STRATEGIST. MedTech START-UPS TO WATCH. ORTHOPEDICS/SPORTS MEDICINE Orthobiologics at a Crossroads. Wendy Diller. PERSPECTIVE Is Medtech Too White?

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1 SEPTEMBER 14, 2018 Vol. 5, No. 12 MedTech STRATEGIST ORTHOPEDICS/SPORTS MEDICINE Orthobiologics at a Crossroads Wendy Diller DIABETES DEVICES CGM on the Upswing: A Three-Month Implantable Enters the Fray Mary Thompson PERSPECTIVE Is Medtech Too White? Kwame Ulmer START-UPS TO WATCH EXECUTIVE INTERVIEW Senseonics Expands the CGM Toolbox with a 90-Day Implantable: CEO Tim Goodnow Charts the Path Forward Mary Thompson Otolaryngology Neuromod Devices: Targeting Tinnitus Discreetly and Effectively Colin Miller Structural Heart Disease Transverse Medical: Total Protection for the Brain During TAVR Mary Stuart

2 28 EXECUTIVE INTERVIEW Senseonics Expands the CGM Toolbox with a 90-Day Implantable: CEO Tim Goodnow Charts the Path Forward Senseonics Tim Goodnow discusses the US launch of Eversense, a first-of-itskind 90-day implantable continuous glucose monitoring system, as well as the company s well-stocked product pipeline, and the challenges it faces in the rapidly expanding and fiercely competitive US CGM space. by MARY THOMPSON As the newest competitor in the US continuous glucose monitoring (CGM) market, with its recently launched 90- day Eversense implantable CGM sensor system, Senseonics Holdings Inc. is entering the CGM space at a time of unprecedented market growth and rapidly expanding patient and physician awareness. That advantage is not lost on CEO Tim Goodnow, PhD, who spoke recently with MedTech Strategist about the status of the US Eversense launch and the company s strategy going forward. As he notes in the following Q&A, Senseonics took steps early on to make sure it could hit the ground running as soon as the FDA PMA approval was issued in June Although the competition is likely to be fierce, Goodnow believes there s plenty of growth runway to go around. There s great recognition that CGM is working, he says. The market is growing at something like a 35% CAGR. It s one of the hottest areas in medtech. (See also, CGM on the Upswing: A Three-Month Implantable Enters the Fray, this issue.) MedTech Strategist: Senseonics has made pretty remarkable progress over the past couple of years, launching the 90-day Eversense in Europe in 2016, transitioning in Europe to the 180-day device, and now, in 2018, achieving FDA approval and US launch of the 90-day device (pictured in Figure 1). In addition to that, the company has an impressive pipeline of future products for both type 1 and type 2 diabetes and you ve announced two separate partnerships in the artificial pancreas (AP) arena. Certainly the diabetes device market is moving a lot faster than it used to with the influx of high-tech, digital devices, but even against that backdrop, the company s list of accomplishments stands out. What s your take on the state of innovation in the diabetes arena? Tim Goodnow: We re clearly seeing an acceleration in the space. And as it happens, you stand on the shoulders of those that go before you, and as they advance, you try to climb higher. That s the beauty of a competitive environment, and that stimulation certainly has occurred. Before I came to Senseonics, I was at Abbott [Goodnow headed up diabetes technology development for TheraSense, retaining the same position after Abbott purchased TheraSense in 2004], and frankly, I loved to see what Abbott did with Libre because that was my product while I was there; that team s done a fantastic job. Before that, it was the Navigator product, and DexCom did everything with their CGM system that MEDTECH STRATEGIST 2018 Innovation In Medtech, LLC. All rights reserved.

