scPharmaceuticals Inc (SCPH) 2024 Q3 法說會逐字稿

Good afternoon and welcome to SC Pharmaceuticals third quarter, 2024 earnings conference call.

(Operator Instructions)

I would now like to turn the conference call over to Nick Colangelo investor relations to cover forward-looking statements. Nick. Please go ahead.

Thank you operator. Before beginning today's earnings call, we would like to highlight the following forward-looking statements. All statements on this conference call other than historical facts are forward-looking statements within the meaning of the federal securities laws including but not limited to statements regarding sc pharmaceuticals expected future financial results, management expectations and plans for the business.

The ongoing commercialization and marketing of PO six and other regulatory approvals of po six. The words anticipate, believe, estimate expect intend guidance, confidence, target project and other similar expressions are used typically to identify such forward-looking statements.

These forward-looking statements are not guarantees of the future performance. It may involve and are subject to certain risks and uncertainties and other crucial factors that may affect C pharmaceuticals, business, financial condition and other operating results.

These include but are not limited to the risk factors and other qualifications contained in SC Pharmaceuticals annual report on form 10-K, quarterly reports on form 10-Q and other reports filed by the company with the SCC to which your attention is directed actual outcomes and results may differ materially from what is expressed or implied by these forward-looking statements.

Any forward-looking statements made in this conference call including responses to your questions are based on current expectations as of today.

And C pharmaceuticals expressively disclaims any intent or obligation to update these forward-looking statements except as required by law with that. I will now turn the call over to John Tucker, Chief Executive Officer of SC Pharmaceuticals, John. Please.

Go ahead.

Thank you, Nick and thank you to everyone who has dialed in to this afternoon's call. I'll begin today's call by discussing the company's operational and business highlights the third quarter of 2024 before handing the call to Steve Parsons, our senior Vice President of commercial to provide a more thorough FUROSCIX commercial update.

We will then provide a detailed review of financials from Rachel. No C pharmaceuticals' Chief Financial Officer. Before losing the call out with a question and answer session in the third quarter of 2024. We generated net revenue of $10 million.

This represents an approximately 24% increase in net revenue from the second quarter of 2024. While we were disappointed with where the third quarter ended. Given the strong demand at the beginning of the quarter, we are pleased with the growth we have seen so far in the fourth quarter. We see this growth being driven by the sales force expansion.

The indication expansion to include class four patients and continued growth in the IDM business. I will give a more comprehensive update on our longer term growth initiatives. Momentarily, FUROSCIX net discount was approximately 15.7% just over the high end of the range of 10 to 15% that we guided to during our second quarter results.

The increase in our GTN is largely due to lagging C MS reporting on coverage, GAAP rebates and to a lesser degree on Thoro sales, integrated delivery networks and hospital system pharmacies for the balance of 2024 we anticipate the GTN to stay in the 10 to 15% range.

And in 2025 we anticipate the GTN discount to increase up to 35% by the end of the year driven by the Medicare part D redesign. Please keep in mind we feel the impact on the GTN to be more than offset by the lower patient copays due to the Medicare part D redesign. We feel we are uniquely positioned to take advantage of the redesign and the lower patient out of pocket costs.

In 2025 Looking towards our future growth opportunities for FSIC. One of our long term initiatives has been the Ferros indication expansion to cover all heart failure patients including class four patients that present more severe symptoms more frequently and have the greatest limitation on physical activity.

Despite consisting of roughly 10% of the overall chronic heart failure market. Class four patients are responsible for over 30% of the hospitalization for heart failure. And class four patients are more likely to benefit from cirrhosis to manage their increased fluid events outside of the inpatient setting.

Ultimately, we are focused on getting patients back to their maintenance therapies without the costly hospitalization and delaying patients having symptom resolution. This is the message that resonates strongly with both physicians and their patients.

We are already filling prescriptions for class four patients and are seeing an uptick in the size of our prescriptions reflecting larger script sizes in class four patients.

Another key objective we accomplished this quarter that relates to the ongoing franchise expansion and FUROSCIX was the acceptance of our NDA filing by the FDA to expand the indication to include the treatment of edema through the fluid overload in patients with chronic kidney disease.

Or we believe FSIC if approved has the potential to play an important role in the CD market. Again, being utilized by the patients who are comfortable with an at home treatment option for their fluid build up until their everyday oral loop diuretic treatment regime begins to work again. While these oral loop diuretics are the current standard of care and fluid overload for CKD patients.

