uncertain, and we may see increased product utilization without corresponding recognized revenue.
Further, existing tax laws, statutes, rules, regulations, or ordinances could be interpreted differently, changed, repealed, or modified at any time. 67 Any such enactment, interpretation, change, repeal, or modification could adversely affect us, possibly with retroactive effect.
Further, existing tax laws, statutes, rules, regulations, or ordinances could be interpreted differently, changed, repealed, or modified at any time. Any such enactment, interpretation, change, repeal, or modification could adversely affect us, possibly with retroactive effect.
If NPG or other partners fail to perform satisfactorily under these agreements our commercialization efforts and financial results would be directly and adversely affected. 28 ● Our stock price has been highly volatile and may continue to be highly volatile.
If NPG or other partners fail to perform satisfactorily under these agreements our commercialization efforts and financial results would be directly and adversely affected. ● Our stock price has been highly volatile and may continue to be highly volatile.
However, certain changes to a PMA-approved device do not require submission and approval of a 45 new PMA or PMA supplement, or appropriate modifications in other jurisdictions, and may only require notice to FDA in a PMA Annual Report, or similar notifications in other jurisdictions.
However, certain changes to a PMA-approved device do not require submission and approval of a new PMA or PMA supplement, or appropriate modifications in other jurisdictions, and may only require notice to FDA in a PMA Annual Report, or similar notifications in other jurisdictions.
For example, 52 in September 2019 we voluntarily initiated a recall of Eversense sensors that had not yet been implanted, due to premature loss of function due to inadequate hydration of the sensor’s glucose-sensing surface.
For example, in September 2019 we voluntarily initiated a recall of Eversense sensors that had not yet been implanted, due to premature loss of function due to inadequate hydration of the sensor’s glucose-sensing surface.
For 53 example, in September 2019 we voluntarily initiated a recall of Eversense sensors that had not yet been implanted, due to premature loss of function due to inadequate hydration of the sensor’s glucose-sensing surface.
For example, in September 2019 we voluntarily initiated a recall of Eversense sensors that had not yet been implanted, due to premature loss of function due to inadequate hydration of the sensor’s glucose-sensing surface.
Due to differences between foreign and 48 U.S. patent laws, our patented intellectual property rights may not receive the same degree of protection in foreign countries as they would in the United States.
Due to differences between foreign and U.S. patent laws, our patented intellectual property rights may not receive the same degree of protection in foreign countries as they would in the United States.
In addition, under Section 382/383 of the Internal Revenue Code of 1986, as amended, or the Code, and corresponding provisions of state law, if a corporation undergoes an "ownership change," which generally occurs if the percentage of the corporation's stock owned by 5% stockholders increases by more than 50% over a three-year period, the corporation's ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited.
Under Section 382/383 of the Internal Revenue Code of 1986, as amended, or the Code, and corresponding provisions of state law, if a corporation undergoes an "ownership change," which generally occurs if the percentage of the corporation's stock owned by 5% stockholders increases by more than 50% over a three-year period, the corporation's ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited.
The loss of the services of our executive officers or other key employees could impede the 46 achievement of our research, development and commercialization objectives and seriously harm our ability to successfully implement our business strategy.
The loss of the services of our executive officers or other key employees could impede the achievement of our research, development and commercialization objectives and seriously harm our ability to successfully implement our business strategy.
Governments have passed and are likely to pass additional laws regulating generative AI. Our use of 57 this technology could result in additional compliance costs, regulatory investigations and actions, and lawsuits.
Governments have passed and are likely to pass additional laws regulating generative AI. Our use of this technology could result in additional compliance costs, regulatory investigations and actions, and lawsuits.
Security incidents and attendant consequences 59 may prevent or cause customers to stop using our products, deter new customers from using our prodcuts, and negatively impact our ability to grow and operate our business. ​ Our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our data privacy and security obligations.
Security incidents and attendant consequences may prevent or cause customers to stop using our products, deter new customers from using our products, and negatively impact our ability to grow and operate our business. ​ Our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our data privacy and security obligations.
The stock market in general and the market for innovative, emerging medtech and biotechnology companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies.
The stock market in general and the market for innovative, emerging medtech and biotechnology companies in particular have experienced volatility that has often been unrelated to the operating performance of particular companies.
If our estimates and projections overestimate the size of this market, our sales growth may be adversely affected. ​ Our estimates of the size and future growth in the market for CGM systems and CGM-related products, including the number of people currently managing their diabetes with insulin who may benefit from and be amenable to using Eversense, is based on a number of internal and third-party studies, reports and estimates.
If our estimates and projections overestimate the size of this market, our sales growth may be adversely affected. ​ Our estimates of the size and future growth in the market for CGM systems and CGM-related products, including the number of people currently managing their diabetes with insulin who may benefit from and be amenable to using Eversense, are based on a number of internal and third-party studies, reports and estimates.
If any conflicts arise with any future collaborators, they may act in their self-interest, which may be adverse to our best interest, and they may breach their obligations to us.
If any conflicts arise with any future collaborators, they may act in their self-interest, which may be adverse to our best interest, and they may 40 ​ breach their obligations to us.
To manage our anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel.
To manage our future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel.
In addition, voluntary EU and national industry Codes of Conduct provide guidelines on the advertising and promotion of our products to the general public and may impose limitations on our promotional activities with healthcare professionals, which could negatively impact our business, operating results and financial condition. ​ Off-label use of our product by patients could lead to product liability claims and regulatory action. ​ Eversense is currently labeled as non-adjunctive; however once a day fingerstick calibrations are still required.
In addition, voluntary EU and national industry Codes of Conduct provide guidelines on the advertising and promotion of our products to the general public and may impose limitations on our promotional activities with healthcare professionals, which could negatively impact our business, operating results and financial condition. ​ Off-label use of our product by patients could lead to product liability claims and regulatory action. ​ Eversense is currently labeled as non-adjunctive; however, once weekly fingerstick calibrations are still required.
The extent of coverage and the rate of reimbursement varies on a payor-by-payor basis. Most of the largest private third-party payors, in terms of the number of covered lives, have issued coverage policies for the category of CGM devices. These policies include varied coverage requirements regarding patient condition and characteristics.
The extent of coverage and the rate of reimbursement vary on a payor-by-payor basis. Most of the largest private third-party payors, in terms of the number of covered lives, have issued coverage policies for the category of CGM devices. These policies include varied coverage requirements regarding patient condition and characteristics.
Our data processing activities subject us to numerous data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, contractual requirements, and other obligations relating to data privacy and security. ​ In the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), and other similar laws (e.g., wiretapping laws). ​ In the past few years, numerous U.S. states have enacted comprehensive privacy laws that impose certain obligations on covered businesses, including providing specific disclosures in privacy notices and affording residents 56 with certain rights concerning their personal data.
Our data processing activities subject us to numerous data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, contractual requirements, and other obligations relating to data privacy and security. ​ In the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), and other similar laws (e.g., wiretapping laws). ​ Numerous U.S. states have enacted comprehensive privacy laws that impose certain obligations on covered businesses, including providing specific disclosures in privacy notices and affording residents with certain rights concerning their personal data.
We have no material weaknesses in our internal control over financial reporting at December 31, 2023. While we have established certain procedures and controls over our financial reporting processes, we cannot assure you that these efforts will prevent future material weaknesses or restatements of our financial statements.
We have no material weaknesses in our internal control over financial reporting at December 31, 2024. While we have established certain procedures and controls over our financial reporting processes, we cannot assure you that these efforts will prevent future material weaknesses or restatements of our financial statements.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeDepending on the environment, we implement and maintain various technical, physical, and organizational measures, processes, standards and policies designed to manage and mitigate material risks from cybersecurity threats to our Information Systems and Data, including, for example: incident detection and response processes; disaster recovery plan; encryption of certain data; network security controls; segregation of certain data; access and physical security controls; assess management; tracking, and disposal; systems monitoring; a vendor risk amangmeent program; employee training; penetration testing by third parties; and maintaining cybersecurity insurance.
Biggest changeThis group identifies and assesses risks from cybersecurity threats by monitoring and evaluating our threat environment using various methods including, for example: manual and automated tools, conducting scans of the threat environment, subscribing to reports and services that identify cybersecurity threats, analyzing reports of threats and actors and evaluating threats reported to us, external audits, third party testing and vulnerability assessments, and tabletop incident response exercises. ​ Depending on the environment, we implement and maintain various technical, physical, and organizational measures, processes, standards and policies designed to manage and mitigate material risks from cybersecurity threats to our Information Systems and Data, including, for example: incident detection and response processes; disaster recovery plan; encryption of certain data; network security controls; segregation of certain data; access and physical security controls; asset management; tracking and disposal; systems monitoring; a vendor risk management program; employee training; penetration testing by third parties; and maintaining cybersecurity insurance. ​ Our assessment and management of material risks from cybersecurity threats are integrated into the Company’s overall risk management processes.
Risk Factors in this Annual Report on Form 10-K, including the risk factor entitled “If our information technology systems or those third parties upon which we rely or our data, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse consequences.” ​ Governance Our board of directors addresses the Company’s cybersecurity risk management as part of its general oversight function.
