Senseonics Holdings Inc (SENS) 2021 Q1 法說會逐字稿

Good day, and welcome to the Senseonics First Quarter 2021 Earnings Release and Conference Call. (Operator Instructions)

Please note, this event is being recorded.

I would now like to turn the conference over to Philip Taylor, Investor Relations. 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 these 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, 2020, and our 10-Q for the quarter ended March 31, 2021, 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. Also on this call, we will be discussing our 2021 outlook.

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, Trip, and good afternoon, and thank you all for joining us today. On the call, we'll discuss the implementation of our commercial collaboration with Ascensia Diabetes Care, our promising upcoming clinical activities, as well as pipeline and regulatory updates. Nick will provide detailed first quarter financial results before I conclude, and then we'll open up the call for the Q&A.

The first quarter of 2021 marks the beginning of Senseonics operating as a strategically realigned business. We're enthusiastic about the opportunity to advance the value of the Eversense system through our commercial collaboration with leading diabetes technology company as Ascensia. To remind you, our commercial collaboration established the transfer of marketing, market access, sales, distribution, reimbursement and customer service functions to Ascensia for all of Senseonics products over the next few years. With the Ascensia driving commercialization of these products, our focus within Senseonics is now centered solely around the strength of our organization, research, development and manufacturing of our innovative, long-term implantable CGM systems, and the associated clinical and regulatory activities.

We have a strong partner in Ascensia to drive the commercialization of Senseonics products. This agreement meets the needs of and benefits both organizations. Ascensia now has ever since in their portfolio, a highly differentiated product participating in 1 of the fastest-growing markets in medical technology, and Senseonics is able to have its Eversense system globally commercialized with an immediate size and scale of a more mature business and global diabetes leader. The collaboration agreement aligns our incentives, providing Ascensia with a tiered share of revenue generated from Eversense sales, as we have previously described.

In the first quarter of 2021, Senseonics generated revenue of $2.8 million, including approximately $310,000 in the U.S. and over $2.5 million in Europe. Ascensia's commercial efforts have been expanding since their initial sales support of Eversense late last year. The early experience has played a valuable role in forming the next phase of our collaboration, the restart of full-scale commercialization in the U.S. on April 1, which complements the transfer of commercial activities that occurred in February.

With that, let me describe some of our recent progress. There are many proof points that demonstrate the strength of Ascensia's commitment to Eversense. This is evident not only in the shared mission to improve and make the lives of patients with diabetes better, but also through their investment in Senseonics. Most important, but not as visible externally, is their collaborative and strategic approach to the commercial partnership. Following the collaboration announcement, our integration plan called for initial activities in the U.S. through the first quarter to familiarize Ascensia with the Eversense product, sales and clinical processes.

Our own experience and subsequent discussions with Ascensia around optimizing the sales and marketing strategies and tactics for Eversense have formed the design of a high touch, comprehensive approach. For example, early learnings highlighted the skill set and experience required for sales professionals to be successful in the CGM space, which may differ from the long-standing BGM market. In late March, Ascensia completed the hiring and training of the U.S. sales force, increasing to 25 marketing and sales professionals and approximately an additional 25 team members in commercial support roles, including sales -- inside sales, clinical training, market access and customer care professionals. This group was recruited to fit the specific skills that required to sell Eversense. And we anticipate that backgrounds with in office sales, procedural training and the reimbursement process should ease their ramp-up to proficiency with our product.

The team is strategically positioned across geographies based on an assessment of the diabetes patient population, patient access and our Eversense opportunity. Currently, the team is in the process of managing and setting up their territories, including calling on current Eversense providers and prescribers. We're encouraged to see that as the quarter progressed, some clinic access restrictions implemented throughout COVID were being removed or eased, allowing them to return to being able to work in-person with health care providers. At the same time, they have been pursuing virtual introductions.

As Senseonics had stepped back last year from pursuing new sales of Eversense, Ascensia is now pursuing the immediate opportunity to restart growth in the patient base with clinicians who were the early Eversense adopters. When these introductions to existing accounts are complete, the team will then prioritize outreach to new accounts, with an initial focus on the top insulin, CGM and pump prescribing physicians.

