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Senseonics Holdings (SENS) Risk Analysis
Risk Overview Q3, 2023
Source: the company's latest filing for the period ended Sep 30, 2023, filed Nov 09, 2023
Risk Change Over Time
- Capital Markets - Risk 1Our recent exchange agreements with certain holders of our 2025 Notes will result in additional dilution and could cause our stock price to decline.
On August 10, 2023, we entered into separate, privately negotiated exchange agreements with certain holders of our 2025 Notes, pursuant to which the noteholders agreed to exchange an aggregate principal amount of up to $30.8 million of 2025 Notes for a combination of cash and newly issued shares of common stock. The number of shares we issued in connection with these exchanges was determined based upon the volume-weighted average price per share of the common stock during a 15-day averaging period commencing on August 11, 2023 and ending August 31, 2023. Based on the volume-weighted average price per share of the common stock during the averaging period, a total of 35.1 million shares of common stock were issued in the Exchanges. The number of shares that issued in connection with the exchanges exceeded the number of shares underlying the 2025 Notes that were exchanged, resulting in incremental dilution to our common stockholders. Additionally, the shares that we issued to the noteholders will be eligible for immediate resale in the open market without restriction, which could increase the number of shares of common stock sold over the near term and could cause our stock price to decline.
Risk Highlights Q3, 2023
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 69
- Share Price & Shareholder Rights - Risk 1Our amended and restated certificate of incorporation and amended and restated bylaws provide that the Court of Chancery of the State of Delaware and the federal district courts of the United States of America will be the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: (1)any derivative action or proceeding brought on our behalf;(2)any action asserting a claim for breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders;(3)any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws; or (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. Our amended and restated bylaws further provide that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. We note that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. These exclusive forum provisions may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other employees. Any person or entity purchasing or otherwise acquiring any interest in any of our securities shall be deemed to have notice of and consented to these provisions. There is uncertainty as to whether a court would enforce such provisions, and the enforceability of similar choice of forum provisions in other companies' charter documents has been challenged in legal proceedings. While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions, and there can be no assurance that such provisions will be enforced by a court in those other jurisdictions. If a court were to find these types of provisions to be inapplicable or unenforceable, and if a court were to find the exclusive forum provision in our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could materially adversely affect our business.
- Share Price & Shareholder Rights - Risk 2Provisions 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.
There are provisions in our certificate of incorporation and bylaws that may make it difficult for a third party to acquire, or attempt to acquire, control of our company, even if a change of control was considered favorable by some or all of our stockholders. For example, our board of directors has the authority to issue up to 5,000,000 shares of preferred stock. The board of directors can fix the price, rights, preferences, privileges, and restrictions of the preferred stock without any further vote or action by our stockholders. The issuance of shares of preferred stock may delay or prevent a change of control transaction. As a result, the market price of our common stock and the voting and other rights of our stockholders may be adversely affected. An issuance of shares of preferred stock may result in the loss of voting control to other stockholders. Our charter documents also contain other provisions that could have an anti-takeover effect, including: - only one of our three classes of directors is elected each year;- stockholders are not entitled to remove directors other than by a 66 2/3% vote and only for cause;- stockholders are not permitted to take actions by written consent;- stockholders are not permitted to call a special meeting of stockholders; and - stockholders are required to give advance notice of their intention to nominate directors or submit proposals for consideration at stockholder meetings. In addition, we are subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law, which regulates corporate acquisitions by prohibiting Delaware corporations from engaging in specified business combinations with particular stockholders of those companies. These provisions could discourage potential acquisition proposals and could delay or prevent a change of control transaction. They could also have the effect of discouraging others from making tender offers for our common stock, including transactions that may be in your best interests. These provisions may also prevent changes in our management or limit the price that investors are willing to pay for our stock.
- Share Price & Shareholder Rights - Risk 3Holders of our Series B convertible preferred stock and our convertible notes may convert their note into common stock and, upon conversion, will dilute your percentage of ownership. Our note holders have the ability exert substantial influence over us in a manner adverse to your interests.
