Q2 2024 scPharmaceuticals Inc Earnings Call
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Operator: .. .. .. .. .. .. ... [inaudible] Greetings and welcome to the SC Pharmaceuticals second quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode.
Speaker Change: [inaudible]
Speaker Change: Greetings and welcome to the SC Pharmaceuticals second quarter 2024 earnings conference call.
Operator: A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference... Please press star and then zero on your telephone keypad.
Speaker Change: At this time, all participants are in a listen-only mode.
Speaker Change: A brief question and observation of follow the form of presentation. If anyone should require operator assistance during the conference, please restore and in zero, I tell the phone keypad.
Operator: The government As a reminder, this conference is being recorded. [inaudible] It is now my pleasure to introduce your host, PJ Kelleher, Investor Relations. Thank you. You may begin.
Speaker Change: The Cofermaid, as a reminder, this conference is being recorded. It is now my pleasure to introduce your host, PJ Kelleher, investor relations. Thank you, and may begin.
PJ Kelleher: Thank you, operator. Before turning the call over to management, I would like to make the following remarks concerning poor looking statements. All statements on this conference call, other than historical facts, are forelooking statements within the meaning of the federal securities laws, including, but not limited to, statements regarding SC Pharmaceuticals' expected future financial results. Management's Expectations and Plans for the Business, the Ongoing Commercialization and Marketing of Furosics, and the Potential Label Expansion and Other Regulatory Approvals of Furosics. The words anticipate, believe, estimate, expect, intend, guidance, confidence, target, project, and other similar expressions are used typically to identify such forward-looking statements.
PJ Kelleher: Thank you operator. Before turning the call over to management, I would like to make the following remarks concerning poor looking statements.
PJ Kelleher: These forward-looking statements are not guaranteed to perform and may involve and are subject to certain risks and uncertainties and other important factors that may affect SC Pharmaceuticals' business, financial condition, and other operating results. These include, but are not limited to, the risk factors and other qualifications contained in the SD Pharmaceuticals Annual Report on Form 10K, quarterly reports on Form 10Q, and other reports filed by the company with the X, to which your attention is directed. However, actual outcomes and results may differ materially from what is expressed or implied by these forward-looking statements.
Speaker Change: All statements on this conference call, other than historical facts, are for looking statements that in the meeting of the federal security laws, including, but not limited to statements regarding SC pharmaceuticals, expecting future financial results.
Speaker Change: Management's Expectations and Plans for the Business, the Ongoing Commercialization and Marketing of Perosix, and the Potential Label Expansion and Other Regulatory Approvals of Perosix.
Speaker Change: The words anticipate, believe, estimate, expect, intend, guidance, confidence, target, project, and other similar expressions.
Speaker Change: are used typically to identify such forward-looking statements. These forward-looking statements are not guaranteed in the future performance and may involve and are subject to certain risks and uncertainties and other important factors that may affect SC Pharmaceutical's business, financial condition, and other operating results.
Speaker Change: These include, but are not limited to, the risk factors and other qualifications contained in ST Pharmaceutical's annual report on Form 10-K, quarterly reports on Form 10-Q, and other reports filed by the company with the SEC.
Speaker Change: https://www.peterkelleher.com
Speaker Change: 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.
PJ Kelleher: 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 disclaims 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 Change: and S.T. Pharmaceuticals expressively disclaims any intent or obligation to update these four looking statements except as required by law.
Speaker Change: It is now my pleasure to turn the call over to Mr. John Tucker, Chief Executive Officer of SC Pharmaceuticals.
John Tucker: Thank you, PJ. Thank you to everyone listening to this afternoon's call and webcast to review our second quarter 2024 results. At the center of practice, I will begin with an operational update before turning the call over to Steve Parsons, our Senior Vice President of Commercial, for a more detailed commercial update on furosics, and then Rachael Nokes, our Chief Financial Officer, for a review of our financials. We will then open the call to your questions.
John Tucker: Thank you, PJ. Thank you to everyone listening to this afternoon's call and webcast.
John Tucker: to review our second quarter 2024 results.
John Tucker: As has been our practice, I will begin with an operational update before turning the call over to Steve Parsons, our Senior Vice President of Commercial, for a more detailed commercial update on Furosics, and then Rachael Nokes, our Chief Financial Officer, for a review of our financials. We will then open the call for your questions.