Given the unique nature of our implantable product, the current awareness of the technology and growing patient access, their team has identified several strategic opportunities where we anticipate focus and investment can drive further adoption of Eversense. Patients play a key role in choosing their CGM system, and continuing to raise awareness for Eversense is an important factor for adoption. Ascensia is prioritizing expanding this awareness among both patients and clinicians. To address this opportunity most effectively and efficiently, they have launched a comprehensive direct-to-consumer advertising campaign. Not only is it expected to create impressions among the target patient audience but is also to be a strong supplement to the direct health care provider outreach. The systems necessary for lead capture and management are now in place. Our shared goal is to deliver the benefits of Eversense to more patients with diabetes, and this program represents a proven avenue to introduce patients to the technology.

As of April 1, we are now moving to the next phase of our integration plan. This means that the full commercial strength of one of the leaders in diabetes technology now markets Eversense as a key product focus, providing patient, health care provider, distribution and payer support. Many commercial health plans and Medicare have recognized the value of our implantable CGM and have implemented formal coverage policies that provide reimbursement for the product and for the implant procedure. We have completed much of the heavy lift of earning coverage for Eversense with a strong established coverage base. We're also excited to announce that Centene Corporation, a top 10 U.S. health care insurance company, is now covering Eversense. This coverage provides Ascensia with a strong foundation to increase HCP's confidence that more and more of their patients will be covered.

In addition, and as we announced, the 2021 physician fee schedule includes coverage for the Eversense system and the implant procedures, offering the benefits of our CGM system to the entire qualifying Medicare population with diabetes. To that end, we are pleased to announce that the University Hospitals Accountable Care Organization, or ACO, in Cleveland, Ohio, is the first accountable care organization to adopt Eversense in their practice. ACO is our integrated health care provider networks that offer superior care to Medicare beneficiaries at a lower cost.

Under a shared savings program with the government, if ACOs can prove to CMS that they can reduce the cost of care, improve quality and improve patient experience, they are entitled to keep 50% of the savings that they've created. To date, the general ACO program is to consider a clinical and economic success with nearly 500 participating ACO's saving $1.5 billion, managing approximately 10 million patients. We believe Eversense has the potential to be another avenue of savings for such programs.

One specific metric of success that is used in the evaluation that ACO's performance is in the HbA1c control of their diabetes population. We feel strongly, as we have demonstrated with eversense ability To drive A1c reduction in patients, combined with its unique features, Eversense can be a particular benefit to the Medicare population. With continuous 3-month glucose monitoring that doesn't require the biweekly hassle of inserting and removing a sensor.

The insertions are done by providers that can address any dexterity challenges, on body vibration alerts and can address any visual or auditory issues and the high sensor accuracy, especially at the important low glucose, all of which we believe supports greater adherence to CGM and therapy optimization. We believe that the benefits of Eversense give it the potential to be the preferred CGM for this population and will directly aid ACOs like University Hospitals at meeting their A1c and outcomes objectives.

Ascensia is also launching additional efforts to win coverage from the remaining payers not yet covering Eversense. In the meantime and in line with industry conventions in order to support those patients who do not currently have coverage for Eversense or of high deductibles, Ascensia is implementing new Eversense access programs. First, for patients with commercial coverage for Eversense, the patient assistance program is designed to reduce the patient's out-of-pocket costs, such as co-pays, coinsurance or deductibles, that are associated with starting Eversense. This program will help accelerate growth, and has a positive economic contribution for the partnership.

Second, for patients who have insurance that is not yet covering Eversense, the prior authorization program is designed to help patients submit claims petitioning to receive coverage for their system on a case-by-case basis. If there is no formal coverage policy in place with their health insurance plan.

These programs are yet another example of our joint commitment to ensure we provide the necessary support to get this innovative solution to patients who choose or need to be on long-term CGM therapy.

