Senseonics Holdings Inc (SENS) 2020 Q2 法說會逐字稿

Good morning, and welcome to Senseonics Second Quarter 2020 Earnings Conference Call. (Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to Lynn Lewis, Investor Relations. Please go ahead.

Thank you very much, and welcome to the Senseonics Second Quarter 2020 Earnings Call. This is Lynn Lewis 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, 2019, our 10-Q for the quarter ended July -- June 30, 2020 and our 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.

Also on this call, we will be discussing our 2020 outlook. In light of the COVID-19 pandemic, 2020 financial guidance was suspended on March 26, 2020. On this call, we will be providing investors with U.S. GAAP net revenue and gross revenue measures to provide meaningful supplemental information regarding our performance and provide better transparency on the impact of reimbursement in the Eversense Bridge Program. In accordance with U.S. GAAP, Senseonics reports revenue and its financial statements on a net basis, which includes gross to net reductions primarily related to the Eversense Bridge Program. Gross revenue measures do not reflect the gross to net reductions and accordingly, may be considered to be non-GAAP financial measures. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for or superior to the financial information prepared and presented in accordance with U.S. GAAP, and Senseonics' non-GAAP measures may be different from non-GAAP measures used by other companies.

For more information on these non-GAAP financial measures, please see the reconciliation of these non-GAAP financial measures to their nearest comparable GAAP measures in this afternoon's earnings release, which is available on our corporate website at senseonics.com.

Joining me from Senseonics are Tim Goodnow, President and Chief Executive Officer; and Nick Tressler, Chief Financial Officer.

With that, I would like to turn the call over to Tim Goodnow, President and CEO. Tim?

Thank you, Lynn, and thank you all for joining us. Before we begin today, I would like to offer our thoughts to everyone that has been affected by the wide-reaching impacts of this public health crisis, including the economic hardships experienced across our communities. As an organization, the health and safety of our employees and their families are a top priority. We have taken every precaution to ensure a safe work environment and will continue to be diligent for our efforts to limit infection risk across our community.

This afternoon, in addition to our second quarter financial results, we have exciting news to share regarding the future advancement of Senseonics. Our efforts exploring strategic alternatives to increase stakeholder value have culminated in agreements with Ascensia Diabetes Care that were announced earlier today. Together, we have entered into a collaboration and commercialization agreement with Ascensia, concurrent with the financing arrangement with PHC, the parent company of Ascensia, a KKR portfolio company, as well as an additional financing agreement with Masters Special Situations, an affiliate of Masters Capital Management. The focus of our call will be on the details of these agreements and what it means for Senseonics moving forward. We feel this is an ideal result for our shareholders, users, health care providers, payers, the company and our partners towards ensuring patient access to the only long-term CGM on the market.

The partnership with Ascensia is designed to combine the strength and leverage the complementary competencies of each organization through a highly collaborative relationship. The agreement is structured to align incentives for mutual benefits through penetration of the CGM market with our current and future Eversense products. To start, we think it would be helpful to provide some background on our partner to frame why this is such an exciting opportunity.

Ascensia Diabetes Care is a subsidiary of PHC Group, formerly known as Panasonic Healthcare Holdings, which is a KKR portfolio company. PHC Group was formed as a spin-out of Panasonic's health care asset and a transaction with KKR in 2013, resulting in KKR as the majority owner of PHC Group. Since then, PHC Group is focused on creating a portfolio of precision digital diagnostic companies spanning across health care. Over the past 5 years, PHC Group has acquired not only Ascensia Diabetes Care, but also the anatomical pathology business from Thermo Fisher that focuses on precision cancer diagnostics and LSI Medience Corporation, a provider of clinical and nonclinical diagnostic services.

