45th Annual TD Cowen Healthcare Conference. My name is Eric Anderson from the TD Cowen Medical Devices Equity Research Team. We're happy to have the team from Senseonics here who will be giving a presentation. I'll pass it off now. Thank you, guys, for joining us.
Good afternoon, everyone. Thanks for having me to the TD Cowen team. My name is Rick Sullivan. I'm the Chief Financial Officer at Senseonics. With me today is my colleague Mukul Jain, our Chief Operating Officer. I'm going to tell you about our company, Senseonics, and our product Eversense. Before I get started, our forward-looking statements. We are a medical technology company, and we're focused on transforming the lives in the global diabetes community with differentiated, long-term implantable glucose management technology. Here's a brief summary of our business. We are one of only four FDA-approved continuous glucose monitors in the United States. The three competitive products are transcutaneous, lasting anywhere between 10 and 14 days. We have the only implantable one-year-long CGM product. CGM is a very large and growing market. This 2024 was over a $12 billion market, continues to grow at over 20%.
We participate in that market along with the other three FDA-approved products. We have a partnership for the commercialization of our product with Ascensia Diabetes Care, which I'll speak to a little bit later. We have a unique health system strategy that we've partnered with Mercy, is the first of a number that we plan to roll out in the coming quarters. We have a very robust near-term product pipeline, which Mukul will go to in detail with products currently in feasibility studies, with anticipated pivotal trials starting later this year and commercialization in the coming years. All of this is protected by a very robust patent portfolio with our differentiated implantable technology. This is the management team. Our President and CEO, Tim Goodnow, has years of experience in medical technology with the majority in diabetes devices coming from Abbott and prior to that, TheraSense.
Fran Kaufman is Dr. Kaufman is our Chief Medical Officer. She comes from us from Medtronic. Prior to that, was a past President of the American Diabetes Association. As I mentioned, with me today is Mukul Jain, very deep technologist coming from Medtronic. I talked about the growth of the market, $12 billion, growing 20%+ per year. That is made up of a number of expanding indications over the past several years. Started initially with type 1 diabetes, but expanded to type 2 diabetes. Those on multiple daily injections recently has continued to expand the indication for people who are hypoglycemic unaware or on basal- only once a day insulin. There is continued expansion for future indications. Many of those market segments are still under penetrated today, hence the continued growth at the 20%+. This is our product. This is the Eversense system.
In the very middle of the slide, you can see our sensor. It is inserted in a physician's office. It is a very quick outpatient procedure. It involves a little bit of lidocaine, a nick incision. The sensor is inserted, and then the site is closed with a Steri-Strip, a Band-Aid. On top of that sensor is our transmitter. This is really the brains of the system. That transmitter sits on top of the sensor to power it via NFC technology. It sends the power to the transmitter to the sensor, waking it up. The sensor takes the glucose reading and transmits it back to the transmitter. That then does the glucose calculation. The transmitter also includes Bluetooth so that it's able to send that glucose calculation to your phone in a mobile medical app.
The app then, once on the phone, of course, has the Wi-Fi or cellular that can send it out to the cloud. Our product lasts for a full year now. Competitive products only last for 10 to 14. This is our third-generation product. Prior to that, we had a 90-day version, 180-day version, and this 365-day version was approved last September and launched in the fourth quarter. The transmitter is unique because it's able to be removed. You can take it on and off. It also has vibratory alerts and alarms so that it will vibrate whether a patient is going hypo or hyperglycemic with different levels of alert. It's also removable, so it is recharged on a daily basis.
The patients love that because you can take kind of a break from your CGM, whether it's to take a shower, to attend a formal occasion, to go to the beach, et cetera. Reimbursements, very good. The third-generation product lasting 365 days, we are reimbursed by over 300 million covered lives in the United States today. That's really been built upon the 90, the 180-day products. CGM today is reimbursed on a daily basis. Our competitors have certainly helped us as they've gone from three to seven to 10 to 14 or 15-day products. It allowed us to start at 90 to double to 180 and now be reimbursed for 365 days of CGM. We're in the process of transitioning the commercial payers. Many have transitioned already with the launch of the new 365-day product.
We have good coverage from Medicare, but are finalizing the payment associated with those G- codes now for the 365-day product. As I mentioned, our competitors have done a really great job of expanding indications. Last year, we were included in the expansion to the once a day insulin delivery, the basal- only patients, almost doubling our target available market. These are patient profiles. On the left-hand side, you can see that the majority of our patients are actually type 2, so multiple daily injections or basal -only patients. That comes a lot from the Medicare population, with about 1/3 still being the type 1 multiple daily injectors. Of our patient base today, 81% have switched from competitive products. They like our differentiated form factor, where while we do still expand the market with nearly 20% new to CGM.