Outside of the United States, we've talked about before, and we're happy to report that Ascensia's initial European commercial transition in February was executed according to plan. We were able to provide patients with sustained access to Eversense and customer service. The priority here is for the successful transfer of existing payer contracts and tenders. Ascensia is now active in Germany, Italy, Switzerland, Spain, the Netherlands and Poland. Given their international presence, Ascensia has a large sales force of more than 250 sales professionals who are very excited to have a next-generation glucose monitoring system added to their portfolio. Additionally, recently, we signed an agreement to accelerate the transition of Scandinavian distribution rights from Rubin Medical. This transition is now planned to happen towards the end of this second quarter.

Following the successful execution of the commercial transition planned in the U.S. and Europe, we remain on track and continue to expect Senseonics global net revenue for 2021 to be in the range of $12 million to $15 million.

Another positive aspect of the commercial collaboration agreement is our ability to focus on advancing our implantable sensor platform. Market research of CGM patients has consistently indicated that the 2 most desired features in a CGM system are sensor accuracy and longer sensor duration. Studies have continually demonstrated our positive accuracy throughout our sensor life. And we have achieved a substantial lead in sensor wear compared to the other available technologies, offering 180-day sensor life compared to the next closest competitor of just 14 days.

We believe each sensor wear duration extension for our product represents a stepwise market penetration and market expansion opportunity for us. Our loyal patient base continues to highlight the lifestyle benefits provided by Eversense, and we are confident we can offer additional advancements with future generation products.

Next, I'll speak to our PROMISE pivotal study and the publication of the study results. We're excited to announce that next month, we will be presenting at 2 of the key diabetes conferences, the data from the large PROMISE study that supports the 180-day Eversense PMA supplement. First off will be the ATTD meeting, followed quickly by the annual ADA meeting, both in June. Dr. Satish Garg of the University of Colorado and the Barbara Davis Diabetes Center is presenting the clinical data on behalf of all of the PROMISE study investigators. Dr. Garg will describe the accuracy and safety results from the 181 subjects who participated across 8 clinical research sites in the United States.

We're excited to report these results. And as we have previously shared, the data demonstrated performance matching that of the current 90-day product and achieved it with reduced calibration, yet with the useful life extend all the way out to 180 days. Though these are virtual meetings, they are 2 key diabetes conferences of the year and represent an important forum to showcase the clinical benefits of Eversense.

At the ADA meeting, Ascensia is also sponsoring a product theater that will feature prominent KOLs in patients to discuss the advantages of the Eversense technology.

On the regulatory front, we are pleased to share that in mid-April, in line with the previous communicated expectations amid continued emergency use authorizations relating to the COVID pandemic. The FDA has now assigned a lead reviewer to our PMA supplement application for the submitted 180-day Eversense product. We believe the data to be published at the upcoming meetings, and as submitted in our application, demonstrate a favorable safety and accuracy profile for the product. And we are hopeful we'll aid the agency in an efficient review cycle.

While we are pleased with the strength of the submission, there is potential for extended review timelines based on recent public comments by agency officials on the continued residual general impact of COVID and emergency use authorization application. It's always difficult to precisely predict timelines for agency reviews, especially amid the current unprecedented environment. But we are hopeful for a straightforward review process.

And progress on our next-generation technology platform. This is a sensor that will last for up to a year, and it continues well. This is a top priority on the development front. The team is in the process of working to lock down a chemical and technical configuration for this sensor. A sensor that lasts for a year, requiring just 1 calibration per week will be a game changer for people with diabetes. Following the technical optimization, we expect to file a submission with the FDA for IDE approval to initiate the pivotal clinical testing. We are pleased with the progress that we're making to date and continue to plan to file the submission in the fourth quarter of this year.

I will now turn the call over to Nick to go over the calls -- the details of our first quarter financial results.

Thank you, Tim. Our Q1 results demonstrate the advantages of our new business model following the strategic transition into our commercial partnership with Ascensia. Our new business model creates a meaningful change to our financial profile by leveraging the partnership with Ascensia to commercialize Eversense in both the U.S. and Europe, enabling significant reductions to our operating expenses and cash burn rate by significantly reducing our sales and marketing expenses. In the first quarter of 2021, total net revenue was $2.8 million compared to $36,000 in the first quarter of 2020.