They do have limitations particularly around acute spikes in fluid levels. Given that these oral loop diuretics have less predictable bioavailability. It is crucial that KD patients, fluid levels are well controlled as fluid overloaded KDS associate with both significantly increased mortality as well as a faster decline in renal function and dialysis initiation.

We've undertaken several steps to prepare for a potential launch of perosis and CKD. These initiatives include establishing a cross functional team that has been field testing, positioning, conducting exploratory market research, identifying key opinion leaders and calling on high impact high impact nephrologists who are already treating heart failure patients that also have CKD.

While we await our PDUFA date of March 6th, 2025 we're undertaking every prelaunch activity to enable rapid commercial uptake should FUROSCIX receive approval for CKD.

The final growth initiative we were focused on executing over the course of the third quarter is our low volume auto injector which we announced positive top line results from a PK PD bridging study in August. Importantly, the auto injector demonstrated bioavailability 107.3%.

And participants receiving the auto injector had similar urine output and urinary sodium and potassium excretion compared to IV furosemide, the auto injector if approved has the potential and meaningfully reduced manufacturing costs compared to FUROSCIX current on body infuser and offers a compelling treatment option for HCPS and patients.

We are continuing to work through our SND A package and currently anticipate submitting to the FDA in January of 2025.

Before I hand the call to Steve Parsons for a more comprehensive overview of fos' launch metrics. I wanted to quickly highlight the transformative financing that we completed in early August that resulted in a net addition of roughly $75 million to the pharmaceutical balance sheet and bolsters our projected cash runway through expected profitability in addition to the $75 million that was immediately available. C Pharmaceuticals has the ability to pull down an additional $50 million via both a debt and royalty stream facility that we put in place with perceptive advisors.

In summary, we are pleased to have the validation and continued support from a great roster of both our new and existing equity investors. I will now turn the call over to Steve Parsons , Senior Vice President of Commercial.

Thank you, John. We remain encouraged by the continued progress achieved during the third quarter. From launch through September 30th 2024 approximately 3,100 unique health care providers have prescribed FUROSCIX representing a 13% increase compared to the second quarter and is reflective of our efforts to expand the FUROSCIX prescriber base while still increasing utilization with existing repeat writers.

During the third quarter, we filled approximately 10,800 doses of FSIC up 16% from the previous quarter. Of note. The average number of doses per prescription has risen to 6.8 in the third quarter compared to an average of 6.3 doses. In the second quarter, we anticipate this upward trend will continue driven by the expansion of the sclerosis indication to include class four and some health care providers writing larger prescriptions for patients.

Also, we have increased efforts over the past quarter to further penetrate advanced heart failure clinics. Now that the NYHA class restrictions have been removed.

We have seen that advanced heart failure patients typically receive a higher number of doses per prescription.

The new FSIC direct patient services hub continues to perform well. Following the transition, the hub allows for streamlined online prescription submissions and offers a real time data dashboard that all prescribers value the prescribers and their staff can now track key information including the patient's prior authorization submission approval status, the patient's co pay amount and the shipment date to the patient.

This improved hub is intended to reduce friction from the prescribing process and we have received encouraging feedback from the health care providers.

Thus far, they've highlighted the convenience and ease of access which we believe will drive future increases in patient treatment volumes over the medium to long run convenience and ease of access is also what we are hearing from the IDN hospital system.

Customers who are seeking to bring forensics into their internal distribution systems which connect to the e prescribing system and captures forensics treatment data for all system specialists to see internal distribution can also support early discharge planning and meds to beds.

In addition to the normal home delivery service to conclude, we've expanded our number of territories to approximately 90 for the fourth quarter. And we feel with reach and frequency on more customers during the highest treatment opportunity of the year that these factors will should have positive impact on our revenue.

With that. I would like to hand the call to Rachel KNS C pharmaceuticals', Chief Financial Officer.

Thank you, Steve and good afternoon everyone. Product revenues were $10 million for the third quarter of 2024 compared to $3.8 million for the third quarter of 2023. Cost of product revenues were $3.3 million for the third quarter of 2024 compared to $1.1 million for the third quarter of 2023.

The increase in both product revenues and cost of product revenues for the quarter ended September 30th 2024 was due to an increase in demand of fo six further into commercial launch and related manufacturing costs.

Research and development expenses were $3.5 million for the third quarter of 2024. Compared to $3.4 million for the third quarter of 2023. The increase in research and development expenses for the quarter ended September 30th 2024 was primarily due to an increase in clinical study costs offset by a decrease in pharmaceutical development, quality, regulatory and employee related costs.