Patients like our product, we have very competitive accuracy. The sensor lasts for a full year. I mentioned the convenience of being able to take on and off that transmitter. We have a commercialization agreement from Ascensia. Senseonics today designs, develops, and manufactures the Eversense product. We hand it over to Ascensia, who does the commercialization efforts. They are responsible for the marketing, sales, reimbursement of the Eversense product. We estimate that they will spend over $60 million in their fiscal year ending later this month on the commercialization efforts for Eversense. Ascensia, you might not be familiar with. They are a leader in blood glucose monitoring, one of the four major players. They have been in business for over 80 years, have hundreds of millions of dollars in blood glucose meter sales across multiple countries with a couple thousand employees. Very big.
They are a subsidiary company of PHC, a publicly traded company on the Tokyo Stock Exchange. Our revenue sharing arrangement with them, we recognize revenue upon the sale to Ascensia. This year, we're expecting that revenue share percentage to be about 70/30, where we would maintain 70% of the revenue, and Ascensia has the other 30%. That revenue share percentage changes over time as it gets longer in the contract and as the volumes increase. This is Brian Hansen. He's the President of CGM for Ascensia Diabetes Care. He's also a member of our board. He was recruited to commercialize the Eversense product by both companies a little over a year ago. Prior to that, he was a Chief Commercial Officer at Tandem Diabetes, where he took revenues from tens of millions to hundreds of millions of dollars, very experienced in scaling, growing organization.
We're really excited to have him. He speaks to about four pillars of his commercial strategy. First is the direct-to-consumer. There's a push-pull in diabetes technology. The direct-to-consumer has to do with advertising campaigns, social media spend in order to get patients aware of the product and ask their physician about it. Supporting that is approximately 50 inside sales reps who will take those calls, turn those leads into opportunities, and coordinate with patients to find a physician's prescribe and to insert Eversense. Next is the healthcare professionals. Much like all the diabetes technology companies, we do call on endocrinologists that are high insulin prescribing, that are familiar with CGM. We're also starting to target the primary care physicians that may see a number of the type 2 patients. We have approximately 50 territories at Ascensia that are doing those targeting right now.
Outside the United States., that global organization Ascensia is sharing the resources for blood glucose measurements and CGM together to sell the product. Briefly mentioned the hospital systems. This is the third pillar of our commercial strategy. This is a top-down approach where we engage with large hospital systems to encourage or to work with the Eversense as their CGM that allows them to have a year's worth of CGM, but also remotely monitor patients. I'll speak more to that in a little bit. Finally, existing users. We want to make sure that we retain our existing patients. Right now, we're interacting with them just once a year when they receive their new sensor.
We want to make sure that we stay top of mind during their whole course of CGM so that when a year comes up and they're ready for their next sensor, there's no other choice besides Eversense. All this is built upon our network of inserters. Previously, we had the nurse practitioner group as a partner where we have nurses in approximately 30 geographies that would take referrals and do the procedure of Eversense. We have acquired the inserter network assets of NPG into our wholly owned subsidiary Eon Care. We're in the process of transitioning those nurse practitioners into Eon Care. Once that is complete, we'll start increasing the number of geographies that we service through the Eon Care network. Both patients and providers love the Eversense system. I've mentioned a number of times, the longest lasting, full year. You can take it on and off.
If you knock your sensor off, you don't have to hassle with calling customer care, getting a replacement. You can just put it back on. There are alerts, very good alerts, and the adhesive is very gentle. There is oftentimes skin irritation associated with wearing an adhesive patch for 10-14 days. Being able to change that out on a daily basis, wash the skin, we have a very low rate of skin reactions. Physicians love it because you have a full year of CGM without any interruptions. There is an increased compliance aspect to it, as well as continued high level of accuracy. There is no resetting of a sensor or accuracy every 10 and 14 days with the Eversense product. What is also resonating with both patients and physicians in our new product is the reduced calibration.
Our prior products had daily calibration, but we have gone to a once a week calibration due to the longevity of the sensor. This is really comparable to how often the competitive products change their sensor. It is a simple fingerstick on a weekly basis versus a full new sensor reinsertion. This is the One Year, One CGM campaign. We received approval for the 365-day product in September. We began this campaign in October and really started providing the product to patients in November. This marketing campaign is exceeding all of our expectations. It is primarily on Facebook and Instagram, but the amount of awareness that it is generating, the interactions we are getting with the social media posts, the amount of time spent on our website as a result of this campaign is certainly very encouraging in the early days of our launch. We have seen some really impressive early metrics.