Risk Factors in this Annual Report on Form 10-K, including the risk factor entitled “If our information technology systems or those third parties with whom we work, for our data, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse consequences.” ​ Governance ​ Our board of directors addresses the Company’s cybersecurity risk management as part of its general oversight function.
The board of directors’ audit committee is responsible for overseeing the Company’s cybersecurity risk management processes, including oversight and mitigation of risks from cybersecurity threats. Our cybersecurity risk assessment and management processes are implemented and maintained by certain Company management, including our executive team and head of IT who has over twenty-five years of IT management experience.
The board of directors’ audit committee is responsible for overseeing the Company’s cybersecurity risk management processes, including oversight and mitigation of risks from cybersecurity threats. ​ Our cybersecurity risk assessment and management processes are implemented and maintained by certain Company management, including our executive team and head of IT who has over twenty-five years of IT management experience. ​ Management is responsible for hiring appropriate personnel and the head of IT is responsible for communicating key priorities to relevant personnel.
Cybersecurity ​ Risk management and strategy We have implemented and maintain various information security processes designed to identify, assess and manage material risks from cybersecurity threats to our critical computer networks, third party hosted services, communications systems, hardware and software, and our critical data, including intellectual property, and confidential information that is proprietary, strategic or competitive in nature (collectively, “Information Systems and Data”).
Cybersecurity ​ Risk management and strategy ​ We have implemented and maintain various information security processes designed to identify, assess and manage material risks from cybersecurity threats to our critical computer networks, third party hosted services, 66 ​ communications systems, hardware and software, and our critical data, including intellectual property, and confidential information that is proprietary, strategic or competitive in nature (collectively, “Information Systems and Data”). ​ Our information security function is led by our head of IT and supported by our executive team (specifically, our CEO, COO, and CFO), our engineering department, and third-party service providers, and helps identify, assess and manage the Company’s cybersecurity threats and risks.
Depending on the nature of the services provided, the sensitivity of the Information Systems and Data at issue, and the identity of the provider, our vendor management processes may involve different levels of assessment designed to help identify cybersecurity risks associated with these providers.
Depending on the nature of the services provided, the sensitivity of the Information Systems and Data at issue, and the identity of the provider, our vendor management processes involve different levels of assessment designed to help identify cybersecurity risks associated with these providers. ​ For a description of the risks from cybersecurity threats that may materially affect the Company and how they may do so, see our risk factors under Part 1.
Our cybersecurity incident response processes are designed to escalate certain cybersecurity incidents to members of management depending on the circumstances, including the executive team, legal and others. The executive team works with the head of IT and the Company’s incident response team to help the Company mitigate and remediate cybersecurity incidents of which they are notified.
The executive team works with the head of IT and the Company’s incident response team to help the Company mitigate and remediate cybersecurity incidents of which they are notified.
The processes in place include a risk assessment for certain vendors and the imposition of certain contractual obligations related to cybersecurity on certain providers.
We have vendor management processes designed to manage cybersecurity risks associated with our use of certain of these providers. The processes in place include a risk assessment for certain vendors and the imposition of certain contractual obligations related to cybersecurity on certain providers.
We use third-party service providers to assist us from time to time to identify, assess, and manage material risks from cybersecurity threats, including for example professional services firms, managed cybersecurity services providers, penetration testing firms, dark web monitoring services and cybersecurity software providers.
For example, our executive team evaluates material risks from cybersecurity threats against our overall business objectives and reports to the audit committee of the board of directors, which evaluates our overall enterprise risk. ​ We use third-party service providers to assist us from time to time to identify, assess, and manage material risks from cybersecurity threats, including for example professional services firms, managed cybersecurity services providers, penetration testing firms, dark web monitoring services and cybersecurity software providers. ​ We use third-party service providers to perform a variety of functions throughout our business, such as application providers, hosting companies, contract manufacturers and distributors.
Management is responsible for hiring appropriate personnel and the head of IT is responsible for communicating key priorities to relevant personnel. The executive team works with the head of IT to help prepare for cybersecurity incidents, approve cybersecurity processes, and review security assessments and other security-related reports.
The executive team works with the head of IT to help prepare for 67 ​ cybersecurity incidents, approve cybersecurity processes, and review security assessments and other security-related reports. ​ Our cybersecurity incident response processes are designed to escalate certain cybersecurity incidents to members of management depending on the circumstances, including the executive team, legal and others.
Removed
Our information security function is led by our head of IT and supported by our executive team (specifically, our CEO, COO, and CFO), our engineering department, and third-party service providers, and helps identify, assess and manage the Company’s cybersecurity threats and risks.
Removed
This group identifies and assesess risks from cybersecurity threats by monitoring and evaluating our threat environment using various methods including, for example: manual and automated tools, conducting scans of the threat environment, subscribing to reports and services that identify cybersecurity threats, analyzing reports of threats and actors and evaluating threats reported to us, external audits, third party testing and vulnerability assessments, and tabletop incident response exercises.
Removed
Our assessment and management of material risks from cybersecurity threats are integrated into the Company’s overall risk management processes. For example our executive team evaluates material risks from cybersecurity threats 68 against our overall business objectives and reports to the audit committee of the board of directors, which evaluates our overall enterprise risk.
Removed
We use third-party service providers to perform a variety of functions throughout our business, such as application providers, hosting companies, contract manufacturers and distributors. We have vendor management processes designed to manage cybersecurity risks associated with our use of certain of these providers.
Removed
For a description of the risks from cybersecurity threats that may materially affect the Company and how they may do so, see our risk factors under Part 1. Item 1A.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe believe that our current facilities are suitable and adequate to meet our current needs. We intend to add new facilities or expand existing facilities as we add employees, and we believe that suitable additional or substitute space will be available as needed to accommodate any such expansion of our operations. 69 ​
Biggest changeWe intend to add new facilities or expand existing facilities as we add employees, and we believe that suitable additional or substitute space will be available as needed to accommodate any such expansion of our operations. ​
Item 2. Properties ​ Our principal offices occupy approximately 33,000 square feet of research and office space for our corporate headquarters in Germantown, Maryland pursuant to a lease that expires in 2033.
Item 2. Properties ​ Our principal offices occupy approximately 33,000 square feet of research and office space for our corporate headquarters in Germantown, Maryland pursuant to a lease that expires in 2033. We believe that our current facilities are suitable and adequate to meet our current needs.
Removed
Additionally, on July 31, 2019, we entered into a new, non-cancellable operating sub-lease agreement for approximately 30,500 square feet of office space which commenced on September 2, 2019 and expired in 2023. This facility was decommissioned in 2021 and we made lease payments until the lease expiration.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThis order affirms the District Court’s dismissal of plaintiff’s lawsuit. ​ Except as described above, we are not currently a party to any material legal proceedings, and we are not aware of any pending or threatened legal proceeding against us that we believe could have a material adverse effect on our business, operating results or financial condition. ​ Item 4.
Biggest changeShould any asserted claim in the three patents survive the invalidity challenge in the Inter Partes Review proceedings, the Company intends to vigorously defend the lawsuit. ​ 68 ​ Except as described above, we are not currently a party to any material legal proceedings, and we are not aware of any pending or threatened legal proceeding against us that we believe could have a material adverse effect on our business, operating results or financial condition. ​ Item 4.
The complaint was filed by a relator under seal in May 2020 pursuant to the qui tam provisions in the federal False Claims Act. Prior to the unsealing of the complaint, the government declined to intervene in the case. The case, therefore, is being pursued only by the relator and his counsel.
SA20CA0657DAE. The complaint was filed by a relator under seal in May 2020 pursuant to the qui tam provisions in the federal False Claims Act. Prior to the unsealing of the complaint, the government declined to intervene in the case. The case, therefore, is being pursued only by the relator and his counsel.
Item 3. Legal Proceedings ​ From time to time, we are subject to litigation and claims arising in the ordinary course of business. In February 2021, the Company received notice and accepted service of a civil complaint that had been filed in the Western District of Texas and styled Carew ex rel. United States v. Senseonics, Inc., No. SA20CA0657DAE.
Legal proceedings, including litigation, government investigations and enforcement actions could result in material costs, occupy significant management resources and entail civil and criminal penalties. ​ In February 2021, the Company received notice and accepted service of a civil complaint that had been filed in the Western District of Texas and styled Carew ex rel. United States v. Senseonics, Inc., No.
Added
Item 3. Legal Proceedings ​ From time to time, we are subject to litigation and claims arising in the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business.
Added
This order affirms the District Court’s dismissal of plaintiff’s lawsuit. ​ In May 2024, the Company received notice and accepted service of a civil complaint that had been filed in the Eastern District of Texas and styled Cellspin Soft, Inc. vs. Senseonics Holdings, Inc., and Ascensia Diabetes Care Holdings AG Case No. 2:24-cv 263.
Added
The case was filed by a non-practicing entity alleging patent infringement of three patents. The validity of all three of these patents currently is being challenged in Inter Partes Review proceedings at the U.S.
Added
Patent and Trademark Office by another party, and on September 30, 2024, the Patent Trial and Appeal Board instituted a review with respect to each of the asserted claims in these three patents.
