Good afternoon, and welcome to the Senseonics Second Quarter 2017 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]. Please note this event is being recorded. I now would like to turn the conference over to Don Elsey, Chief Financial Officer. Please go ahead, sir.

Thank you very much, and welcome to the second quarter 2017 Senseonics earnings call. Before we begin today, let me remind you that the company's remarks include forward-looking statements. These statements reflect management's expectations about future events, operating plans, regulatory matters, product enhancements, and company performance, and speak only as of the date hereof. These forward-looking statements involve a number of risks and uncertainties. A list of the factors that could cause actual results to be materially different from those expressed or employed by any of these forward-looking statements is detailed under Risk Factors and elsewhere in our annual report on Form 10-K and our other reports filed with the SEC. These documents are available in the Investor Relations section of our Web site at www.senseonics.com. We undertake no obligation to update publicly or revise these forward-looking statements for any reason except as required by law. With that, I will now turn the call over to Tim Goodnow. Tim?

Thank you, Don. As we embark on the second half of 2017, we are well positioned and are making meaningful progress on a number of fronts. We are pleased with the accomplishments we have made thus far this year. Amongst these are the scaling up of our European launch, the approval of our Gen2 transmitter, continued progress on our Canadian pediatric trial, our initial preparation work for the United States launch as well as the imminent launch of Eversense XL. On the call today, I will address the state of each of these. Don will provide more detail on our financials. And then I’ll wrap up with some comments about our longer-term direction at Senseonics. First, we generated 800,000 in revenue in Europe in the second quarter, in line with our expectations. We expect to ramp our revenues meaningfully in the second half of the year as we have transitioned to full launch in many of the countries. As such, we are reiterating our forecast of 6 million to 7 million in revenue for 2017. We also added roughly 40 million to our balance sheet in Q2 through an equity offering that was comprised by a group of institutional investors led by our European commercial partner, Roche. Most recently, we have commercially launched in the countries of Belgium and Austria. This brings the number of countries in which Eversense is available to seven. By the end of the year, we expect to have doubled that number. While we are still in the early stages of our launch in Europe, we are able to share some initial metrics which provide insight as we scale and also provide visibility into our trajectory going forward. As planned, given the positive user experience and clinical acceptance of Eversense and with the recent introduction of…

Thank you, Tim. For the three months ended June 30, 2017, we generated $814,000 in revenue compared to $19,000 in the prior year period. The increase was attributable to sales of the Eversense sensor in Europe. For the three months ended June 30, 2017, total net loss was $12.4 million or $0.12 per share compared to $11.9 million or $0.13 per share in the second quarter of 2016. Second quarter 2017 net loss per share is based on 103.7 million weighted average shares outstanding compared to 92.7 million weighted average shares outstanding in the second quarter of 2016. The largest driver of the increase in net loss was higher interest expense compared to last year. Specifically, our total interest expense for the three months increased $500,000 to $800,000 due to our increased term loans with Oxford and Silicon Valley Bank. For the six months ended June 30, 2017, total net loss was $25.4 million or $0.26 per share compared to $23.1 million or $0.27 per share in the first half of 2016. First half 2017 net loss per share is based on 98.8 million weighted average shares outstanding compared to 85 million weighted average shares outstanding in the first half of 2016. The largest driver of the increase in net loss for the first six months was higher interest expense as well compared to last year. Specifically, our total interest expense for the six months increased $1 million to $1.5 million due to our increased term loans again with Oxford and Silicon Valley Bank. I'd like to now turn to our balance sheet at quarter-end. At the end of the second quarter, our cash, cash equivalents and marketable securities were $41.4 million. In the second quarter, as Time mentioned previously, we completed an equity raise of just over $40 million. Turning to guidance for the year, as Tim mentioned in his opening remarks, we are reiterating our expectations for full year revenue between $6 million and $7 million with additional confidence driven by our expanding launch presence. I will now turn the call back over to Tim.

Thank you. I’m encouraged by the progress that we made in the first half of 2017 and I expect the second half of the year to be an active period for us as well. As I noted, we will continue to ramp sales and introduce Eversense XL in Europe, move to complete the approval process for our PMA and prepare for the U.S. launch, all while we continue to advance our product development efforts. To that end, we’ve recently announced work on an integrated automated insulin delivery system combining Eversense with the TypeZero artificial pancreas algorithm and the Roche Accu-Chek inflate pump. We’re excited about this opportunity and we believe a long-term, easy to use, automated insulin delivery system may help reduce some of the day-to-day burden Type 1 patient’s face in their diabetes management. This integrated AID system is now in full development and is part of the NIH-sponsored International Diabetes Closed Loop trial. We expect to have this system in the hands of our European clinical sites early next year for the pivotal trial. As we have illustrated, we are focused on an accurate, easy to use glucose monitoring system that continuously provides readings for up to 180 days. The automated insulin delivery system is one example of how our core long-term accurate sensor can be utilized. We have also accelerated our efforts on optimal utilization of all data captured in a long-term wear sensor. The healthcare needs of today can be summarized as improved outcomes, expanded access and improved cost and efficacy. And all of these needs can be enhanced with a more real-time integrated information exchange. Our commitment is to intersect diabetes management and lifestyle management with an eye towards ease and convenience that can able with a long-term sensor. Toward this end, we are planning…

Thank you. We will now begin the question-and-answer session. [Operator Instructions]. The first question comes from Danielle Antalffy from Leerink Partners.

