Why Senseonics (SENS) is a perfect buy under $5

Shares of Senseonics (SENS) has reached a high of around $5.27 this year, with SENS stock up over 200% year to date. The company recently released promising data on their 180-day device. I expect approval of the 180-day device by the end of the year.

The company will start enrolling for their 365 day device in 2022. You should note that the 180-day device is already approved in Europe, which has stricter regulations.

Looking at the options chain there is a high open interest on $4 June 18 calls indicating a big move. Open interest is a measure of market activity. Little or no open interest means there are no opening positions, or nearly all the positions have been closed.

High open interest means there are many contracts still open, which means market participants will be watching that market closely.

Open interest is a measure of the flow of money into a futures or options market. Increasing open interest represents new or additional money coming into the market while decreasing open interest indicates money flowing out of the market.

Collaboration with Ascensia Diabetes Care

Many investors are over looking the collaboration with Ascensia. The diabetes care giant was created through an acquisition of Bayer Diabetes Care by PHC Holdings or Panasonic Healthcare Holdings. PHC Holdings bought it out from Bayer AG, one of the world’s largest pharmaceutical companies.

With the acquisition Ascensia became one of the largest diabetic care company in the world. Senseonics’ collaboration with Ascensia will be a great benefit of savings on the cost of doing business, Senseonics will enhance focus on advancing its pipeline of long-term implantable CGM solutions, while Ascensia will be responsible for sales, marketing, market access, patient and provider onboarding, and customer support.

In addition, Ascensia’s parent company, PHC Holdings Corporation, will also provide up to $50 million to Senseonics through the purchase of $35 million in aggregate principal amount of convertible debt securities in a transaction expected to close on or about August 14, 2020 and a commitment to purchase up to an additional $15 million in convertible preferred stock, at Senseonics’ option and contingent upon FDA approval of the 180-day Eversense sensor in the U.S.. Both organizations share a vision focused on providing leading technology to diabetes patients around the world to lessen the burden of disease management.

What happens when SENS stock reach $5?

Stocks that trade below $5 are considered so risky that institutional investors, including pensions and mutual funds, aren’t allowed to buy penny stocks and can even be required to sell securities that fall below the $5 mark. This double-edged sword cuts both ways, however, when a security rises above $5 and institutions are allowed to buy.

So when the stock reached $5 we can expect that more institutions will be inclined to buy as the stock stays above the $5 threshold.