Added
Together with LifeScan and Ascensia, on October 30, 2024, we filed a joint motion to join the Inter Partes Review as well as similar Inter Partes Review challenges to these patents. On February 5, 2025, the court issued an order staying the proceedings in the Eastern District of Texas pending resolution of the Inter Partes Review.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOur ability to pay dividends on shares of our common stock is further limited by restrictions on our ability to pay dividends or make distributions under the terms of the agreements governing our indebtedness and may be limited by future similar agreements. ​ Stockholders ​ As of February 23, 2024, we had 530,668,435 shares of common stock outstanding held by 168 holders of record. ​ Recent Sales of Unregistered Securities ​ None. ​ 70 Item 6. [Reserved] ​ ​ ​
Biggest changeOur ability to pay dividends on shares of our common stock is further limited by restrictions on our ability to pay dividends or make distributions under the terms of the agreements governing our indebtedness and may be limited by future similar agreements. ​ Stockholders ​ As of February 24, 2025, we had approximately 156 active holders of record of our common stock.
Added
The number of beneficial owners of our Common Stock is substantially greater than the number of record holders because a large portion of our Common Stock is held of record in broker “street names” for the benefit of individual investors. ​ Recent Sales of Unregistered Securities ​ None. ​ Item 6. [Reserved] ​ ​ ​

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAs part of our liquidity strategy, we will continue to monitor our capital structure and operating plans and we may access the capital markets or debt markets for additional funding if the opportunity arises to enhance our capital structure for changes to our operating plans, for financing strategic initiatives and to provide financial flexibility. 80 ​ Cash Flows ​ The following is a summary of cash flows for each of the periods set forth below (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ 2023 ​ 2022 ​ Net cash used in operating activities $ (70,163) $ (66,312) Net cash provided by investing activities ​ 89,713 ​ 26,882 ​ Net cash provided by financing activities ​ 20,366 ​ 41,762 ​ Net increase in cash and cash equivalents ​ $ 39,916 ​ $ 2,332 ​ ​ Net cash used in operating activities ​ Net cash used in operating activities was $70.2 million for the year ended December 31, 2023, and consisted of a net loss of $60.4 million, a $14.1 million exchange-related gain, a $6.6 million gain in the fair value of derivatives on convertible notes, and a $4.0 million net change in operating assets and liabilities, partially offset by $8.7 million of stock-based compensation, and $6.3 million related to depreciation/amortization and other non-cash items. ​ Net cash used in operating activities was $66.3 million for the year ended December 31, 2022, and consisted of a $184.2 million gain in the fair value of derivatives on convertible notes, a $43.7 million gain on fair value adjustment of options, a $2.5 million net change in operating assets and liabilities, partially offset by net income of $142.1 million, $13.3 million related to depreciation/amortization and other non-cash items, $8.6 million of stock-based compensation, and $0.1 million of loss on extinguishment of options. ​ Net cash provided by investing activities ​ Net cash provided by investing activities was $89.7 million for the year ended December 31, 2023, and consisted of $158.6 million from the sale and maturity of marketable securities, offset by $68.5 million from the purchase of marketable securities and $0.4 million of capital expenditures for laboratory equipment and leasehold improvements. ​ Net cash provided by investing activities was $26.9 million for the year ended December 31, 2022, and consisted of $131.9 million from the sale and maturity of marketable securities, offset by $104.7 million from the purchase of marketable securities and $0.3 million of capital expenditures for laboratory equipment. ​ Net cash provided by financing activities ​ Net cash provided by financing activities was $20.4 million for the year ended December 31, 2023, and primarily consisted of $7.4 million in proceeds related to the issuance of common stock and the exercise of stock options and warrants, $14.7 million in proceeds from the issuance of the PHC Purchase Warrant, and $24.4 million in net proceeds from borrowings pursuant to the Loan and Security Agreement, partially offset by $15.7 million and $7.5 million in repayment of the 2023 and 2025 notes, respectively, $2.7 million taxes paid related to net share settlement of equity awards, and $0.4 million in debt issuance costs. ​ Net cash provided by financing activities was $41.8 million for the year ended December 31, 2022, and primarily consisted of $12 million in proceeds from the issuance of Series B preferred stock related to the Energy Capital option exercise, $34.2 million from issuance of common stock, and $1.1 million for proceeds related to exercise of stock options and warrants, offset by $2.9 million in repayment of the PPP loan and $2.6 million taxes paid related to net share settlement of equity awards. ​ 81
Biggest changeThere is no assurance that the Company will be successful in obtaining sufficient funding on acceptable terms, if at all, and could be forced to delay, reduce, or eliminate some or all of its research, clinical trials, product development or future commercialization efforts, which could materially adversely affect its business prospects or its ability to continue as a going concern. ​ ​ 79 ​ Cash Flows ​ The following is a summary of cash flows for each of the periods set forth below (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ 2024 ​ 2023 ​ Net cash used in operating activities $ (60,465) $ (70,163) Net cash provided by investing activities ​ 32,838 ​ 89,713 ​ Net cash provided by financing activities ​ 26,830 ​ 20,366 ​ Net (decrease) increase in cash and cash equivalents ​ $ (797) ​ $ 39,916 ​ ​ Net cash used in operating activities ​ Net cash used in operating activities was $60.5 million for the year ended December 31, 2024, and consisted of a net loss of $78.6 million, partially offset by a $0.9 million net change in operating assets and liabilities, $9.2 million of stock-based compensation, $3.9 million in non-cash inventory costs primarily due to transition to the 365-day product, and $4.1 million related to depreciation/amortization and other non-cash items. ​ Net cash used in operating activities was $70.2 million for the year ended December 31, 2023, and consisted of a net loss of $60.4 million, a $14.1 million exchange-related gain, a $6.6 million gain in the fair value of derivatives on convertible notes, and a $4.0 million net change in operating assets and liabilities, partially offset by $8.7 million of stock-based compensation, and $6.3 million related to depreciation/amortization and other non-cash items. ​ Net cash provided by investing activities ​ Net cash provided by investing activities was $32.8 million for the year ended December 31, 2024, and consisted of $93.1 million from the sale and maturity of marketable securities, partially offset by $58.1 million from the purchase of marketable securities and $2.2 million of capital expenditures for laboratory equipment and leasehold improvements. ​ Net cash provided by investing activities was $89.7 million for the year ended December 31, 2023, and consisted of $158.6 million from the sale and maturity of marketable securities, partially offset by $68.5 million from the purchase of marketable securities and $0.4 million of capital expenditures for laboratory equipment and leasehold improvements. ​ Net cash provided by financing activities ​ Net cash provided by financing activities was $26.8 million for the year ended December 31, 2024, and primarily consisted of an aggregate of $4.0 million in proceeds related to the issuance of common stock pursuant to our at the market offering and the exercise of stock options, $14.5 million in proceeds from a registered direct offering, and $10.0 million in net proceeds from borrowings pursuant to the Loan and Security Agreement, partially offset by $1.7 million taxes paid related to net share settlement of equity awards. ​ Net cash provided by financing activities was $20.4 million for the year ended December 31, 2023, and primarily consisted of an aggregate of $7.4 million in proceeds related to the issuance of common stock pursuant to our at the market offering and the exercise of stock options, $14.7 million in proceeds from the issuance of the PHC Purchase Warrant, and $24.4 million in net proceeds from borrowings pursuant to the Loan and Security Agreement, partially offset by $15.7 million and $7.5 million in repayment and exchange of the 2023 Notes and 2025 Notes, respectively, $2.7 million taxes paid related to net share settlement of equity awards, and $0.4 million in debt issuance costs. ​ ​ 80 ​
(“Hercules”) in its capacity as administrative agent and collateral agent for itself and the Lenders, pursuant to which the Lenders agreed to make available up to $50.0 million in senior secured term loans (the “Term Loan Facility”), consisting of (i) an initial term loan of $25.0 million (the “Tranche 1 Loan”), which was funded on September 8, 2023 and (ii) two additional tranches of term loans in the amounts of up to $10.0 million (the “Tranche 2 Loan”) and $15.0 million (the “Tranche 3 Loan”), respectively, which will become available to us upon our satisfaction of certain terms and conditions set forth in the Loan and Security Agreement.
(“Hercules”) in its capacity as administrative agent 76 ​ and collateral agent for itself and the Lenders, pursuant to which the Lenders agreed to make available up to $50.0 million in senior secured term loans (the “Term Loan Facility”), consisting of (i) an initial term loan of $25.0 million (the “Tranche 1 Loan”), which was funded on September 8, 2023 and (ii) two additional tranches of term loans in the amounts of up to $10.0 million (the “Tranche 2 Loan”) and $15.0 million (the “Tranche 3 Loan”), respectively, which will become available to us upon our satisfaction of certain terms and conditions set forth in the Loan and Security Agreement.
You should review the “Risk Factors” section of this Annual Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. ​ Overview ​ We are a medical technology company focused on the development and manufacturing of glucose monitoring products designed to transform lives in the global diabetes community with differentiated, long-term implantable glucose management technology.
You should review the “Risk Factors” section of this Annual Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. ​ Overview ​ We are a medical technology company focused on the development and manufacturing of glucose monitoring products designed to transform lives in the global diabetes community with differentiated, long-term implantable glucose 69 ​ management technology.
The loans under the Loan and Security Agreement mature on September 1, 2027. 77 ​ On August 10, 2023, we entered into separate, privately negotiated exchange agreements (the “Exchange Agreements”) with a limited number of holders (the “Noteholders”) of our outstanding 5.25% Convertible Senior Notes due 2025 (the “2025 Notes”).
