Senseonics averts cash crunch with $20 million loan, but future remains bleak


Diving summary:

  • Senseonics took out a $20 million loan to buy some time to find a buyer and apply to bring the 180-day version of its implantable continuous glucose monitor to market, the company said Wednesday.

  • The precariousness of Senseonics’ financial position became apparent last month when the termination of a loan deal led Stifel analysts to estimate that the company will end the first quarter with $15 million in the bank, enough to keep the lights on for another quarter “or so.”

  • Faced with the prospect of running out of money before reaching a deal to save the company, the Senseonics management team obtained a loan from an existing shareholder. However, IIf Stifel’s estimate is accurate, the $20 million loan will only extend the company’s cash margin by a few months.

Diving information:

Senseonics seemed poised for a tough year at the time of its fourth quarter results last month. At the time, the CGM player shared the anticipated impact of its revised deal with Roche, revealing that the new terms were likely to cut a third of sales outside the US. Senseonics ended 2019 with $96 million in cash to overcome the difficult moment.

COVID-19 then affected global finances and Senseonics’ attempt to obtain a waiver of default under its loan agreement failed, forcing it to pay $48.5 million to terminate the financing agreement. The emptying of Senseonics’ cash pile prompted the company to look for a buyer and stop selling its 90-day CGM to new patients.

With the end of its cash trail in sight, Senseonics has struck a deal with its shareholder Highbridge Capital Management for the money it needs to keep going. The funds managed by Highbridge are established in provide Senseonics with a loan of $15 million, at a rate of 12% per year, in the next few days. The deal gives Senseonics the option to receive an additional $5 million at a later date.

The cash injection could be enough to push Senseonics past some key milestones. Last month the company said was on track to receive FDA approval for a 180-day version of its CGM by the end of 2020. Senseonics currently sells a 90-day version of the device. CEO Tim Goodnow sees the availability of a 180-day product as “a major turning point” for the business, reflecting the belief that “as people evaluate an implantable sensor…longevity is what matters.” certainly matters.”

Goodnow contends that the loan, along with cost-cutting efforts, will fund Senseonics until “the filing to seek FDA approval for commercial distribution.” The money will also buy the company more time to find a deal, potentially an offer to buy, that will provide a long-term solution to its problems.

Senseonics stock price has fallen more than 70% over the past year, giving potential acquirers the chance to buy the company for far less than at any time during its four years on the public markets. However, Senseonics’ failure to carve out market share against competition from rivals like Abbott’s FreeStyle Libre could give suitors pause.

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