3 EXECUTIVE INTERVIEW 29 I wanted to do with Navigator. So, it s hard for me not to look at the players in the space and feel a little bit of pride for all of us because we have all done some pretty great work for people with diabetes. And, ultimately, that s what this is all about. Right now, glucose monitoring is undergoing a transition from point-in-time monitoring with a blood glucose meter to highly accurate temporal CGM technologies that can track glucose day and night. Physicians and patients now understand the benefits of temporal monitoring, and now we re creating various form factors to appeal to a variety of people. That s what we ve been able to do with the Eversense implantable CGM, and there is a portion of the population that is going to see benefit in that. We re glad to finally be here. I wouldn t say it feels like it has gone fast, but I appreciate the perspective from the outside. You were able to move fairly rapidly after receiving PMA approval on June 21 just a few weeks later, at the end of July, the first US commercial patients were implanted with the device. So you must have had a lot of the launch infrastructure already in place. Can you update us on the status of the US launch and your launch goals going forward? Right now [the third week of August] we re at just about week eight of our US launch. In that eight weeks we ve been very much focused on initiating the commercial execution. But that plan was actually put in place well before we even had the FDA panel meeting at the end of March. At that point, we knew the clinical data looked very reasonable, both from a safety and efficacy perspective. So the expectation was that the panel would be positive, although that s never a given, and in fact, the panel meeting went extremely well, and we did end up with a unanimous vote in favor of safety, efficacy, and risk/benefit. That not only made us feel good, but what s more important, it enabled FDA to recognize that there was professional support for an implantable product like this. The big question for FDA, of course, was the insertion procedure, which had been much more commonplace, if you will, with a transcutaneous CGM sensor creating a small opening for a 7, 10, or 14 day sensor, versus a longer term Figure 1 fully implantable device like Eversense. So the positive panel outcome kind of emboldened FDA, and they did a good job of getting the approval decision wrapped up in about the three-month time period between the panel meeting and final approval. Physicians and patients now understand the benefits of temporal monitoring, and now we re creating various form factors to appeal to a variety of people. Prior to that, we had raised some money in a convertible debt facility, which was our bet that we were going to have a positive panel and get approval. That allowed us to go ahead and do some of the commercial infrastructure investment beforehand, so we were able to really hit the ground running when the final approval was issued. At the time of the ADA [American Diabetes Association] meeting in June, we already had 15 sales reps in place, and they had all gone through training on Eversense Implantable CGM System Implantable Sensor Wearable Smart Transmitter Source: Senseonics SEPTEMBER 14, 2018

4 30 EXECUTIVE INTERVIEW the product. Our plan is to double that number by the end of this year to 30 reps. Today we re at 18, so we re making good progress, and my expectation is that we ll have 30 reps in place by the end of the year. Where are you focusing your initial US roll-out efforts? There are between 2200 and 2500 physicians who are very high prescribers of rapid-acting insulin and CGM in the United States. About 2200 of them, by the way, are endocrinologists, and the balance is a fair number of internal medicine folks and the like that are heavy prescribers as well. Obviously, they treat a lot of diabetes. That s the total professional population, and we re focusing our team initially on the top 300 in that group. Those are the biggest prescribers of rapid-acting insulin. As you can imagine, there s a lot of overlap between rapid-acting insulin and CGM. If you re a big rapid-acting insulin prescriber, that means you re doing a lot of intensive diabetes management. We believe it is a good corollary and the right initial focus for us. We have some very experienced people that we ve brought in that know all of these folks as well. A really good sales rep will cover 20 to 25 accounts, so that puts us right on target with who we should be reaching out to. So that was the day-one focus, and we continue to be on that track. Our plan is to make sure that we ve got good access, good introduction, good training, and good convincing where we can of those top 300 between now and the end of the year. In parallel to that, we re also engaging with payors. Payment is pretty good for CGM in the US, so we don t have a whole lot of work to do to convince the payors about the value of CGM, but we still have to get our contracts and our payments agreed to. We d like to get up to 200 million covered lives here over the next couple of years. The majority of those are commercial pay, but that also includes Medicare and Medicaid. We estimate there are about 100 different payors we need to call on to make that happen some big and some smaller, regional payors. We ve got a commercial sales operational team that I spoke of that started out at 15 and is going to grow to 30 this year, and we ve got the infrastructure in place to support that. We ve got a payor team that s calling on the insurance companies to get partnerships established. And then in addition to that we have a 24/7 call center we ve got 10 or 12 folks that are dedicated just to answering people s questions on our 800 number and of course we ve got web presence and the