Good day, and welcome to the Senseonics First Quarter 2023 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 today’s event is being recorded. I would now like to turn the conference over to your host today, Philip Taylor. Mr. Taylor, please go ahead.

Thank you. This is Philip 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 those 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, in our 10-Q for the quarter ended March 31, 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, Philip. And thank you all for joining us this afternoon. Today we'll open up with our first quarter performance comment on a Senseonics key commercial priorities for driving patient adoption of ever since and discuss the key milestones for advancing the Eversense technology pipeline, all to enhance shareholder value. Then our Chief Financial Officer, Rick Sullivan will discuss the first quarter financials in detail and we'll open up the call for questions In the first quarter, Senseonics generated total revenue of $4.1 million representing 66% growth compared to the prior year period, including $2.1 million of revenue from the U.S. and $2 million from outside the U.S. As a reminder, net revenue to Senseonics in 2023 will represent approximately 70% to 75% of total Eversense revenue generated in the global markets, as the revenue share for our partner increases according to our collaboration agreement with Senseonics. Recently, Ascensia diabetes care and the parent company PHC Holdings made incremental financial and strategic investments in Senseonics, further demonstrate their commitment to the partnership and that resulted in a stronger Eversense commercial infrastructure and a stronger Senseonics balance sheet. During the first quarter Ascensia’s investments in the commercialization of Eversense increased, focusing on U.S. patient and healthcare provider awareness, as well as commercial access to drive patient adoption. Specifically, Ascensia’s targeting driving interest and recommendations for Eversense, by utilizing direct to consumer marketing and by expanding the dedicated U.S. CGM Salesforce. Additionally, Senseonics, and Ascensia continue to take steps to improve access to the progress of commercial programs such as the collaboration with the Nurse Practitioner Group, the consignment program and patient assistance programs. To increase awareness of Eversense among people with diabetes, ADC is primarily utilizing direct to consumer marketing. In the last year, there been over one million unique…

Thank you, Tim. And good afternoon, everyone. We appreciate the opportunity today to update you on our business. In the first quarter of 2023 net revenue was $4.1 million, compared to $2.5 million in the prior year period. U.S. revenue for the third quarter was $2.1 million and revenue outside the U.S. was $2 million. As a reminder Senseonics recognizes revenue based on our revenue share. When shipments are delivered to Ascensia, initiating the multi-step distribution to patients via Ascensia and their distributors. Gross profit in Q1 2023 was $0.4 million, a decrease of $0.1 million from a gross profit of $0.5 million in the prior year period. Gross margins were in line with expectations for the full year. Research and development expenses in Q1 2023 were $12.4 million, an increase of $4.6 million compared to $7.8 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. First quarter 2023 selling general and administrative expenses were $7.7 million, a decrease of $0.2 million compared to $7.9 million in the prior year period. The decrease was a result of reduced personnel costs and other general and administrative costs. For the three months ended March 31 2023 operating loss was $19.7 million, compared to $15.2 million in the first quarter of 2022, due to the increased investments in research and development. The decrease in the company's share price at the end of the first quarter as compared to the company's share price at the end of Q1 2022 and the exchange of the PHC notes lead to non-cash gains in Q1. As a result, total other income decreased by $80.8 million compared to the prior year period, primarily related to non-cash charges resulting from the accounting…

Thank you Rick. In the first quarter of 2023, we are pleased with the initiatives that the team at our global commercial partner Ascensia and our team have undertaken to expand our commercial reach and awareness, including facilitating increased access to Eversense, and further develop our product pipeline. Team ADC is committed to driving awareness of our Eversense E3 sensor to increase DTC investment, and expanding its U.S. commercial organization by onboarding several additional sales reps. Our collaboration with the Nurse Practitioners group is stretched across more U.S. territories supporting our hub and spoke model and facilitating patient and HCB convenience through our at home or in office insertions. Looking ahead, we are very excited about the progress with our ongoing clinical trial for the 365-day system and our Gemini product advances as well as the Freedom product development. With each program, its intended to transform the diabetes market. While reaching for these goals, we continue to work to improve our manufacturing margins, and operational execution. 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. Thanks for your time today. Also joining us for question is Mukul Jain, our Chief Operating Officer. Operator, let's open up the call for questions.

[Operator Instructions] And the first question comes from Marie Thibault with BTIG.

Hey, good afternoon, everyone. This is Sam Eiber on for Marie. Thanks for taking the questions here. Maybe I can start on the added salesforce from Ascensia. Just want to try to understand the pace of new ads throughout the year. Is that something where we could see maybe a bolus to start? Or is it going to be more evenly weighted throughout this year?

I think it'll progress fairly evenly weighted, pretty much over some of its already actually begun and into the second quarter, I would anticipate that the majority of that should be finished through the second quarter. But our experience has typically been it's a couple of quarters of learning training coming up to speed before they're really highly contributory. So we expect to happen pretty quick, but there is some typical ramp up time.

Right. Okay. That makes sense. And then, you know, it's been a couple of quarters now since E3 has been commercial here in the U.S. I guess, any insights in terms of how those first groups of patients, what those repeat rates are looking like?

Yes, we've continued to see the 70% to 75% transition from first to second sensor and as you go beyond just incrementally gets better with each sensor transition. So I don't think there's been a material change in that, really since the original 90-day product.

Got it. Okay, so it sounds like nice, sticky, doctrinaire. Thanks for taking the questions.

Great. Thank you, Sam.

[Operator Instructions] And the next question comes from Jason, -- comes from Mathew Blackman with Stifel.

Hey guys, this is Colin on for Matt. I believe E3 has been reimbursed differently than competitors transcutaneous sensors. So I'm curious what the pathway to reimbursement looks like to participate in the basal only opportunity first through that this first Medicare tranche of patients and then later through commercial payers in the U.S?

Yes, so Medicare and through the physician fee schedule has established payment for Eversense, as what we call the global payment model. So that's the combined purchasing of the product as well as remunerating, the medical professional for actually doing the insertion and removal itself. And in consideration of what's encouraged, Medicare and the Max have established the rate for that. You know, we are encouraged and I think that's an appropriate investment for the product and the procedure. On the commercial pay, we continue to see reimbursement that's been pretty consistent with the general market for CGM at about $4,000 per year for the patients on the commercial pay side.

And with the physician fee schedule being implemented this January. I'm curious about the Medicare patient mix in the first quarter. And if that's changed significantly since the end of last year. Thank you.

I’ll certainly see it increase. We ended last year at about 52% and we do see the index greater towards type II as we evolve. I don't have an update through the quarter as of yet. But my expectation is it would be a couple of points higher than that just based on the blended growth that we're seeing.

Great. Thank you.

And the next question comes from Jason Bedford with Raymond James.

This is [indiscernible] on for Jason. And I just had a question about the ICGM data being submitted to the FDA, previously we have it that you said end of 2Q that gets submitted this -- that will be submitted this upcoming quarter?

Mukul, you want to take, where we are?

Yes, I can take that. This is Mukul. Yes, we are very much on track to finish up the ICGM, but patient data has been completed, we are cleaning up the data, that clinical team is cleaning up data and we expect it to be in front of FDA in the coming months. Then the review process should take us to the end of the year where we expect the approval.

Okay, wonderful. Thank you. And I just had one follow-up question. From your Investor day 4Q, you said that around 70% of your users are coming from other CGM platforms. Does that still hold true?

It does. Yes, that's consistent.

Okay, thank you very much.

[Operator Instructions] Okay, and as there are no more questions at the present time, this does conclude both the Q&A session as well as the call. Again, thank you for attending today's presentation and you may now disconnect your lines.