Good evening to those joining us from the U.S., and good morning to those joining us from Japan. Welcome to the Eversense Investor and Analyst Day. Thank you for all your participation. My name is Tim Goodnow, and I serve as CEO for Senseonics. As our partners, Ascensia and PHC play an important role in helping us build the Eversense franchise and increase our sales. With Eversense CGM being an important part of Ascensia and PHC's growth initiatives, Senseonics technology and development pipeline are important to PHC's plans. Therefore, we felt it would be valuable for our respective shareholders to get to hear from each of the partners in our collaboration to round out a fuller view of our aligned vision, our respective capabilities, and our shared plans to grow Eversense. In Senseonics, 2022 was a very productive year.
We received both FDA approval and a CE mark for our Eversense E3 180-day continuous glucose monitoring system. We launched the product globally with our commercial partners, Ascensia Diabetes Care. We expanded Medicare and commercial payer coverage and completed enrollment of our pivotal trial for a 365-day sensor configuration. In today's event, we will discuss how these accomplishments position Eversense for success in the future. We'll provide further detail on our strategic partnership, growth plans, and product roadmap for Senseonics. We'll also review our fourth quarter 2022 full- year performance on which we just filed our quarterly earnings release. We are very pleased to be joined by the executive leadership of our partners today, including both our exclusive global commercial partner, Ascensia Diabetes Care, and their parent company, PHC Holdings.
In August of 2020, our organizations entered into a global collaboration agreement for the commercialization and distribution of Eversense. As a result, Senseonics is now able to primarily focus on our core competency the design, development, and manufacturing of the Eversense technology. Ascensia assumed the role of exclusive worldwide distributor of Eversense, with PHC providing financing to Senseonics. As we announced today, we'll speak to later in the call, PHC has made an additional $15 million investment in Senseonics and has agreed to swap its debt for the equity position it would have converted into, which we see as enabling us to streamline our balance sheet and add focus to our development efforts. We'll take this opportunity today to let our partners introduce themselves and present their perspectives on the CGM market and how they will expand access to advanced technology for people with diabetes.
The Eversense long-term CGM. Our shared objective is to increase patient adoption of Eversense, and our organization are constantly collaborating and aligned on this vision, and we're 100% committed to driving growth of Eversense. We're happy to share more of these plans with each of our organization's investors today. In a minute, I'll turn the call over to Ko Sato, COO of PHC Holdings Corporation, for an overview of their organization and priorities for success for PHC and for the partnership. Rob Schumm, President of Ascensia Diabetes Care, will introduce ADC and will review the market opportunity, unique positioning, and commercial strategy for Eversense. Finally, I'll outline Senseonics' future product pipeline, and our CFO, Rick Sullivan, will detail our fourth quarter, 2022 financial results and key financial targets for the next three years. We will open it up for question and answers.
Now let's remind everyone what makes Eversense so special.
Break free with Eversense E3 Continuous Glucose Monitoring System, the only long-term six-month CGM. Featuring an implantable sensor that measures glucose levels continuously for up to six months. A removable and rechargeable smart transmitter with unique on-body vibration alerts and a mobile application for long-term and continuous monitoring. The sensor is inserted under the skin in the upper arm by a trained healthcare provider in a brief in-office procedure. Innovative design stabilizes the glucose indicator within the hydrogel to maintain accurate readings over months. A gentle on skin silicone-based fresh daily adhesive patch secures the Eversense E3 smart transmitter to the skin over the sensor. The smart transmitter powers the sensor beneath the skin. The smart transmitter communicates with the sensor via the NFC antenna.
The porous matrix of the sensor's hydrogel allows glucose in the body's interstitial fluid to access the glucose indicator, a modified fluorophore. Glucose molecules in the interstitial fluid reversibly bind to the fluorescent indicator molecules in the hydrogel. The indicator molecules are stimulated by the sensor's LED and fluoresce. The intensity of the fluorescent light signal rises and falls in proportion to the body's glucose levels. Special electronics inside the sensor digitize the light signal and send the data to the transmitter every five minutes. The body-worn smart transmitter receives this data and calculates the glucose concentration. In case of predicted or current hypo or hyperglycemic events, the smart transmitter quickly provides unique on-body vibe alerts to warn the user.
The transmitter sends glucose data via Bluetooth directly to a smartphone running the Eversense mobile application. The Eversense mobile app displays and updates real-time glucose readings every five minutes, showing if the user is in or out of range. Break free from the hassle of short-term CGM with Eversense E3, the only long-term six-month CGM system.
You can clearly see why we're all excited about Eversense and why we believe this product and our future innovations represent a transformational leap forward for diabetes management. We recognize that through these differentiated features, we can improve glucose management for Type 1 and Type 2 people with diabetes that each have unique needs. I'll turn the call over to Ko.
Hello, I'm Ko Sato, Chief Operating Officer of PHC Holdings Corporation. Thank you for joining us today. PHC is a diversified healthcare company listed on the Tokyo Stock Exchange. We are headquartered in Japan with operations around the globe. PHC builds on a strong legacy with our origins in Panasonic. Our current company started in 2014 with carve-out from Panasonic by KKR. We have developed our current business portfolio, which I look forward to discussing further with you today, and we became a publicly traded company in October 2021. An important foundation for the exciting initiatives you will hear about today, including our collaboration with Senseonics. Our mission is we contribute to the health of a society through our diligent effort to create healthcare solutions that have a positive impact and improve the lives of the people.
We are now facing critical challenges around the world with healthcare costs on the rise and disparities seen in healthcare quality, as well as access to the good healthcare. To address such challenges, the approach by value-based healthcare has gained popularity. This is a healthcare delivery model that seeks to maximize healthcare outcome for patient, while at the same time optimizing and reducing the medical costs. Our mission is to contribute to society by positive impact. This is possible by leveraging our strengths of providing a leading brand products and services to customers across our healthcare from research to diagnostics, treatment and prevention of the diseases. With that background on our mission, here is a overview of our group. For FY 2021 results, revenue was JPY 340 billion, roughly $2.5 billion.
We provide products and services more than 125 countries with a majority of our revenue coming from outside of Japan. Our products and services are used by a wide range of the customer, such as pharmaceutical companies, universities, research institutions, hospitals, clinics, pharmacies, patients and individuals. We deliver strong recognizable brands. We enjoy a significant advantage of having the leading brands that rank in the top three for domestic and international markets in each business. As a global healthcare company with a heritage in Japan, we deliver solutions to help solve healthcare challenges around the world. I would like to turn specifically to diabetes management, which makes up about 1/3 of our company. Our diabetes management business is a integrated business of Ascensia and PHC.