Hi. Good afternoon, guys. Thanks so much for taking the question and congrats to all. It sounds like you guys are making really good progress. Tim, I was wondering if you could talk a little bit more about some of the metrics that you’re seeing and you’re appreciating that with early stages of the full launch mode, but anything you can comment on regarding re-implant rates and I know something else we’ve talked about in the past. It’s not just the physicians that are doing the quote procedure but also the nurses, maybe talk a little bit about any hesitation you’re running into as far as doing the procedure, getting trained on the procedure? And how you think that could translate into what we should expect here in the U.S.?

Sure. Thanks, Danielle. In regards to the further information on the metrics, as you’ll recall, really May was the trigger point time period for us to transition. We had been doing introductory training, if you will, especially for our commercial distribution partners on how to sell, how to communicate, how to follow the product through its use cycle. And it’s in that time period the broad base launch in the key markets, especially Germany and Italy really occurred. So we don’t have full Q2 impact to it but we are very encouraged with the reinsertion rates that we’re seeing, especially in Italy where their launch was a little bit different than Germany. Germany, the reinsertion rates are impacted by the reality that it was about approximately 110 users that got a single sensor and were not given the opportunity to reinsert. There was some frustration with the patients who had a strong interest but the pilot was done in a static mode such as that. Italy on the other hand was able to see and do the reinsertion and the reinsertion rate there is appropriately high and well within the expectation at what we’ve modeled. So encouraged with what we’re seeing. I’ll let Mirasol speak to the actual insertion, training and procedure. We continue to be very active and supportive. We do have direct Senseonics employees that are onsite in Europe that work with our distributors to do the training on it. So I’ll let her give a little bit of color on the who and how of those insertions and rollout.

Sure. Thanks, Tim. Danielle, just to answer your specific question about who’s actually doing the procedure, most of the insertion and removal are still being done by the doctors themselves, by physicians. I don’t have exact split between doctors or nurses, but the majority are still physicians. And we expect that that will continue as we continue to bring on more new clinics. New clinics tend to go via doctors first and then some of them eventually turn to the nurses to do the insertion or the removal. But as Tim also mentioned, the switch or the pivot from the controlled launch to the full launch, we’ve now seen just many, many more new clinics come onboard particularly in the two markets that Tim mentioned, because we have more reps coming on clinics and we have many more clinics that we’re calling on. For instance, we actually even had to right now looking for additional clinical trainers to tide us over during this increased demand period. So we’re just seeing a lot more demand now, especially given the Gen2 smart transmitter launch back in May. So hopefully that adds a little bit more color about what we’re doing.

Yes, that’s very helpful. And if I could just follow up. The XL, I think if I remember correctly, Tim, you’ve been expecting this for some time now. It feels like maybe a little bit delayed. Just wondering if you can comment on that? What might be going on there to hold that up? Is it just a slowdown a summer months with the European regulatory body or I assume you’re still just as confident that it’s going to get approved? There’s nothing wrong. But just want to get your comment.

No, a fair question. We had, based on our conversations with BSI, our Notified Body, anticipated that they would be wrapped up with the review in the June time period. Unfortunately it did slip. Like many of the rest of us, they really do have some capacity constraints in regards to their ability to dig in and do reviews. And the escalation process that is the normal practice for once there is a lead reviewer which we have, which is the States for us. It then gets referred to Europe for their more central analysis. That unfortunately did take a little bit longer in the summer months. BSI has certainly worked with us and recognizes that they’ve taken a little bit longer. But there’s been no issue behind it under than frankly capacity and some turnover that they’ve had on their team. So we do very much feel that we are at the very end and we hope to be able to make a formal announcement on the CE Mark issue in the very short term.

Great. Thanks so much for taking the questions.

Thank you. The next question comes from Kyle Rose of Canaccord Genuity.

Hi, everyone. Can you hear me all right?

Yes.

All right. It’s actually Brandon Vazquez in for Kyle Rose. First question just on – thanks for the color on your installed base. It sounds like you guys are getting about 80% of your patients from competitors now. Do you think that’s a dynamic that you’ll expect to continue going forward, or do you think you might start to see some more growth coming from new CGM users?