U.S. revenue for the first quarter was $310,000 and revenue outside of the United States was $2.5 million. First quarter revenue in the U.S. was reflective of Ascensia's initial sales support prior to their April 2021 full commercialization.

Gross profit in Q1 2021 increased by $20.2 million year-over-year to $526,000. The positive gross margin in the quarter was primarily due to the ability to fill resupply orders with existing written-off inventory as existing patient reinsertion rates were above the expectations established in the first quarter of 2020 amid the onset of the COVID-19 pandemic.

First quarter 2021 sales and marketing expenses decreased by $9.5 million year-over-year to $1.6 million compared to $11.1 million in the prior year period. The decrease was primarily due to the strategic changes in our market commercialization approach with the Ascensia collaborative partnership.

Research and development expenses in Q1 2021 decreased by $2.1 million year-over-year to $5.3 million compared to $7.4 million in the prior year period. The decrease was primarily driven by lower clinical study costs and personnel-related expenses.

General and administrative expenses in Q1 2021 were $5 million, a decrease of $716,000 year-over-year compared to $5.7 million in the prior year period, mostly due to a decrease in personnel-related costs. For the 3 months ended March 31, 2021, operating loss was $11.3 million compared to $43.8 million in the first quarter of 2020. This represents a $32.5 million decrease in operating loss from 1 year ago.

The increase 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 the fourth quarter of 2020 led to significant noncash charges in Q1. As a result, other expenses increased by $239.4 million compared to the prior year period, primarily related to noncash charges resulting from the accounting for embedded derivatives and fair value adjustments related to the company's financings, including the 2023 and 2025 notes, along with the PHC 2024 notes and energy capital equity line of credit.

As required by U.S. generally accepted accounting principles or GAAP, we mark the value of these interest instruments to market for each reporting period and the change in these values are recorded as noncash charges to the income statement. Each quarter, the value of these noncash gains or losses will vary based on the volatility in the company's share price. So generally, as share price increases, we incur a noncash loss. And as share price decreases, we recognize a noncash gain.

For the first quarter, the cash portion of the other expenses was $4.1 million of interest expenses out of the total $238.2 million. For the 3 months ending March 31, 2021, total net loss was $249.5 million or $0.68 per share compared to $42.6 million or $0.21 per share in the first quarter of 2020. Net loss increased by $206.9 million due to a $239.4 million increase to other expenses primarily related to the noncash accounting charges from the accounting of the company's -- company financings previously mentioned, partially offset by a $32.5 million decrease in loss from operations.

I would also like to reiterate that in January, we completed a series of financing transactions that raised over $175 million of proceeds for the company. With our new business model, this capital is currently expected to be sufficient to fund the business through cash flow breakeven from operations. In Q1, our net cash used in operating activities was approximately $16.3 million. As of March 31, 2021, cash and cash equivalents totaled $178.6 million.

Looking at the remainder of the year, we are reiterating our 2021 guidance. We expect global revenues to Senseonics of between $12 million and $15 million for 2021. The annual revenue cadence is expected to be split roughly 40% in the first half and 60% in the second half. As a function of the current patient installed base sizes and relative growth, U.S. revenue is expected to be approximately 1/3 of total revenue for the year. For full year 2021, net cash used in operations is projected to be in the range of $60 million to $65 million.

With that, I will turn it back over to Tim.

Great. Thank you, Nick. Before we conclude, I'd like to announce and extend our gratitude and thanks to Dr. Justin Klein, a long-standing Senseonics Board member. For over 5 years, Justin's guidance and leadership has been very valuable across the development, regulatory approval and commercial launches of our Eversense products. Justin transition from NEA, the venture capital firm, where we previously participated in the private investments in Senseonics to recently starting his own fund. And we are excited for him, and this opportunity.