Ascensia was formerly the Bayer Diabetes Care business that became a part of PHC Group in 2016. PHC was long-standing high quality OEM supplier for Bayer at the time. We have a long history with this business. Now 32% of PHC's consolidated revenue come from this domain. Our BGM has been a leading offering in this domain. With our manufacturing capability developed in Japan and our global sales marketing capability, our BGM business has delivered industry top-class measurement accuracy, hold the third largest global market share, and is the leader in Japan. From this strong market position, expanding our solution to include the benefit of CGM is compelling strategy and natural expression of our mission to improve access to the good healthcare. In order to support that strategic step, that collaboration with the Senseonics that you will hear more about today was born.
Partnering with Senseonics with its Eversense CGM System is a natural expansion and a continuation of our strong diabetes legacy. It fits seamlessly with a strong heritage based on a globally distributing innovative, high accuracy products that are well regarded for improving the lives of the people. We knew that together we could make a positive impact on the health. In August 2020, PHC made an investment through convertible note in Senseonics. Concurrently, our Ascensia business entered into a collaboration agreement to continue the global commercialization of Eversense. As I will describe further, this alliance forms an important component of PHC growth initiatives. During our collaboration, we are exclusive worldwide partner for Eversense E3 and its future generation products, such as the one-year CGM that Senseonics currently has in clinical trials.
Developing the CGM market together with Senseonics is an important growth initiative in our midterm plan that we announced last November. Let me take a moment to provide an overview. The overview of our midterm plan is shown on this slide. We currently operate in three domains, diabetes management, healthcare solutions, and diagnostics and life sciences. Our existing businesses in each domain enjoy high market shares and are the basis of our strengths, so we define them as our foundation. From there, we will expand our range of the customers, products, and services, as well as pursue the synergies among our businesses. We have defined this adjacent area as our growth areas, where the market are larger and offer higher growth opportunities. You can see on this slide that personalized testing and diagnostic solution is one of our main growth areas, expanding from diabetes management business.
Our key driver we are looking to for that growth is to focus on developing CGM sales in the United States during our midterm plan period. Eversense is our key platform to achieve CGM growth, so the Eversense platform is a top class priority for PHC as we execute on our midterm plan. These are the revenue target of our midterm plan, JPY 420 billion in 2025, roughly $3.1 billion. Our annual growth target of 5.4% is primarily driven by the growth area initiatives. Annual growth rate of around 27% is targeted for the growth areas. We aim to achieve JPY 52.5 billion growth out of our total revenue growth target of JPY 80 billion.
The CAGR of the growth area is planned to exceed the market, and we are targeting to increase the revenue in growth areas to around 20% of our total revenue. As you can see, personalized testing and diagnostic solutions, including the CGM, is the biggest contributor to our midterm plan. This is a key priority. We are committed to driving a CGM business together with Senseonics to achieve our growth ambitions. Now, I will hand over to Rob, Head of Diabetes Domain and President of Ascensia of PHC Group, to explain more about how we intend to develop CGM sales in the United States and other key markets. Thank you very much.
Hello, I'm Rob Schumm, President and CEO of Ascensia Diabetes Care, and a corporate officer of the PHC Group. For those of you who don't know us, Ascensia Diabetes Care is a global innovator and leader in the blood glucose monitoring industry. Ascensia was formed with the sale of Bayer HealthCare's diabetes business in 2016 to the PHC Group, Bayer's longtime partner for the leading CONTOUR family of high-accuracy blood glucose monitors. Today, Ascensia markets the number one selling BGM test strip in the world, CONTOUR NEXT. We operate in over 100 countries and have a number one or number two position in the 18 out of 27 measured countries. Importantly, we continue to be successful in BGM, gaining market share in the majority of countries where this data is available. Our company has a strong sense of purpose.
We invented the very first self-testing blood glucose monitor back in 1969. As a company that is today 100% focused on diabetes, our people wake up every day with the mission of improving the lives of people living with diabetes around the world. Sharing that passion with the team at Senseonics is one of the things that makes the Eversense partnership compelling. While we see traditional BGM as playing an important role in the treatment of people with diabetes, even in the long term, we are extremely excited by the benefits that CGM, particularly a long-term CGM such as Eversense, can offer to millions of people. Before I talk about how we are approaching the market for Eversense, I'd like to give you a sense of why we pursued this partnership and why we are bullish about its future.
First of all, as a leader in traditional blood glucose monitoring, we have assessed the CGM landscape from top to bottom, and we liked the unique value proposition of Eversense. There are many technologies out there that claim to offer an advance in glucose measurement, but when you look more carefully, we see them as me-too technologies operating in a crowded intellectual property landscape. We believe other potential new technologies are still very far from working like a CGM. Eversense, on the other hand, is now on its third-generation product approved through regulatory bodies, and it delivers remarkable accuracy. As compared to other CGMs out there, it is highly differentiated. It's not a me-too product. Perhaps most importantly, it is loved by the people who use it. This was an important factor we considered when making our initial investment in Senseonics. Additionally, Eversense captures the imagination.
When you think of what the CGM of the future looks like, it looks a lot like Eversense, and that's why we believe that the vast majority of Type 1 and Type 2 patients are open to an implantable CGM option. For these reasons, Eversense struck us as an ideal product where leveraging our existing resources and capabilities in bringing high accuracy, well-regarded BGM to the market, we could collaborate as a successful commercial partner with Senseonics. The opportunity for Eversense is quite attractive, and we have made long-term financial and strategic commitments to drive its adoption. Let's talk about the specifics. The CGM market is huge and growing. Today, it is about $8 billion globally and expected to exceed $14 billion in the coming years. Both the Type 1 and Type 2 markets present a large opportunity for Eversense.
Our leads increasingly reflect the overall split in diabetes patient type. In fact, we are seeing increasing success with Type 2s, and today, about half of our U.S. patients are people with Type 2 diabetes. How do we position Eversense to people with diabetes as well as healthcare professionals? Well, for Type 2 patients on intensive insulin therapy, we see Eversense as one of three or four CGM options with meaningfully different benefits. With Eversense, you get the proven clinical benefits of real-time CGM, it also allows patients to break free from various challenges that come along with other CGM options. That includes six months of wear. That means freedom from constantly changing your CGM and having to make sure you've got your next sensor with you if you're traveling or if you just haven't gotten to the pharmacy.
The first day of any CGM sensor requires a warm-up period. With Eversense E3, this generally happens 2x a year instead of 2x or 3 x per month. It provides freedom from aggressive adhesives that stay on the skin continuously for long periods of time. It offers freedom to be unattached to a device, at least some of the time. Our users enjoy what they call a naked shower or to simply get a break from being connected to their diabetes device. The target patient for Eversense has a similar mindset to those people with diabetes who, despite advancing durable pump technology, choose to treat with multiple daily injections of insulin. They simply prefer not to be tethered 24/7. As you'll hear from Tim, Senseonics' pipeline is driving to build further on that promise. Eversense E3 already brings important, meaningful benefits in that area.