It is a good fair question. It’s still early. I would say that I would anticipate that we are certainly going to continue to have users, especially in Europe, where the penetration of CGM is still pretty low that are going to agree to come to CGM now that they’re looking at the particular benefits of any one particular system. Obviously, there is a good penetration of the FGM relative to CGM because of the economics history there, but we do anticipate that a number of those are going to see the value of CGM. And as the reimbursement equity between the difference gets normalized, many folks are going to chose CGM over FGM. But I do think that the market expansion that we’re seeing is going to continue. I just think it’s too early to say it’s going to be at the 20% level. We’d obviously like it to be as large as it can, but that’s what we’re seeing today.

Okay, great. Thank you. That’s very helpful. And just one other quick one to follow up. Now another quarter into the launch here, any updates on attrition rates? Has that been changing or anything normal there? Thank you.

No, we’re not seeing it. We still have very good retention and re-insertion rate. It’s hard to comment on it directly and we don’t necessarily mean to be obtuse, but recall that in Europe we are one step away. The direct customer interface, doctor interface is done of course with their distribution partner and our role is to do secondary support. So we get reports but we don’t have the real-time access like we’ll have in the United States.

Thank you. The next question comes from Dominick Leali with Raymond James.

Hi. This is Dominick in for Jayson. Thanks for taking the question. I was hoping to start with the partnership of Roche for the artificial pancreas. I was just wondering if we could get a sense of how big that study will be and maybe how you’ll that study for the goal of commercialization an AP product, if that’s your goal.

No, that certainly is the goal. As we partnered not only with Roche from the pump perspective but also TypeZero, they’ll be bringing the algorithm. The key focus for us and requirement in the participation is that it’d be more than a research project. So we are actively working with both of those partners such that we do, as we call it a pivotal trial, to certainly support at the very least the CE Mark for the product and to fully enable and educate us for the conversations with the FDA in regards to what their requirements will be. We’ve seen a good portion of that with the work that they’ve done in the clinical trial that they requested for the Medtronic product, and we’ll certainly be focused to that. But the work is intended to commercialize a product out of the clinical program.

Okay, great. And then are there any numbers we should keep in mind maybe for the size of the trial or when we could expect the trial to complete?

We anticipate that we will begin enrolling in early in 2018 and then we would expect that the trial would be done in 2018. We’re still negotiating these specific numbers, so we’ll get back to you on that as it evolves. But it’s material enough for regulatory consideration for product’s approval.

Okay. And just a couple more here. I was wondering in Germany with Roche if there was a specific percent of lives on the coverage that they have access to now with the full launch?

I don’t have access to that. I do know that some quarters ago that they had been in conversation with well in excess of 80% of the covered lives. I don’t have an update. Mirasol, you can chime me if you do. But it’s the vast majority that they’ve covered.

Yes, I have – in terms of what we’re really seeing in Germany is the reimbursement is happening, we’re getting the prescriptions and then it hasn’t been much of an issue with respect to getting that reimbursed by the payers. The exact percent that we have contracts with, I can’t recall at the moment.

Okay, that’s helpful. And in terms of European commercialization, I think you mentioned on the last call that you were broadening the marketing. I think Sweden in particular had a broader advertising campaign. I was wondering if you saw good interest from that in the quarter and whether that was spurring interest from endocrinologists or whether it’s more consumer focused?

We have gone – excuse me, I should say we are going to a more DTC approach but investment in the summer months especially in Sweden is not a good investment. So that program is actually kicking off here as folks come back near towards September. Mirasol, I don’t know if you want to add any more to it. But June, July and August are traditionally appropriately distracted months in northern Europe.

In general, however, the countries who are now in the controlled – in a full launch mode has increased their consumer awareness campaign and program, particularly in social media. So that’s part of truly the increase in the awareness and increase in the demand is that there’s just a lot more noise and buzz about the Eversense system given the campaigns by the countries. Particularly I would say in Germany where it’s consumer focused and Italy probably a little bit more clinic focused, but eventually that would also turn into more consumer awareness campaign.

Okay. And my last question was on the U.S. regulatory dynamic. Has that – you said that you’re expecting a panel but the day in the panel itself, those haven’t been formally requested or have they?

They have not. The FDA has been silent on it. But this is a group that has traditionally used the panel process for each new technology; the original transcutaneous – the original GlucoWatch, the original transcutaneous with Medtronic were all – a panel was used. In the adjacent space, the first alternate site testing of blood glucose meter, this panel called – excuse me, this review group called a panel on. And as you are aware they called the panel for the dosing claim or the non-adjunctive claim for the Dexcom product. Surprisingly they did not for the 670G, but it’s just my expectation and we are working towards the fact that our history has predominately been towards calling a panel that they will do that for new generation of technology like this.

Okay. Thank you very much.

Thank you. And as that was the final question, this concludes with the question-and-answer session as well as the call. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.