Good day, and welcome to the Senseonics Second Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Trip Taylor, Investor Relations. Please go ahead.

Thank you. This is Trip Taylor from the Gilmartin Group. 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, company performance and other matters 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 implied by any of these forward-looking statements is detailed under Risk Factors and elsewhere in our annual report on Form 10-K for the year ended December 31, 2022, our 10-Q for the quarter ended June 30, 2023, and other reports filed with the SEC. These documents are available in the Investor Relations section of our website 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. Joining me from Senseonics are Tim Goodnow, President and Chief Executive Officer; and Rick Sullivan, Chief Financial Officer. With that, I would like to turn the call over to Tim Goodnow, President and CEO. Tim?

Thank you, Trip, and thank you all for joining us this afternoon. Today's call will start with an overview of our quarterly financial results, followed by an update on Senseonics continued execution of development, clinical and commercial programs to drive growth. And our Chief Financial Officer, Rick Sullivan, will provide details on our financials, and we'll open up the call for questions. The second quarter, Senseonics generated total revenue of $4.1 million, representing 11% growth compared to the prior year period, including $1.8 million of revenue from the U.S. and $2.3 million from outside the U.S. Eversense shipments continue to be in line with our expectations for 2023. The second quarter continued to be productive for Senseonics as we advance our initiatives designed to improve ease of use and increase patient adoption of Eversense while enhancing our technology pipeline. To begin, I'll describe recent progress that we've made in our collaboration with Ascensia Diabetes Care, our global commercial partner on their initiatives to drive adoption of Eversense by providers and patients. Together, we are focused on two main objectives: increasing awareness in the market and increasing access to Eversense by our users. During the second quarter, we made meaningful progress in both areas including the expansion and training of new sales professionals in ADC's dedicated U.S. CGM Salesforce. We also are in a positive policy decision from UnitedHealthcare to cover Eversense as of July 1, and we increased to regional coverage by Nurse Practitioner Group, certified and credential practitioners who conduct Eversense insertions. Broadening the commercial footprint is a critical component of increased awareness and access in an area in which Ascensia continues to invest and expanded salesforce is enabling increased physician interactions and new account engagement which ADC will leverage to increase their presence in numerous territories. The Salesforce…

Thank you, Tim, and good afternoon, everyone. We appreciate the opportunity today to update you on our business. In the second quarter of 2023, net revenue was $4.1 million compared to $3.7 million in the prior year period. U.S. revenue for the third quarter was $1.8 million, and revenue outside the U.S. was $2.3 million. As a reminder, net revenue to Senseonics in 2023, will represent approximately 70% to 75% of the total Eversense revenue, generated in the global markets as the revenue share for our partner increases according to our collaboration agreement with Ascensia. Senseonics recognizes revenue based on our revenue share, when shipments are delivered to Ascensia initiating the multistep distribution to patients via Ascensia and their distributors. Gross profit in Q2, 2023 was $0.4 million, a decrease of $0.4 million from a gross profit of $0.8 million in the prior year period. The reduction in gross margin was primarily driven by an increase in the revenue share percentage due to Ascensia and gross margins were in line with expectations for the full year. Research and development expenses in Q2, 2023 were $12.8 million, an increase of $3.5 million compared to $9.3 million in the prior year period. The increase was primarily due to investments in our product pipeline for development and clinical trials of next-generation technologies. Second quarter 2023 selling, general and administrative expenses were $7.5 million, a decrease of $1.1 million compared to $8.6 million in the prior year period. The decrease was the result of reduced personnel costs and other general and administrative costs. For the three months ended June 30, 2023, operating loss was $19.9 million compared to $17 million in the second quarter of 2022 due to the increased investments in research and development. For the three months ended June 30, 2023, total…

Thank you, Rick. We are pleased with the progress made in the second quarter and expect the continued execution of our initiatives to further advance the company and drive greater patient utilization. We continue to leverage superior clinical data, a strong product pipeline and active commercialization efforts driven by Ascensia to expand our footprint within the diabetes market. We believe we are well positioned to grow our franchise to create shareholder value and look forward to updating you on our progress in the future. Thank you for your time today. Also joining us for questions is Mukul Jain, our Chief Operating Officer. Operator, let's open up the call for questions.

[Operator Instructions] Our first question comes from Matthew Blackman with Stifel. Please go ahead.

Hi. This is Colin on for Matt. I wanted to start on the U.S. number for the quarter, which was down sequentially. Just curious, was there any outsized Ascensia destocking domestically like relative to what you were expecting? Or are there other dynamics that didn't play out as you anticipated? And any metrics that you could share that tell a different story, like training or any other leading indicators you follow, that would be helpful, too. Thank you.