The loans under the Loan and Security Agreement mature on September 1, 2027. ​ On August 10, 2023, we entered into separate, privately negotiated exchange agreements (the “Exchange Agreements”) with a limited number of holders (the “Noteholders”) of our outstanding 5.25% Convertible Senior Notes due 2025 (the “2025 Notes”).
This sub-set of 72 30 participants were left undisturbed for 365 days with the goal of measuring accuracy and longevity over the full 365 days.
This sub-set of 30 participants were left undisturbed for 365 days with the goal of measuring accuracy and longevity over the full 365 days.
Upon the closing of the PHC Notes, we prepaid in full the First Lien Notes, issued and sold pursuant a loan agreement with Highbridge Capital Management, LLC (“Highbridge”) (the “Highbridge Loan Agreement”), in the amount of approximately $17.6 million.
Upon the closing of the PHC Notes, we 77 ​ prepaid in full the First Lien Notes, issued and sold pursuant to a loan agreement with Highbridge Capital Management, LLC (“Highbridge”) (the “Highbridge Loan Agreement”), in the amount of approximately $17.6 million.
As described in Note 21, on March 13, 2023, we entered into an agreement with PHC, whereby PHC has agreed to exchange the PHC Notes for a warrant (the “PHC Exchange Warrant”) to purchase up to 68,525,311 shares of common stock. The 78 Exchange Warrant is a “pre-funded” warrant with a nominal exercise price of $0.001 per share.
As described in Note 2, on March 13, 2023, we entered into an agreement with PHC, whereby PHC has agreed to exchange the PHC Notes for a warrant (the “PHC Exchange Warrant”) to purchase up to 68,525,311 shares of common stock. The Exchange Warrant is a “pre-funded” warrant with a nominal exercise price of $0.001 per share.
In February 2022, the extended life Eversense E3 CGM system was approved by the FDA. ​ In June 2019, we received FDA approval for the non-adjunctive indication (dosing claim) for the Eversense system and launched with an updated app in December 2019.
In February 2022, the Eversense E3 CGM system was approved by the FDA. ​ In June 2019, we received FDA approval for the non-adjunctive indication (dosing claim) for the Eversense system and launched with an updated app in December 2019.
Ascensia began commercializing Eversense E3 in the United States during the second quarter of 2022. ​ The ENHANCE clinical study was initiated as a pivotal study with the purpose of gathering additional clinical data to support an integrated continuous glucose monitoring (“iCGM”) submission for the Eversense E3 system using the SBA technology.
Ascensia began commercializing Eversense E3 in the United States during the second quarter of 2022. 71 ​ ​ The ENHANCE clinical study was initiated as a pivotal study with the purpose of gathering additional clinical data to support an integrated continuous glucose monitoring (iCGM) submission for the Eversense E3 system using the SBA technology.
Variable consideration, such as discounts and prompt-pay incentives, are treated as a reduction in revenue and variable considerations, such as revenue share, is treated as an addition in revenue when the product sale is recognized.
Variable consideration, such as rebates and prompt-pay incentives, are treated as a reduction in revenue and variable considerations, such as revenue share, is treated as an addition in revenue when the product sale is recognized.
These estimates, particularly estimates relating to accounting for variable consideration related to revenue and embedded derivatives, have a material impact on our financial statements and are discussed in detail throughout our analysis of the results of operations discussed below. We did not make any material changes to these assumptions for the year ended December 31, 2023.
These estimates, particularly estimates relating to accounting for variable consideration related to revenue, inventory obsolescence and embedded derivatives, have a material impact on our financial statements and are discussed in detail throughout our analysis of the results of operations discussed below. We did not make any material changes to these assumptions for the year ended December 31, 2024.
The 2023 Notes were paid in full in January 2023 and the derivative liability was derecognized. ​ In connection with our issuance of the convertible senior subordinated notes due 2025, or the 2025 Notes in July 2019, we bifurcated the embedded conversion option along with the fundamental change make-whole provision and the cash settled fundamental make-whole shares provision, and recorded the fair value of these embedded features as a derivative liability in our consolidated balance sheets in accordance with Accounting Standards Codification, or ASC, Topic 815, Derivatives and Hedging. ​ In August 2020, we issued convertible senior secured notes due 2024, or the PHC Notes.
The 2023 Notes were paid in full in January 2023 and the derivative liability was derecognized. ​ In connection with our issuance of the convertible senior subordinated notes due 2025, or the 2025 Notes in July 2019, we bifurcated the embedded conversion option along with the fundamental change make-whole provision and the cash settled fundamental make-whole shares provision, and recorded the fair value of these embedded features as a derivative liability in our consolidated balance sheets in accordance with Accounting Standards Codification, or ASC, Topic 815, Derivatives and Hedging.
All or any part of the Purchase Warrant shall is exercisable by the holder at any time and from time to time. ​ In addition, on March 13, 2023, we entered into an exchange agreement with PHC, pursuant to which PHC agreed to exchange $35.0 million aggregate principal amount of the PHC Notes, including all accrued and unpaid interest thereon, for a warrant (the “PHC Exchange Warrant”) to purchase up to 68,525,311 shares of common stock.
All or any part of the Purchase Warrant is exercisable by PHC at any time and from time to time. ​ In March 2023, we entered into an exchange agreement with PHC, pursuant to which PHC exchanged $35.0 million aggregate principal amount of the PHC Notes, including all accrued and unpaid interest thereon, for a warrant (the “PHC Exchange Warrant”) to purchase up to 68,525,311 shares of common stock.
We do not expect any material changes in the near term to the underlying assumptions during the year ended December 31, 2024. ​ We base our estimates on historical experience and various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets, liabilities and equity that are not readily apparent from other sources.
We do not expect any material changes to the underlying assumptions during the year ending December 31, 2025. ​ We base our estimates on historical experience and various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets, liabilities and equity that are not readily apparent from other sources.
In February 2024, we announced that Medicare coverage was expanded for Eversense E3 to include all people with diabetes using insulin and non-insulin users who have a history of problematic hypoglycemia providing access to millions of Medicare patients.
In February 2024, we announced that Medicare coverage was expanded for Eversense E3 to include all people with diabetes using insulin and non-insulin users who have a history of problematic hypoglycemia providing access to millions of Medicare patients. All of the Medicare administrative contractors (“MAC”) expansions became effective in 2024.
Our implantable CGM (“Eversense”), Eversense E3 continuous glucose monitoring (“CGM”) system version is designed to continually and accurately measure glucose levels in people with diabetes via an under-the-skin sensor, a removable and rechargeable smart transmitter, and a convenient app for real-time diabetes monitoring and management for a period of up to six months as compared to seven to 14 days for non-implantable CGM systems.
Our implantable CGM (“Eversense”), including Eversense E3 and Eversense 365 CGM systems are designed to continually and accurately measure glucose levels in people with diabetes via an under-the-skin sensor, a removable and rechargeable smart transmitter, and a convenient app for real-time diabetes monitoring and management for a period of up to six months in the case of Eversense E3 and up to twelve months in the case of Eversense 365, as compared to seven to 14 days for non-implantable CGM systems.
We have reached approximately 300 million covered lives in the United States through positive insurance payor coverage decisions. In June 2023, we received positive payor coverage decision from UnitedHealthcare, the largest healthcare insurance company in the United States that effective July 1, 2023, Eversense E3 CGM system would be covered.
In June 2023, we received positive payor coverage decision from UnitedHealthcare, the largest healthcare insurance company in the United States that effective July 1, 2023, Eversense E3 CGM system would be covered.
Contracts with our distributors contain performance obligations, mostly for the supply of goods, and is typically satisfied upon transfer of control of the product. Customer contracts do not include the right to return unless there is a product issue, in which case we may provide replacement product.
Our contract with Ascensia contains performance obligations, mostly for the supply of goods, and are typically satisfied upon transfer of control of the product and does not include the right to return unless there is a product issue, in which case we may provide replacement product.
The number of shares issued was determined based upon the volume-weighted average price per share of the common stock during a 15-day averaging period.
The number of shares issued was determined based upon the volume-weighted average price per share of the common stock during a 15-day averaging period. Based on the volume-weighted average price per share of the common stock during the averaging period, we issued a total of 35.1 million shares of common stock in the exchanges.
In February 2022, the 180-day extended life Eversense E3 CGM system was approved by the FDA and Ascensia began commercializing Eversense E3 in the United States in the second quarter of 2022.​ ​ Our net revenues are derived from sales of the Eversense system which is sold in two separate kits: the disposable Eversense Sensor Pack which includes the sensor, insertion tool, and adhesive patches, and the durable Eversense Smart Transmitter Pack which includes the transmitter and charger. ​ We sell directly to our network of distributors and strategic fulfillment partners, who provide the Eversense system to healthcare providers and patients through a prescribed request and invoice insurance payors for reimbursement.
In September 2024, the 365-day extended life Eversense E3 CGM system was approved by the FDA and Ascensia began commercializing Eversense 365 in the United States in the fourth quarter of 2024. ​ Our net revenues are derived from sales of the Eversense CGM system which includes the Eversense Sensor Pack containing the sensor, insertion tool, and adhesive patches, the Eversense Smart Transmitter Pack containing the transmitter and charger and in some cases the procedure revenue associated with insertions and removals. ​ We primarily sell directly to our network of distributors, strategic fulfillment partners, who provide the Eversense system to healthcare providers and patients through a prescribed request and invoice insurance payors for reimbursement.
