Not Dead Just Yet
This afternoon after the market closed Senseonics, not only released second quarter results but a new agreement with Ascensia, per the press release;
“Senseonics Holdings, Inc. (NYSE American: SENS), a medical technology company focused on the development and commercialization of long-term, implantable continuous glucose monitoring (CGM) systems for people with diabetes, today announced the formation of a strategic partnership with Ascensia Diabetes Care (Ascensia), through a commercialization and collaboration agreement, which will make Ascensia the exclusive worldwide distributor of Senseonics’ Eversense® CGM systems. The company also announced a concurrent financing agreement with PHC Holdings Corporation, the parent company of Ascensia. In addition, Senseonics also announced a financing agreement with Masters Special Situations, LLC and affiliates thereof (“MSS”). The financing arrangements collectively provide for a total of up to $80 million of debt and equity capital.”
It goes without saying this is great news for Senseonics and their stakeholders as the company was on death’s doorstep. We’re not so sure this is great news for Ascensia as without a major overhaul of the Senseonics platform the same problems that existed with an implantable sensor will still exist. Senseonics was not on life support because their platform didn’t work, the platform worked just fine it was the business model. The same business model that caused Roche, the company’s previous partner, to walk away.
Now unless we missed something, and we don’t think we did the CGM remains the domain of Dexcom and Abbott. Two companies that are expanding their installed patient bases, developing more advanced versions of their existing platforms and making CGM the standard for glucose measurement. Additionally they are locking up the most valuable space in diabetes device land, formulary position. None of which will change with this new agreement between Senseonics and Ascensia.
This makes us wonder just what Ascensia is thinking here. We have known for some time they have been thinking of developing a Tyler which needs a CGM but the Senseonics system just doesn’t fit with a Tyler. Nor does it make sense if the goal was to transition from BGM to CGM, something that LifeScan and Roche would both like to do. Even if Ascensia was crazy enough to enter the insulin pump business this move still makes no sense. Nor does it make sense from an intellectual property perspective as quite frankly the Senseonics IP isn’t worth all that much.
So why then was the deal done? Seriously we have no clue and can only speculate that Ascensia was afraid they wouldn’t find a CGM partner. Which when you think about it doesn’t make much sense either as there are plenty of Dexcom wannabes who’d be delighted to do a deal.
To us Senseonics and their Eversense platform is solution looking for a problem to solve. Worse compared to their competitors it’s a very expensive solution. Even if the 180 platform becomes a reality the same problems will exist and there is no guarantee the 180 platform will ever get here.
Our best guess and it is just a guess is that Ascensia like so many others in the past ignored the glaring and very obvious issues with Senseonics and Eversense. They see CGM growing like a weed and like the investors funding all the Dexcom wannabes wanted a piece of this expanding pie. So what if implantable sensors are at best a niche play. So what if physicians don’t want to deal with the insertion and reinsertion procedure. So what that G7 is coming or that Libre2 is now here and will likely one day solve its AID issue. Nope CGM is hot getting hotter and we don’t care if we get burned.
Folks we seriously wish we were making this up but as Momma Kliff used to say there is no cure for stupid.