Ascensia is a growing global market leader offering premium connected glucose monitoring systems and testing supplies to over 10 million worldwide people with diabetes in over 125 countries, with operations in over 31 countries, marketing products across North America, the EU, Asia Pacific, Middle East and Latin America. Ascensia has a global growth-focused strategy, offering the glucose monitoring devices with the largest market share in Europe. Their CONTOUR BGM can be used alone with diabetes apps that allow for greater advancement in diabetes care, with insulin pumps, with CGMs and as a component of closed-loop systems, as described, their global focus, combined with products that have been designed to lessen the burden of diabetes management for patients worldwide.

At Senseonics, we, of course, share a similar philosophy, which will help drive synergies between our organization and create an effective long-term partnership. We're excited to be partnering with Ascensia to be bringing Eversense to their expansive base of people actively managing their diabetes.

Regarding our financial agreement with PHC and with the additional financing agreement with Masters, I will touch on the financing components at a high level and let Nick provide additional details later in the call. We have strengthened our balance sheet. First, we have agreed to issue senior secured convertible notes to PHC in the amount of $35 million, with a company option to issue up to $15 million of convertible preferred equity following receipt of FDA approval for the 180-day Eversense product in the U.S. and upon receipt of any required shareholder approval, which might be required by the NYSE American listing rules.

Now to the second financing agreement. This one is with Masters Special Situations. In this agreement, we intend to issue up to $30 million in convertible preferred equity to Masters and affiliates. The funding will take place and up to 2 closings, with the first closing for an initial 10% of the investment expected to occur on or about August 14. MSS has the option to purchase up to an additional $27 million of convertible preferred equity in a subsequent closing that is expected to occur within the next 3 months, subject to the receipt of stockholder approval.

The combined capital of up to $80 million will primarily be used to support manufacturing operations for the ramp-up of the 180-day product in the U.S., if approved, and product development of future-generation products as well as to repay the Highbridge first-lien term loan balance. Given the decreased organizational requirements resulting from ADC providing several significant commercial functions under the collaboration agreement, we expect our operational expenses will be significantly below historical levels, as we described on our last call. We expect that if all the potential capital available under these agreements is accessed, we will significantly extend our cash runway through 2021.

Regarding the second component of the agreement, the collaboration and commercialization agreement is intended to be a close commercial partnership to maximize the value of the Eversense system in the global market. Senseonics will maintain pipeline and product development, regulatory, manufacturing and branding responsibilities, while Ascensia received sales, marketing and distribution rights for current and future products worldwide for approximately 5 years following the 180-day product availability in the U.S., and in certain circumstance, that period may be extended.

From an established position in the diabetes management market, Ascensia has been identified with an opportunity and potential for Eversense as a differentiated CGM technology and is committed through this agreement to partner with us to drive commercial adoption and market penetration. Ascensia will be providing significant commercial investment for Eversense in both U.S. and OUS operations over the agreement horizon.

While the economic terms of the agreement will remain undisclosed, incentives are aligned through the revenue-sharing structure. Early in the term, the weighting will favor Senseonics, while sharing shifts towards Ascensia later in the term. To initiate the partnership, Ascensia will begin conducting pilot sales and marketing activities in the U.S. this quarter, with a significant ramp of those activities expected to begin in Q1 2021, subject to the 180-day product approval. During this period, the 2 companies will work hand-in-hand to share and transfer the Eversense knowledge base to Ascensia's commercial team, providing real-world, hands-on, new patient and provider onboarding experience as we advance the installed base.

We have a pipeline of providers who would like to be trained on the product as well as patients interested in being first-time users. These 2020 efforts are expected to prepare the market for the next-generation 180-day sensor launch in early 2021, if approved. Once the transition phase is completed, Ascensia will take primary responsibility for sales, marketing and market access, in addition to patient and provider support. Ascensia's current plans include providing approximately 30 direct sales staff in 2021, ramping to more than 80 by the end of 2023.