How are we approaching the marketig for Eversense? In our first phase, we have a high focus geographically. We are concentrating our initial sales efforts in the U.S. around key metro areas with high diabetes populations and access to inserter networks. Today in the U.S., we have about 60 sales personnel, roughly half of whom are quota-carrying territory managers, and the other half are inside sales roles, all 100% dedicated to Eversense. All are working to generate and convert leads in territories that cover a large part of the U.S.. We have plans to scale that aggressively with expanded penetration over the next two to three years. Outside the U.S., we also use a similar geographical focus in our large markets, those where we see favorable tenders and that building on our existing business is useful.
We are leveraging our sizable BGM sales forces along with smaller mission-focused teams around CGM to support their efforts. A key factor in driving U.S. demand is direct-to-consumer activities. We are spending significantly to drive targeted direct-to-consumer advertising to generate individual patient leads. Over the past year, we have generated tens of thousands of leads representing individual patients who take the effort to fill out a form to get more information about Eversense. These are people who we believe are more interested in learning more about the unique benefits of Eversense. Right now, we are working to develop the processes and the systems to more effectively convert these leads to users. We believe these dynamics indicate that there is truly a broad interest among people with diabetes for this novel technology, and it reflects their willingness to consider an implanted product.
Of course, as with any truly innovative product, there are challenges, and our teams are working diligently to characterize and address these. The largest challenges we are addressing to grow this innovative product are inserters, converting insurance, and sales force coverage. Let me speak a little bit more about these factors and some of the initiatives behind them. In the U.S., our insurance coverage is very strong. Aetna, Cigna, Humana, Elevance, many Blue Cross Blue Shields, and HCSC currently cover Eversense, just to name a few. Medicare has also provided favorable reimbursement and convenient billing codes for E3, which have just taken effect in January of this year. UnitedHealthcare is the only major national insurer that still does not cover Eversense. We see this as typical of the slow adoption by this U.S. payer, but we have efforts underway seeking to expand their coverage.
Even without UnitedHealthcare, we have over 250 million covered lives for Eversense in the U.S. Importantly, I would note that once you have a covered account. You still need to actively convert positive policy coverage into smooth actual reimbursement for each patient. This is one area of friction that we've been working to address. The convenience of reimbursement differs by payer, and we have resources in place to actively work this issue as we partner with DME distributors to make that happen. It's important to note that under its 2023 fee schedule, Medicare has more straightforward reimbursement that provides a streamlined path for those patients to get access and onto treatment. Because of this favorable dynamic and the significant benefits that we see Eversense can bring to this population, Medicare patients are an important group for Eversense.
The major difference between Eversense and other CGMs as it pertains to the process of initiating patient treatment is the extra step of the insertion procedure. We provide two ways of doing this: training endocrinologists and providing third-party options. We have approximately 230 certified inserters in the U.S. and over 600 outside the U.S. As noted, these are often endocrinologists who are comfortable doing procedures in their office and have worked them into their practice workflow. In case you're not familiar with what the actual insertion entails, here's a short video with a leading endocrinologist in the U.S. briefly showing how the actual procedure is done.
David, tell us what you've done already and what's next.
First, we marked the area that we're gonna be putting the sensor, and then we created a sterile field with the drape. Next, we're gonna really get started with the procedure by using lidocaine to numb the area. Let's get started.
Wait, David. David, is this gonna hurt?
No. Really the lidocaine is probably the only place where you might feel something. I tell patients it might pinch and burn, but no different than, like, a blood draw or something like that. All right, we'll get started. This is the part where you might feel a pinch and a burn as we put in the lidocaine. Okay?
Okay.
The room that we use in my office is actually, it's just the same room that I see patients in.
Yeah.
There's already, you know, most exam rooms already have an exam table. You don't need anything fancy. No fancy equipment, just a table and supplies. First, I'm gonna make a tiny incision. Then this tool helps us create a little pocket where the sensor's gonna go. It's less than half the width of my fingernail.
Yeah.
It's very, it's a very narrow incision. Now the tunnel has been created, so we're gonna try to put in the sensor now. That's it. The sensor's already in. Did you notice anything? Did you feel anything?
No. Nope. Not at all.
Awesome. Most patients are shocked when they hit this point. They're like, "Wow, you're already done?
Yeah.
All right, Steve. We're done. How'd it go?
It went really well. I really couldn't believe how fast you did it, and it was easy.
We also recognize that there are physicians who, while they recognize the benefits of Eversense for their patients, are less interested in doing the procedures themselves. Seeking to ensure that those providers' needs are met and that their patients have good access to Eversense, we also provide the option of having a third party take care of the procedure, requiring simply a prescription from these physicians. As reported previously, Senseonics and Ascensia are working with the Nurse Practitioner Group, a national firm of nurse practitioners who have started building a network of trained Eversense inserters in over 20 geographic markets to date across the country. This is a significant focus in 2023 and is currently ramping into additional geographies around the U.S.
We believe this third-party approach offers notable access benefits, substantially reducing the requirements for a prescriber to bring the unique benefits of Eversense to patients in their practice. Through NPG or other providers in the certified Eversense specialist network, once a provider prescribes Eversense, patients can have Eversense professionally inserted by certified clinicians who have focused on making convenient insertions available. Some of these procedures can even take place in the patient's home. Once a prescriber brings Eversense into their practice, whether they conduct the insertion procedures themselves or simply prescribe the product and have another certified inserter provide that service to the patients, the product not only has benefits for the patient, but there are additional benefits for the prescriber who is treating them. Here's Dr. Corriere, a prominent endocrinologist in Maryland, speaking about his experience and the benefits of Eversense for his patients.
The advice I would give to healthcare providers not familiar with Eversense is you should become familiar. It's a really good system that can be great for your patients. Each CGM on the market has pros and cons. None of them are perfect. I like to be able to offer to my patients, you know, information on all of the different sensors that are on the market. Some of the things about Eversense that are unique, you can remove the transmitter. You can take it on and off. That may be very important to your patient. The fact that there's only one day that's the first day of that sensor is another unique thing. On that first day of a sensor, the accuracy might not be as perfect. With some other systems where you're changing the sensor so frequently, you have a first day very often.
With the Eversense system, you only have a first day every six months, and that's a real advantage potentially for your patients. How easy was it for me to incorporate Eversense into my practice? Pretty easy. After I became familiar with doing the insertions and removals, it's just part of the routine with speaking to a patient about what types of sensors are available on the market. I'll include it when we discuss all the available options. As far as timing and incorporating insertions and removals into our practice, I do the procedures the same morning that I do thyroid biopsies, so it fits in very nicely in an endocrine practice. The feedback I get from patients using Eversense is generally very positive. Patients appreciate the fact that they can put the transmitter on and off as they wish.
They really like the on-body vibration alerts. That is a unique factor with this type of CGM. Patients also enjoy the fact that the sensor is now 180 days. The benefits of having Eversense as an option in our practice really come in a couple-fold. There are many patients that have been completely reticent to using continuous glucose monitors, whether it be from bad experiences they've had in the past with other systems or the fact that they don't wanna wear something that has to be changed so frequently or can't be removed. Being able to offer them a continuous glucose monitor like Eversense with its unique ability to stay on or off, remove that transmitter, put it back on, to only have to change things out every 180 days, that can be a game changer.