With this term coming to an end, Justin will not stand for reelection to the Senseonics Board at this year's annual meeting, which will enable him to focus on the next chapter and concentrate on future investments. We wish him the best of luck in his future endeavors and thank him for his continuing support and lasting impact he's made on the business.

In the first quarter, we worked hard with our partner Ascensia, to transition Eversense and the commercial responsibilities for both Europe and the U.S. The team at Ascensia has proven that they are committed to driving adoption of Eversense as demonstrated by the investments that they have made in our collaborative endeavor and in building a comprehensive U.S. commercial organization to support the Eversense product. We spent years developing, earning regulatory approval and payer coverage for our revolutionary, long-term implantable continuous glucose monitoring system. Now Ascensia is positioned to leverage the size and scale of their organization to raise awareness and drive patient adoption of Eversense.

We are very confident in our ability to maximize the value of Eversense in the market over the long term. We look forward to providing updates in the future. And we thank you for your time.

Joining us on the call 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)

The first question comes from Chris Pasquale with Guggenheim.

I have a few questions. I wanted to start with the revenue build. Can you give us an update on what you think your installed base was in the U.S. and international markets as of the end of 1Q? And then as we think about the better-than-expected international results this quarter, was that driven by Ascensia bringing new patients on? Or was there a catch-up in terms of restocking of distributor inventory or something like that, that may have contributed to the results?

Thanks, Chris. In regards to patient account, we've stuck to an annual update. You'll recall, the most recent information we put out was at the end of last year, beginning of this year. There were about 4,000 patients in Europe that were on the technology, and about 1,000 in the U.S. So I don't have a quarter update for you. We'll go ahead and stick to the annual cadence of putting information out. In regards to the performance in Europe. That is in line generally with our expectation. Do recall that also includes purchases that Roche made to complete their responsibility for a portion of Q1. They went through the end of January. So really is pretty representative of patient demand. There is not material stocking that's occurring, but it is the servicing of the existing patients that are on the product.

And then, Nick, I was just hoping on gross margin, you could give us a little bit of a better sense of what to expect from here on out. Have you now worked your way through the written-off inventory and so going forward, should we see something that's a little bit more normalized? And I think back to September, you talked about a negative 30% gross margin for this year. It seems unlikely it's going to be that low after this start. So just updated thoughts on what the full year is going to look like.

Sure. Yes, happy to take that. So we've worked through the majority of the material that we have written off a year ago. And in terms of gross margin for the year, recall that we still expect back half of the year to be greater. So as we move into Q2 and through the back half. And so we still continue to maintain the range that we provided of negative 25% to negative 35% for the full year.

The next question comes from Mathew Blackman with Stifel.

Let me just start, Tim, I just want to get a better feel for the U.S. relaunch and how it sort of phases over the next several quarters. It sounds like Phase I is going after previous high-volume Eversense implanters and then moving to just high-volume insulin prescribers who may be new to Eversense. So how does that play out over the next few quarters? 2Q focused on existing accounts, and then the second half of the year is when you start going after new accounts. Just any help with the cadence of how the U.S. relaunch will play out? And then I've got a few follow ups.

Sure, Matt. Directionally, I don't think that, that sounds unreasonable, although the timing is going to be gated by success. And of course, this is appropriately under Ascensia's timing and direction. But the focus for sure, especially with the new reps and the dynamics of not being able to get to see them for some time, is to get to reestablish the relationships with the existing prescribers and inserters. So that's current. The areas get comfortable, the territories are comfortable, then expansion to the bigger prescribers and opportunities will happen in the future. It's not currently in place. Right now, it really is about getting a new rep getting established in their territory and working with their prior inserters and prescribers.

Recall that it's been just about a year that we took our sales force out of the field. So those docs and those patients have been out without a sales rep for quite some time. So I do expect it will take us a little while to build that back up again. And hence, the cadence that we've guided to on the U.S. in the back half of the year versus the first half.

Okay. Makes sense. And then, Tim, you mentioned some clinics are now starting to lift restrictions in the U.S. just curious how much of a headwind that still represents today, whether it's access for Ascensia reps or the implant specialists. Is that still a big hill decline? And then just got one more follow-up.