John Tucker: I would like to begin this afternoon with a recap of the finance needs, up to $175 million that we announced earlier this week. Upon closing of these transactions, approximately $75 million was added to the company's balance, which extends our cash runway through profitability. Through this financing, the company also has access to an additional 50 million through debt and, Financing is comprised of three parts. First, $75 million of senior debt facility with perceptive advisors, of which $50 million was funded at closing, to repay $50 million of existing debt with open.
Speaker Change: I would like to begin this afternoon with a recap of the finance needs, up to $175 million that we announced earlier this week. Upon closing of these transactions, approximately $75 million was added to the company's balance sheet, which extends our cash runway through profitability.
Speaker Change: Through this financing, the company also has access to an additional $50 million through debt and or royalty facility.
Speaker Change: The financing is comprised of three parts. First, $75 million of senior debt facility with perceptive advisors, of which $50 million was funded at closing to repay $50 million of existing debt with Oaktree.
John Tucker: An additional $25 million will be available subject to the achievement of certain pre-specified commercial and regulatory models. That carries a five-year term, of which the first four years are interest only with a bullet repayment in year five.
Speaker Change: An additional $25 million will be available subject to the achievement of certain pre-specified commercial and regulatory milestones.
Speaker Change: The debt carries a five-year term, of which the first four years are interest-only with a bullet repayment in year five. Facility lowers our interest rates and pushes out the amortization as compared to the retired Hope Treat facility.
John Tucker: The facility lowers our interest rates and pushes out the amortization as compared to the retired Hope Treat facility. Second, a synthetic royalty agreement of up to $50 million, also with perceptive buyers. Twenty-five million of the royalty financing was funded at close, and the additional twenty-five million was made available subject to the achievement of certain pre-specified commercial models.
Speaker Change: Second, a synthetic royalty agreement of up to $50 million, also with perceptive advisors. $25 million of the royalty financing was funded at close, and the additional $25 million was made available subject to the achievement of certain pre-specified commercial milestones.
John Tucker: And finally, a public offering of approximately $50 million of equity led by leading life science investors. Together, we believe this financing extends our cash runway through profit. Turning now to our launch progress, during the second quarter we generated sequential net revenue growth that we believe reflects increasing awareness and utilization of nephrosis by cardiologists and heart failure specialists. As Steve will detail shortly, our leading indicators suggest that providers are increasingly more comfortable prescribing for osics to their heart failure patients during critical intervention windows, which are pre-hospital admission or post-discharge.
Speaker Change: And finally, a public offering of approximately $50 million of equity, led by leading life science investors. Together, we believe this financing extends our cash runway through profitability.
Speaker Change: Turning now to our launch progress, during the second quarter we generated sequential net revenue growth that we believe reflects increasing awareness and utilization of furosics by cardiologists and heart failure specialists.
Speaker Change: As Steve will detail shortly, our leading indicators suggest that providers are increasingly more comfortable prescribing fluorosics to their heart failure patients during critical intervention windows, which are pre-hospital admission or post-discharge.
John Tucker: We reported net revenue of $8.1 million, representing sequential growth of 33% as compared to the first quarter of 2020. Our gross net discount during the second quarter was approximately 8%, down from 19% in the first quarter.
Steve: We reported net revenue of $8.1 million, representing sequential growth of 33% as compared to the first quarter of 2024.
Speaker Change: Our gross net discount during the second quarter was approximately 8% down from 19% in the first quarter.
John Tucker: We expect the GTN discount to increase over time as contracting with payers evolves and IDN demand grows. Looking to the back half of the year, we currently anticipate our GTN discounts to range from 10 to 15% for the next two quarters. Over the longer term, we continue to believe that a GTN in the 30-35% range is appropriate, although there will be some variability from quarter to quarter as we continue to expand our roster of payers and IDNs.
Speaker Change: We expect the GTN discount to increase over time as contracting with payers evolves and IDN demand grows. Looking to the back half of the year, we currently anticipate our GTN to range from 10-15% for the next two quarters.
Speaker Change: Over the longer term, we continue to believe that a GTN in the 30-35% range is appropriate, although there will be some variability from quarter to quarter as we continue to expand our roster of payers and IDNs.