That's a win for my patients in general.
We are making good progress and expect growth in the U.S. in both the number of new patients and our total user base. We are also expanding our sales force investment, having recently added 10 sales reps and planning to continue to expand our sales force with additional personnel and territories. With the newly announced Medicare coverage, the reimbursement focus, and the expanded sales and marketing investment, we have significant plans to accelerate our progress in the U.S. over the course of fiscal 2023. Outside of the U.S., we've been encouraged by the execution and the progress made by our team in Italy, where we have seen the continued potential for attractive growth through the tender process in that market.
Our largest market, however, is Germany, where we have faced pricing dynamics, reimbursement access, and executional challenges that have led to a decline in our patient base that was not anticipated. We continue to make fundamental changes to that business, shifting our go-to-market approach and creating a model that creates both dedicated CGM focus while building on our BGM resources there. We're focused on improving the operational structure, the reimbursement dynamics, and commercial execution in Germany in 2023. While smaller, we also continue to focus on execution, tenders, and awareness in the other European markets we serve, which include Spain, Sweden, Switzerland, Poland, the Netherlands, and Norway. The net of these efforts in the U.S. and Europe are that today we have approximately 1,100 users on the Eversense E3 in the U.S. and approximately 2,000 outside the United States.
With FDA approval just over 12 months ago and the E3 CE mark last summer, we have now been able to lean into launching this product. 2022 was certainly an important transition year for us, with many learnings around inserters, reimbursement, and coverage in the U.S. and in Europe, go-to-market models, and unique market dynamics. As a result, we experienced softer demand than anticipated in the third and fourth quarters. We currently have greater inventory than we had planned, which we expect to be utilized in the first half of 2023 as we continue to execute on the plans I've just mentioned. For our fiscal year 2023, as we continue to drive E3 awareness, access, and growth and build out the initiatives discussed here today, we expect a global patient count to be approximately 7,500, up from just over 3,000 today.
We anticipate the vast majority of that growth to come from the U.S. Our perspective is that while this is significant growth, it only requires us to access a sliver of the enormous CGM market this year to achieve our goals. We believe we have the right team and the right plans in place to achieve this growth. Our goals don't stop there. We believe this business has the potential to grow to over $500 million in Eversense sales in the next five years based on our plans for additional innovation coming through from Senseonics' development programs to provide growth enablers such as pump integration, reduced calibration, a flash monitoring option, and a one-year sensor. With the right innovation and only a small share of the large growing CGM market needed to achieve significant growth, we believe in this opportunity.
We envision a world where CGM patients have an open choice among three to four major standalone CGMs with Eversense being one of them. At Ascensia Diabetes Care, making Eversense an unmitigated commercial and medical success is our number one priority. Yes, our BGM business continues to be important with additional opportunities, particularly in developing markets, but we are directing our resources and our focus heavily toward Eversense, which we see as the future of CGM. Additionally, our organization is excited and motivated behind this goal.
When we became Ascensia in 2016, we rolled out the following mission statement, which is at the heart of who we are as a company: "To simplify and improve the lives of people living with diabetes." I can think of no better way to realize that goal than the efforts that we are doing here, and I'm excited and proud to be partnering with Senseonics to make that vision a reality. Thank you. Now back to Tim.
Thanks, Rob. As Rob has spoken to, the Eversense E3 is a compelling product that offers many positive attributes for people with diabetes, and we're excited to see the new patients being added to the Eversense family. I'd like to spend some time now on our vision for the future of CGM. Senseonics has a strong history of driving true innovation and technology evolution to deliver new and differentiated products. Continuing to be the innovation engine of the Eversense franchise is our priority, and I'll now turn to our pipeline and our roadmap to further advance Eversense. Accuracy and measurement is key to Eversense as it has been for all of our products. We hold ourselves to an extremely high standard of delivering exceptional performance, patient safety, and a track record of extending the world's longest duration CGM sensors.
Most recently, we delivered on these combined attributes in the Eversense E3 product with a demonstrated MARD of 8.5% in the pivotal PROMISE Study. We are driven to set a new bar with long-term CGM and are working hard to dramatically push the boundaries of duration, all while never losing sight of also delivering on these safety and accuracy imperatives. As we previously announced, we are currently underway with our pivotal clinical trial of our next generation one-year product while also advancing the design of our future generation systems. Each system is designed to further increase patient flexibility and freedom. Through this focus, we are developing products that are designed to require just one sensor change per year while not requiring daily calibration. Importantly, we are actively working towards a future Eversense product with no transmitter, the first CGM without anything on the skin.
This is the top requested attribute for people on or considering using a CGM. To attain all of this, our technology platforms are being developed in an integrated approach to enable three planned future product configurations: the 365-day system, the Gemini system, and the Freedom system. First, we continue to focus on significantly expanding sensor duration. We believe we have achieved in vivo stability for a single implanted sensor to last a full-year and are excited to be in the pivotal trial. Doubling the duration of the E3 system to one year will make the product even more attractive to patients, the healthcare providers alike, and even further differentiates Eversense from the competing short-term products. As of last September, we were fully enrolled in the enhanced pivotal clinical study to evaluate the safety and effectiveness of the one-year system.
This study is also structured for us to submit data at the six-month mark for an iCGM indication. If successful, we plan for FDA submission in the coming quarters. In parallel, the clinical study will continue, and when all patients have passed through 365 days of wear, we are planning to submit to the agency for the one-year indication in early 2024. In addition, we have also received IDE approval to include a pediatric cohort into this ongoing study and will begin enrolling participants shortly. Our second product configuration is developed, we call Gemini. The Gemini design offers a new level of capability that will serve as the first solution for those users looking for the flexibility of having both on-demand intermittent glucose monitoring and full real-time CGM.
The partnership is certainly excited about the product and with the potential to revolutionize the flexibility people can experience with CGM. Let's take a look at this product and how it will work.
Today, Senseonics offers the first and only long-term implantable continuous glucose monitoring system. The next technological advancement from Senseonics will feature a sensor with an integrated battery that lasts one full- year. The Gemini system provides CGM data two different ways to meet different therapeutic needs. For those who require intensive diabetes management, the Gemini system offers the best of both worlds. Whenever the transmitter is worn, the system provides continuous glucose data with trend arrows and on-body vibe alerts. The Gemini system also offers the flexibility to remove the transmitter during times of the day when real-time alerts are not needed. Without the transmitter, glucose values are available on demand by swiping the phone near the sensor. For those with type two diabetes who are not intensively managed, the Gemini system can be offered as a flash-only glucose monitoring system.
The system will show current glucose and provide up to eight hours of data per swipe without ever having to wear a transmitter on the body. Meeting the needs of people with diabetes with the Gemini system.