In true partnership form, we have together identified joint work streams headed by leaders from each side to ensure a smooth transition. I'm pleased to report that the teams have started to meet and the level of engagement has been naturally positive and collaborative. Product and clinical teams have been identified and collaboration structures being reviewed. Customer support is also being set up and marketing programs are being advanced. Joint governance committees will be established comprised of members of both organizations to create comprehensive commercial infrastructure plans and budgets and drive close cooperation on this endeavor. Objectives will be set by these groups to determine marketing budgets and revenue goals that both organizations are incentivized to meet.

Customer and patient support will be handled collaboratively as well. Ascensia will handle the frontline interactions with users globally. This will consist of product use, performance, ordering, return and warranty inquiries. We will provide the second line of customer technical support. We will handle and be responsible for warranties, regulatory reporting and liaising with our engineering and manufacturing teams.

Health care provider support will be managed by Ascensia following the hands-on field training and transition period. We know they share the goal of providing the highest level of quality clinician training and clinic support because we both understand this creates positive patient outcomes. Creating long-term partnerships with providers is the goal for both organizations.

Today, we remain focused on market access in the U.S., where we now have approximately 200 million covered lives, including Medicare, Medicare Advantage and commercially insured patients eligible for reimbursement for Eversense. As in other areas, we will assist Ascensia in a transition of these responsibilities in the coming months, including working together to gain additional reimbursement. Armed with the real-world clinical data and the additional value-add of a sensor that lasts up to 180 days, we are confident we will continue our progress in obtaining broad-based coverage.

Outside the U.S., we will not be renewing our distribution agreements with Roche and Rubin Medical when they expire. Until expiration, we expect these agreements will stay in full force and that we and our current partners will work together to effectively serve the needs of patients in those markets.

Upon transition, Ascensia will be focused on the markets of Germany, Italy, Switzerland and Sweden, where Eversense is already commercially available. In summary, Ascensia's responsibilities, beginning with a transition period and extending to the launch of the 180-day product in the U.S., include all aspects of commercialization and frontline patient and provider interaction, from downstream marketing, to sales detailing, onboarding, patient retention and support. Historically, this has been the largest cost and use of resources for our organization. This change to our cost structure will ultimately be beneficial for our progress towards profitability.

From a high level, product and brand development, regulatory approvals and manufacturing are now our core responsibilities. One of the most important parts of this agreement from our perspective is our ability to now focus on product development and the future generation of our game-changing CGM technology. We feel that we can be in better control and drive the value-creation process through this division of responsibilities, with the goal of bringing people with diabetes additional features and extended wear on the backbone of our existing technology.

Regarding our operations in the second quarter, revenue was weak primarily due to the forced halting of the U.S. commercial operations in March after the solar capital debt return and the effects of temporary patient deferments resulting from the pandemic. In the quarter, we generated total net revenue of $260,000 as distributors reduced existing inventory levels. During March and April, insertions were notably reduced as many clinics in the country were shut down or on restricted access. We did see some positive trends in May and June, but we are still seeing insertion volumes below pre-COVID levels.

Given the slowdown in insertion rates, most of our fulfillment partners that are still working through their inventories and shipments into the channel were minimal in the quarter. Through all of this, however, we are happy to continue to see reinsertion rates in the U.S. of over 85% in patients wearing a third and fourth sensor. These patients have been users since early in our launch and this is a strong testament to the positive patient experience Eversense provides. This underscores our belief that there will continue to be a large opportunity to satisfy the needs of people with diabetes and that we are pursuing a very committed patient population who are focused on their diabetes management, especially in these current trying times.

Similarly, with Roche, they did not order product in the quarter and they serve their needs from their existing inventory. They have reported an increase in insertion volumes in June as well compared to earlier in the quarter.

