scPharmaceuticals Inc. Q1 2023 Earnings Call

Speaker 1: Greetings and welcome to the SD card suitable for quarter 2023 earnings conference call. At this time, all participants find this in only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, these press stars are there on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, PJ Kellaha from my side vises. Thank you. Please go ahead, so. Thank you, operator. Before turning the call over to management, I would like to make the following remarks.

Speaker 2: concerning forward-looking statements. All statements on this conference call other than historical facts are forward-looking statements within the meeting of the federal securities laws, including but not limited to statements regarding SC pharmaceuticals, expected future financial results, and management's expectations and plans.

Speaker 2: for the business and for ethics. The words anticipate, believe, estimate, expect, intend guidance, confidence, target, project, and other similar expressions are used to typically to identify such forward-looking statements.

Speaker 2: These four looking statements are not guarantees of future performance and may involve in our subject to certain risks and uncertainties and other important factors that may affect as the pharmaceuticals business financial condition and other operating results.

Speaker 2: These include but are not limited to the risk factors and other qualifications contained in SC pharmaceuticals, annual report on Form 10K, quarterly reports on Form 10Q, and other reports filed by the company with the SEC to which your attention is directed.

Speaker 2: Actual outcomes and results may differ materially from what is expressed or implied by these forward-looking statements.

Speaker 2: Any forward-looking statements made in this conference call, including responses to your questions, are based on current expectations as of today. And SC Pharmaceuticals expressly describes any intent or obligation to update these forward-looking statements except as required by law. It is now my pleasure to turn the call over to Mr. John Tucker, chief executive officer of SC Pharmaceuticals.

Speaker 2: John , thank you PJ and thanks to everyone listening to this afternoon's call and webcast.

Speaker 3: This afternoon, I'm pleased to provide an operational update before turning the call over to Steve Parsons, our Senior Vice President of Commercial, for a more detailed update on the early stages of the Parosics launch, and then Rachel Nokes, our Chief Financial Officer, for a review of our financials. We will then open the call up for your questions.

Speaker 3: Just two and a half months into the Phorosis launch on February 20th, we are pleased with our progress today and early feedback suggests that Phorosis is being well received in the market. Notably, our commercial team continues to execute on an important leading indicator in services with healthcare providers and have completed 518 through March 30th.

Speaker 3: In the legal detail momentarily, these early efforts are working as intended, as both unique prescribers and total prescriptions written are growing nicely. This supports a strong belief that ferrosics will quickly become a core part of the heart failure treatment paradigm. Either pre-hospital admission or post discharge, as it allows patients for the very first time.

Speaker 3: to receive IV equivalent for osmide based on similar systemic exposure and diaries in the comfort of their own homes.

Speaker 3: Not only is this beneficial to patients who much rather be treated as home than in a hospital setting, but by avoiding hospital admissions and readmissions, significant cost savings can accrue to commercial, Medicare Part D, and Medicaid payers, as well as hospitals who face significant and worsening reimbursement pressure for their heart failure patients.

Speaker 3: As a reminder, Ferro6 is indicated for the treatment of congestion due to fluid overload in adult patients with New York Heart Association Class 2 and Class 3 chronic heart failure. Ferro6 is not indicated for use in emergency situations or in patients with acute pulmonary edema.

Speaker 3: The on-body infuser will deliver only an 80-milligram dose of ferrousics.

Speaker 3: Last quarter, we detailed two studies that we conducted that clearly demonstrate the potential financial benefits of Ferro6. One prospective study, Freedom HF, focused on select patients who presented to the emergency room with a worsening heart failure event and were treated with Ferro6 at home as opposed to being admitted to the hospital.

Speaker 3: The result of the study was that the patient's treat with parosix had heart-cle related costs that were lower by an average of $16,995 versus historically matched comparators. And this result was achieved with a very high rate of statistical significance, with a p-value less than 0.001.

Speaker 3: While this analysis excludes the cost of ferrosics since pricing had not been established at the time of the study, the conclusion remains unchanged.

Speaker 3: And the second study, the Phase II pilot study at home HF, impaired for roadsticks with treatment issues or approaching chronic heart failure.