As you can see, there is nothing else like Gemini available. Our market feedback indicates this product will appeal to a wide variety of users. We expect we will significantly target the Type 2 population with this product. Given our position, track record, and technology, we believe we can be first to market with such a revolutionary offering. Currently, we are making progress and expect feasibility work to be done by the end of this year. That would make an IDE submission possible in the beginning of 2024. Now to our third product configuration in the pipeline, the Eversense Freedom system. We view this as the ultimate solution for glucose monitoring. Again, we wanna be the first company to offer a system without the need for any on-body device for a full-featured real-time CGM. Let's take a look at this vision of Eversense Freedom.
After integrating a battery into the sensor in the Gemini system, the next breakthrough product from Senseonics adds in Bluetooth capability. The Freedom system is the only CGM that does not require a body-worn transmitter ever. The system delivers a single product solution for all people who need continuous glucose monitoring. Short-term transcutaneous sensors will always require a physical connection through the skin to a transmitter that must be worn on the body at all times. Only Senseonics has the technology for a CGM sensor that completely eliminates the need to wear a transmitter on the body. This is the Freedom system. Imagine real-time continuous glucose readings, trend arrows and alerts directly from the sensor to your phone. The Freedom system will benefit all people with diabetes with nothing attached to the body. The only CGM technology that truly offers freedom for people with diabetes.
The Freedom system is truly remarkable and answers the top request for people on or considering using a CGM. We recognize that removing the on-body component is simply not feasible for the transcutaneous technologies used in the other systems on the market. Senseonics is uniquely positioned to capture this opportunity. We see the Freedom system as the product with the most potential to meaningfully expand the CGM market. We are in the early stages of development with this product. At this point, we are focused on incorporating the additional battery power and circuitry required to run the internalized Bluetooth technology. Our current plan is to complete feasibility in 2024 and begin clinical trials in 2025. Senseonics has always been about bold advances in technology. Our innovation plans are robust, and as we've done in the past, we are working hard to make these a reality.
Now, I will turn it over to Rick to discuss the planned financials of the commercial strategy and pipeline development initiatives discussed today.
Thank you, Tim. Hello, everyone. Today I'm going to cover our fourth quarter 2022 financial results and then provide near-term financial guidance. We're also going to take this opportunity to articulate important factors that impact our P&L as a result of the commercial collaboration. In the fourth quarter of 2022, net revenue was $5.6 million compared to $4 million in the prior year period. U.S. revenue for the fourth quarter was $3.6 million, and revenue outside the U.S. was $2 million. Fourth quarter results drove revenue for full-year of $16.4 million, ahead of the midpoint of our guidance. Gross profit in Q4 2022 was $0.6 million, an increase of $1.1 million from a gross profit of negative $0.5 million in the prior year period.
We're pleased that gross margins were + 16.6% for full-year 2022, demonstrating an important progression in our business. Research and development expenses in Q4 2022 were $11.6 million, an increase of $3.9 million compared to $7.7 million in the prior year period. The increase was primarily due to investments in our product development pipeline and ongoing clinical trials for our 365-day product. Fourth quarter 2022 selling general and administrative expenses were $7.8 million, an increase of $2 million compared to $5.8 million in the prior year period. The increase was primarily the result of increased payroll and stock-based compensation expenses, offset by lower sales and marketing costs.
For the three months ended December 31st, 2022, operating loss was $18.9 million, compared to $13.9 million in the fourth quarter of 2021. The decrease in the company's share price at the end of the fourth quarter as compared to the company's share price at the end of the third quarter of 2022 led to non-cash gains in Q4. These gains were less than the gains from the prior year period and result in total other income decrease of $18.5 million related to non-cash charges resulting from the accounting for embedded derivatives and fair value adjustments from the company's previous financings. As required by U.S. Generally Accepted Accounting Principles, we mark the value of these instruments to market for each reporting period, and the changes in these values are recorded as non-cash charges to the income statement.
Each quarter, the value of these non-cash gains or losses will vary based on the volatility in the company's share price. Generally, as share price increases, we incur non-cash loss, and as share price decreases, we recognize a non-cash gain. For the three months ended December 31st, 2022, total net income was $11.6 million or $0.02 per share, compared to net income of $84.4 million or $0.19 per share in the fourth quarter of 2021. Net income decreased by $72.9 million due to the accounting for embedded derivatives and fair value adjustments previously mentioned. As of December 31st, 2022, cash equivalents, and long and short-term investments totaled $156.3 million.
For full-year 2022, our net cash used in operating activities was approximately $66.5 million and favorable to the midpoint of our guidance provided at the beginning of the year, resulting from improved gross margins and operating efficiency. We closed 2022 with strong financial performance. Looking ahead, we plan to continue to be disciplined with our expense management as we increase our manufacturing volumes and prioritize investments in our robust product pipeline. Before turning to our expectations for 2023 and beyond, I wanna take time to explain two aspects of the Ascensia or ADC commercial partnership that impact our revenue. First, Senseonics recognizes revenue when shipments are delivered to Ascensia, not when Eversense systems are provided to patients.
This means that a portion of Senseonics revenue is impacted by ADC's Eversense inventory. ADC's demand forecasts are updated regularly based on what they are seeing in the market, a portion of the forecast is binding to align closely with our manufacturing process and commitments, which may cause ADC's inventory levels to vary. As Rob noted, Ascensia currently has more inventory than planned. ADC is more than their targeted 60 days of Eversense inventory, throughout 2023, it is their goal to reduce inventory levels to closer to 60 days. Again, this will be subject to new patient forecasting, we will continue to collaborate with ADC to ensure we are managing the channel as efficiently as possible. The graphic at the top half of this slide shows the expected flow of Eversense products from Senseonics through Ascensia and distributors to a patient.
As a reminder, we present revenues based on what we expect to be recognized by Senseonics and not what Eversense is generating in the market. As a result of our revenue sharing agreement with ADC, what Senseonics reports for revenue is not indicative of actual Eversense sales in the market. We recognize our revenue upon delivery to Ascensia based on what we expect our share of the revenue to be once it is sold through the channel. The Senseonics revenue percentage, which we also refer to as revenue share, generally declines over the term of the agreement and for each year is tiered based on the level of sales for that year, with ADC receiving a higher percentage of the revenue as sales increase. As ADC gains tenure in the partnership and generates higher Eversense sales, they earn an increasing percentage of the revenue.
The percentage of Eversense revenue Senseonics receives ranges from a maximum of 85% to a minimum of 52.5% throughout the remaining four-year term of the agreement, which may be automatically extended under certain circumstances. For 2022, we ended up at an about 80% share of revenue, it being early in the partnership tenure. In the coming years, Senseonics expects revenue growth and gross margin to be impacted by contractual decreases in our revenue share percentage, reflecting sales growth in the product to higher sales tiers that result in a greater share of revenue going to Ascensia. The graph at the bottom of the slide shows the anticipated revenue growth in the coming years for both Eversense and Senseonics and highlights the difference in estimated compound annual growth rates as a result of the projected change in revenue sharing.