The Warrant was exercised in full in February 2022. ​ On August 9, 2020, we entered into a financing agreement with Ascensia’s parent company, PHC Holdings Corporation (“PHC”), pursuant to which we issued $35.0 million in aggregate principal amount of Senior Secured Convertible Notes due on October 31, 2024 (the “PHC Notes”), to PHC on the Closing Date.
We received aggregate gross proceeds of $15.0 million in the transaction, before deducting private placement expenses payable by us. ​ On August 9, 2020, we entered into a financing agreement with Ascensia’s parent company, PHC Holdings Corporation (“PHC”), pursuant to which we issued $35.0 million in aggregate principal amount of Senior Secured Convertible Notes due on October 31, 2024 (the “PHC Notes”), to PHC on the Closing Date.
In November 2022, CMS released its Calendar Year 2023 Medicare Physician Fee Schedule Proposed Rule that updates the payment amounts for the three CPT© Category III codes to account for the longer 6-month sensor. The Calendar Year 2024 Medicare Physician Fee Schedule continues to include the three CPT© Category III codes.
In December 2021, CMS released its Calendar Year 2022 Medicare Physician Fee Schedule that updated global payments for the device cost and procedure fees. In November 2022, CMS released its Calendar Year 2023 Medicare Physician Fee Schedule Proposed Rule that updates the payment amounts for the three CPT© III codes to account for the longer 6-month sensor.
On March 31, 2023 (6:00 am Japan Standard Time on April 1, 2023), the PHC Exchange was consummated, and the Company issued the PHC Exchange Warrant in consideration for the cancellation of the PHC Notes.‌ ​ Warrants ​ In connection with certain of our historical financing transactions, we have issued warrants to investors and providers of debt financing, as described below. ​ On June 30, 2016, we entered into a loan agreement with Oxford Finance and Silicon Valley Bank (collectively, the “Lenders”) and issued to the Lenders 10-year stock purchase warrants to purchase an aggregate of 116,581, 63,025 and 80,645 shares of common stock at an exercise price of $3.86, $2.38 and $1.86 per share, respectively (“Oxford/SVB Warrants”).
In the first quarter of 2025, Energy Capital converted its Series B Preferred Stock in full into 30,372,058 shares of common stock. ​ Warrants ​ In connection with certain of our historical financing transactions, we have issued warrants to investors and providers of debt financing, as described below. ​ On June 30, 2016, we entered into a loan agreement with Oxford Finance and Silicon Valley Bank (collectively, the “Lenders”) and issued to the Lenders 10-year stock purchase warrants to purchase an aggregate of 116,581, 63,025 and 80,645 shares of common stock at an exercise price of $3.86, $2.38 and $1.86 per share, respectively (“Oxford/SVB Warrants”).
The distribution rights under the agreement expired January 31, 2021. 73 ​ In June 2022, we affixed the CE mark for the Eversense E3 CGM system, and Ascensia began commercialization in certain European markets during the second half of 2022. ​ ​ Critical Accounting Estimates ​ The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. ​ The preparation of our consolidated financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities and equity and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.
Following CE Mark approval, we plan to launch Eversense 365 with our global commercial partner, Ascensia, in the second half of 2025. ​ Critical Accounting Estimates ​ The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. ​ The preparation of our consolidated financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities and equity and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.
Our gross profit increased to $3.1 million for the year ended December 31, 2023, compared to $2.7 million for the year ended December 31, 2022. Gross profit as a percentage of revenue, or gross margin, was 13.8% and 16.6% for the years ended December 31, 2023 and 2022, respectively.
Our gross profit decreased to $0.5 million for the twelve months ended December 31, 2024, compared to $3.1 million for the twelve months ended December 31, 2023. Gross profit as a percentage of revenue, or gross margin, was 2.4% and 13.8% for the twelve months ended December 31, 2024 and December 31, 2023, respectively.
As of the date of this Annual Report on Form 10-K, no sales have been made under the Equity Distribution Agreement. ​ In November 2021, we entered into an Open Market Sale Agreement (the “2021 Sales Agreement”) with Jefferies LLC (“Jefferies”) under which we could offer and sell, from time to time, at our sole discretion, shares of our common stock having an aggregate offering price of up to $150.0 million through Jefferies as our sales agent in an “at the market” offering.
For the year ended December 31, 2024, the Company received approximately $4.3 million in net proceeds from the sale of 11,918,121 shares under the Equity Distribution Agreement. ​ In November 2021, we entered into an Open Market Sale Agreement (the “2021 Sales Agreement”) with Jefferies LLC (“Jefferies”) under which we could offer and sell, from time to time, at our sole discretion, shares of our common stock having an aggregate offering price of up to $150.0 million through Jefferies as our sales agent in an “at the market” offering.
The Tranche 2 Warrants may be exercised through the earlier of (i) September 8, 2030 and (ii) the consummation of certain acquisition transactions involving the company, as set forth in the warrant agreement. 79 The number of shares for which the Tranche 1 Warrants are exercisable and the associated exercise price are subject to certain customary proportional adjustments for fundamental events, including stock splits and reverse stock splits, as set forth in the warrant agreement. ​ Indebtedness ​ Loan and Security Agreement ​ On September 8, 2023, we entered into the Loan and Security Agreement with the Lenders and Hercules, pursuant to which the Lenders agreed to make available to us the Term Loan Facility, consisting of (i) an initial Tranche 1 Loan, which was funded in the amount of $25.0 million on the Effective Date and (ii) the Tranche 2 Loan and Tranche 3 Loan, respectively, which would become available to the Company upon our satisfaction of certain terms and conditions set forth in the Loan and Security Agreement.
The PP Warrants are non-exercisable for the first six months after issuance and expire on April 29, 2030. ​ Indebtedness ​ Loan and Security Agreement ​ On September 8, 2023, we entered into the Loan and Security Agreement with the Lenders and Hercules, pursuant to which the Lenders agreed to make available to us the Term Loan Facility, consisting of (i) an initial Tranche 1 Loan, which was funded in the amount of $25.0 million on the Effective Date and (ii) the Tranche 2 Loan and Tranche 3 Loan, respectively, which would become available to the Company upon our satisfaction of certain terms and conditions set forth in the Loan and Security Agreement.
At the time of termination, approximately $106.6 million remained available for issuance pursuant to the 2021 Sales Agreement. ​ On November 9, 2020, we entered into the Equity Line Agreement with Energy Capital, pursuant to which Energy Capital committed to purchase up to an aggregate of $12.0 million of shares of our newly designated Series B convertible Preferred Stock (“Series B Preferred Stock”), at our request from time to time during the 24-month term of the Equity Line Agreement.
On March 31, 2023 (6:00 am Japan Standard Time on April 1, 2023), the PHC Exchange was consummated, and the Company issued the PHC Exchange Warrant in consideration for the cancellation of the PHC Notes.‌ ​ On November 9, 2020, we entered into the Equity Line Agreement with Energy Capital, pursuant to which Energy Capital committed to purchase up to an aggregate of $12.0 million of shares of our newly designated Series B convertible Preferred Stock (“Series B Preferred Stock”), at our request from time to time during the 24-month term of the Equity Line Agreement.
The PHC Exchange Warrant was recorded in equity based on its fair value of $48.6 million. ​ On September 8, 2023, we entered into the Loan and Security Agreement and issued the Tranche 1 Warrants to acquire an aggregate of 832,362 shares of common stock at an exercise price of $0.6007 per share.
All or any part of the Exchange Warrant is exercisable by PHC at any time and from time to time. ​ On September 8, 2023, we entered into the Loan and Security Agreement with several lenders and issued the Tranche 1 Warrants to acquire an aggregate of 832,362 shares of common stock at an exercise price of $0.6007 per share.
As of December 31, 2023, we had cash, cash equivalents and marketable securities of $109.5 million. ​ During 2023, we undertook a number of financing transactions designed to strengthen our balance sheet, including the repayment of our 2023 Notes, the issuance of additional pre-funded warrant to PHC for cash in a private placement, the exchange of our PHC Notes for a newly issued pre-funded warrant, the exchange of a portion of our 2025 Notes for cash and newly issued common stock in a series of private exchanges, the entry into a new term loan facility and the issuance of shares of common stock pursuant to an at the market offering program.
As of December 31, 2024, the Company had unrestricted cash and cash equivalents of $74.6 million. ​ In the past two years, we have taken a number of measures to strengthen our financial position, including the repayment of our 2023 Notes, the sale of common stock in a registered direct offering and related issuance of warrants, the issuance of a pre-funded warrant to PHC for cash in a private placement, the exchange of our PHC Notes for a newly issued pre-funded warrant, the exchange of a portion of our 2025 Notes for cash and common stock in a series of private exchanges and the repayment of the remaining 2025 Notes, the entry into a term loan facility and the issuance of shares of common stock pursuant to an at the market offering program.
In both the United States and our overseas markets, we have entered into strategic partnerships and distribution agreements that allow third party collaborators with direct sales forces and established distribution systems to market and promote Eversense. ​ ​ United States Development and Commercialization of Eversense ​ In 2016, we completed our PRECISE II pivotal clinical trial in the United States.