Very important for patient access, we continue to see positive progress on the reimbursement front as well. Notably, CMS, this past week, released its calendar year 2021 Medicare Physician Fee Schedule Proposed Rule. In this, they announced policy changes for Medicare payments. This year, this included the proposed establishment of national payment amounts for our 3 CPT codes as a medical benefit rather than as part of the more cumbersome durable medical equipment channel that includes the other CGMs. These codes describe the insertion, removal and combined removal and insertion of the implanted interstitial glucose sensor. Currently, Eversense is contractor-priced by the regional MACs. Through this proposal, which is set to be effective January 1, Eversense will now receive a national coverage for the 3 CPT codes. This is significant and a highly differentiated opportunity for Eversense.

Additionally, we've also had continued progress in the commercial payer space as well, especially with multiple Blues plans, most recently, including coverage by Highmark, 1 of the top 10 largest health care insurers in the U.S. To place this opportunity in perspective, in 2019 in the U.S., Senseonics grew patients by nearly 4,000 users, with an average of only 30% of covered lives for the period. Eversense now has approaching 80% insurance coverage in the U.S., with over 2,000 prescribing clinicians and roughly 550 authorized insertion specialists. Due to our capital constraints associated with the Solar Capital debt, the company has not yet been able to take advantage of this increase in coverage. Given our current position with the signing of the collaboration agreement and financing agreements, we now expect to be in a position to capitalize on the increased coverage and to resume growing our patient base, in partnership with Ascensia.

Transitioning to our pipeline development initiatives. As we mentioned, our top priority is the PMA submission for our 180-day product in the U.S. With the execution of the agreements announced today, our organization is focused on preparing this submission. We are pleased to share that we remain on track to make the submission in coming weeks.

Following the PMA supplement submission in the U.S., our priority will be to bring the improved performance to the Eversense XL system in Europe, which we developed for the U.S. version of the product through our notified body in Europe. Additionally, the product development team is shifting their attention to the next-generation sensor that we plan would extend the wearable life up to 365 days. We are currently testing configurations demonstrating 1-year stability, and we are working toward IDE approval from the agency for the 365-day product in the first half of 2021. We would then estimate beginning the trial enrollment in the second half of the year.

In addition to extending the wearable life, the product is also targeted to reduce calibration frequency to up to one fingerstick per week. This next-generation sensor is also anticipated to provide the platform for the Gemini product, which would offer both continuous and on-demand readings from a swipe command.

Finally, we are working on integrating a battery in the Gemini product that would eliminate the need for any on-body transmitter for a fully implanted 365-day sensor. As you can see, we have a pipeline full of revolutionary devices that have the potential to again shift the paradigm in CGM technology.

As projects continue to progress, and we have better visibility on time lines for completing milestones, we will provide additional updates. Now with this, I'll turn the call over to Nick for additional details on the financials.

Thank you, Tim, and good afternoon, everyone. First off, I would like to provide more color on how the Ascensia agreements change our financial profile moving forward. As we had previously announced, we created -- we ceased operations targeting new commercial patients in the U.S. to improve our cost structure and address the reality of the COVID environment. With Ascensia assuming commercial responsibilities and the related expenses starting in Q4 of 2020 and into 2021, we expect the sales and marketing spend for Senseonics will be significantly reduced on a full year basis when compared to prior historical levels. This accelerates our breakeven point and reduces cash needed to access patients in the U.S. and EU marketplace while allowing the company to focus on our core competencies in R&D, product development, clinical trials and regulatory, along with manufacturing and quality.

The initial $35 million funding from Ascensia will be generated by the issuance of senior secured convertible notes to Ascensia at a 9.5% interest rate, decreasing to 8% following the PMA approval of the 180-day product, with a maturity date of October 31, 2024. A portion of the proceeds will be used to repay the Highbridge first-lien term loan balance, including the discounted prepayment premium. The remainder will be used to fund continuing operations, including supporting the current Eversense installed base and product development initiatives.

