Senseonics Holdings (SENS) risk factors, FY2024 10-K

Other

1. 01Summary of Risks Affecting Our Business
2. 02summarized below as well as a discussion of other risks related to our business and an investment in our common stock, as well as our other public filings with the Securities and Exchange Commission, or SEC
3. 03with applicable laws and regulations should harm our business and we may incur significant expenditures related to compliance efforts

Risks Relating to our Business and our Industry

1. 04We have incurred significant operating losses since inception and cannot assure you that we will ever achieve or sustain profitability
2. 05Our Commercialization Agreement with Ascensia to market Eversense may not be successful
3. 06nonexclusive rights, which may make it difficult for us to successfully engage with another commercial partner. The agreement is also terminable by either party if the other party undergoes bankruptcy, dissolution or winding up
4. 07Our Commercialization Agreement with Ascensia and the terms of our debt may discourage a change of control of our company
5. 08We have limited operating history as a commercial-stage company and may face difficulties encountered by companies early in their commercialization in competitive and rapidly evolving markets
6. 09If we are unable to successfully expand our commercialization of Eversense in the United States and Europe through our Commercialization Agreement with Ascensia, our business will be harmed
7. 10We are dependent on one product, Eversense. Our success depends on our ability to continue to develop, commercialize and gain market acceptance for our products
8. 11In addition, Eversense may be perceived by people with diabetes, their caregivers or healthcare providers to be more complicated or less effective than traditional monitoring methodologies, including SMBG or CGM systems which may require less calibration, and people may be unwilling to change their current regimens
9. 12We contract with third parties for the manufacture of Eversense. Risks associated with the manufacturing of our products could reduce our gross margins and negatively affect our operating results
10. 13We depend on a limited number of third-party suppliers for the components of Eversense and the loss of any of these suppliers, or their inability to provide us with an adequate supply of materials, could harm our business
11. 14Our third-party suppliers operate primarily at facilities in a single location, and any disruption to these facilities could adversely affect our business and operating results
12. 15If we do not enhance our product offerings through our research and development efforts, we may fail to effectively compete or become profitable
13. 16If important assumptions we have made about what people with intensively managed diabetes are seeking in a CGM system are inaccurate, our business and operating results may be adversely affected
14. 17We operate in a very competitive industry and if we fail to compete successfully against our existing or potential competitors, many of whom have greater resources than we have, our sales and operating results may be negatively affected
15. 18Competitive products or other technological innovations for the monitoring, treatment or prevention of diabetes may render our products less competitive or obsolete
16. 19The size and future growth in the market for CGM systems and CGM-related products has not been established with precision and may be smaller than we estimate, possibly materially. If our estimates and projections overestimate the size of this market, our sales growth may be adversely affected
17. 20Our ability to maintain and grow our revenue will depend on establishing a customer base and retaining a high percentage of our customer base
18. 21Various factors outside our direct control may adversely affect manufacturing, sterilization and distribution of our products
19. 22Potential complications from Eversense or future versions of Eversense may not be revealed by our clinical experience
20. 23Undetected errors or defects in Eversense or future versions of Eversense could harm our reputation, decrease the market acceptance of Eversense or expose us to product liability claims
21. 24We may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships with third parties that may not result in the development of commercially viable products or the generation of significant future revenues
22. 25We may seek to grow our business through acquisitions of complementary products or technologies, and the failure to manage acquisitions, or the failure to integrate them with our existing business, could harm our business, financial condition and operating results

Risks Related to our Financial Results and Need for Financing

1. 26We will need to generate significant sales to achieve profitable operations
2. 27Our operating results may fluctuate from quarter to quarter or year to year
3. 28Our product revenue is subject to seasonal variation
4. 29Covenants under the Loan and Security Agreement may result in the acceleration of outstanding indebtedness and limit the manner in which we operate
5. 30Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt
6. 31Despite our current debt levels, subject to certain conditions and limitations, we may still incur substantially more debt or take other actions which would intensify the risks discussed above
7. 32Our business may be exposed to foreign exchange risks
8. 33There is uncertainty regarding our ability to maintain liquidity sufficient to operate our business effectively, which raises substantial doubt about our ability to continue as a going concern

Risks Related to Development of our Products

1. 34If we modify our approved product or CE marked, we may need to seek additional approvals or CE Certificates of Conformity, which, if not granted, would prevent us from selling our modified products
2. 35Medical device development involves a lengthy and expensive process, with an uncertain outcome. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, ongoing development for lifecycle management of our products

Risks Related to Employee Matters and Managing our Growth

1. 36Our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel
2. 37We may need to expand our development and regulatory capabilities and our marketing and distribution capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations
3. 38Our employees, independent contractors, consultants, manufacturers and distributors may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements
4. 39We may incur product liability losses, and insurance coverage may be inadequate or unavailable to cover these losses