like. So those are the three legs of the stool for commercial infrastructure. We would expect that if you re going to get 2500 docs and each rep can cover 20 to 25, you re looking at 100 to 120 reps at full expansion. But good coverage progress is what defines where we put the new reps you get a contract in a region and you ll tend to target your folks there. From this we ll grow and add on as those agreements come in. Have you ramped-up your manufacturing capacity do you think you ll be able to meet US demand for Eversense going forward? I have to ask because, as you know, competitors have had issues with that Medtronic had a bottleneck with its CGM sensor manufacturing capacity during US launch of the 670G hybrid artificial pancreas system last year. I continue to knock on wood that we haven t had a single issue, and our plan is to execute so that we don t. The only conservatism you hear in my voice is, like you, I m certainly aware of it. I ve had launch issues in the past. I ve been in medical devices for 30 years, so I unfortunately know of what you speak. But we ve tried to be very careful here. We don t actually manufacture ourselves, we use a number of high-quality partners. We have an electronics assembly that goes on the inside of the sensor as the first process. We put the chemistry that recognizes the glucose on the outside as the second major step, and then we terminally sterilize it as the third key step. For each one of those steps, we have two parallel but independent suppliers that have expertise in that area. We have a US-based and a Europeanbased electronics assembly; we have chemistry deposition capabilities both in the UK and here in the US; and we have sterilization capabilities in Europe and the US. Therefore, we ve been working on transitioning and bringing up parallel, independent suppliers, anticipating that growth. We have been on the market in Europe, manufacturing for two years. And in those two years, as we ve had the PMA under review, we ve been anticipating the scale on it. There s certainly more work to do, but it s an area that is well planned and hopefully well executed. That s why we were able to have product shipped and installed in patients just six weeks after FDA approval. From that perspective, I guess the fact that you had a longer pathway to FDA approval than, say, DexCom did with their latest CGM, the G6, actually worked in your favor by giving you a bit more preparation time. There you go, the upside. The fact that the FDA asked for a panel and added at least six months to our review has a silver lining somewhere. MEDTECH STRATEGIST 2018 Innovation In Medtech, LLC. All rights reserved.

5 EXECUTIVE INTERVIEW 31 And then you also recently closed on an approximately $149 million equity offering to support the launch. One analyst commented that the offering takes all financing risk off the table until Do you agree with that? Yes. We do anticipate that we ve got the funds to take us through that time, which is also encouraging because, we haven t guided to this, but if you look at consensus, that s also about our break-even time period. How many US physicians have you trained to date to do the insertion procedure? I assume it s a fairly straightforward process. It s not a difficult procedure to do, right? It s a simple process. It is a doctor s office procedure done under lidocaine, so that s probably the most complex part of it. You need to set up a sterile field, but the insertion technique, with our insertion tool, is very straightforward. We ve implanted Eversense in something like 5,000 humans and the average insertion time in our total population is about two and a half minutes. It s been shown now to be quite simple. Removing it takes about four and a half minutes. It s a little bit longer because going in, of course, you can go in anywhere, but when you take it out, you have to go right to that center to take it out. But even so, our four-and-a-half minute procedure is pretty quick. Now, with field prep and all of that, it s still about a 25-minute office visit, but the procedure portion of it is pretty straightforward. What we opted to do is really try to address that insertion procedure and removal procedure head-on. Those who are aware don t really need to be trained on what CGM is, but they do want to be trained on what the differences are with an implantable product. And obviously the big difference is how you do the professional insertion. We ve been able to get in front of about 1,500 clinicians so far in the last eight weeks. They have an opportunity to sense it and feel it and actually do insertions and removals in a simulated skin. We ve been doing that in our mobile clinic [a converted 18-wheeler], which not only has a training facility inside, but it has a real life, working exam room as well. So physicians can really get a feel for how this would fit into their particular world. We ve got our mobile clinic at all the big meetings, for example we recently attended the big nurse educator meeting [the American Association of Diabetes Educators, held in Baltimore, MD, in mid-august] and of course the ADA and other big diabetes conferences, and we re also on the road at all of the major clinics. We d love to be able to get to as many of those 300 top prescribers as we possibly can over the next six months. And what we re doing there is training and educating, introducing the concept and product to the entire treating office. Payment is pretty good for CGM in the US, so we don t have a whole lot of work to do to convince the payors about the value of CGM, but we still have to get our contracts and our payments agreed to. We d like to get up to 200 million covered lives here over the next couple of years. You mentioned having a presence at the nurse s meeting. Can the insertion