Following the PMA approval of the 180-day product and receipt of any required shareholder approval required by the NYSE American listing notes, we will also be eligible to issue $15 million of convertible preferred equity to Ascensia which will further strengthen the balance sheet. We further improved our liquidity position with additional financing through the entry of a stock purchase agreement with Masters Special Situations, an affiliate of Masters Capital Management, to issue up to $30 million in convertible preferred equity. The funding will take place in up to 2 closings, with the first closing for the initial 10% of the investment expected to occur on or about August 14, 2020. MSS has an option to purchase up to the balance of the convertible preferred equity in a subsequent closing that would be expected to occur within the next 3 months, subject to the receipt of stockholder approval.

Now to our results for the quarter. In the second quarter of 2020, total net revenue was $261,000 compared to $4.6 million in the second quarter of 2019. U.S. net revenue for the second quarter was $206,000 after accounting for gross to net increases. During the second quarter, insertion rates for existing patients on Eversense were more favorable than we originally anticipated at the start of the outbreak, leading to several new order requests from our distributors and adjustments to concession allowances, reflecting actual product usage that were previously provided in Q1 to some of our customers in the United States for Eversense systems that may expire before placement with a patient.

In the OUS, net revenue was $55,000. As we mentioned on the Q1 call, we did not expect Roche to make a meaningful order in the second quarter. Gross revenue for the first quarter of 2020 was $165,000, nearly all of which was generated in the U.S. Gross profit in Q2 2020 increased by $3.4 million year-over-year to negative $1.1 million. The increase in gross profit was predominantly related to the lower product volume production and shipments. Second quarter 2020 sales and marketing expenses decreased by $11 million year-over-year to $3.1 million compared to $14.2 million in the prior year period. The decrease was primarily due to recent changes in our commercial activities.

Research and development expenses in Q2 2020 decreased by $6.7 million year-over-year to $3.8 million compared to $10.5 million in the prior year period. The decrease was primarily driven by lower PROMISE clinical study costs and personnel-related expenses. General and administrative expense in Q2 2020 was $4.4 million, a decrease of $1 million compared to the prior year period, mostly due to personnel-related expenses, patent legal fees and other administrative costs resulting from our change in operational focus and stay-at-home orders during the COVID-19 pandemic. For the 3 months ended June 30, 2020, total net loss was $7.5 million or $0.03 per share compared to $31.1 million or $0.17 per share in the second quarter of 2019.

Now turning to the balance sheet. As of June 30, 2020, cash, cash equivalents and restricted cash totaled $21.6 million. Subsequent to the quarter, resulting from the Ascensia financing and repayment of the Highbridge loan, pro forma cash, cash equivalents and restricted cash, following the closings of these transactions, is estimated to be approximately $42 million, including transaction and adviser fees. To accommodate the return to reduction and supporting Ascensia with a 90-day restart and preparation for commercial launch of the 180-day product in the U.S., we are slightly revising our monthly operational cash burn guidance to $3.5 million to $4.5 million on an average monthly run rate for the second half of 2020 from the previously announced range of $3 million to $4 million per month. For fiscal year 2021, we expect annualized cash burn to be below $60 million for the year.

Tim, I'll turn it back to you.

Great. Thank you, Nick. To conclude, overall, we are extremely excited about the positive outcome of the strategic process and the opportunity ahead for Senseonics and Ascensia. With the announcement of these transactions, we have concluded the strategic review that we had announced in March and we're looking forward to the opportunity to drive shareholder value. We are creating a partnership with a world-class organization, Ascensia, who is also focused on providing patients with advanced diabetes management technology. Combining the strengths of our organization, this will offer significant value to all shareholders as well patients, physicians and payers will benefit from the collaboration with increased resources dedicated to driving adoption of the Eversense technology.

We are proud to partner with Ascensia, who has shown through their actions, an equally strong long-term commitment to our life-changing technology. Again, I would like to say thank you to all of you and importantly, to all of our employees, who have shown tremendous dedication and drive amid these challenging circumstances, both internally and externally.