Yes. We certainly see it improving. I would say that February was better than January, and March was better than February. So certainly believe it's in the right direction. I think as we all tend to feel in the U.S. that we're making good headway with the vaccine penetration. There's always more to do, but it does feel like that we're starting to get back to normal. And we would hope that certainly by later in Q2, certainly by Q3 that we'd be in pretty good shape to have in-office visits and trainings and so forth back on the docket for everyone.

Okay. And then the last one, I appreciate the comments on the PROMISE study. Is there anything we should pay particular attention to or be sensitive to when the data comes out, anything interesting that you think -- you don't have to be too specific, but just curious if there's any part of the data you think we should pay close attention to?

Yes. Yes. I think, obviously, one of the key metrics, of course, that the agency is going to look at is just how accurate the device is. And we've always felt it's always been a #1 focus for us. The Eversense technology is, quite frankly, very accurate and very competitively positioned against the other devices that are out there. So we feel quite good about that. And I think when you get a chance to see the full data set, you will as well. So obviously, safety is another element, and we feel pretty encouraged that we didn't certainly see anything new. We didn't see anything of note or materially more, more complicated than you would see with the 90-day product. So overall, we feel pretty good about it and look forward to getting it published and having people take a look at it.

The next question comes from Danielle Antalffy with SVB Leerink.

Tim, I had a follow-up on the ACO partnership, and that sounds really interesting to me. And I'm just curious about how that came about? And does that potentially represent a more meaningful opportunity and an underappreciated opportunity for Senseonics over time?

Well, Danielle, as you know, we're pretty excited about the opportunity we have in Medicare because of the alignment of the capabilities, the features and benefits of Eversense for that population. So the ACO is a group that -- part of the group that we've reached out to. And this particular group was pretty active in getting back to us in regards to their interest as well. As I said, they've got just over 20 specific metrics that they are definitively specifically measured on. And one of them is their A1c reduction. So it's pretty well-known and pretty well documented that when you put people on Eversense, that we will reduce their A1cs, and that's the intent of the evaluation that we're going to do with this group. And I do think we're pretty excited about the opportunity in all of Medicare. The focus that you get in an ACO and the additional attention around the economic return, we're pretty excited about as well.

Yes. That makes a lot of sense. Okay. And perhaps you could leverage whatever outcomes you see with this ACO to drive adoption and other -- or drive a similar partnership in other ACOs. Is that sort of like the overarching strategy?

Absolutely. And Dr. Fran Kaufman is staying very close to this. She's well familiar with the group. It's a high quality group, and she'll certainly be partnering with them. And we look forward to results and experience publication out of that as well.

Got it. And then just one follow up. Nick, this is probably for you. But just around the readiness for the 180-day from a manufacturing perspective, how quickly can you ramp up? If, in fact, that does prove to be an inflection point, which I sort of feel like it could from an adoption perspective.

Yes. I guess I'll jump in, Danielle. I would say that, obviously, we're doing a lot of planning right now in anticipation for that. We are reading the tea leaves in regards to the timing on it. We've begun the investment, the preparatory investment for the process, building the capacity. So we feel pretty good about the ability to ramp. We have a strong partnership with strong capability where we've invested direct capital with them previously. So we feel pretty confident that we're going to be able to support the growth, and excited about what it's going to grow as well because it is going to be certainly an improvement in the likability of the product. And we know that adoption is going to go up as well.

(Operator Instructions)

The next question comes from Jayson Bedford with Raymond James.

I hope everyone's doing well. Just on the 180-day. Tim, you talked about timelines, I realize it's difficult. But just in terms of your expectation as to when you'll get approval for the 180-day?