Selling general and administrative expenses were $21.3 million for the third quarter of 2024. Compared to $14.1 million for the third quarter of 2023.

The increase in selling general and administrative expenses for the quarter ended September 30th 2024 was primarily due to costs associated with entering into the credit agreement and revenue purchase and sale agreement in August. 2024 employee related costs, commercial costs, patient support and professional service costs offset by a decrease in taxes and insurance.

Etsy pharmaceuticals reported a net loss of $35.1 million for the third quarter of 2024 compared to $15.6 million for the third quarter of 2023.

The increase in net loss for the third quarter of 2024 was primarily due to onetime charges related to the extinguishment of debt and accounting for the new financial instruments, ETSI pharmaceuticals entered into in August 2024.

The pharmaceutical net loss for the third quarter of 2024 was 75¢ per share. The 75¢ per share was burdened by one time charges of 47¢ per share.

Pharmaceuticals ended the third quarter of 2024 with $91.5 million in cash and cash equivalents compared to $76 million in cash, cash equivalents and short term investments. As of December 31st 2023 the transformative debt and equity financing that was completed in August funds, the company through expected profitability as of September 30th 2024 the pharmaceuticals total shares outstanding was 50,40,134 million, financial update and I will now hand the call back to John for closing remarks before beginning our question and answer session.

Thank you, Rachel and thank you, Steve. This concludes our prepared remarks at this point. We'll open the call for questions, operator.

(Operator Instructions)

Our first question comes from Roana Ruez.

Just second.

Our first question comes from Rana Roes with Lein partners. Please proceed with your question.

Hi, this is Lessay. We just have a couple of questions. I think first curious as to what you think the doses per prescription could look like for for Roi and CKD relative to Heart failure.

Steve, will I answer that?

Yeah, our early research is suggests it will be similar. It won't be as high as class four heart failure patients, more like the class two, class three heart failure patients. So you know, in the 6 to 6.5 range.

Okay. Thank you for the added color. And then you know, with the potential auto injector if approved, what do you think the rate of on body diffuser versus auto injector could shake out to in the long term?

Yes. So this is John.

Yes. So we we've modeled this based on, you know, some initial market research. We think at the end of the day, you know, 90 plus percent of this will be in the auto injector.

Now the you know that the transfer rate or the or the adoption rate will be driven by a number of things, we don't think it will get to 100%. We know there are some patients who you know, for, for years have struggled with fluid overload and going back and forth to the hospital.

The IV clinic found something that works and we will stay with it. But we think the vast majority will move and new patients will adopt the auto injector. So we think by the end of the convergence 90 to 95% auto injector.

Okay. And then a last one from us. So what do you, what do you think about the holiday season? Is there any expected seasonality that we could see in Q4.

Yeah, I'll turn that over to Steve.

Yeah. The the the fourth quarter of the year is the, is the biggest opportunity of the year based on how many patients get admitted to the hospital visit.

S fluid overload is a big problem around holidays. And so our model, you know, predicts that we have the most sales in the fourth quarter, that's where the most opportunity is for these patients. So there is seasonality.

And you know, some doctors will actually preempt understanding that the patients are going to have too much salt, too much turkey, too much Chinese food, whatever and they will, they will preempt by writing by writing a script just in case that patient does get in trouble. So we see an opportunity both in that pre admission or even prophylactic therapy.

And as I said, in my prepared remarks, you know, we are seeing, you know, a good start to this quarter and we haven't even really gotten close to the holidays yet.

Okay, great. Well, you know, I actually, to follow up on that, when do you usually see that with the, with this kind of stocking up, maybe physicians like prescribing for the holidays? Does that come in Q3 or is that something that you expect to see more in the November, December period?

It's a Q4 phenomenon. So we'd expect to see it in November and December.

Okay. Okay, great. Thanks, that's all from Us.

Thank you.

Stacy Ku; TD Cowen.

Thanks for taking our questions. We had a few. So just first regarding class four patients as you exit the year, what percentage do you think will be class four and, and long term, where do you think it could stabilize and then for CKD still early days?

But can you comment on how the initial nephrology detailing is going and what you're learning about the upcoming CKD launch? Thank You.

Sure.

Hey, Stacy, it's John, I'll take the class four. So we think it's right now about 10 10% now, we didn't really launch it until September. So, you know it's early I think what we have seen though is an increase in the script side. So there might be about 10% of our scripts that are sitting here today.