procedure be done by a nurse or does it have to be done by the physician? The first FDA approval that we ve gotten is only for insertions done by the physician. However, we recognize other providers such as nurse practitioners and physician assistants not only are very able but willing to perform the procedure, and we have submitted for a labeling modification here in the US that will allow nurse professionals to do it here. Our plan is to have it, but we don t have it now. What about payor coverage in the US? You have one large payor on board now that you announced at the time of the launch in August Horizon Blue Cross/Blue Shield of New Jersey, which represents about four million covered lives in that region of the country. What are you anticipating by the end of the year and beyond? We do anticipate we ll have some more wins before the end of the year. I don t know which ones they are, but we re certainly working on it; we ll be announcing those as they come. So for right now, if a patient doesn t have insurance coverage and they want this device, do they just have to pay out of pocket? At this point we ve been parallel processing. We do go ahead and file with the insurance company with the understanding that there s a potential that patients will have to SEPTEMBER 14, 2018

6 32 EXECUTIVE INTERVIEW pay out of pocket. But most of the very early adopters have been so interested they ve said, Hey, I m going to go ahead and do this, and if I need to pay, I need to pay. I just want the product. Based on our experience in Europe, about 50% of Eversense patients switch from Libre and another 30% are actually using a transcutaneous, real-time CGM but want a more convenient option. And all of the cost of Eversense is paid up-front, correct? There is no option for a monthly payment schedule or anything like that? You ve said the cost is similar, on a per-day basis, to a traditional CGM, but have you had any pushback from insurers about what I assume is a higher up-front cost with the 90-day system? Well, I ll challenge that assumption. If you go on a Dex- Com CGM, you re going to get three months worth of CGM sensors, you re going to get a receiver, and you re going to get a couple of transmitters. If you go on an Eversense, you re going to get one three-month sensor and one transmitter. We have no receiver. So the up-front cost is actually about the same, or maybe even a bit lower with Eversense because we don t require a receiver. You mentioned your goal is to get to 200 million covered US lives over the next few years. Of those, what is the total addressable market for Eversense the patients that are most likely to benefit from a CGM device? There are approximately 24 million people diagnosed with diabetes in the US and of those, seven million use insulin, either exclusively or combined with an oral drug. Typically, as people move to more aggressive insulin therapy, they should be on a temporal CGM. Type 2s that are managing their disease with diet and exercise don t need a CGM. Their concern is predominately hyperglycemia. The first approach for those patients is lifestyle diet and exercise and then they ll move to metformin, the first oral agent, and as their disease progresses, they ll move on to the drug cocktails that make sense. When they come off from that and go on insulin, that s about the time, in my view, that they should also be moving to real-time CGM for acute daily management, although they may also benefit from a staging type CGM to obtain a glycemic profile earlier in their disease progression. So there are roughly seven million people in the US who could benefit from real-time CGM, and we re working over the next two years to build to that. We need two years to negotiate all of the payor contracts since many of the plans have a timing component there is only one time per year when they look at new technology and we have to wait until the next review period. That s why we ve anticipated a ramp over the next two years, which is very typical in this space. Of those roughly seven million people that make up the total addressable US market, what is the percentage that are currently using CGM? I assume that is growing fairly rapidly since CGM seems to be heading toward standard of care for insulin using intensively managed patients. If you look at data from the T1D exchange, which is a very good, large database, the number is somewhere around 20% penetration for CGM. I ve heard real-world estimates of 15% to 20%, but, we ve seen huge growth since Abbott s Libre came out and DexCom also has done extremely well. So I m going to say that about 20% of the population in the real world is using CGM today. But it s growing pretty fast it s going up from there. How does that compare with what s going on in Europe? In Europe, CGM penetration follows societal payment, and coverage in Europe is about as disparate as you can get. You ve got everything from an environment like Germany, where you ve got good coverage, to a country like the UK that won t pay for a full CGM and where there is no utilization. So it s very regional. Sweden is the most progressive diabetes treatment country in the world, and a couple of years ago their CGM utilization among type 1s was already more than 50%. And that s because Sweden has very good recognition and acceptance of the technology, and first and foremost, good payment by the regional payors. As I understand it, Eversense can be covered in the US via either the durable medical equipment (DME) or CPT pathway. Is one preferred over the other by US physicians? It depends, as some are already familiar with DME and prefer to use that, while others don t like the DME channel and prefer to use the CPT code route. We have a Category 3 CPT MEDTECH STRATEGIST 2018 Innovation In Medtech, LLC. All rights reserved.