Speaker 3: presenting to a heart failure clinic that worsening congestion, acquiring augmented diuresis.

Speaker 3: Among the key findings, subjects randomized to parostics had a 37% reduction in the risk of a heart failure hospitalization at day 30 relative to patients randomized to treatment as usual.

Speaker 3: The outcome of both studies provide a compelling picture of the many benefits of Ferocix and further support the efforts of our commercial team as they work to educate treating physicians and their staff. They also provide critical validation as we engage with payer pharmacy and therapeutic committees regarding reimbursement dynamics.

Speaker 3: On the topic of the payers, we continue to have productive discussions with commercial, Medicare Part D, and Medicaid payers in a continuing effort to make ferrosics broadly available to patients at the most favorable terms possible. This involves not only securing initial coverage of ferrosics, but also working to have a place on a formular interior that would be affordable to most patients.

Speaker 3: We previously indicated that approximately 60% of all heart failure patients can access for us under fixed-tier co-pays of $100 or less. And we believe that over time we can increase this to 75% or more.

Speaker 3: We're selecting our continued progress. We are recently notified by a top five national health plan that for Ro6, we've placed in a preferred form of a status across all of its commercial plans effective June 1st. We regard this as a significant positive reimbursement development and we remain in discussions with this payer regarding its part D plans with the goal of

Speaker 3: Cade coverage of ferrosics, effective July 1, 2023.

Speaker 3: In the U.S. alone, our estimated be 6.7 million adults suffering from heart failure, resulting in 4 million heart failure events annually.

Speaker 3: If we assume $3,300 per episode, which is four doses of parostics, we have the potential to ask us a market opportunity that is nearly $7 billion. And again, this is in the U.S. alone. There are total of 15.8 million adults suffering from heart failure if we include the other G7 countries.

Speaker 3: At this early stage, we are seeing a wide range of doses of phlerosis per prescription from two to twelve. As this is at the discretion of the treating physician, and some patients require more aggressive interventions than others. Finally, we are well-funded with more than $116 million of cash. We will be seeing a wide range of patients with phlerosis per prescription from two to twelve.

Speaker 3: Casual Provence and short-term investments as of March 31st, providing us with ample resources to continue to execute on our commercial plan.

Speaker 3: At this point, I'll turn the call over to our Senior Vice President, Commercial Steve Parsons, for deeper dive into early launch metrics. Steve?

Speaker 3: Thank you, John . As John indicated, well, it has only been about two and a half months since we announced the launch and commercial availability of the Euro 6 on February 20. We are pleased with our initial progress.

Speaker 3: I'll start with an update on our commercial team. We currently have 41 field territory sales representatives with three additional reps expected to join by the end of May for a total of 44. They are conducting face-to-face inserves at hospitals, doctors offices, and nurses.

Speaker 3: and heart failure clinics. We stand ready to add more as demand patterns of perfurosis continue to emerge.

Speaker 3: targeting approximately 150 to 200 healthcare providers and 12 hospitals per territory in services provide healthcare providers with training and prescribing instructions for ferozics designed to ensure office readiness.

Speaker 3: Democrats, traditions, and provided the completion of each end service.

Speaker 3: The focus on the in service is crucial to ensuring effective use and training on bureaucrats. As John mentioned, our Salesforce conducted 518 in services as of March 31st and completed 743 total in services as of April 28th.

Speaker 3: Many of these in-services are lasting one to two hours as physicians desire to have training done throughout the entire office or clinic. This reflects the interest in forensics by healthcare providers. This sales team is a specialized force that can target top clinics and doctors offices efficiently.

Speaker 3: and effectively. They are focused on building stronger relationships with the key constituencies at these clinics through an educational and consultative approach.

Speaker 3: And while it is still early,

Speaker 3: We will be ready to add more reps in the field as needed to maximize the clinic and patient access to the furosics.

Speaker 3: The early results are encouraging. Through March 31st, we had 194 total prescribers with a total of 381 prescriptions written and 161 prescriptions filled by the last day of the quarter. The early results are encouraging. Through March 31st, we had a total of 381 prescriptions filled by the last day of the quarter.

Speaker 3: As of March 31st, we had 152 prescriptions still pending.