Yes. So as you know, a review such as this, this is a PMA supplement. It's not a primary view. PMA supplements typically would be 180-day review. So we don't have a reason to believe that it should vary from that other than the dynamics of COVID, and what it might take a particular review or review teams time to clear off their desk from some of the prior work that they were doing. So that's what we really don't know. And probably why we're trying to be a little bit oblique on the timing. I certainly hope that it wouldn't be much, much longer than the traditional review time periods, but I do know it was a group that was notably impacted by the diagnostics responsibilities with COVID diagnostics. So our feeling is that it will be in probably that time period.

And just to be clear, the 100 -- the clock started in mid-April.

Correct. Correct. And the reviewer picked it up.

Okay. And just also, just for clarity on Ascensia and revenue recognition. I think you mentioned the international revenue pretty much matched underlying demand. Is that correct?

Correct.

And is there going to be a quarter where Ascensia takes a bit of a bolus of inventory?

We're certainly going to be working together to always be driving the inventory up. But we are -- unlike the relationship we had with a prior distributor where there was a desire for them to hold a bolus for a long time period. That's not the same distribution partnership that we have with Ascensia. So I would not expect that same. I would imagine that we'll continue to do as close to just-in-time manufacturing as we can support while keeping the channel appropriately full in all of the markets. So...

Okay. And then I guess just lastly, on the U.S. revenue, I realize things are just starting up again, but is there any way you can break out of the U.S. revenue? What came from new users versus those that were getting reimplanted?

In the first quarter, recall that we had pretty limited coverage. So the predominance of that. I don't have the full breakout, Jayson, but the predominance of that is really of existing patients, right?

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

This is Trent McCarthy on for Alex. Just a quick question on the Ascensia. With Ascensia you're selling the product compared to the internal team, are you finding the reception to be different. Do they have certain call points that are helping? And if you could just speak to the initial response you're seeing to the DTC campaign here through the first part of Q2?

It's quite early in Q2 for us to have the feedback on it. The reception, we believe, is quite positive because recall the predominance of the folks that they're calling on are our existing prescribers. So they're certainly encouraged to have us as a partnership back in a more formal commercial relationship with the clinicians because that actually helps them. We now have sales reps that can speak with patients and help them handle issues and transition and so forth that we were not able to fund for the previous year.

So I would say, as we expected, it's pretty positive. But we're back in with the most interested users at this point. As we grow, we'll expand beyond that. The early DTC, the impressions that we're getting, I know that Ascensia feels really good about. But we'll continue to work to push those through the funnel. And it does take some time with the insurance adjudication that it needs to occur and so forth, pull through a new start. So that's the active work that's going on today.

Okay. Got it. That's helpful. And then just one follow up. Diabetes Care has definitely seen a significant jump in competition as of late. Just what is your game plan to address this? And I mean do you think Eversense sensors have enough to effectively compete with products like Libre 3 and G7? And I guess, just what do you think is key in making for a highly competitive continuous glucose monitor?

Well, certainly, in the CGM space, it is very attractive because the recognition is that essentially, if you're on insulin, you should be on a CGM. And I think you're seeing that in the market growth that everyone has experienced. We're very excited about our differentiation. Our key point is, of course, the duration, right? We're the 1 group that could go for a long time, but a very, very long time. So expansion for us -- the 180 in the U.S., bringing that along, bringing it up to where the Europe already is. And as I described, we're actively working on the 365. So we know the excitement level for those longer duration sensors increases significantly with people's desire to go into the office and have the insertion procedure done.

So we are very confident that our long-term sensors are going to be highly competitive with the transcutaneous sensors that are getting smaller. Transmitters are getting smaller, so on and so forth. But it's still creating a small open wound that you need to keep [paying] the entire life of the sensor. And there are issues with adhesives and so forth. So duration is important for us. As we talked about, we're going to have a fully implanted system, so no on-body transmitter. That gets people very, very excited. So we're very confident in our technology platform and what we can do and how we can compete in the future, in what's a very meaningful and pretty exciting market.

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

Great. Well, I would like to thank everybody for their time and participation. As you've heard, we're very excited about the opportunities that we have and the emerging work that we're doing with Ascensia, both here in the U.S. and in Europe. So we appreciate everyone's time and look forward to future updates in the coming quarters.

With that, thank you, and good day.

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