In both the United States and our overseas markets, we have entered into strategic partnerships and distribution agreements that allow third party collaborators with direct sales forces and established distribution systems to market and promote Senseonics CGM systems, including 90-day Eversense, Eversense XL, Eversense E3, Eversense 365 and future generation products.
We received aggregate gross proceeds of $15.0 million in the transaction, before deducting private placement expenses payable by us. ​ On September 8, 2023, we entered into a loan agreement (the “Loan and Security Agreement”) with several institutions (collectively, the “Lenders") and Hercules Capital, Inc.
The offering closed on October 28, 2024, and the Company received proceeds of approximately $14.8 million after payment of fees to the placement agent, but before payment of any additional expenses incurred by the Company in connection with the transaction. ​ On September 8, 2023, we entered into a loan agreement (the “Loan and Security Agreement”) with several institutions (collectively, the “Lenders") and Hercules Capital, Inc.
We engage a third-party valuation specialist to perform the valuation using the binomial option pricing model. ​ 75 ​ Results of Operations ​ Comparison of the Years Ended December 31, 2023 and 2022 ​ The following table sets forth our results of operations for the years ended December 31, 2023 and 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ 2022 ​ Period Change ​ ​ (in thousands) ​ ​ (in thousands) Revenue, net $ 1,655 $ 656 $ 999 ​ Revenue, net - related parties ​ ​ 20,735 ​ ​ 15,733 ​ ​ 5,002 ​ Total revenue ​ ​ 22,390 ​ ​ 16,389 ​ ​ 6,001 ​ Cost of sales ​ ​ 19,299 ​ ​ 13,663 ​ ​ 5,636 ​ Gross profit ​ ​ 3,091 ​ ​ 2,726 ​ ​ 365 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Research and development expenses ​ 48,752 ​ 39,719 ​ 9,033 ​ Selling, general and administrative expenses ​ 29,942 ​ 31,634 ​ (1,692) ​ Operating loss ​ (75,603) ​ (68,627) ​ (6,976) ​ Other income (expense), net: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest income ​ ​ 5,362 ​ ​ 1,824 ​ ​ 3,538 ​ Gain on fair value adjustment of option ​ ​ — ​ ​ 43,745 ​ ​ (43,745) ​ Exchange related gain, net ​ ​ 14,109 ​ ​ — ​ ​ 14,109 ​ Loss on extinguishment of debt and option ​ ​ — ​ ​ (101) ​ ​ 101 ​ Interest expense ​ (11,110) ​ (18,703) ​ 7,593 ​ Gain on change in fair value of derivatives ​ ​ 6,648 ​ ​ 184,221 ​ ​ (177,573) ​ Impairment cost ​ ​ — ​ ​ (138) ​ ​ 138 ​ Other income (expense) ​ 202 ​ (102) ​ 304 ​ Total other income, net ​ 15,211 ​ 210,746 ​ (195,535) ​ Net (Loss) Income ​ $ (60,392) ​ $ 142,119 ​ $ (202,511) ​ ​ ​ Components of Results of Operations ​ Total revenue ​ Our total net revenue increased to $22.4 million for the year ended December 31, 2023, compared to $16.4 million for the year ended December 31, 2022, an increase of $6.0 million.
We engage a third-party valuation specialist to perform the valuation using the binomial option pricing model. ​ 74 ​ Results of Operations ​ Comparison of the Years Ended December 31, 2024 and 2023 ​ The following table sets forth our results of operations for the years ended December 31, 2024 and 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 ​ Period Change ​ ​ (in thousands) ​ ​ (in thousands) Revenue, net $ 3,973 $ 1,655 $ 2,318 ​ Revenue, net - related parties ​ ​ 18,499 ​ ​ 20,735 ​ ​ (2,236) ​ Total revenue ​ ​ 22,472 ​ ​ 22,390 ​ ​ 82 ​ Cost of sales ​ ​ 21,939 ​ ​ 19,299 ​ ​ 2,640 ​ Gross profit ​ ​ 533 ​ ​ 3,091 ​ ​ (2,558) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Research and development expenses ​ 41,144 ​ 48,752 ​ (7,608) ​ Selling, general and administrative expenses ​ 34,231 ​ 29,942 ​ 4,289 ​ Operating loss ​ (74,842) ​ (75,603) ​ 761 ​ Other income (expense), net: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest income ​ ​ 4,502 ​ ​ 5,362 ​ ​ (860) ​ Exchange related gain, net ​ ​ — ​ ​ 14,109 ​ ​ (14,109) ​ Interest expense ​ (8,437) ​ (11,110) ​ 2,673 ​ Gain on change in fair value of derivatives ​ ​ 102 ​ ​ 6,648 ​ ​ (6,546) ​ Other income ​ 59 ​ 202 ​ (143) ​ Total other (expense) income, net ​ (3,774) ​ 15,211 ​ (18,985) ​ Net Loss ​ $ (78,616) ​ $ (60,392) ​ $ (18,224) ​ ​ ​ Components of Results of Operations ​ Total revenue ​ Our total net revenue increased to $22.5 million for the twelve months ended December 31, 2024, compared to $22.4 million for the year ended December 31, 2023, an increase of $0.1 million.
In June 2022, we affixed the CE mark to the Eversense E3 CGM system and Ascensia Diabetes Care Holdings AG (“Ascensia”) began commercialization in select markets in Europe during the third quarter of 2022. In June 2018, the U.S. Food and Drug Administration (“FDA”), approved the 90-day Eversense CGM system for distribution throughout the United States.
In February 2022, the 180-day Eversense E3 CGM system was approved by the FDA and Ascensia began commercializing Eversense E3 in the United States in the second quarter of 2022. In June 2022, we affixed the CE mark to the Eversense E3 CGM system and Ascensia began commercialization in select markets in Europe during the third quarter of 2022.
The change was primarily due to a $177.6 million reduction in gains on the fair value of derivatives primarily driven by debt settlement and the decrease in our stock price, and a $43.7 million reduction in the gain on fair value of options primarily driven by the decrease in our stock price, partially offset by a $3.5 million increase in interest income, a $7.6 million decrease in interest expense, a $14.1 million gain on exchange of debt, and $0.6 million increase in other income (expense) items, net. ​ ​ Liquidity and Capital Resources ​ Since our inception, we have incurred significant net losses and expect to incur additional losses in the near future.
The decrease in other income was primarily due to a $14.1 million reduction in exchange related gains, net, a $6.5 million reduction in gain on the change in the fair value of derivatives driven by the decrease in our stock price, and $1.0 million reduction in interest and other income.
On March 31, 2023, the exchange was consummated, and we issued the PHC Exchange Warrant in consideration for the cancellation of the PHC Notes. The PHC Exchange Warrant is a “pre-funded” warrant with a nominal exercise price of $0.001 per PHC Exchange Warrant Share.
The PHC Exchange Warrant is a “pre-funded” warrant with a nominal exercise price of $0.001 per PHC Exchange Warrant Share.
These activities, including our ongoing focus to grow covered lives through positive insurance payor policy decisions and continued development of Eversense 365-day product in the United States, will require significant uses of working capital through 2024 and beyond. ​ Management has concluded that based on our current operating plans, existing cash and cash equivalents and cash flows from our future operations will be sufficient to meet our anticipated operating needs through twelve months after issuance of the financial statements.
These activities, including our ongoing focus to grow covered lives through positive insurance payor policy decisions and continued development of Eversense 365-day product in the United States, will require significant uses of working capital through 2025 and beyond.
We are generally paid for our sales directly to the Customers, regardless of whether or not the Customers resell the products to health care providers and patients. ​ Revenue from product sales is recognized at a point in time when the Customers obtain control of our product based upon the delivery terms as defined in the contract at an amount that reflects the consideration which we expect to receive in exchange for the product.
Actual results and outcomes could differ from these estimates and assumptions. ​ Revenue ​ We generate a significant portion of product revenue from sales of the Eversense system and related components and supplies to Ascensia, through the Commercialization Agreement, who then resells the products to health care providers and patients. ​ Revenue from product sales to Ascensia is recognized at a point in time when the Ascensia obtains control of our product based upon the delivery terms as defined in the contract at an amount that reflects the consideration which we expect to receive in exchange for the product.
In April 2022, we repaid the outstanding principal and accrued interest in full. ​ Convertible Notes ​ The following table summarizes our outstanding senior convertible note obligations at December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Aggregate ​ ​ ​ Initial Conversion ​ Conversion Price ​ Convertible ​ Issuance ​ ​ Principal ​ Maturity ​ Rate per $1,000 ​ per Share of ​ Note ​ Date Coupon (in millions) Date Principal Amount Common Stock 2025 Notes ​ July 1, 2019 ​ 5.25% ​ $ 20.4 ​ ​ January 15, 2025 ​ ​ 757.5758 ​ $ 1.32 ​ ​ See Note 13 in the accompanying notes to our consolidated financial statements included elsewhere in this Annual Report for further discussion of the 2025 Notes. ​ Funding Requirements and Outlook ​ Our ability to generate revenue and achieve profitability depends on the successful commercialization and adoption of our Eversense CGM systems by diabetes patients and healthcare providers, along with future product development, regulatory approvals, certifications and post-approval requirements.