John Tucker: I would like to now provide an update on several long-term growth initiatives that we previewed last quarter that we view as critical to our long-term growth strategy. We announce that the FDA has approved our supplemental new drug application seeking to expand the FuroCyst label to include all heart failure, including the most symptomatic patients and those with the greatest limitation on physical activity categorized as New York Heart Association Class 4. Furosics was previously indicated as a treatment for congestion due to fluid overload in adult patients with finger heart association, class 2 and class 3 chronic heart failure.
Speaker Change: I would like to now provide an update on several long-term growth initiatives that we previewed last quarter that we view as critical to our long-term growth strategy.
Speaker Change: We announce that the FDA has approved our supplemental new drug application seeking to expand the Furo6 label to include all heart failure patients.
Speaker Change: including most symptomatic patients and those with the greatest limitation on physical activity categorized as New York Heart Association class 4.
Speaker Change: Furosics was previously indicated as a treatment of congestion due to fluid overload in adult patients with pre-heart association, class 2 and class 3 chronic heart failure.
John Tucker: By expanding the label to include New York Heart Association Class IV, which accounts for approximately 10% of heart failure patients and 30% of heart failure hospitalizations, we estimate that as many as 40% of these patients may potentially benefit from ferocity, given its ability to improve signs and symptoms of congestion, which may lead to a reduction in unnecessary hospital admissions and re-admissions, with the potential to improve patient-quality of life while reducing overall and heart failure- We believe uptake among cardiologists and heart failure specialists who treat these very symptomatic patients could be needed.
Speaker Change: By expanding the label to include New York Heart Association Class IV, which accounts for approximately 10% of heart failure patients and 30% of heart failure hospitalizations, we estimate that as many as 40% of these patients may potentially benefit from cirrhosis.
Speaker Change: Given 406's ability to improve signs and symptoms of congestion, which may lead to a reduction in unnecessary hospital admissions and readmissions.
Speaker Change: with the potential to improve patient-qualified life while reducing overall and heart failure-related health care costs. We believe uptake among cardiologists and heart failure specialists who treat these very symptomatic patients could be meaningful.
John Tucker: Turning now to the low-volume photoinjector that is in development, we announced earlier this week positive top-line study results from a PK study, which demonstrated that furosics achieved primary pharmacokinetic and secondary pharmacodynamic end-to-end results. Some of the highlights from the study results include. SCP-111 demonstrated five availability of 107.3, achieving the 90% confidence interval limit of about 80 to 125. Additionally, participants that received SCP-111 had similar urine output, urinary sodium excretion, and urinary potassium excretion at 6, 8, and 12 hours compared to IV ferocity. Participants reported a median pain score of zero across all time points.
Speaker Change: Turning now to the low-volume autoinjector that is in development. We announced earlier this week positive top-line study results from a PK study which demonstrated that furosics achieved primary pharmacokinetic and secondary pharmacodynamic endpoints.
Speaker Change: Some of the highlights from the study results include SCP-111 demonstrated bioavailability of 107.3, achieving the 90% confidence interval limit of about 80 to 125%.
Speaker Change: Participants that received SCP-111 had similar urine output, urinary sodium excretion, and urinary potassium excretion at 6, 8, and 12 hours compared to IV furosemide.
Speaker Change: Participants reported a median pain score of zero across all time points assessed.
John Tucker: The most common adverse events of SCP-111 were localized at the injection site and systemic adverse events were consistent with those reported in the prescribing information for intravenous and oral ferocity. The results will continue to work towards our target submission of an SMDA to the FDA by the end of the year. As we stated previously, we believe an auto-injector, if approved, will reduce our manufacturing costs compared to the current on-body injection, confer environmental advantages and give treating providers and their patients treatment flexibility.
Speaker Change: The most common adverse events of SCP-111 were localized at the injection site and systemic adverse events were consistent with those reported in the prescribing information for intravenous and oral furosemide.
Speaker Change: With these results, we continue to work towards our target submission of an SMDA to the FDA by the end of the year. As we stated previously, we believe an auto-injector, if approved, will reduce our manufacturing costs compared to the current on-body infuser, confer environmental advantages, and give treating providers and their patients treatment flexibility.
John Tucker: Finally, we announced that FDA has accepted our filing of a supplemental new drug application seeking to expand the process label to treatment of edema due to fluid overload in patients with chronic kidney disease or CKD. FDA previously indicated that no additional clinical studies were required to expand the furosics indication to include CKB if we can demonstrate an adequate PK and pharmacodynamic bridge to the listed drug, which is furosemide injection. CKD is a progressive disease characterized by worsening renal function over time.