We look forward to providing you with updates in the future. Joining us for questions are Mukul Jain, our Chief Operating Officer; and Mirasol Panlilio, Vice President and General Manager of Global Commercial Operations.

Operator, let's now open up the call for questions.

(Operator Instructions) Our first question today comes from Mathew Blackman with Stifel.

And congratulations, a lot of positive updates today. Maybe, Tim, if I could start with you, you gave us a little bit of color on Ascensia's selling footprint. I think you mentioned starting out with 30 reps, ramping to 80 over some period of time. First of all, I assume that's just a U.S. number. Is there any way to sort of also talk about the selling footprint outside the U.S.? And again, I know probably a tough question to ask you, but is there any way to sort of think about what Ascensia's current BGM user base is? And I have got a couple of follow-ups for Nick.

Yes. Thanks, Mat. Pleasure to speak. Yes, those numbers specifically are dedicated Eversense sales personnel, sales professionals, not including sales management or other supportive folks for the U.S. sales efforts. Outside the United States, obviously, Ascensia is a very significant organization in glucose monitoring, especially outside the United States. They have a very significant position in the U.S., but even larger outside the United States. And as such, that's one of the reasons that they're such a great partner for us. We're still in the process of really defining what are the best joint opportunities for 2 organizations. So I don't have all the details. But we do know that beginning in the first quarter of 2021, the European opportunity will be significant in the initial countries that I mentioned. And we fully anticipate working with Ascensia to expand beyond that.

Okay. I appreciate that. And then, Nick, a couple for you. I know you're not giving guidance and I appreciate that. But is the sort of the run rate we're seeing now on revenues, in particular, the way we should be thinking about the run rate until sometime in the first half of next year when everything sort of restarts again? Just any help as we think about the next couple of quarters as we try to build our models.

And then the last question for you, Nick, you brought it up, so I'm going to ask. You mentioned accelerating sort of the breakeven threshold. Again, probably not fair to ask at this point, but how should we be thinking about sort of the new profitability framework for Senseonics? Is there a revenue run rate threshold for possibility we should be contemplating? Just any help, I guess, in these early days to sort of think about how this might play out over the next several years. And I'll hop back in queue.

Yes, I appreciate those questions, Mat. For revenue, I'll start there and say, obviously, as we mentioned in our opening comments, given COVID, given the uncertainty of the environment here in 2020, we are suspending any revenue guidance for this year. Certainly, we provided some color of what we look to achieve with our partner here for the remainder of the year, our new partner.

In your second question, on breakeven, again, at this time, we're not looking to provide any long-range guidance of what that would look like. But certainly, we're very excited about how, from a P&L perspective, as Tim mentioned in his comments, that our P&L will be improved with a much lower sales and marketing investment and OpEx moving forward. Tim, any comments to add?

No. I think you've covered it. Obviously, we are excited. We have, given the COVID dynamic and the financial situation of Senseonics with the Solar debt, we are excited that we are able to now begin the process of commercialization again. We do have a number of doctors and patients that have reached out to us that we have not been able to serve. So we're excited about serving that backlog. We're also very excited about the opportunity to serve the Medicare population. This is especially important, especially in the time of COVID, to be able to have a long-term monitor and to be able to do it with now coverage from Medicare for that population, is very exciting for us. So we're going to be looking to expanding those conversations and roles with Ascensia and really jumping back in right here in the third quarter and fourth quarter with that Ascensia partnership for U.S. commercialization again.

Our next question comes from Danielle Antalffy with SVB Leerink.

And many congrats on this deal. It sounds fantastic. So nice work there. I guess, Tim, just a quick question on Ascensia and sort of how -- what they will be able to do differently, besides the obvious, which is the footprint and the presence in the physicians' offices. I guess I felt like some of the issues were around reimbursement, a lot of utilization of the Bridge Program previously. So maybe talk a little bit about what has changed fundamentally other than the breadth of reps in the physicians' offices that will now elevate the status of Eversense in the U.S.