7 EXECUTIVE INTERVIEW 33 code granted for insertion, and another one for removal, and then the third one, which we like the most, of course, is the removal and insertion in the same visit. Based on the data that we have so far in Europe, where we ve been on the market for two years, about 50% of our patients are actually coming from Libre. If they do use the DME route for reimbursement, is the insertion procedure cost included in that? Or is that part only covered via CPT code? What we ve seen with Blue Cross/Blue Shield in New Jersey is they re covering the sensor though the DME, but then they re covering the procedure with the procedure code. So it s a little bit of a hybrid. In order to get Medicare coverage, you re going to need a dosing claim that would allow a user to dose insulin based directly on glucose readings from the device, without the need for a confirmatory finger stick. DexCom was the first CGM supplier to get a dosing claim from FDA back in 2016, and then in 2017, Abbott was granted a dosing claim when Libre was approved. Are you planning to file with FDA for an Eversense dosing claim in the near future? And if so, when do you anticipate you might have it? We do plan to submit a supplement soon for a dosing claim. It takes about six months after you submit the supplement for the regulatory process approval. But once the dosing claim is approved, I expect Medicare coverage will be granted pretty quickly. Medicare coverage didn t come too much later for DexCom [after they got a dosing claim] and it came very quickly for Libre. So my expectation is we ll be able to get it pretty quickly, too, once we get the dosing claim. Really? Half of your early adopters are switching from a Libre to Eversense? Yes. That s the biggest funnel for us. And why is that? Well, the key reason is you ve taken strip and meter users who heard about and got excited about and really liked the Libre, its simplicity and the retrospective eight hours of data. Libre was a big improvement from their strip and meter. But over time they realize that Libre is missing the prospective alarms and the overnight protection that real-time CGM provides. So we ve actually found it easier to switch a Libre user to Eversense than to switch a strip and meter user. Because they re more motivated to use CGM in the first place? Because they ve gotten used to wearing a sensor. And some of the frustrations they ve had with the open wound and this aggressive adhesive just go away with Eversense. So about 50% of our patients switch from Libre and another 30% are actually using a transcutaneous, real-time CGM but want a more convenient option. Once Eversense is implanted, they just forget about it. Our patients never, ever touch the sensor, it s all done by the doctor. They deal with their app and they put the transmitter on and that s it. So it s another level of simplicity. And then the last 20% are folks that should have been on CGM but for one reason or another didn t want to use any of the So Medicare coverage could be in place by mid- 2019? Yes, that s our current plan. From what you ve been experiencing in Europe and what you ve seen here in the US over the past eight weeks, how would you characterize the patients who are early adopters of Eversense? Are they current CGM users who may want more convenience or have had a negative experience with traditional CGMs (see Figure 2), or are they new to CGM? What are their main reasons for wanting an implantable option? Figure 2 CGM s Poor Compliance 27% of CGM Users Discontinue Use Within One Year Reason % CGM not working properly/accurate enough 71 Problem with adhesion/insertion 61 Too expensive/not covered by insurance 58 Uncomfortable to wear 41 Using pump/don t want two sites on body 33 CGM too big 28 N=262 Source: Senseonics; data from the Type 1 Diabetes (T1D) Exchange Registry, 2016 SEPTEMBER 14, 2018

8 34 EXECUTIVE INTERVIEW existing transcutaneous CGMs. But now that we ve got the implantable device, they re willing to give us a try. So that s where our patients are coming from in Europe. Are you seeing any commonality among these groups is there any one characteristic or advantage of Eversense that appeals across the board? If there s any thread of commonality in some of the early patients, it s those that are looking for that ease of convenience, put it in and forget about it. They get their invisibility back. They just want to take one more thing off their plate. That s one group that we re seeing. Another group is the very, very active. If you bike and sweat a lot, if you re a big swimmer, our transmitter is waterproof, so you literally can swim with it. There s no issue with an open wound to deal with; you don t have to over-tape to get it to stay in place. A lot of people really like that. So I would say if there s a common theme, it s in one of those two areas for our earliest adopters. What about usage in children and adolescents? It seems like this may be a good option for younger age groups because the sensor is all internal. What age range is approved in Europe and the US now? I know some promising data came out at the ADA this year on adolescents using the 180-day device do you hope to have approval for both adults and children when the Eversense XL (180-day) device reaches the US market? The pediatric indication is of course very important for us. At this point, with our initial approval we have the indication in the adult (18 years or older) population. But you are right, our early clinical work from Canada showed very positive results with very high accuracy and safety and well tolerated by the kids, so we re very encouraged by this and as you mentioned, we published this data a few weeks ago at the ADA. Our plan is to do a dedicated trial on pediatrics and we hope to get that started in Approval would, of course, come under a PMA Supplement and those generally take about six months to review and approve. We ll have to work with the FDA to determine the required study to get our