The benefit of the partnership structure for Senseonics is our expectation of achieving higher operating margins, given our plan for operating expenses to be relatively flat from 2023 through the agreements horizon, with ADC covering the sales and marketing expenses. With that as context, let's take a look at our financial outlook. Full- year 2023 revenue is expected to be between $20 million and $24 million and reflects three factors. Expected patient growth, which is expected to accelerate in the back half of the year, some expected destocking from ADC throughout the first half of the year as they use inventory, and a decrease in Senseonics share of the Eversense revenue in 2023 compared to 2022.
Based on both sales growth and being later in the partnership, we feel it is helpful to show the anticipated decrease in our share of the Eversense revenue each year, which is based on our current revenue growth projections. Consistent with prior years, we expect full-year 2023 revenue to be weighted towards the back half of the year, with the second half accounting for approximately 2/3 of the revenue. The vast majority of our growth will be in the U.S., and we expect the majority of our 2023 revenue to come from the U.S. Full- year gross margins in 2023 are expected to be between 7.5% and 12.5%, and the year-over-year decrease in our gross profit margins are a result of the decrease in our share of the Eversense revenue described above.
This is, in part, offset by expected scaling manufacturing volumes, so we're planning gross margins to improve throughout the year, but from a lower level. Operating expenses are expected to increase in 2023, almost entirely based on investments in research and development targeted to complete the adult 365-day trial, start the pediatric trial, and make investments in our future products, Gemini and Freedom, described here today. Based on Ascensia's commercial forecast and market dynamics, we currently expect to see continued revenue acceleration, improvements in gross margins, and leverage at the operating income level based on our relatively flat operating expenses in 2024 and 2025 relative to this year. This is also based on our current assumption to plan for the launch of the 365-day product at the end of 2024, subject to product development and regulatory approval.
As Tim and Rob mentioned, we believe an up to one-year product would represent another significant step forward in freedom for people with diabetes. We expect annual cash burn to continue to decrease each year with expected increases in revenues and gross profit margins. Assuming the launch of the 365-day product by the end of 2024, we would expect our operations to turn cash flow positive in the first half of 2026. Announced earlier today, the additional $15 million equity investment and agreement to exchange the PHC notes for equity bolsters our balance sheet and enhances our capital structure. We will continue to monitor our capital structure for future opportunities to provide financial flexibility. As you can see, we believe there's a meaningful opportunity in front of us and that Eversense positions us to both grow and take share in the global CGM market.
With that, back to you, Tim.
Thanks, Rick. In wrapping up, I'd like to thank Ko and Rob for their presentations and participation today. This is just a small illustration of our extensive collaboration and the strong shared commitment we have towards delivering people with diabetes the benefits of Eversense. Together, we've launched a revolutionary product that is having meaningful impact on patients' lives. Awareness for the product is increasing with the direct-to-consumer digital advertising and our interactions with healthcare providers. We are jointly focused on continuing to build this awareness. Patient access has expanded materially, and we have trained new inserters. We've initiated an exciting partnership with the Nurse Practitioner Group and increased Medicare and commercial payer coverage for Eversense. These are important initiatives to continue through 2023, and we are committed to drive patient adoption that we expect will increase in the creation of greater value across our organizations.
With a uniquely differentiated product attracting significant patient interest, initiatives to facilitate greater access, and a growing commercial team to service this demand, we are extremely excited for more patients to adopt Eversense and by its potential to win, share, and grow the CGM market. Looking ahead, our vision for the 365-day system, Gemini and Freedom all represent additional transformative solutions we intend will provide unparalleled freedom to our users. Today, the PHC-ADC Senseonics Alliance has confirmed our strategic and mission alignment, including the substantial commitment to building the Eversense franchise and shared prioritization of Eversense growth for the years to come. Thanks for participating, we'll now open up the presentation for questions.
We're on page right now.
Hi. Can you guys hear me okay?
You're great, Colin. Thanks for the time today.
Absolutely. Thank you for taking my questions. I just wanted to start with 2023 guidance. Obviously a few puts and takes here, first, if I annualize the revenue you put up in the fourth quarter, I get to around the middle of your 2023 guidance range. How should I interpret that? Should we be thinking about you guys having worked through a backlog of reinsertions to this point? Is it the, is it the 60 days inventory on a Senseonics part that's having a factor here in the first half? Should we be thinking about you guys growing in that 20%-40% range until the launch of 365?
Well, Colin, there certainly is growth going on. There's a lot of work, as we've described in the commercial investment. What I'll do is let me ask Rick to go through the inventory situation, which I think does drive a lot of the first half versus second half dynamics.
First, Colin, the target inventory is 60. We're a little bit ahead of that today, so that inventory will be worked down for the first half of 2023. The other item that I would reference is that the revenue share per se has increased from or it's gone from 80% of Senseonics to 70%. We are gonna recognize less revenue per sensor. Those are really two of the reasons why the growth looks a little bit slower.
As you said, the actual growth in patient count is actually attractive.
Right.
Okay, great. I guess I'm not sure revenue growth is necessarily the best way to track the progress on the E3 launch. Maybe if there are any metrics at the account level you'd be willing to provide to give us a sense of how the rollout's progressing, whether that be the number of accounts you're reengaging or anything to display your success in new accounts. Anything would be helpful there. I have one more follow-up.
Sure. Rob, maybe you can talk about the U.S. rollout, where most of the attention is. Obviously, Europe's important for us as well, but we've got a lot of focus in the U.S.
Right. I talked a little bit in the presentation about our user base and how we see it growing. We are continuing to see continuous growth of our user base in the U.S., and that is something that is gonna be a key indicator for us. It's important that you think about the growth really on the user side as opposed to necessarily looking at Senseonics revenue as the original, the key indicator there. Don't wanna go into a lot of more detail about specific accounts except to say that we've, have, you know, expanded reimbursement recently, which has been a big enabler.
The partnership with the Nurse Practitioner Group provides us a whole new avenue of, whole new opportunity to be able to facilitate insertions for the patients who are interested in getting on Eversense.
Okay. I guess lastly, on the financing with PHC, why are warrants the right vehicle for this transaction? Where is Senseonics planning to use the funding in the business? Thank you.
Sure. Yeah.
Yeah.
PHC's preference was for warrants, and as we understand it's has similar financial treatment to the original convertible note. There was no financial discount for the warrants, and we expect them to be equity classified but do have to go through a technical accounting review. The use of proceeds is primarily for research and development. We're in the midst of our 365-day trial with the expected last patient to come out in September.
Thank you for taking my questions. I'll hop back in the queue.
Thanks.
Our next question comes from Marie Thibault with BTIG. Please unmute and go ahead.
Hi, can you hear me?
We can, Marie. How are you?