Sure. Sure, Danielle, and thanks. Obviously, you hit on a couple of key ones, right? The reimbursement position for Eversense just continues to grow and get better and better. Even the physician fee schedule that was proposed by CMS last week is, honestly, really a big deal. It's not typically talked about in the CGM space because the other products, frankly, are DMEs, right? They're durable medical and they go through a different channel. But the opportunity to have this as a medical benefit without some of that encumbrance for a large population of patients is very significant. And obviously, we're going to work hard with Ascensia to really get that implemented as quickly as possible.

So that's clearly one of the big changes, as you've seen. Even though we've had to scale back commercial activities in the last quarter-plus, the reimbursement activities continue to make progress on the commercial side as well. Just a week or so ago, we did get notification that additional Blues plans, many Blues plans will be coming up and going live and Highmark being one of the biggest ones. So it's great to see progress in that space as well.

And then, in addition, obviously, Danielle, the biggest change, of course, is really to be able to use the infrastructure and capability, the buying power. When you talk about marketing programs, Ascensia really has a deep and capable global commercial organization. And as we were, at being Senseonics on our own, attacking the U.S., obviously, you're doing that from a much smaller base.

Ascensia has over 1,700 employees, right, a broad global position, 10 million patients that they talk to on a daily basis or that they talk to, not on a daily basis for all 10 million certainly, but a lot of depth of an experience. Remember, they are the original BGM folks. So they know it extremely well. They know the space incredibly well. And they're just going to bring a lot of depth to us in not only commercial operation, their partnerships with distributors, their infrastructure to move product around. We should certainly have been able to leverage. We've had conversations with as well as our U.S. distribution partners, that they actually have a much stronger relationship. So there's a whole lot that we can leverage. And really, instead of bifurcating the global opportunity like we had done in the past, having that under one umbrella with a global partner, I think, is going to bring a lot of value to us jointly.

Got it. That makes a ton of sense. And then, Nick, maybe this question is for you. And I'm sorry if I missed it, but I just want to make sure I understand what this means from a revenue recognition and also margin perspective for Senseonics. Can you give a little bit more color? As we think about our model, should we be thinking about the same ASP? What's going to Ascensia? And how does it impact margins?

Sure. Yes. Happy, Danielle. I would describe it that our commercial agreement is that there will be a revenue-sharing piece. And Ascensia will receive a portion of the net revenue and that's going to be at specified tiered percentages. And that changes as the revenues grow. So Ascensia's portion will grow as the revenue grows. And we talk -- we provide a little bit more additional color in our 8-K in terms of disclosures, but we talk about the specified tiered percentages that they're going to range from, for Ascensia, approximately the mid-teens to the mid-40s and that's based on levels across the global net revenue. And again, we've got some additional disclosures that, obviously, we provide into our 8-K. But the modeling then will be based on those tiers, which we won't necessarily disclose, but we certainly look forward to providing revenue guidance at the appropriate time based on, obviously, the collaborative work with our partner.

In terms of margins, really, the biggest dimension there for margin improvement over 2021 and beyond is the switch from the 90-day product in the U.S. to the 180-day product. We're not prepared to talk about pricing or any of those types of mechanics. But certainly, we see expansion there as well as other operational levers to continue to improve those gross margins.

Our next question comes from Alex Nowak with Craig-Hallum Capital Group.

This is actually Will Fafinski on for Alex. Apologies if this was already addressed. We're jumping between a couple of calls here. But could you provide us with a general sense of what the ongoing level of operating expenses is with the deal and whether you have any levers that you could use to slow the burn more?

Sure. I'll go ahead and take that. In our prepared remarks, Will, we talked about that for the second half of 2020. We expect the operational cash burn to be in the $3.5 million to $4.5 million on average per month. Obviously, that's down significantly from what we were operating in 2019 and in the first quarter of 2020. For 2021, based on current projections, we expect the operational cash burn to be below $60 million for the full year of 2021.