See Note 13 in the accompanying notes to our consolidated financial statements included elsewhere in this Annual Report for further discussion of the 2025 Notes. ​ Funding Requirements and Outlook ​ Our ability to generate revenue and achieve profitability depends on the successful commercialization and adoption of our Eversense CGM systems by diabetes patients and healthcare providers, along with future product development, regulatory approvals, certifications and post-approval requirements.
These transactions are described in greater detail below. ​ ​ On March 13, 2023, we issued and sold to PHC in a private placement a warrant (the “Purchase Warrant”) to purchase an aggregate of 15,425,750 shares of common stock (the “Purchase Warrant Shares”). The purchase price of the Purchase Warrant was approximately $0.97 per Purchase Warrant Share.
At the time of termination, approximately $106.6 million remained available for issuance pursuant to the 2021 Sales Agreement. ​ On March 13, 2023, we issued and sold to PHC in a private placement a warrant (the “Purchase Warrant”) to purchase an aggregate of 15,425,750 shares of common stock (the “Purchase Warrant Shares”).
The Tranche 1 Warrants may be exercised through the earlier of (i) September 8, 2030 and (ii) the consummation of certain acquisition transactions involving the company, as set forth in the warrant agreement. The Tranche 1 Warrants were recorded in equity based on their fair value of $0.4 million .
The Tranche 1 Warrants may be exercised through the earlier of (i) September 8, 2030 and (ii) the consummation of certain acquisition transactions involving the company, as set forth in the warrant agreement. ​ On January 2, 2024, we issued the Tranche 2 Warrants to acquire an aggregate of 347,887 shares at an exercise price of $0.5749 per share.
Depending on the variable consideration, we develop 74 estimates for the expected value based on the terms of the agreements, historical data, geographic mix, reimbursement rates, and market conditions. ​ Contract assets consist of trade receivables and unbilled receivables from customers and are recorded at net realizable value.
Estimating variable consideration and the related constraint requires the use of significant management judgment. Depending on the variable consideration, we develop estimates for the expected value based on the terms of the agreements, historical data, geographic mix, reimbursement rates, and market conditions.
In March 2022, we extended the ongoing ENHANCE clinical study to evaluate the safety and accuracy of the Eversense 365 System for a period of up to one year in the United States. In mid-2023, the data gathered in this trial was used to submit an application to the FDA for the integrated continuous glucose monitoring (“iCGM”) designation.
In March 2022, we extended the ongoing ENHANCE clinical study to evaluate the safety and accuracy of the Eversense 365 System for a period of up to one year in the United States. In September 2022, we completed enrollment of the ENHANCE study and the last patient of the adult cohort completed the study in the third quarter of 2023.
In 2022, we submitted and received approval for an investigational device exemption (“IDE”) for an extension of the trial to allow for pediatric patients and we began enrolling patients in the first half of 2023.
In November 2022, we submitted and in the first quarter of 2023 we received approval of an investigational device enrollment (“IDE”) for the enrollment of a pediatric cohort in the ENHANCE study.
We expect that this data will support an FDA submission to be made in the coming weeks for a new product with a target 365-day duration and once per week calibration. ​ ​ European Commercialization of Eversense ​ In September 2017, we affixed the CE mark for Eversense XL, which permits the product to be sold freely in any part of the European Economic Area (“EEA”).
Data gathered from this first-in-human testing will be utilized for an IDE submission anticipated in the second half of 2025. ​ European Commercialization of Eversense ​ In September 2017, we affixed the CE mark for Eversense XL, which permits the product to be sold freely in any part of the European Economic Area (“EEA”).
The Highbridge Warrants are exercisable until April 24, 2030. During the year ended December 31, 2021, the warrant holders exercised 1,750,000 warrants.
The Highbridge Warrants are exercisable until April 24, 2030. During the year ended December 31, 2021, the warrant holders exercised 1,750,000 warrants. ​ On March 13, 2023, we issued and sold to PHC a Purchase Warrant to purchase 15,425,750 shares of common stock for $15.0 million.
Unbilled receivables relate to the revenue share variable consideration from the Commercialization Agreement. ​ Derivative Financial Instruments ​ In connection with our issuance of the convertible senior subordinated notes due 2023, or the 2023 Notes in January 2018, we bifurcated the embedded conversion option, along with the interest make-whole provision and make-whole fundamental change provision, and recorded the embedded conversion option as a derivative liability in our consolidated balance sheets in accordance with ASC Topic 815, Derivatives and Hedging.
Our estimates are based on information known at the time and include factors such as anticipated future usage and sales, potential for external unfavorable conditions such as import holds or quality issues, and planned product upgrades. ​ However, if actual product conditions differ from our assumptions, additional inventory adjustments that would increase cost of sales could be required. ​ Derivative Financial Instruments ​ In connection with our issuance of the convertible senior subordinated notes due 2023, or the 2023 Notes in January 2018, we bifurcated the embedded conversion option, along with the interest make-whole provision and make-whole fundamental change provision, and recorded the embedded conversion option as a derivative liability in our consolidated balance sheets in accordance with ASC Topic 815, Derivatives and Hedging.
The decrease was primarily the result of a $1.0 million decrease in personnel costs, a $0.8 million decrease in other general and administrative costs to include recruiting and associated employee overhead, local tax expenses, and legal expenses, partially offset by a $0.1 million increase in other selling and marketing costs. ​ Total other income, net ​ Total other income, net, was $15.2 million for the year ended December 31, 2023, compared to $210.7 million for the year ended December 31, 2022, a reduction of $195.5 million.
These increases were partially offset by a $0.4 million reduction in insurance costs and other sales and marketing expenses. ​ Total other (expense) income, net ​ Total other expense, net was $(3.8) million for the twelve months ended December 31, 2024, compared to other income, net of $15.2 million for the twelve months ended December 31, 2023, a decrease in other income of $19.0 million.
The ENHANCE pivotal study for the Eversense 365-day system completed enrollment, the last patient of the adult cohort completed the study, and we completed our analysis of the data. Based on this analysis, we determined to advance to the next generation sensor platform as the underlying technology used in the 365-day and future products.
Based on the analysis of the ENHANCE Pivotal study data, the decision was made to advance to the next generation sensor platform as the underlying technology used in the 365-day and future products. In May 2024, this data supported an FDA 510(k) submission for a new product with a 365-day duration and once per week calibration.
Sales of the Eversense system are widely dependent on the ability of patients to obtain coverage and adequate reimbursement from third-party payors or government agencies. We leverage and target regions where we have coverage decisions for patient device use and provider insertion and removal procedure payment.
In addition, we sell our product through a consignment model through arrangements with our network of healthcare professionals. Sales of the Eversense system are widely dependent on the ability of patients to obtain coverage and adequate reimbursement from third-party payors or government agencies.
This increase was primarily the result of increased commercial activities driving new patients and awareness and a full year of Eversense E3 revenue in 2023, partially offset by slightly lower sales outside of the United States during 2023. ​ Cost of sales and gross profit ​ Our cost of sales increased to $19.3 million for the year ended December 31, 2023, compared to $13.7 million for the year ended December 31, 2022.
Higher sales within the United States of $1.2 million was largely offset by $1.1 million in lower sales outside of the United States primarily due to reduced inventory levels. ​ Cost of sales and gross profit ​ Our cost of sales were $21.9 million for the twelve months ended December 31, 2024 compared to $19.3 million for the twelve months ended December 31, 2023, an increase of $2.6 million.
On November 7, 2022, Energy Capital exercised in full its right to purchase $12.0 million of Series B Preferred Stock. ​ Concurrently with entry into the Equity Line Agreement, we issued a warrant to Energy Capital, exercisable beginning May 9, 2021, to purchase up to 10,000,000 shares of common stock at an exercise price of $0.3951 per share, (the “Warrant”).
On November 7, 2022, Energy Capital exercised in full its right to purchase $12.0 million of Series B Preferred Stock.
We incurred total net (loss) income of ($60.4) million and $142.1 million for the years ended December 31, 2023 and 2022, respectively. Positive net income during 2022 was substantially the result of fair value gains due to embedded derivatives in our convertible notes. As of December 31, 2023, we had an accumulated deficit of $869.3 million.
We incurred total net loss of $(78.6) million and $(60.4) million for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, we had an accumulated deficit of $947.9 million. To date, we have financed our operations primarily through sales of our equity securities and debt financings.
Product conformity guarantees do not create additional performance obligations and are accounted for as warranty obligations in accordance with guarantee and loss contingency accounting guidance. ​ In addition, we sell small quantities of our products directly to healthcare provider locations within the United States.
Product conformity guarantees do not create additional performance obligations and are accounted for as warranty obligations in accordance with guarantee and loss contingency accounting guidance. ​ The consideration we expect to receive includes estimates of variable consideration for which reserves are established that is primarily the result of variable consideration such as patient assistance program rebates, prompt-pay discounts, tier-volume price discounts and for the Commercialization Agreement, revenue share.
We expect that this data will support an FDA submission to be made in the coming weeks for a new product with a target 365-day duration and once per week calibration. ​ We are in the early commercialization stages of the Eversense brand and are focused on driving awareness of our CGM system amongst intensively managed patients and their healthcare providers.