Speaker 3: The vast majority of the balance of prescriptions pending are either due to prescriptions doctors have written that are queued and ready for patients or prescriptions still in progress with payers.

Speaker 1: We continue to move ending prescriptions into the filled bucket with each dead.

Speaker 3: We have a small number of prescriptions abandoned, and the reason for these cancellations are varied, ranging from patient being unreachable, hospitalized, or deceased.

Speaker 3: There have also been a small number where the patient's copay loads a little too high. As we've already seen so far in April , we would anticipate that the difference between prescriptions written and filled will narrow as phyrrosics is placed on more health clinical formulas, expanding access for patients.

Speaker 3: and lowering patients out of pocket expense.

Speaker 3: At the moment, the average number of doses per prescription is slightly higher than four, so we continue to believe four doses per prescription to be the right number long term.

Speaker 3: In terms of distribution, as we indicated last quarter, we are pleased with the functioning of our distribution process thus far through our strategic partnership with Cardinal Health as our third-party logistics provider. Cardinal is working well with our three specialty pharmacy partners.

Speaker 3: including our main specially pharmacy bio-majors. Cardinal has shipped initial inventory to the specially pharmacies which is reflected in our first quarter revenue. As a reminder, we recognize revenue when fluorescence moves from Cardinal to the specially pharmacies. Turusics Direct, our reimbursement support hub.

Speaker 3: provides benefits investigations for physicians to determine insurance coverage and patient out of pocket costs.

Our specialty pharmacy partners provide device training to patients and are available 24 hours a day to answer questions about the use of Furosix.

channel Market Awareness Campaign to drive brand awareness adoption and commitment.

different activities, but some of the key ongoing activities include KOL engagement and development.

Conference appearances, prints and electronic collateral, and the development of both provider and patient websites among other critical tasks.

Overall, although we still have a lot of work to do, we are pleased with our early progress and the trajectory that we are on.

That concludes my update. I would now like to turn the call over to our CFO , Rachel Notes for financial update. Rachel?

Thank you, Steve. We generated net product revenue of $2.1 million during the first quarter of 2023, and the cost of revenue was $0.6 million, yielding a growth profit of $1.5 million. One quick note for Q1, the cost of revenue excludes inventory that was exempt prior to FDA approval.

decreased in clinical study and medical affairs costs, employee related costs, device and pharmaceutical development costs, and quality and regulatory costs. Selling general and administrative expenses were $10.9 million for the first quarter of 2022. We are now in the open to the first quarter of 2022. Compared to $2.9 million for the first quarter of 2022. We are now in the open to the first quarter of 2022.

The increase in selling general and administrative expenses for the quarter ending March 31, 2023, was primarily due to an increase in employee-related costs, commercial costs, and legal and professional service costs.

We reported a net loss of $11.2 million for the first quarter of 2023 compared to a net loss of $7.7 million for the comparable period in 2022.

As of March 31, 2023, we held $116.1 million in cash, cash equivalence, and short-term investment compared to $118.4 million as of December 31, 2022.

As of March 31, 2023, SE Pharmaceuticals total shares outstanding was 35,769,773 shares.

That concludes the financial update. John ?

Thanks, Rachel. This concludes our prepared remarks. At this point, we will open the call for questions.

Thank you so. We will now be conducting a question and answer session.

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Again, if you would like to ask a question, please press star and then one now. The first question we have is from Glen Sand and Jelou from Jeffries. Please go ahead.

Yeah, good evening. Thanks for taking my question. Glad to see the launch is up to a great start. So congrats on that. John , I don't know if this question is for you or for Steve, but I didn't want to follow up on some of the KPIs you gave particularly around, you know, the 381 scripts that were written versus the 161.

that were filled. I think Steve, I heard you say that that's due to a combination of things like the patient being unreachable or hospitalized or unfortunately deceased, but some of them I think you suggested might have been, you know, reimbursed that related around copays. So I was wondering if you could just flesh that out a little bit more.

And I think you said you expected the sort of narrow, any sort of color around that you can give us would be helpful. Thanks. Hey, Glen, this is John . Thanks for the question. I'll let Steve answer that. Steve.