Got it. Okay. I appreciate that. And just second one for me. Just given the COVID dynamics, do you mind commenting more broadly on what you're seeing out in the field today? And do you sense that endocrinologists are less hesitant to do new implants now and that the opportunity is continuing to open up in Q3?

Tim, would you like to take that one?

Pardon me, ladies and gentlemen, it does look like we might have lost Tim's line. So if you'll just hang on a moment and we'll try to reconnect.

(technical difficulty)

Hey, Will, it's Mirasol Panlilio. Let me take that on while we try to get Tim back online. We are seeing the insertions increase, particularly in Europe. We certainly saw a dip come March and April time frame. But in Europe as in the U.S., we've steadily seen it really stabilize. So we expect that, that will continue. But with COVID and some of the countries still experiencing, either regional or local level, some shutdowns, it's a little hard for us to predict, but we've been very pleased how stabilized it has been in the last couple of months, particularly in Europe.

Great. I appreciate all the detail there. And congrats on the positive developments.

Sure.

(technical difficulty)

Pardon me, everyone. I have Tim to rejoin. And we'll go ahead and take a question from Marie Thibault.

Hi, folks. Can you hear me?

Yes, we can.

We can hear you, Tim.

Okay. I apologize for that. I don't know what happened. I got cut out.

Yes. I wanted to ask one question here on sort of how we should be thinking very high level about this partnership. I know Ascensia has had partnerships in the past, I believe, with a company called, POCTech, to market a CGM, I believe, in parts of Europe and Asia. So I wanted to get kind of a high-level idea of the trajectory as you think over the next couple of years. Does this partnership kind of put you ahead of where you would have been on your own in 2019 if insurance coverage had not been a bit of a stumbling block? How can we think about this generally? I know you can't give guidance at this point.

Yes. But it is a good point, Marie. We obviously think that this is a great advantage for us with the depth of commercial resources that Ascensia brings to the table for sure, especially in the U.S., the largest market, the biggest opportunity. I would -- in regards to the POCTech product, we certainly are aware of it. It's been a very -- an open part of our communication. It was a technology that Ascensia does have a partnership with. However, it's in a different place in the market and we do expect it to be certainly geographically differentiated as well. So we don't expect that there will -- certainly, in a short-term horizon, certainly be any overlap. And obviously, the commercial focus that we've referred to is dedicated just to the Eversense product. So as you know, the Eversense is quite a bit further, with already having PMA approval in regards to scale-up and regulatory and the like.

Great. Perfect. And then I guess my follow-up would be as we look ahead to the 180-day product, is there anything that needs to be done on the insurance coverage side? Or is that really just sort of a supplementary update that all the commercial payers have kind of put out once the 180-day is FDA-approved?

Yes, it's certainly something that we've talked to the commercial payers about. Remember, one of their big advantages is the expense of insertion and removal is cut in half. So there's certainly a motivation to do that. And do recall the history in the space, we have started out with 3 then 5 and 7 and 10 and now 14 days in the transcutaneous sensors. So many of the payers have gotten used to a per-day payment scheme. So we haven't received pushback as of yet, but we do expect that we'll be approaching them probably in the fourth quarter of this year and letting them know where we are in the new transition to a new product.

So there is communication that's required. But we don't see it as being a major issue. Just as you've seen, it really hasn't been a major issue with some of the other products that have gone from 7 to 10 to 14 days.

This concludes our question-and-answer session. And I would like to turn the call back over to Tim Goodnow for any closing remarks.

Well, great. I want to thank everyone for the opportunity this afternoon to speak. We're very excited about the news and the partnership with Ascensia. And we certainly look forward to updating you as it evolves on future quarterly calls.

So with that, we'll go ahead and conclude. And again, I thank everyone for their participation today. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.