No. Really, the quarterly - as we described earlier in the year, with the inventory dynamics, we did anticipate that Ascensia would be optimizing their stocking levels in the first couple of quarters. That certainly has occurred, and this is all part of that transition. The plan, as we've guided to, is a significant ramp in the second half of the year, and we feel well placed to be in that transition.

And what gives you confidence in the full year guidance reiteration? Has anything changed with regard to the geographic mix of the business that you expect? Is it really that you're expecting that U.S. ramp to happen? Predominantly domestically rather than the OUS sales mix you saw this quarter?

Yes. It is predominantly the U.S. growth. Key drivers are, of course, the additional sales reps that Ascensia has put in place that began in the second quarter of this year. Additionally, of course, we did have the win with United, which is just beginning here in this third quarter. And the planned growth and effectiveness of those sales reps as well as the consumer advertising which we do anticipate will continue to grant here in the second half of the year.

Great. Thank you very much.

Our next question comes from Marie Thibault with BTIG. Please go ahead.

Hi, guys. You've got Sam on for Marie. Thanks for taking the questions this afternoon. Maybe I can start on the submission for the iCGM designation. Congrats on getting that through the door. Any way to quantify how large of an impact that could be to new patient starts once you get the potential approval? And is it fair to say you'll be working with the two large open pump players?

At this point, we're not going to comment on the partnerships. Obviously, we recognize that the integration with the insert delivery devices is important. But quite frankly, it's not just pumps that are important to us. Of course, there are so many more people that inject with Penn, making that [indiscernible] is a significant issue for us as well. So we do expect that after the approval. So 2024 impact at iCGM not only for the access of those patients, but also just quite frankly, to give the doctors the comfort that there is future in the integration the ICGM designation is certainly important. So given the timing, there won't be any contribution for '23, but we certainly see that in '24.

Okay. Very good. We'll stay tuned for more. And then maybe I can use my follow-up here on the sales force expansion. Tim, I think I call in your prepared remarks that they're also going to be targeting outside endos into primary care and other settings as well. I guess, is the messaging any different between the two channels? Is one resonating more with the other? And yes, any more color you can give on the channel expansion. Thanks.

Yes, we are looking to Ascensia is actually creating some new messaging. As we've indicated in the past, it certainly continues to be the case. The majority of our patients are now coming in as type 2 which are treated in different environments and do have different needs and expectations. So we are updating the messaging or Ascensia is updating the messaging, and they'll be rolling that out over the next couple of quarters. But that really has been the key driver that's gone on really for the last couple of years. As you've noted, about two-thirds of our patients are now type 2 patients that are coming from different prescribers and most of them - many of them are coming to us from the DTC efforts that they have in place.

Okay. Very good. Thanks for taking the questions.

Our next question comes from Jayson Bedford with Raymond James. Please go ahead.

Hi. Good afternoon. I have a few questions just kind of maybe all over the place here. But what percent of the new users are taking advantage of the patient assistant program.

Rick can you speak to that? Do we have an update on -

Yes. I mean, so it was in - less than 50% were taking advantage of the patient assistance program in the first half of the year. And then I think with the UnitedHealthcare coverage effective July. We're going to see that number decrease going forward.

And then just getting back to the U.S. number. Can we assume that there were more new users added in 2Q than new users added in 1Q. Is that a fair assumption?

Yes.

Okay. And then you made an interesting comment on the two-thirds type 2. Any idea of in terms of inserters what percent are endos versus non-endos.

Our inserters population is now just over 700. The majority are still endocrinology, but outside of endocrinology is growing quite fast. And that, of course, includes the Nurse Practitioner Group.

Okay. And then, Tim, in terms of the 365-day data, are you going to press release that? Or what's in terms of disclosure, how will you communicate that to investors?

Jayson, it's probably not best to press release the results from that given that it is an FDA submission. So I think what I would expect is if we make the submission, which I do fully expect that we would do it based on comfort and performance of the data, it would be acceptable for approval. But it's generally not a good idea to press release the data before its peer reviewed and before the agencies had a chance to take a look at it.

Okay. Fair enough. And then maybe, Tim, last one for you. Bigger picture. Love to get your view on GLP-1s and the impact they may have on your business or the CGM category.

Yes. So obviously, it's great to see advances diabetes is a significant disease state. We have, of course, seen no impact to date on the utilization of the GLP-1s. And then honestly, just given the size of especially for the position that Senseonics has at this point. We don't see it impacting our market opportunity at all. Long term, could that be the case for sure, but not over a multiyear horizon at all, especially given the market share that Senseonics is growing from.

Okay. Thank you.

This concludes our question-and-answer session and our conference is also now concluded. Thank you for attending today's presentation. You may now disconnect.