Yeah, it's multiple factors that contribute to the fill percentage and the timing at which that happens. You know, as I alluded, it depends on the prescriber, some on the patient. It's early.

We got to get the HEPs, the HOPK providers in the habit of providing everything that the payer needs up front so that they can process the prescription quickly. They have everything that the payer needs. When they forget to include something in my slow down the process until the HOPK can reach them.

Some are sending in prescriptions for what we call pre-approval. They don't need it immediately. The patient doesn't need it immediately. It's in case they need ferrosticks in the future. So there's some of that that's in the pending, as I said. And in that case, there's less urgency for adjudication. There's some patients who resolve. They order a ferrosticks just in case and then using standard care.

Now, the patient resolves, which is a good thing for the patient. We do still have some plans where the copays are too high and we're actively working to address that. We think the addition of this, you know, one top five health plan coming online, June 1 could really help us there. Perfect. Thanks. Thanks for the details.

Yeah, it does. Thanks, Luzzi. Maybe I can just follow up on one more here. I want to ask about the in services completed today. I think you said 743 as of April 28th and you know John , I thought I might have heard you quoted out of confidence somewhere saying that you'd expect to have the bulk of the in services, you know done by the middle of the second quarter. I may be mistaken, but I don't know if that's still your goal. And I'm just trying to reconcile that versus, you know, now you have 44 sales reps.

A number booked moving forward, both in new territories and and some existing territories. It's important to note that. You know, in some places 1 in services and enough, they might have, you know, all kinds of satellite locations. They might want us to come back to see a different part of their staff. So.

I think we'll have the bulk of them done here, here, you know, in the next month or so. But I, we want to be doing in services now. We don't want to be doing just in services forever because it slows down your call average a little bit. But we think we'll still be doing them, you know, at least through the end of this quarter, probably, probably into third. But I think the bulk of them will be done.

You know, the big block will be done by the end of this quarter.

Okay, thanks for the comments.

Thanks for the comments. Thanks, Clint.

The next question we have is from Rwanda Ruiz from SBB Securities. Please go ahead.

Hey, afternoon everyone and congrats on the progress so far. A few from me. I wanted to ask about the range of doses seen for Ferrosics. I think you mentioned 2 to 12. So I was curious what's driving the high end of that range What are physicians saying basically to...

doses will moderate to. You know, we still think our guidance of around four will be where we end up. It's a little higher than that right now, we admit.

The 12 versus the two. The two is really someone just tip of putting their toe in the pool. They're not quite sure how it's going to work yet. So they just want to see. They want to try it. And then they'll order a couple more. The 12 is it's more severe patients. People who have an awful lot of fluid.

They want to, you know, really sometimes they'll use two a day, you know, to try to address that fluid. These are people who, you know, are pretty close to go into the ER, the hospital. They don't need to, but they're close if they don't get an intervention. So those are the extremes. I think we just wanted to give you color and how big or small they get, but...

We think it'll moderate around four.

Okay, great. And thinking about the total for OSX prescriptions written, I was curious if you could give us some detail around if any of them are pre-admission versus post-discharge and to try and understand the dynamics there. I know it's pretty early, but if you're seeing any themes, that would be super interesting. Steve, I'll let a comment for once you do a headmapper. Yeah.

We don't capture that information in our RX star forms or anywhere in our hub data. Anecdotally, we feel like more RXs are happening pre-admission than post discharge at this early stage. There's a lot more patients who are in the pre-admission setting.

with fluid issues, then there are post discharge, which is really just a 30-day period. So that makes sense. And again, it's early in the launch. We don't know the split, but I would say anecdotally, it's more on the front end before they get hospitalized. And I think, Ron, this is John , and by the way, thanks for joining the call. I also think...

That anecdotally what we're here on these pre admissions might be part of the reason why we're seeing a little higher average number of units. Per script, because I think if you think about it. A patient that's being discharged that way has was discharged and is coming back in 5 days after the discharge.

has been diarized actively, IV diarized for four or five days. So you would think they would need less. So I think the higher script count or the higher doses per script might also kind of here fall of what we're hearing anecdotally that it's more pre-admission right now. Thank you.

Interesting. Super helpful. And last one from me. I was curious, what are you seeing in the regional trends, any sort of like fast growing areas that you're noticing so far? Dave, do you want to?