system approved for use by the younger set. Most of your usage data is coming from your experience in Europe; do you expect to see similar patterns in the US? I think people with diabetes are people with diabetes. There s more of a recognition in the clinical prescribing world that Libre is a great product for some, but a true CGM is probably a better alternative for type 1s, especially people with any night time hypoglycemia. And then you ve got the other dynamic that the US reimbursement market is actually pretty good for CGM. What about the prescribing physicians? To which patients are they most likely to recommend an implantable, based on what you ve seen thus far? If a patient is humming along just fine, if they re one of the 20% in the US that is already on a CGM, there s little impetus to change unless that patient complains to their doctor, Jeez, this tape is really irritating me, I m frustrated with the redness, or my sensors aren t lasting, they keep falling off. Then the doctor can say, Well, here s another one that you can try. Or, if they re among the 80% that aren t currently using a CGM, this is an opportunity to revisit that conversation and say did you hear there s a new technology? I d like to tell you about it. It would be really valuable to you if you got on a CGM. And I know you didn t want to do it in the past, but let me tell you about this one. It sounds like you are competing with both DexCom and Abbott here. But the interesting dynamic with Abbott s Libre is, as you ve said, some of these Libre users should probably be on a full-function CGM and over time these people may come to recognize the benefits of an implantable full-function device. (Editor s Note: According to analysts, Abbott is also developing a continuous monitor with alert/ alarm functionality.) I do believe, and I think you d get most doctors to confirm, that if you re a type 1, you should be on a full-function CGM. Because a third of your life eight hours a day you re asleep, and you don t get any protection with Libre unless you wake up and take a reading. So certainly, I think some of that dynamic is going to play out. Just go back and look at the concern among DexCom investors when Libre received FDA approval. DexCom s stock price got hammered for a few days just over the belief that they were going to lose market share and growth. And we ve seen just the opposite. So we re going to continue to do what we can to try and earn our share of the full-feature CGM market. Not that the competition isn t real. We are going to take some share from them; they re of course going to take some from us. But the one attractive thing for all of us is that we re trying to help a lot of people with diabetes. There s great recognition that CGM is working. The market MEDTECH STRATEGIST 2018 Innovation In Medtech, LLC. All rights reserved.

9 EXECUTIVE INTERVIEW 35 is growing at something like a 35% CAGR. It s one of the hottest areas in medtech. Right. And some of that recent growth can be attributed to the success of Abbott s Libre in bringing in new CGM users, right? Is Abbott s success benefitting the entire CGM space? Oh, absolutely. A big company like that coming in and innovating with a different technology that encouraged more people to try CGM. All of that knowledge, exposure, investment they re running television commercials and that gets people asking about CGM when they come to the doctor s office. And when they ask, that s an opportunity to explain the entire CGM landscape to them. coming in the strip and meter segment, in fact, you re seeing players leave the space. And maybe that s good because we ve replaced it, right? The cost of strips and meters has come all the way down, but the functionality, compared to CGM, isn t there. If I gave my product away for free and DexCom gave their product away for free, there would be no more innovation. So you have to find About 20% of the population in the real world is using CGM today. But it s growing pretty fast it s going up from there. From what I understand, one of the reasons Libre has been so successful is that it is less costly than traditional CGMs. In other words, cost is an issue for many patients who choose Abbott s Libre versus, say, DexCom s G6 CGM. Is that going to be a continuing issue for competitors like Senseonics and DexCom that offer more expensive, full-function CGMs? Or do you think that s going to work itself out because the Libre users that should be on a full-function CGM are going to eventually realize they re not getting the functionality they need with Libre it may cost less but it s not meeting their needs? And then, when you take insurance coverage into account, is there really that much of a difference in outof-pocket costs between Libre, DexCom, and Eversense? You bring up some great points. A couple of macro level comments. One, yes, we can always get more people on the product, and for some segment of the population, cost will always be an issue that prevents them from having access to it because they re uninsured or underinsured. So we need to do everything we can to manage the cost as effectively as we can and bring it down so as many people as possible can access the technology. Number two, this is healthcare. Costs are only going to go in one direction, which is up. Against that backdrop, we can t take our costs up. We wouldn t have a product or a business if we tried to take the cost up. So we re going to try to take it down. But number 3, there does have to be some level of interest and stimulation/profit potential in an industry segment or there will be no investment and there will be no innovation. This only happened because there was a financial opportunity that made the business community look at CGM. There is no more innovation the right balance. As I said, the price of Eversense is going to come down over time and I m trying to earn the right by increasing my volume so I can take the price down via an economy of scale and efficiencies. And to the