Speaker Change: Finally, we announced that FDA has accepted our filing of a supplemental new drug application seeking to expand the process label to treatment of edema due to fluid overload in patients with chronic kidney disease or CKD.
Speaker Change: The FDA previously indicated that no additional clinical studies were required to expand the furosics indications to include CKD if we can demonstrate an adequate PK and pharmacodynamic bridge to the listed drug, which is the furosemide injection.
Speaker Change: CKD is a progressive disease characterized by worsening renal function over time.
John Tucker: Resulting in frequent episodes of fluid overload that are treated with loop diuretics. It is estimated that there are 6.6 million Americans... CKD that are treated with loop diuretics, and as many as 50% of patients with CKD do not have a diagnosis. This resulted in a potential incremental increase of $3.1 billion to the already existing $9.4 billion addressable market opportunity in part failure, with fluid overload being one of the most common complications in CPR, which worsens with disease progression. We believe Ferocity is beneficial to patients with CKD who have worsening symptoms due to fluid overload and are not responding to oral loop diarrhea.
Speaker Change: Resulting in frequent episodes of fluid overload that are treated with loop diuretics. It is estimated that there are 6.6 million Americans with CKD that are treated with loop diuretics. And as many as 50% of patients with CKD do not have a diagnosis of heart failure.
Speaker Change: This resulted in a potential incremental increase of $3.1 billion to the already existing $9.4 billion addressable market opportunity in part failure, with fluid overload being one of the most common complications in CKDs.
Speaker Change: which worsens with disease progression. We believe ferocity is beneficial to patients with CKD who have worsening symptoms due to fluid overload and are not responding to oral loop diuretics.
John Tucker: The FDA has signed a PDUCA date of March 6, 2025. If approved, we would make investments in our sales and commercial infrastructures to expand our reach to Nefrol. At this point, I will turn the call over to our Senior Vice President, commercial Steve Parsons for a deeper dive into our launch metrics. Thank you, John.
Speaker Change: The FDA has signed a PDUFA date of March 6, 2025. If approved, we would make investments in our sales and commercial infrastructures to expand our reach to nephrologists.
Speaker Change: At this point, I will turn the call over to our Senior Vice President of Commercials, Steve Parsons, for a deeper dive into our launch metrics. Steve?
Steve Parsons: As John indicated, we continue to be pleased with our progress since launch. From launch in February 2023 through June 30, 2024, we've had 2,713 unique prescribers. That's up 24% from the 2,183 prescribers we had from launch through March 31st. We are encouraged by the prescriber growth in this quarter, and we believe this reflects our strategy of establishing a broad prescriber base. Importantly, more than half of these prescribers have written multiple prescriptions. During the second quarter, approximately 9,300 doses were filled; that's up 15% sequentially from approximately 8,100. Joseph's in the first quarter of 2024.
Steve Parsons: Thank you, John . As John indicated, we continue to be pleased with our progress since launch.
Speaker Change: from launch in February 2023.
Steve Parsons: Through June 30th, 2024, we've had 2,713 unique prescribers. That's up 24% from the 2,183 prescribers we had from launch through March 31st.
Speaker Change: We are encouraged by the prescriber growth in this quarter, and we believe this reflects our strategy of establishing a broad prescriber base. Importantly, more than half of these prescribers have written multiple prescriptions.
Speaker Change: During the second quarter, approximately 9,300 doses were filled, that's up 15% sequentially from approximately 8,100 doses in the first quarter of 2024.
Steve Parsons: During the second quarter, the average number of doses per prescription filled was 6.3 doses, which remains higher than our long-term expectations and up slightly from the 6.1 doses per prescription in the first quarter of 2024. With the label expansion to now include class 4 heart failure patients, we anticipate that the average number of doses may rise further as those patients may need additional doses to treat more severe symptoms. Our sales force has conducted 3,324 in-services from launch through June 30th. That's up from 2,938 in-services from launch through March 31st. In-services provide important training to offices on the prescribing process of thoracics and this ensures office readiness.
Speaker Change: During the second quarter, the average number of doses per prescription filled was 6.3 doses, which remains higher than our long-term expectations and up slightly from the 6.1 doses per prescription in the first quarter of 2024.