The number of providers of Eversense has increased, and many of those were in the fourth quarter with the launch of our new 365-day product. Number of leads have increased significantly, 40% year -over -year as a result of those DTC campaigns. More encouragingly, the leads have doubled in the fourth quarter as a result of the 365-day launch. I mentioned the number of type 2 patients, and the campaign really does target both patients who are CGM -naive, but also those patients that might be dissatisfied with their current CGM. That is why we are seeing over 80% coming from other competitive products. The hospital system opportunity is quite large.
With our product, it certainly works for large hospital systems to utilize in the setting as it relates to the full year long lasting, and then also integrating with their electronic medical records and providing remote patient monitoring. It helps them both provide better outcomes, but also have better patient experiences. This is a diagram of the actual solution. The population health would identify the patient base that could utilize CGM. The procedure is performed in a hub -and -spoke solution that's then integrated with Epic. Third -party provides remote patient monitoring so that patients are monitored over the course of the year, but importantly, in between visits, all that information is stored in the clouds. As I mentioned, better outcomes, reduced costs for the full healthcare system.
As a result of the case study with Mercy and the announcement, the national accounts team at Ascensia is having conversations with other health systems on similar opportunities for the Eversense product. It's very early in the Mercy systems integration with Eversense. It has not materially contributed to our revenue, but we expect that it will in the coming quarters. The Mercy system has identified 30,000 patients that could utilize Eversense and want to put the majority of them on that in the next couple of years. Recently, we've begun working with Mercy on their primary care physicians. This is where we think the majority of the patients will come from, with the predominance being the type 2. This is our projected patient ramp to profitability. Today, there's about 10 million patients on CGM. We finished the year with just 6,000.
We expect to double our patient base over the next couple of years to get to that approximately 50,000 patients, which we think we'll need for break-even profitability sometime in the middle of 2027. Our 365-day product has great unit economics. I'm very excited about it. The gross profit margins are certainly improved as we've gone from 180 days to 365 days of CGM. We expect it to contribute to our operating expenses. As we launch that product further in the United States and then outside the United States later this year, we expect a greater contribution to our operating expenses to get us to that break-even profitability. That 50,000 patients is half of a percentage point of market share at today's market. As I mentioned earlier in the presentation, that market is increasing at a 20% per year CAGR.
In a couple of years, it'll be even less than a half percentage market share point. I think with that, I'm going to turn it over to Mukul Jain, our Chief Operating Officer, to discuss our exciting product pipeline.
Thank you, Rick.
Quick question. What is the rate of acquiring new patients and customers recently?
Recently? We had our greatest month ever in the company's history in December as a result of the 365-day launch. New patient acquisitions are increasing with the new product that we have on market. We expect that to continue. It is a combination of new patients, but also the retention of our existing patients. In order to double our patient base each of the next couple of years, most of them are going to be new patients. We will see an increase in patients outside the United States once we launch the 365-day product later this year.
Thanks, Rick. All right. As we talk about the product pipeline, it's good to know where we are coming from. We have been working on the generations of product for the last decade. One of the things we kept in front of us, the driving force was people. Diabetes never goes away, right? For people with diabetes, as we make it much easier for them to manage their diabetes, then they can go around living their lives and not spend all their time worrying about diabetes. The product vision we had was to get to a product that could be used by all segments of diabetes, whether insulin-dependent, non-insulin-dependent, type 1 diabetes, type 2 diabetes, a product that can last an entire year, does not require daily calibrations.
The most important of all would be to get them to a no transmitter on the body, no on-body component of that management device. With the launch of the 365-day product, we have achieved the first two. We have a sensor now that goes on for an entire year. We do not require daily calibrations because we have moved to a weekly calibration. Rick talked about these two features. Now we are focused on no transmitter on body. The current sensor that we have is a passive device. It does not have a power source, does not have a battery on it. That is where the need for the transmitter is, that you have to put on body to communicate through RF and then get the reading, take the reading out, and show it on your phone.
The first thing that we need to do is add a battery. That is what we have accomplished. We did go to the only show in town when it comes to implantable devices to get the battery developed. We have a battery. What this gives us is a platform that lends itself to two kinds of different products. You could still wear a transmitter on top of the device like we do today and get continuous data back and forth every five minutes. You have a sensor that is implanted for an entire year with nothing on body, and you can get the data out of it with a phone. With the battery, you have the capability to take readings every five minutes, store the readings.
What we don't have today in this next version, which we call Gemini because of the uniqueness where it can go to two different platforms, what you don't have is communication directly to the smartphone. It takes the reading, stores the reading. You get it out either by scanning it or by a transmitter. We do believe this will be an excellent product for people with type 2 diabetes who need to know their glucose reading every now and then on demand. This would be a huge alternative, a great alternative to somebody pricking their fingers today to manage their diabetes. The next step from Gemini would be getting to the Freedom device. What we term as Freedom is freedom from any on-body component at all, right? The thing that we need to do next is to add on communication into the device.