The Series B convertible preferred stock, PHC Notes, and 2025 Notes are convertible into our common stock at the option of the holder. Accordingly, any conversion of convertible preferred stock would dilute the ownership of our holders of common stock. The potential dilutive effect of the conversion of shares of convertible preferred stock or convertible notes may also adversely affect our ability to obtain additional financing on favorable terms or at all. Subject to maintaining specified ownership thresholds, the holders of the PHC Notes have a right to designate two individuals to serve on our board of directors. As a result, the holders of the PHC Notes are able to influence our decisions, including the election and removal of directors, any merger, consolidation, sale of all or substantially all of our assets, or other significant corporate transactions. The holders of the PHC notes may have interests different the interests of the holders of our common stock.
- Share Price & Shareholder Rights - Risk 4The issuance of additional stock in connection with financings, acquisitions, investments, our equity incentive plans, or otherwise will dilute our existing stockholders.
Our certificate of incorporation authorizes us to issue up to 900,000,000 shares of common stock and up to 5,000,000 shares of preferred stock with such rights and preferences as may be determined by our board of directors. Subject to compliance with applicable rules and regulations, we may issue our shares of common stock, including securities convertible into common stock, in connection with a financing, acquisition, investment, our equity incentive plans or otherwise. This includes the issuance, from time to time, of non-statutory stock options exercisable for shares of our common stock and/or restricted stock units that may be settled in shares of our common stock pursuant to the Senseonics Holdings, Inc. 2023 Commercial Equity Plan. Any such issuance could result in substantial dilution to our existing stockholders and cause the trading price of our common stock to decline.
- Share Price & Shareholder Rights - Risk 5Because 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.
Our stock price has been highly volatile. The stock market in general and the market for innovative, emerging medtech and biotechnology companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. From January 1, 2021 through March 10, 2023, the trading price of our common stock has been as low as $0.85 per share and as high as $5.27 per share. This extreme stock price volatility has been accompanied by extremely high trading volume in our common stock in comparison to historical experience. During this period, the average daily trading volume of our common stock has been approximately 15 million shares and on January 19, 2021, our trading volume exceeded 409 million shares, whereas the average daily trading volume from January 1, 2022 to December 31, 2022 was 6.5 million shares. The extreme increase in trading volume and volatility has not necessarily correlated to the company's announcement of material developments and often appears unrelated to changes in actual or expected operating performance. Purchases or sales of large quantities of our stock, including the establishment and/or closing of significant short positions in our stock could have an unusual or adverse effect on our market price. Market fluctuations may also cause short sellers to periodically enter the market in the belief that we will have poor results in the future. Abnormal trading activity, including activity that is considered market manipulation, can lead to irrational and/or temporary movements in the price of our common stock, which, in turn, may increase its risk and volatility. We cannot predict the actions of market participants and, therefore, can offer no assurances that the market for our common stock will be stable or appreciate over time. The market price of our common stock may also be influenced by many additional factors, including: - analyst coverage, recommendations or changes in their estimates of our financial performance;- future announcements about us or our competitors, including the results of technological innovations or new commercial products;- announcement of operating results and other factors relating to the commercialization of our products;- clinical trial and topline data results;- depletion of our cash reserves;- sale of equity securities or issuance of additional debt;- announcement by us of significant strategic partnerships, capital commitments or acquisitions;- changes in government regulations;- impact of competitor successes;- developments in our relationships with our collaboration partners;- global market or financial developments, whether due to the global COVID-19 pandemic or otherwise;- announcements relating to health care reform, legislation and reimbursement levels, including third-party payor coverage decisions;- sales of substantial amounts of our stock by existing stockholders (including stock by insiders or 5% stockholders);- regulatory approvals, certifications, timelines or other actions;- litigation;- public concern as to the safety of our products or recalls;- the make-up of our shareholder base; and - the other factors described in this Risk Factors section.
- Share Price & Shareholder Rights - Risk 6If securities or industry analysts do not publish research or reports, or publish unfavorable research or reports, about us, our business or our market, our stock price and trading volume could decline.
The trading market for our common stock is influenced by the research and reports that securities or industry analysts publish about us or our business, our market and our competitors. Securities or industry analysts may elect not to initiate or continue to provide coverage of our common stock, and such lack of coverage may adversely affect the market price of our common stock. Even if we have securities or industry analyst coverage, we will not have any control over the analysts, or the content and opinions included in their reports. The price of our stock could decline if one or more securities or industry analysts downgrade our stock or issue other unfavorable commentary or research. If one or more securities or industry analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which in turn could cause our stock price or trading volume to decline.
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