All but over

There are times when we honestly wish when predictions we make don’t come true. Sadly that it is not the case when it comes to Senseonics who this morning issued a press release which stated;

“Senseonics Holdings, Inc. (NYSE-American: SENS), a medical technology company focused on the development and commercialization of the first and only long-term, implantable continuous glucose monitoring (CGM) system – the Eversense® CGM System – today announced that its Board of Directors has decided to explore potential strategic alternatives to enhance stakeholder value. The Company is engaging Moelis & Company, LLC as its financial advisor and Cooley, LLP as its legal advisor.”

As we noted previously the company was running low on cash and without a major capital infusion or acquisition would likely be forced to cease operations. The situation has now become critical as the company failed to restructure their debt with Solar Capital, LTD. As the release notes;

“On March 22, 2020, the Company terminated its Loan and Security Agreement with Solar Capital Ltd. and paid all amounts outstanding. Including a payoff fee and prepayment premium, the amount paid by the Company totaled $48.5 million.”

Based on the most recent results released by the company back on March 12th the company had approximately $96 million in cash. Take away the payment to Solar and add in their quarterly cash burn of approximately $25 million and it’s easy to understand why the company is now on life support.

The real question is will a white Knight come along to save the day. Again as we previously reported some companies have taken a look but none so far has pulled the trigger and quite frankly we doubt anyone will. Besides the economic shutdown brought on by the coronavirus the company has a host of additional issues that will prevent a sale.

While the coronavirus situation may have put the final nail in the Senseonics coffin it was NOT the cause of the company’s demise. As we have noted from the start there just isn’t a large enough market for implantable CGM. Especially a system which still requires that the patient have a transmitter attached to their body.

We could repeat the many other reasons why Senseonics failed but why throw salt in an open wound. The sad reality here is Senseonics is just the first of many toy companies likely to fail during this economic crisis. A crisis which did not create the failure but will be blamed for the failure.

Perhaps one day everyone will learn it’s not about way cool whiz bang. Perhaps one day everyone will learn that making the damn thing work is just the first step in a very long journey. Perhaps one day everyone will learn that diabetes devices are a BUSINESS and that management talent combined with a sound business strategy is more important than whiz bang way cool.