We have done early technology. Let me actually back up and tell you where we are. At this stage, we are in development. We have collected data already in human and early feasibility. I'll talk about the timeline as to where we are in terms of getting a clinical study and getting to regulatory later. We have collected successfully in human data with this device. When it comes to the Freedom platform, Freedom technology, we basically take the same form factor, right? All this is built on the current Eversense 365 sensor. The part of the sensor, and I don't know if this will work out with the laser, it does. The sensor is still the same. It's exactly the same sensor that we use in Eversense 365. What we have done is added on a battery to it.
It increases the length, but it's invisible to the patient once it's inserted. For Freedom, we have kept the same form factor, removed the RF antenna, which takes a lot of the space in the current sensor, and replaced it with a Bluetooth chip. With that same form factor, we are able to get to a 365-day fully implanted sensor with no on-body component needed for communication. This is something that the transcutaneous devices can never get to, right? They will, just by the very name of that product, the transcutaneous, always have an on-body component that goes through the skin. We can be a fully implanted system with no need for any on-body at any time and full independence from any kind of tapes and taking any vacations because you have a sensor. Once it's in, it's in, and you're fully communicating with it.
This certainly will be a very, very differentiated product. We are very excited about both Gemini and Freedom at this stage. From timeline, we got approval in Q4, and we submitted the application for the current 365-day product to FDA last month, actually, February 25. Expect to get that approval in summer and then launch it in countries that we have presence in Europe. Gemini, we are planning to submit the IDE application, start of the pivotal study in the U.S. in Q4 of 2025. Current projections are putting us in a commercial launch of the product late 2026. Freedom, we are in early technology work has been completed. We actually did some insertions in animals last week.
We are getting one of the reasons we are going through Gemini onto Freedom is also to reduce risk, get FDA much more comfortable with what we are adding onto the current device. As I mentioned earlier, the sensor platform is the same. From Eversense 365 to Gemini is the addition of battery, right? That is the only thing we plan to prove to FDA is that we can add a battery that works reliably in body. When we go from Gemini to Freedom, now the battery is already proven out. All we are looking to show is the Bluetooth capability in body, right? That is the only technology that we are advancing there. Our projections are about a year behind Gemini for that. That should be commercial in late 2027.
In parallel, we have for the calibration capability, we have integrated with Bluetooth, with the fingerstick devices that have Bluetooth already on it, where when you do the fingerstick, the data goes onto your handheld and does the calibration. You do not have to worry about putting the data in. We continue to work with the pump partners, pump integrating for outside the U.S. and in the U.S., the automated insulin delivery devices. We continue to make progress. We have passed prototyping in a couple of instances with the partners. We hope to talk about those partners publicly in the coming quarters. That is all we had for prepared. Any questions we can take?
Can I ask about the pump partners? Are you looking to do an exclusive with one pump company, or would you be available to all to communicate with all?
No, we'll talk to all.
I meant the device to talk.
The device will talk to all, right? Because the pump is a person with diabetes may choose to change the CGM at times or change the pump at other times, right? You have to be compatible with everyone. Not everything comes together at the same time. You may have one partnership announced before others.
Is that what seems to be a real accelerant to your growth?
It will certainly be a validation of the product in terms of people. It'll open up access to people who are on pump and who are on AID. Remember, the number, the proportion of people who are managing their diabetes with multiple daily injections is very high.
Yeah.
Majority of our patients with the type 2 continues to be so. Certainly, as Mukul said, provide us with more of a validation, a reputational. Yeah.
How long have the pumpers are closed loop at this point?
In the U.S., mostly all the pumpers are on closed loop, right?
Yeah.
Mostly. Because the CGM certainly has passed the growth rate of the pumpers, right? Until 2016, 2017, it used to be put people with type 1 on pump. But then the CGM first campaign came along, and that's where it took over.
That'll take about a year or so before you are able to get a closed loop with your system?
I wouldn't say a year at this stage.
Closer to three, but.
Oh, no, even sooner is what I would say.
I would have thought there would have been a lot of regulatory impediments to that.
With iCGM, we did talk about iCGM designation, right? FDA came along with this interoperability roadmap where they have the three components have the designations. You downclassify the devices too. We are no longer a Class III device. We are a Class II device. With that, we have iCGM, a pump with an ACE designation and an algorithm. You can talk even without going back to FDA.
Yeah.
I guess there was a little talk about Tandem, but I don't know if they've been selected out as one of your favorite.
As we are ready to make announcements, we will.
Thanks.
Thanks, everyone.
Thank you.