We think that will grow through the, through the quarter and in the next year, but it didn't get as impactful to us is going to be the the size of the scripts.

We're seeing about eight doses per prescription on class four. So, we're, you know, enthused about how many scripts we're seeing for these patients, but also the size of the scripts.

And as we stated before, we think a lot of that could be palliative care for patients going to use an IV clinic to go in three times a week to get IV treatment.

Now, they can, they can do that at home as well as preventing, preventing using the hospital as a IV clinic as far as nephrology that the offices were called on. And we just started this initiative a month, month and a half ago. But maybe you could talk a little bit about the reception.

The question about actual prescribing by a nephrologist and heart failure or is it market research that your question was about.?

Just kind of curious what the reception is to right now. It's kind of concomitant heart failure and CKD patients.

But I'm sure that's kind of giving the sales force and you all an idea of what the receptivity will be when you launch CKT.

A little bit of both.

Yes. Okay. Well, it's pretty positive. You know, we get a lot of inbound request to go see nephrologists like they weren't on our original target plan for this year.

They were going to be built in for next year. But we do get inbound requests for opening the account. They hear about it from cardiology. So it's been pretty positive.

They don't have access to IV in their offices, outpatient IV. So they, they need a product like PO six. And their adoption has been, I'd say a little faster than cardiology in the offices that we've been to. They see the need, they see the overlap cardiorenal and and they, and they prescribe.

I think, Steve made a really good point. Stacy is that in heart failure, you know, they'll, they'll sometimes have IV clinics at the heart failure clinic, nephrologists really don't have access to that.

So, you know, you hear a lot of them using non loop diuretics like Toone out of sheer, they have nothing else to use. So we've been enthused about the reception and our market research and CK.

D American Society Nephrology meeting a week ago. And that was very positive. Let's say it's.

Okay. Incredibly helpful. Thank you.

Thanks, Stacy.

Douglas Tsao; H.C. Waingright.

Hi, good afternoon. Thanks for taking the Questions John I guess I'm just trying to understand a little bit around some of the dynamics that led to a little Bit of a slower end of the quarter than you expected With it that your Prescriber started to write less.

Frequently as Individuals or did your sort of The breadth of your scriptwriting, sort of diminish a little bit through the quarter.

Yeah, Doug, we were disappointed with how the, the, I guess the second half of the quarter went. And, and it really was, you know, something we didn't fully, you know, you really can't handicap how your coverage GAAP rebates play in. So the coverage GAAP rebates kind of hurt us in two places, one in our GTN, which was, you know, we've given a range 10 to 15. It came in at 15.7.

So we've been a little above the high end. Obviously, every point there costs you over $100,000 in revenue. So that, that hurt us. And then the flip side of the coverage GAAP rebate is when patients get in it. The ones that can afford to pay the higher copay they pay it hurts you on your GTN because you're paying a 70% rebate on all of those patients. And that's what really drove drove the GTN.

But on the flip side of that is when patients have high co pays, we know they abandon it. So we didn't, we saw continued growth in scripts written. These patients that were in the coverage. GAAP. A lot of them did not fill the script because of the co pay.

The good thing about that. Two good things about that. If there are any silver linings is in Q4, these patients have all gone through the GAAP and are now in catastrophic where their copas are and our responsibility is lower. So it helps our GTN and helps the fill rate.

And then again, next year, you don't have any coverage GAAP at all. If you go to the redesign with patients out of pockets, if they smooth, cannot be more than $166. So it's really a phenomenon in the coverage. GAAP. We it's always hard to anticipate early in a quarter, what the gaps, what the rebates are going to be and what that coverage GAAP CO pay is going to be. But that what, you know, we didn't anticipate that level of coverage. GAAP.

We thought the patients had gotten through it in the second quarter early in the third, but they clearly hadn't as we were looking at the copays coming in they were higher than we had anticipated, but the script demand was was there. It continued to grow it's just that, you know, the fill rate in the first half of the quarter was much higher than it was in the second half of the quarter.

Okay, great. Thank You.

Thanks Doug.

Chase Knickerbocker with Craig - Hallum.

Good afternoon. Thanks for taking the questions, guys. Just 1st, 1st and sorry if I missed it. Jumping around calls here. What was the conversion rate in the third quarter? And I guess what kind of improvement did you see kind of sequentially there?

Yeah, so Steve, what was your, what ended.

Up at 53% fill rate of our XS compared to about 48% in Q2 of our XSS. It was higher as we said earlier in the quarter and moderated by the end of the quarter with the coverage GAAP patients, some of them declining 25% cost of.