second part of your question, to a CGM user with insurance coverage, there s actually not a lot of difference in terms of cost. They re going to pay their copay for Libre or their copay for DexCom or Eversense. So the economic advantage of the cheaper Libre in a reimbursed world doesn t make its way all the way to the patient, the payor enjoys most of that savings. Let s talk about your pipeline. First of all, you are moving forward with the 180-day Eversense XL and after that you will have the 365-day Eversense. The 180-day device is already on the market in Europe what s the status of that device in the US? We ll be starting our US clinical trial for the 180-day device in November. That s a six-month trial and then six more months for approval, so we re targeting to have that on the US market by Q In Europe, you ve already transitioned to the 180 day. I assume most of the patients that are getting re-implanted in Europe are on that device? Everybody that s getting re-implanted in Europe is on the 180. I think a few weeks ago we were already at 70% of users having transitioned to 180 in Europe. And we ll be transitioning the rest over the next quarter. Eventually we ll sunset the 90 and go to full 180 over there. SEPTEMBER 14, 2018

10 36 EXECUTIVE INTERVIEW What about the 365-day device? When do you anticipate getting that out in Europe and what kind of a timeline do you have for that device in the US? This is an important program for us to be able to double our longest lasting sensor now and make it last a full year. This will be quite a benefit for patients as you can imagine only one sensor needed for a whole year. Our feasibility study was very promising, but it s too soon to tell when we will file for approval. How will finger stick calibration requirements differ between the 90-day, 180-day, and 365-day devices? The first FDA approval for the 90-day device has labeling requiring two finger stick calibrations per day. The supplement we re submitting with the dosing claim is taking that to one calibration per day. We have the 180-day sensor and we ll be bringing that to the US with only one calibration per day. And we re making very good strides with the basic technology for a one-year sensor, and with that device, we re working toward a single finger stick calibration every seven days. Do you think you ll ever get to the point where you can eliminate calibration, as the new factory calibrated wearables from DexCom and Abbott have? Or is it unrealistic to think you can implant a CGM sensor for up to one year and never have to calibrate it? We do recognize that the market is certainly moving to eliminate calibration. We re going to do our best to head in that direction as well. I don t know if we ll be able to have a no-calibration one-year sensor, but what we re aiming to do with the one-year device is have a single finger stick calibration update every seven days. And we think that would be pretty competitive. Recall that I said 50% of my patients in Europe are coming from Libre, so they re choosing to go from no-calibration back to calibration. And I m not trying to minimize the desire to reduce or eliminate calibration. It is very important, but there are other things that are more important for a person with diabetes. I think a once-a-week finger stick is a tradeoff people are easily going to make because, remember, what they re doing every 10 to 14 days with the other products is starting all over again with a new sensor insertion. I ll happily compete on the attributes at that point. You ve got a couple of other very interesting products further back in your pipeline, including a flash implantable device for type 2s, and a new product, Gemini, that s a combination of flash and real-time CGM. Where does Gemini fit in and what s the status of that project? The big limitation I mentioned earlier with flash products like Libre is night time coverage. Libre users like the freedom and flexibility of the swipe, but they don t have the night time protection. With the implantable, you could literally have our product, Gemini, which is the combination of the two. You swipe it with your phone during the day and, because the transmitter can go on and off whenever you want, you could just wear the transmitter at night so you have the full-function alarms during the overnight period and the ease of the swipe during the day. You can actually read and swipe the implanted sensor with your phone on our technology today, but as we noted, we re still finger stick calibrating with the current configuration. To design this version for people with type 2 diabetes we re also working to minimize the calibration. The Gemini product is currently being designed to be based on our next-generation sensor configuration. We ve built our new electro-optical configuration for our sensor, which has an approximate order of magnitude increase in optical capability and has a second, fully redundant sensor such that we can have two independent checks on the glucose level, all in the same form factor as today. It s on this version that we are targeting one finger stick calibration per week and a useful life of one-year in the body. It s also flexible so that it could be swiped with a phone during the day for spot monitoring and read just at night with the transmitter for continuous protection overnight. Do you have a timeline for when that hybrid system might be available? Give us the next two years. We ve been very materially focused, as you can imagine, on the PMA approval and launch of the first-generation device. So that is still to come and we re working on it, just like our artificial pancreas partnerships. Speaking of which, you have two AP partnerships: one you ve had for a while with Roche and you recently announced another AP partnership with Beta Bionics that will integrate the Eversense CGM into Beta Bionics ilet Bionic Pancreas system. What s the status of those MEDTECH STRATEGIST 2018 Innovation In Medtech, LLC. All rights reserved.