Risks Related to our Intellectual Property

1. 40Our ability to protect our intellectual property and proprietary technology is uncertain
2. 41Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by government patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements
3. 42The medical device industry is characterized by patent litigation, and we could become subject to litigation that could be costly, result in the diversion of management's time and efforts, stop our development and commercialization measures, harm our reputation or require us to pay damages
4. 43We may be subject to damages resulting from claims that we, or our employees, have wrongfully used or disclosed alleged trade secrets of our competitors or are in breach of non-competition or non-solicitation agreements with our competitors
5. 44We may be subject to claims challenging the inventorship of our patents and other intellectual property
6. 45We are subject to the patent laws of countries other than the United States, which may not offer the same level of patent protection and whose rules could seriously affect how we draft, file, prosecute and maintain patents, trademarks and patent and trademark applications
7. 46Our intellectual property rights do not necessarily address all potential competitive threats or confer meaningful competitive benefits

Risks Related to our Legal and Regulatory Environment

1. 47Our products and operations are subject to extensive governmental regulation, and failure to comply with applicable requirements could cause our business to suffer
2. 48The FDA regulatory clearance process and regulatory processes in other countries are expensive, time-consuming and uncertain, and the failure to obtain and maintain required regulatory clearances, certification and approvals could prevent us from commercializing Eversense and future versions of Eversense
3. 49If the FDA requires us to go through a more rigorous examination for future products or modifications to existing products than we had expected, our product introductions or modifications could be delayed or canceled, which could cause our sales to decline or to not increase in line with our expectations
4. 50If we or our third-party suppliers fail to comply with the FDA's or other foreign regulatory authorities’ good manufacturing practice regulations, this could impair our ability to market our products in a cost-effective and timely manner
5. 51A recall of our products, or the discovery of serious safety issues with our products, could have a significant negative impact on us
6. 52We are subject to additional federal, state and foreign laws and regulations relating to our healthcare business; our failure to comply with those laws could have an adverse impact on our business
7. 53compliance and reporting requirements as part of a consent decree or corporate integrity agreement. Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business
8. 54In the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), and other similar laws (e.g., wiretapping laws)
9. 55Because of our hybrid work policies, sensitive information that is normally protected may be less secure as more of our employees utilize network connections, computers and devices outside our premises or network, including working at home, while in transit and in public locations
10. 56We may be liable if the FDA, competent authorities of the EEA countries, or another regulatory agency concludes that we have engaged in the off-label promotion of our products
11. 57International sales of medical devices are subject to foreign government regulations, which vary substantially from country to country. In order to market our products in other countries, we must obtain regulatory approvals or certifications and comply with extensive safety and quality regulations in other countries
12. 58Off-label use of our product by patients could lead to product liability claims and regulatory action
13. 59Legislative or regulatory healthcare reforms may make it more difficult and costly for us to obtain regulatory clearance, certification or approval of our products
14. 60PPACA will be subject to judicial or Congressional challenges in the future. It is unclear how such challenges and the healthcare reform measures of the second Trump administration will impact the PPACA and our business

Risks Related to our Common Stock

1. 61Because our stock price has and will likely continue to be highly volatile, the market price of our common stock may be lower or more volatile than expected
2. 62The issuance of additional stock in connection with financings, acquisitions, investments, our equity incentive plans, or otherwise will dilute our existing stockholders
3. 63Subject to maintaining specified ownership thresholds, PHC continues to hold the right to designate up to two individuals to serve on our board of directors as outlined in their Investor Rights Agreement
4. 64If our estimates relating to our critical accounting policies are based on assumptions or judgments that change or prove to be incorrect, our operating results could fall below expectations of financial analysts and investors, resulting in a decline in our stock price
5. 65We do not intend to pay cash dividends in the foreseeable future
6. 66Provisions in our corporate charter documents and under Delaware law may prevent or frustrate attempts by our stockholders to change our management and hinder efforts to acquire a controlling interest in us, and the market price of our common stock may be lower as a result
7. 67(4) any action asserting a claim governed by the internal affairs doctrine. However, this exclusive forum provision would not apply to suits brought to enforce a duty or liability created by the Securities Act or the Exchange Act
8. 68If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements on a timely basis could be impaired
9. 69Our effective tax rate may fluctuate, and we may incur obligations in tax jurisdictions in excess of accrued amounts
10. 70We may be unable to utilize our tax attribute carryforwards to reduce our income taxes
11. 71Changes in tax laws or regulations that are applied adversely to us or our customers may have a material adverse effect on our business, cash flow, financial condition, or results of operations
12. 72Our bank deposits in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limits could be impacted if the underlying financial institutions fail