And keep in mind, you know, our, our fill rates still we have the dynamics of of doctors putting product on layaway and also just doing coverage determination. So it's always noisy, but it did go up about 10% from Q2 to Q3 but clearly challenged a bit by coverage GAAP rebate patients in the quarter.

Got it. And so, you know, dos is written decelerated a little bit sequentially from the standpoint of growth. Was that largely this coverage GAAP kind of dynamic or is there any other kind of dynamics in the quarter that you call out?

And then John as we kind of are halfway through Q4 here, can you talk to kind of how that conversion rate looks so far on Q4? Thanks.

Yes, so to go back to Q3. Yeah, you know, again the coverage GAAP, you know the thing about that the script gets written and we did see growth in scripts from, from Q2 to Q3.

We saw, you know, growth in filled units, you know, rise from Q2 to Q3, about 16%. That doesn't include the I DNS as well, which you know we added a number of I DNS and that business continues to grow in Q4 so far, Steve on the on the fill rate where 50.

55-54 I think we're seeing a little tick up as patients get through the GAAP and into catastrophic. But we still have the phenomenon of coverage, co pay, determination and and doctors writing layaway scripts.

So, but we are, we are seeing it trending up this quarter versus last, it trended up last quarter versus the quarter before. So that's where we are.

Got it. And that kind of paras into kind of my question kind of around next year. If we think about kind of the part D redesign and what that can do, you know, again, for kind of improvement conversion rates and generating, you know, hopefully, increased demand as well.

Can you kind of talk a little bit to kind of any updated expectations as far as where you see that conversion rate going? And then last guys, sorry for all the questions.

Any return thus far on kind of the the new reps that were hired in Q3 you know happy with their progress thus far.

I know it's early days but any you know, early green shoots there. Thanks.

Yeah, I think so. Let me answer the second question first. Yeah, the new reps, you know, we one thing we look at every, every week, every day is a percentage of the territories are contributing and the new reps in the new territories have already started to contribute. You know, we didn't get them really out in the field until until the beginning of October.

So there really was zero impact of them in Q3. But we have seen and I think we said it usually takes six weeks or so to get them to make any contribution. They got, they got to call the doctors a number of times to get them to write in new territories. But yes, we've seen a contribution. That's why we're really excited about where we are because these reps are in the field.

They're converting doctors now. The fill rates picking up. We think it will continue to pick up a bit this year and then next year, you know what I can tell you where our model is. And, you know, we think the redesign and I talked about it is really, really beneficial for us. We're in a category where there's no competitor and, and patients will be able to move their copay.

So those coverage GAAP copays that are big and we're talking big over $1000 $2,000. Some of these copays, they're going to be at $166 a month and these are heart failure patients and that's for all of their meds. So we're projecting 65% fill rate.

Now the fill rate, that's great. But what that does also is you'll get more doctors prescribing as they understand, more of their patients can afford the drug. And we're already, you know, we're already out with the forms are out from the on how to sign patients up for, for the smooth, all the plans. There's a CMS form but the plans customize it a little bit.

We have all of the plans forms. They're in the hands of our specialty pharmacies and our hubs and we're, we're helping to sign them, we can't sign them up, but we can certainly provide them the form to get them signed up into the smoothing.

So we think 65 could that be higher? Yeah, it it, it could be. But I think the the impact of that obviously is a big jump in your fill rate, but also a big jump in prescriptions being written. So we look at the tail our tailwinds coming in for this quarter.

It's the sales force expansion. It's a class four labeling for next year. You know, even in January, you're going to have the benefit of the sales force expansion.

You benefit of class four for the for the full quarter and you're going to have the benefit of the redesign, which might be the most impactful of all of those things. And then in March, here comes our CD indication in the beginning of March.

So we think we think it's setting up for, you know, a really interesting year for us next year.

Got it. Thanks.

We have reached the end of our question and answer session. I would now like to turn the floor back over to John for closing comments. Please go ahead, sir.

Thank you very much and that concludes our call this afternoon. As we have stated, we remain encouraged by the ongoing launch of FSIC and are consistently receiving overwhelmingly positive feedback on how well Foex is performing and being accepted in the field.

We have a number of tailwinds at our back as we go through the fourth quarter and into 2025 including the expanded Sales force class four label expansion, the CD indication in the first quarter of 2025.

And the Medicare redesign that takes effect January 1st of 2025. I look forward to a successful Q4 in providing our next update. Thank you very much.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.