Okay, great. Great, Tim, Koichiro, Rob, and Rick, thank you for hosting this. Wanted to ask my first here on some of the commentary made around softer demand, and certainly the patient number, the count that you gave us here at the end of 2022. Certainly understood that Germany is seeing some challenges, but did you also see softer demand in the U.S.? If so, what sort of gives you the confidence that patient growth is gonna be so different in 2023? Because if I sort of total up 2021 and 2022, certainly patient numbers for worldwide didn't really change too much. Help me understand where that confidence comes from.
Yeah. Big dynamic was Medicare and the transition we went through. Rob, maybe you can speak to our experience in the U.S. and, and Europe.
Well, first of all, the patient demand is strong in the U.S. and one of the indicators that we have of that is the number of leads that we're able to get from consumers. We're hearing that, you know, we're getting a number of patients who are expressing an interest in taking measures to be able to get to learn more about Eversense so that we can then convert them. One of the challenges we had in recent times is with, well, one of the positives about Medicare coverage is that we have, as I mentioned, favorable Medicare coverage with a very clean path to reimbursement for patients and for healthcare professionals who are helping to get their patients on that. That's the positive.
On the other hand, as you may know, that the pricing doesn't take effect until January 1st for Medicare. There was a period of time there where there was a little bit of ambiguity on pricing, and we weren't able to leverage that as much as possible. Now that we're into 2023, that's been published, and we have a very strong path there. We see Medicare as a really big opportunity for Eversense. That population is one that can benefit very much from many of the key features and differentiations of Eversense. That will be an important growth opportunity going forward.
You mentioned Germany, and yes, Germany has been a little bit more of a challenge, and that's driven in part by the fact that our the original user base that we inherited was more skewed toward patients who are on automated insulin delivery. As that has taken off, that has been, we've seen some attrition among some of those users. We, however, see the bigger opportunity for Eversense today with the multiple daily injector population. People who inject insulin, that user base is much larger than those people who are using pumps.
One of the things we are needing to do in Germany is to pivot that a little bit, and that's taken a little bit of time, and having to work then through some challenges in terms of the reimbursement landscape.
Okay. That's very helpful, Rob. I appreciate that very much. Maybe I'll use my follow-up here to try to make sure we can rightsize some of the drivers of our model. Given all the changes, the really broad commercial coverage, the switch to 180-day, what is sort of the proper ASP or revenue per patient we should be thinking about when we think about sensor and transmitter revenue?
Well, yeah, that is gonna be a little bit complicated because of the revenue share, Marie.
Yeah.
maybe I'll let Rick talk about how we think about.
Yeah.
you know, forecasting, help you guys to get a feel for what your model should look like.
Yeah. I mean, as we've mentioned, we collaborate pretty closely with Ascensia. We talk about the different sales channels in U.S. and O.U.S., and we know that the DME channel and the Medicare channel are the two channels we're in primarily today, and we blend those ASPs. Based on that, we have shipping plans that we use to calculate what we expect revenue to be. There's the revenue share perspective. I think we're still seeing from a commercial pay perspective, consistent pay as all the other competitors in the U.S. and certainly working through tender offerings outside the U.S.
Yeah. There's definitely a lot of variability in terms of that, in terms of the pricing with, you know, various segments within the U.S. having different price points, as well as various countries having various reimbursement, areas with, countries like Italy being on the high end, countries like Germany being on the lower end. That all balances out to our average ASP.
Okay. The average ASP for a sensor, is that about $3,000 a year or so? Am I in the ballpark here?
Yeah. We've, you know, consistently seen about $10 a day and similar in Europe from an annual price per patient from a revenue perspective.
Yeah. Marie, you guys will need to model the revenue split, right?
We need a little bit more guidance on that for the next three years.
Right.
You know, that's the best way to get at it. As I said, there is some dynamics with different countries, as Rob indicated, as well as the payment level in Medicare is a little bit higher than in commercial pay.
Right.
Our blend there has some influence as well.
Okay. All very helpful. Really appreciate the detail.
The next question comes from Jayson Bedford with Raymond James. Please unmute your mic and ask your question.
We can, Jason, how are you?
We do. Rob, you wanna speak to the plans there?
Sure. Yeah, we're excited about the opportunities both inside the U.S. and outside the U.S. In many of our countries, we are seeing a growing user base, and we are investing heavily across all of our markets to be able to, A, have a focused team that is dedicated towards CGM. You know, while we have a heritage in BGM, this is a core priority for us, we're putting a lot of investment behind that in terms of our people as well as spending. Germany is, as I mentioned, is one of those that we are looking to turn that around from the attrition that we've seen.
Again, this is one of our top BGM markets and one of our stronger areas where we can put our efforts behind growth there. By far, we see the biggest opportunity in the U.S., and that's where we're putting the bulk of our investment and expect to see most of the growth over the next fiscal year. In terms of Medicare versus private pay, yes. I think the issue is simply consistent with what you typically see for a product like this in the market. Once you have policy coverage at the national level, you then need to, there are various mechanisms by which you have a path to reimbursement, which, and it varies from payer- to- payer.
Navigating that with healthcare professionals is something that we need to be able to help our patients do and help our healthcare professionals who serve them do. That's something that we've put a lot of effort behind in terms of optimizing the process, creating the education pieces to address it, and then pull those patients through. It's a just a typical process that you'd see for a product like that.
I think Medicare is probably a great example of that, right? In the middle of the year, we had the G-codes put in place to expand the 90 to a 180-day product. January 1st, they got changed back to the T-code. Each and every one of those, Rob's team needs to be out there. Not only are they working with Medicare and all the other commercial payers, but they're also working with the clinicians to explain that process and get through.
Yeah.
It is, it is the usual process of bringing a medical device and getting it reimbursed by all the payers that we do need to go through. It, you know, when you're launching a new product, until it's just a well-oiled machine with lots of experience, we're gonna continue to invest in that, and Rob's got the right team to do that, so.
Right. As I said this point, you know, for traditional Medicare is, there's a very clear path and a very makes it fairly easy to be able to get the patients on. That's something that we're leaning into very heavily.
Okay. Is United expected to come on board in 2023?
I'm not sure that we're ready to give out quotes on United at this point. As we're well aware, they tend to be one of the laggards in the space, but Rob's team is working real hard to convince them, you know, of the clinical benefit that we clearly know that we have for Eversense.
Yeah, I believe as they see increased patient demand, they'll see that it makes sense to cover Eversense.
Okay. Maybe just last couple for Tim on the pipeline. I appreciate the desire to get rid of the transmitter, but are there any efforts to make the transmitter smaller? The second one is just where do you stand with pump integration?
You know, certainly the transmitter is an important component for us today. It not only does all the powering, the communication, and the calculation. We do have some efforts with some partnerships where we can look at the size, but quite frankly, taking that size to zero is the most impressive thing that we can do and the most requested. The predominance of our efforts are really focused on incorporating the battery, which we've made great progress on. We've got a great partner there. Second step is incorporating the Bluetooth. For the pump integration, we are working with some of the folks. The first step for us, of course, is to get the iCGM indication. As you recall, the clinical testing is in place right now.