We have been working with payors to transition their policies to Eversense 365 and have confirmed immediate coverage policy transition from select payors. ​ We are in the early commercialization stages of the Eversense brand and are focused on driving awareness of our CGM system amongst people with diabetes and their healthcare providers.
The increase was primarily due to investments for next generation technologies including a $4.0 million increase in clinical studies activities, an increase of $2.2 million in personnel related costs due to the expansion of our research and development workforce, an increase of 76 $1.4 million for consulting and other support services, an increase of $1.0 million in design and prototype development costs, and an increase of $0.5 million in other administrative R&D expenses. ​ Selling, general and administrative expenses ​ Selling, general and administrative expenses were $29.9 million for the year ended December 31, 2023, compared to $31.6 million for the year ended December 31, 2022, a decrease of $1.7 million.
These decreases were partially offset by a $3.2 million increase in personnel costs to support our development projects, $1.8 million in 365-day product manufacturing costs incurred prior to FDA approval, a $0.8 million increase in contract fabrication costs and a $0.2 million increase in facilities costs. ​ Selling, general and administrative expenses ​ Selling, general and administrative expenses were $34.2 million for the twelve months ended December 31, 2024, compared to $29.9 million for the twelve months ended December 31, 2023, an increase of $4.3 million.
In December 2021, CMS released its Calendar Year 2022 Medicare 71 Physician Fee Schedule that updated global payments for the device cost and procedure fees. In July 2022, CMS provided temporary G-codes to enable immediate access to Eversense E3 for all eligible Medicare beneficiaries.
CMS provided G-codes to enable immediate access to Eversense 365 for all eligible Medicare beneficiaries.
The number of shares for which the Tranche 1 Warrants are exercisable and the associated exercise price are subject to certain customary proportional adjustments for fundamental events, including stock splits and reverse stock splits, as set forth in the warrant agreement. ​ On January 2, 2024, we issued the Tranche 2 Warrants to acquire an aggregate of 347,887 shares at an exercise price of $0.5749 per share.
The Tranche 2 Warrants may be exercised through the earlier of (i) January 2, 2031 and (ii) the consummation of certain acquisition transactions involving the company, as set forth in the warrant agreement. ​ 78 ​ On October 24, 2024, in connection with the registered direct offering described above, the Company issued to the investors in the offering the PP Warrants to purchase an aggregate of 45,714,286 shares of common stock at an exercise price of $0.35 per share.
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We affixed the CE mark to the original 90-day Eversense CGM system in June 2016, which marked the first certification for the product to be sold within the European Economic Area (being the European Union plus Norway, Iceland, and Liechtenstein) (“EEA”).
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We leverage and target regions where we have coverage decisions for patient device use and provider insertion and removal procedure payment. We have reached approximately 300 million covered lives in the United States through positive insurance payor coverage decisions.
Removed
Subsequently, we affixed the CE mark to the extended life Eversense XL CGM system in September 2017 to be sold in select markets in Europe and the Middle East.
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Our future generation products in development are our “Gemini” product variation to allow for a 2-in-1 glucose monitoring system combining the functionality of CGM and Flash Glucose Monitoring, in an implantable sensor with battery that may be utilized with a smart transmitter to get continuous glucose readings and alerts, or be utilized through a swipe over the sensor with a smart phone to get on-demand glucose reading without a smart transmitter and our “Freedom” product variation which would include Bluetooth in the sensor eliminating the on-body component. ​ ​ 70 ​ United States Development and Commercialization of Eversense ​ In 2016, we completed our PRECISE II pivotal clinical trial in the United States.
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In June 2019, we received FDA approval for the non-adjunctive indication (dosing claim) for the 90-day Eversense system. With this approval and the availability of a new app in December 2019, the Eversense system can now be used as a therapeutic CGM in the United States to replace fingerstick blood glucose measurement to make treatment decisions, including insulin dosing.
Added
In 2023 the data gathered in the ENHANCE study supported the iCGM submission and in April 2024 Eversense was authorized to be marketed as an iCGM through the FDA’s De Novo pathway, by establishing the special controls that will serve as a predicate device for 510(k) submissions in the future.
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We also gained coverage expansion through the basal only and hypoglycemic indications across a significant number of commercial payors in 2023.
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The 510(k) submission was approved by the FDA on September 17, 2024 and our 365-day product was cleared for sale in the United States.
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The first MAC expansion became effective on February 25, 2024 with the remaining MAC’s expected to become effective in the near future. ​ In February 2020, we announced that the FDA approved a subgroup of PROMISE trial participants to continue for a total of 365 days to gather feasibility data on the safety and accuracy of a 365-day sensor.
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Ascensia began commercializing Eversense 365 in the United States during the fourth quarter of 2024. ​ In April 2024 and July 2024, Eon Care Services, LLC and Eon Management Services, LLC were formed as wholly owned subsidiaries of Senseonics, Incorporated.
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This sub-set of 30 participants was left undisturbed for 365 days with the goal of measuring accuracy and longevity over the full 365 days. Information gathered from this sub-set and additional development efforts provided us the confidence to start the Pivotal study for the Eversense 365-day System.
Added
In November 2024, Eon Management Services, LLC entered into the Administrative Agreement with the Eon Care PCs, which are consolidated as VIEs. The wholly owned entities and Eon Care PCs (collectively, “Eon Care”) were established to support patient access to the Eversense system by providing convenient Eversense insertion and training services.
Removed
The iCGM designation will enable our ability to integrate with insulin delivery devices like pens and pumps to create systems that would use Everesense for automous control and we exepect approval in the first half of 2024.
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The Company expects established CPT codes associated with Eversense insertions to enable a self-sustaining economic model for this initiative in the future. ​ In November 2022, we announced a collaboration with the Nurse Practitioner Group (“NPG”) designed to expand U.S. patient access to Eversense by providing additional convenient in-office and at-home sensor insertion options utilizing NPG’s broad network in approximately 30 states.
Removed
The ENHANCE pivotal study for the Eversense 365-day system has been fully enrolled, the last patient of the adult cohort completed the study and we completed the preliminary analysis of the data. Based on this analysis we determined to advance to the next generation sensor platform as the underlying technology used in the 365-day and future products.
Added
Under the agreement between Senseonics and NPG, NPG providers will be certified to perform Eversense procedures in the specified geographies and will offer its services for patients who have been prescribed Eversense. During 2023, we expanded the inserter network by setting up Eversense procedure capabilities in additional select geographic areas.
Removed
Actual results and outcomes could differ from these estimates and assumptions. ​ Revenue ​ We generate product revenue from sales of the Eversense system and related components and supplies to Ascensia, through the Commercialization Agreement, third-party distributors in the European Union and to strategic fulfillment partners in the United States (collectively “Customers”), who then resell the products to health care providers and patients.
Added
In October 2024, we acquired the sensor insertion network assets of NPG to begin transitioning nurse practitioners to our Eon Care subsidiaries in order to further expand patient access and convenience. ​ In July 2024, we began first-in-human testing for the Gemini system.
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In these direct sales, inventory is purchased on consignment to ensure availability when a patient is identified. No revenue is recognized upon delivery of our products to the healthcare provider locations, as we retain the ability to control the inventory. Rather, revenue is recognized when the product is consumed by a patient.
Added
The next-generation Gemini product utilizes a fully implantable self-powering system that includes a flash glucose monitor with no on-body component for people with type 2 diabetes and traditional CGM with an on-body component for people with type 1 diabetes.
Removed
Consignment sales represent approximately five percent of our net sales in 2023. ​ Our contracts may contain some form of variable consideration such as prompt-pay discounts, tier-volume price discounts and for the Commercialization Agreement, revenue share.
Added
The Gemini product is built on the 365-day sensor platform and the clinical and regulatory work will be focused on demonstrating the battery integration and functionality rather than the sensor life.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeDue to the short-term maturities of our cash equivalents and the low risk profile of our investments, an immediate 100 basis point change in interest rates would not have a material effect on the fair market value of our cash equivalents. The interest rate on all of our notes payable are fixed.
Biggest changeDue to the short-term maturities of our cash equivalents and the low risk profile of our investments, an immediate 100 basis point change in interest rates would not have a material effect on the fair market value of our cash equivalents. The Company’s Loan and Security Agreement is affected by variations in the U.S. prime rate of interest.
We do not currently engage in any hedging transactions to manage our exposure to foreign currency exchange rate risk. ​ 82 ​ ​
We do not currently engage in any hedging transactions to manage our exposure to foreign currency exchange rate risk. ​ 81 ​ ​ ​
As of December 31, 2023, we had cash, cash equivalents and marketable securities of $109.5 million and at December 31, 2022 we had cash, cash equivalents and marketable securities of $156.3 million. We generally hold our cash in interest-bearing money market accounts or short-term investments that meet our policy for cash equivalents.
As of December 31, 2024, we had cash and cash equivalents of $74.9 million and at December 31, 2023 we had cash, cash equivalents and marketable securities of $109.5 million. We generally hold our cash in interest-bearing money market accounts or short-term investments that meet our policy for cash equivalents.
Added
As of December 31, 2024, we had $35.0 million outstanding under the agreement. A 2% change in the prime rate would result in additional annual interest of approximately $0.4 million based on the outstanding balance at December 31, 2024.

Other SENS 10-K year-over-year comparisons