I don't think it's regional. I couldn't say it that way. We have territories that are doing better and you know the the rep it's really rep driven where people are ahead of others, ahead of the average, ahead of the norm, but it's not it's not regional. It's not.

That's, you know, we have territories in every region of the country, even with just 40 reps we covered the nation except for the, you know, the big center. So I don't have regional observations just individual rep.

performances. So it's a little early. John , I think you had one observation though. I think Rowana you had asked about the number of doses and I think that it's we have had doctors that participated in both the freedom and the at-home study as well that have that are that have had an experience and so they have with them with a little bit more experience.

have a little bit more comfort and are the ones that are probably using some of the higher doses. So that has had an impact on that as well.

And I think the other thing we've seen, which I think is encouraging, is that the doctors that did participate in freedom and at home have been early writers of the product, which hopefully they've had experience and they did well on this study and can embrace it as it gets into the market. But it's really early, but...

The next question we have is from Stacy Ku from TD Cohen. Please go ahead. The next question is from

Thanks so much for taking our questions and congratulations on the progress. So first...

As we think about the different centers and where you're seeing patients, it seems to be a lot of pre-admission. Are you able to get a sense of which...

Heart failure centers might not have easy access to IV terror edX. So maybe some more low hanging fruit are getting a feedback for as you're kind of onboarding. So that's the first question. And then the second is just about the clinicians. Would they need to be more comfortable kind of using it post-admission? What do they want to see to be able to use for?

Yes, Steve showed today.

I think that first one is around any differentiation between places that have access to IV diuretics versus places that don't affect the adoption rate. I think it does. I think it does. Did I get that question right?

that don't have IV diuretics and maybe that's why that you're seeing kind of this really high high branded doses.

Yes, well, they're certainly quicker adopters if they don't have IV access for sure. There's a much greater unmet need for them than some other places. And I think it's probably true. If they do have access to IV, they might treat them, diaries them in the office and then

and then finish the job with 36 at home and maybe they don't need as many doses if they've done a day in the office. You know, they normally four days or five days and if you want less, right? So I think that's rational. You asked about comfort in the discharge setting. I don't think that's an issue.

I think people are comfortable using it there. We don't want to say that it's none happening there. I think people ask me to characterize, you know, what the mix is and it is a little higher in the pre-admission. It's just not as many patients who are fluid overloaded after they've been discharged from the hospital. There's about 20 to 25 percent who get in trouble in the next 30 days. It's just so.

I think those will be our patients, but you just look at the raw numbers. There's more patients who are, quote unquote, pre-admission. Stacy's John , and I think, you know, we think about the different use cases, pre-admission, post-discharge, even reduction of length of stay. It's the same patient. It's the same treating doc. It's kind of where...

where they are in their in the journey, but we do think once.

physicians get more and more comfortable using it. And I think one thing, you know, we're hearing anecdotally is that patients are doing well on process, it's working as advertised, which kind of is a key thing here. Once doctors are more and more comfortable using, if you're gonna if they start with just their pre-admission patients,

that that's why the end services are important, that's why positive use is important. I think the other question, I think John , did you have something to add? I think we're on Stacey Johnmore on the IV clinics. I think it's important just to point out that there's only a minute, why do you, it makes sense that these things should be very, very common because they make...

sense to have the ability to give IV diuretics. It's just not commonly used and we've sort of estimated that about 20% of institutions have the availability to administer IV diuretics in the outpatient setting because it's just it's Logistically challenging to be able to do that. On the flip side those that do do it

have demonstrated comfort with the ability to give IV diuretics in that setting and have and it kind of makes sense for them to be some of the early adopters on the parosaics side. And your third question is, Stacey, on the copates. What we've seen is that it doesn't matter if the dose is two or twelve, it's a single copate for the...

for the patient. That's incredibly helpful. Thank you for all the details. Thanks, Facey. The next question we have is from Douglas, from H.C. Wainwright. Please go ahead. Hi. Thanks for taking my questions. Maybe.