11 EXECUTIVE INTERVIEW 37 projects? (Editor s Note: Roche is the exclusive distributor of Eversense in Europe and an investor in Senseonics.) (For a list of AP systems under development, see Technologies to Watch in 2018, Diabetes Devices: The High-Tech Transformation Continues, MedTech Strategist, April 20, 2018.) We actually inserted our first patient last week in our Beta Bionics partnership, so that clinical testing has already started. And I think October is when we will begin clinical trials in our Roche partnership. The project with Roche is exclusively using Eversense. Beta Bionics is doing half the trial with the Dexcom G6 CGM, and half with Eversense. The partnership with Roche also involves TypeZero Technologies Roche is to supply the insulin pump and TypeZero the dosing algorithm. How will DexCom s recently announced acquisition of TypeZero impact that project? (For more information on this deal, see Diabetes Technology, MedTech Strategist s Community Blog, September 11, 2018.) We ll need to see. We re working through the details with the companies to determine how this new development will affect our TypeZero licensing agreement moving forward. As mentioned, the study is slated to begin in the European sites in October. Are you planning to seek icgm designation for Eversense as part of AP systems, and if so, what will that require in terms of development/clinical work and regulatory filings? We view the work that the FDA has done with the icgm designation as very positive for innovation, which will certainly end up in better products for people with diabetes. As a team we re also highly encouraged with the requirements defined by the Agency to meet the new icgm standards. As we showed at our FDA panel meeting in March, the clinical data on Eversense is very strong. We re certainly planning on an icgm submission; we ll focus on our 180-day product submission, dosing, and icgm in the coming quarters. So to sum up, Senseonics seems to have a lot of positive momentum you re gaining traction in Europe, the US launch has gone well thus far, and the pipeline is full of interesting next-generation products. In fact, you recently increased the company s full-year 2018 guidance. Can you provide some color on your thinking behind that guidance change? Is it reflective of US launch confidence or more due to growth trends in Europe? It really is a combination of the two. We did about $6.4 million in revenue last year, and we will approximately triple that in Europe this year. We transitioned to the 180-day Eversense in Europe, so we re a generation ahead in Europe, and there s been continued excitement with that as well. The product s done very well over there and remember, that s our stated revenue. The US is end-user revenue, but in Europe we only report revenue to our distributors. So you need to keep that in mind; if you add them together you don t necessarily get end-users. And then in combination with our European performance, the reception that we got at the ADA in June and over the last eight weeks of our US launch has been very positive, especially in regard to the doctors desire to see the product and ultimately do the insertion. People ask us all the time if endocrinologists, who are not used to doing procedures, are going to be willing to do an insertion procedure. We certainly believe they will, we re seeing a lot of interest, quite frankly. This enables them to do something for their patients that they haven t done before. A lot of times they re just doing examinations and log book review and coaching and counseling. Well, now they have the ability to do a procedure that can be very valuable for their patient and the reception has been very strong. We re anticipating more success, especially among our initially targeted group of 300 physicians, so we took the guidance up a little bit to reflect that. What do you think is driving endocrinologists to be so open to learning and doing this new procedure? Is part of it the additional revenue they can bring in on the procedure side? I don t know if that s a component for every individual clinician or not. We certainly don t spend time in that domain. I think most of their interest so far has been around the fact that Eversense brings some positive attributes to their practice. For one thing, we ve almost eliminated skin reactions to the adhesives that you see with wearable CGMs. And that s a big issue for people, not only those using CGMs, but those using insulin pumps as well. Also, if a transcutaneous CGM moves if it s not properly locked in place you re going to get erroneous results. And there are other issues with a transcutaneous CGM patients want to know, for example, if they have to over-bandage it when they shower, they want to know if they can sit in a hot tub. A lot people have said no to CGM because it adds too much complexity to their life. But with an implanted device, all of that goes away. I think the doctors recognize that this is one more tool they can have to convince people to use CGM. Online print subscriptions, reprints, and web posting and distribution licenses are available. Contact Bridget Kelly-Stoll b.stoll@medtechstrategist.com SEPTEMBER 14, 2018