The patients will actually be through 180 days here in the end of March. Our last patient was enrolled last September, so of course, six months later, they'll be through their 180 days. We'll take that data. There is a process that needs to go through in regards to characterization, validation, and then the writing that up and submitting it to the agency. That's the next big step for us, and then the partnerships with the various companies where we remain on track for.
I'd add to that, from the patient standpoint, we don't see the size of the transmitter. We don't hear that as being a barrier at all. In fact, the benefit of that transmitter is that you can actually remove it, and that's something that's really appreciated by the patients that we've, we see.
Yeah.
Thank you.
The next question comes from Alexander Nowak with Craig-Hallum. Alex, please choose English from interpretation setting at the bottom of your Zoom screen first, and please unmute your microphone and ask your question. Thank you.
Okay, there we go. Thanks. Good afternoon, everyone. I wanna ask a question to PHC to start. There's been a lot of history with Senseonics over the years. You know, ever since it first had the 90-day sensor, it had its starts and stops. You know, as you were doing the work on Eversense, this was back in, call it, the 2020, 2021 timeframe, how did you get comfort around that the 180-day was going to yield a different result as it was released into the market? How were you taking that interpretation around the 180-day and also thinking about the upcoming products at the 365, the Gemini, the Freedom product?
Maybe just expand a little bit more into how you're kind of sizing up the investment when you, when you made it initially.
Yeah. Ko, maybe you could speak to the, you know, the work that PHC has done actually over many years.
Yeah.
Right? To get comfortable with the CGM and obviously importantly, get comfortable with the Eversense.
Yeah. Yeah, we are very excited about, you know, tightening the partnership with Senseonics. Some, as we mentioned before, you know, our midterm plans, one of the core, you know, growth is the CGM. We very dedicated, you know, ourselves to grow this business. Some, you know, 90 days is 180 days is, you know, very tremendous, you know, progress. Then there are now additional investment into Senseonics, which allow them to, you know, focusing on the more developing the new generation products, which is more beneficial, you know, coming back to us. That is very, you know, we're excited about the new opportunities. Yeah.
No, that's helpful. You know, since you've made the investment, we've seen the competition change in the CGM landscape. You know, Dexcom, Abbott, they both come out with easier to use smaller sensors, easier to implant sensors or, you know, put on the body. Now, I get that Eversense is still the only implantable, but the competitive environment has changed too. I guess just how does that change the thinking around PHC side and maybe the Ascensia side? How does that change the kind of, going into this year, how that's gonna change the competitive landscape when you're going try to sell physicians, you know, door to door?
Rob, maybe you can talk about the competitiveness of Eversense and how it stacks up, but I do wanna reiterate and point out again that the investment was made just today, as recent as today, from PHC into Senseonics. It continues to be very, very current, so.
As it pertains to the 90-day or the 180-day. And the competitiveness versus other products. Yes, all products are gonna get better and better. Traditional CGM and transcutaneous CGM, it is hard to imagine how that is gonna be possible to be able to get to the duration benefit that Eversense has without becoming an implanted sensor. That is a unique benefit of Eversense and one that is highly motivating to the people who have expressed interest in it and to a broad percentage of the people with diabetes out there. The one thing that we've heard people with diabetes say is they really want to not have to be wearing something.
That's the ideal situation. A product like Eversense can uniquely deliver on that benefit, whether it's for a six-month product or for a longer period of time. We see that the path has a path to be able to get there. That's something that we believe that Eversense can do that other sensors can't do.
Okay, understood. I wanted to expand on the, call it the 2027 guidance that was issued, you know, calling for over $500 million of sales. Now, I understand that's coming from the Ascensia side, and we have to break it down to what that means to Senseonics. Still, in rough math based off 2023 numbers, that's gonna come in around a 90% growth CAGR. You're guiding to about 40% for 2023. You know, other than it really just being 5% of the market, you know, it's gonna take a lot of blocking and tackling, training prescribers, inserters, ramping up manufacturing to get to those numbers. Can you walk us through kind of that path?
You know, how do we go from where we're sitting today to ultimately that $500 million that you've outlined here, this afternoon?
Sure. Well, to start with, I think you have to understand that we very much believe that there's no reason that Eversense can't be one of three or four options that most people with diabetes get when they're choosing to be on CGM or their doctors looking to have them start CGM therapy. With that, even with our current six-month product, which brings many benefits along with it, the idea of achieving simply a 5% share of the very large and growing CGM market is quite attainable. Especially as we start to think about the new technologies that come on, the new, the evolution of Gemini, et cetera, that makes that all that much more possible.
We believe that is a very realistic goal, given the benefits that Eversense can bring and the difference that it makes in people's lives.
Tim, just maybe more, if I can. Just the timeline for the Freedom system and the Gemini system with FGM. I know you've outlined some of the, kind of the clinical milestones you wanna do there, but just any timelines for starting the pivotal study, and then we can start to figure it out from there. Any reason why the 180-day product couldn't be an FGM today?
Yeah, we're waiting. We're using the battery, the implanted battery that's in development today. We are partnered with the leading designer and developer of implanted batteries for medical devices. There is a design process they're in. We actually have our prototypes in-house today. They are powering the sensors. We're going through all the verification and validation work that it takes to demonstrate all of the safety for the regulatory bodies to approve it for the preliminary in-person testing, in human testing. We do anticipate that we will get the IDE to do that approval towards the end of this year, and we look to do our pivotal trial next year on it. We feel pretty excited about it. Of course, there's a lot of R&D that needs to happen.
We have the right team focused on it. We have the right partnerships, we're gonna continue to certainly drive it. The 180-day alternative is something that we'll think very strongly about as we make progress in the development.
Okay. Understood. Thank you.
If you'd like to ask a question and one follow-up question, please click on the Raise Hand icon at the bottom of your Zoom screen. We will wait for one minute for questions to queue. Thank you. There appear to be no more questions. I will hand the call back to Tim Goodnow, CEO of Senseonics, for closing remarks.
Well, great. I would like to once again thank everybody for the opportunity to spend time with us this evening. Again, want to thank the folks from PHC and Ascensia that have been tremendous partners in this process, and we very much look forward to the exciting work that we're gonna do together to bring Eversense to people with diabetes. I wanna thank everybody for the participation. I know that it was a relatively long process for tonight, but we hope that you get value out it and really have a clear vision of the value of the partnership focus that we're gonna have on it and help you get some metrics to understand where our growth is coming.
With that, I wanna thank everyone and look forward to from both the PHC side to speaking with analysts and investors in May for their meeting. We look forward to seeing our side in May as well when we deliver our Q2 results. With that, thanks all, and we look forward, as I said, to following up. Take care.