To start, John , in terms of how quick is it taking from a position to participating in an in-service to actually starting to write, or are they needing sort of a follow-up call from a sales rep? And then just in terms of the positions that participated in the Freedom and At-Home Studies variety, you were exactly on the ESG

Are they using the product in a different way than other people who are writing for, for us? Thank you. Hey, Douglas, John , thanks for the question. So I'll probably have Steven John . Chime in, I think it depends on on the in service. I think we. We did see early on, I think we talked about on the last call kind of a queue of. Of patients that some, some doctors did have not not all doctors clearly, but some.

in the one script, which is maybe right after an end service, what you want to do is change long-term behavior, and that's going to take a number of calls. But it just depends on it. Again, the docs that had a patient in the queue, as soon as we activated them, they were writing scripts. And some of them, you know, it's taken a little bit longer to get a patient. And the other question, John ? Doug John Moore. Are the individuals...

the same way in that as others. I think the comment was is that even in some of those studies they were using a little bit more doses because of the types of patients that they were enrolling in the study and it was just the total number of doses I think would be different but the way in which they're using it I say is very very very similar.

Yeah, they have confidence. Some of them are speakers for us, right? So we're doing peer-to-peer speaker programs and it's very helpful for them to talk to their peer physicians, their peer nurse practitioners and PAs because they have questions about, well, what about higher BMI patients? What about lower BMI patients?

new prescriber off the table when they hear about the broad use. So we'll continue to do speaker programs peer-to-peer, virtual, and we're starting to ramp up face-to-face.

Great, thank you. Thanks, Todd. Ladies and gentlemen, just a reminder, if you would like to ask a question, please press star and then 1 now.

The next question we have is from Ramon from Maxim Group. Please go ahead. The next question we have is from

Hi everyone, thanks for taking my questions and congrats on the initial launch metrics. Just a few, the first question I have is in regards to prior odds, could you provide some color on the rate of prior odds that are approved on the first path? My second question is,

On the form of decision by the top five national health plan, could you give some color on how many cover lies that plan covers, how many cover lies that adds? And my third question is, I guess based on the initial feedback and perception that hospitals and physician can have happenor quick. Dr.

groups and practices have gotten from Furosics. Have you seen any requests to potentially purchase bulk orders of Furosis by said practices?

So, let me let me try to. Take the last 2 and then maybe turn it over to Steve for the, for the 1st 1. so, you know, is it the bulk purchases by office is probably doesn't make sense. It's not a part B. is that not by a bill, but but I would, I would think.

might have an outpatient pharmacy in the hospital just to make sure patients have pretty quick access. So I think that's what we see. What was the second question I tried to write in? How many lives in this top five plan?

The problem is that we'd love to tell you who it is. June 1st we can tell you. You'll know the name well, maybe I leave it there, but we're really happy. It's the commercial plan. We've had negotiations now. Negotiations on their on their party with them now as well.

So, but we're really not allowed to use their name. It's over. You have 25 million lives covered on the commercial side of the business, so it's 1 of the big big guys.

And then the last one, I think it was a P. A. yeah, timing how long that takes what's required. What's that what's required in the P. A. what's required in the pay? Like, how how many of those what percentage of those go through like the 1st pass. Oh, good question.

information that's required and they're getting better at that should be around 80% or 85%? Now keep in mind though just you know that's 75% 80% they still could the prior off could be approved they still could have a very high copay so a PA getting approved but obviously is huge but the patient still has a

Factor in.

So if they provide the right information, you know, they go through and Medicare has rules about how quickly they have to be done.

Thanks for taking the time to answer my questions and congrats on this launch.

Got it. Thanks for taking the answer my question and congrats on this launch. Thanks. Thank you,

There are no further questions at this time. I would like to turn the floor back over to John Tucker for closing comments. Please go ahead, Sub. Okay, that concludes our call this afternoon. We hope you take away from this call that we are pleased with our progress to date, and as we continue to execute on our commercial plan, we anticipate continued growth in the percentage of heart failure patients with affordable access to Ferrosics, which we believe will translate into a nice trajectory for both prescriptions and revenue.

We look forward to providing more information during our second quarter update in August . Thank you again and have a good evening. Thank you, so ladies and gentlemen, that then concludes today's conference. Thank you for joining us. You may now disconnect your lines.