Speaker Change: With the label expansion to now include Class IV heart failure patients, we anticipate that the average number of doses may rise further as those patients may need additional doses to treat more severe symptoms.
Speaker Change: Our sales force has conducted 3,324 in-services from launch through June 30th. That's up from 2,938 in-services from launch through March 31st.
Speaker Change: In-services provide important training to offices on the prescribing process of furosics and this ensures office readiness. As we open more new accounts the execution of in-services remains fundamental to furosic success.
Steve Parsons: As we open more new accounts, the execution of in-services remains fundamental to Furosic's success. And we regard the number of inservices conducted each quarter as an important leading indicator. Regarding our field sales, We have said previously that we stand ready to add additional territories as demand warrants. As demand continues to grow, we plan to add 22 territories for a total of 90 territories by the end of the third quarter.
Speaker Change: And we regard the number of inservices conducted each quarter as an important leading indicator.
Speaker Change: regarding our field sales force.
Speaker Change: We have said previously that we stand ready to add additional territories as demand warrants.
Speaker Change: As demand continues to grow, we plan to add 22 territories for a total of 90 territories by the end of the third quarter.
Steve Parsons: This will support the expanded label and increase our reach and frequency with more targeted cardiology and some nephrology specialists that treat chronic kidney disease patients who also have comorbid heart failure. At the beginning of the second quarter, we made the decision to change our patient services hub. This transition took several weeks to get up and running effectively.
Speaker Change: This will support the expanded label and increase our reach and frequency with more targeted cardiology and some nephrology specialists that treat chronic kidney disease patients who also have comorbid heart failure.
Speaker Change: At the beginning of the second quarter, we made the decision to change our patient services hub. This transition took several weeks to get up and running effectively.
Steve Parsons: But by the end of the quarter, the hub was operating very well and has been an asset in increasing the number of filled doses for Q3 and into the future. From a marketing perspective, we continue to execute a broad, multi-channel marketing campaign to drive brand awareness, adoption, and commitment. Our marketing encompasses many different activities, including a significant patient awareness component. Other ongoing activities include engagement and development of key opinion leaders, conference presence, message evolution, and medical education programs, among other critical tasks.
Operator: Santangelo, Douglas Tsao, John Tucker, Rachael Nokes, John Tucker, Rachael Nokes, John Tucker, Rachael Nokes, John Tucker, Rachael Nokes, John Tucker, Rachael Nokes, John Tucker, Rachael Nokes, John Tucker, Rachael Nokes, Greetings and welcome to the AC Pharmaceuticals second quarter, 2024 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and observation will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and then zero on your telephone keypad. As a reminder, this conference is being recorded.
Speaker Change: But by the end of the quarter, the hub was operating very well and has been an asset in increasing the number of filled doses for Q3 and into the future.
Speaker Change: From a marketing perspective, we continue to execute a broad, multi-channel marketing campaign to drive brand awareness, adoption, and commitment. Our marketing encompasses many different activities, including a significant patient awareness component.
Speaker Change: Other ongoing activities include engagement and development of key opinion leaders, conference presence, message evolution, and medical education programs among other critical tasks.
Steve Parsons: We plan to have a very large presence at the Heart Failure Society of America conference coming this September in Atlanta. Overall, we are pleased with our continued progress, and we are excited about the opportunity and the path ahead. My update has concluded. I'd now like to turn the call over to our Chief Financial Officer, Rachael Nokes, for a review of our financials. Thank you.
Speaker Change: We plan to have a very large presence at the Heart Failure Society of America conference coming this September in Atlanta.
Speaker Change: Overall, we are pleased with our continued progress and we are excited about the opportunity and the path ahead.
Rachael Nokes: Thank you, Steve. As of June 30, 2024, we held $38.5 million in cash and cash investments, compared to $76 million in cash, cash equivalents, and investments as of December 31, 2022. This excludes the funds we raised through the financing that John discussed earlier. Now we will cover a few income statement items. We reported a net loss of $17.1 million for the second quarter of 2024 compared to a net loss of $14.2 million for the second quarter of 2020.
Speaker Change: This concludes my update. I'd now like to turn the call over to our Chief Financial Officer, Rachel Nokes, for a review of our financials. Rachel.
Rachael Nokes: Product revenues were $8.1 million for the second quarter of 2024, compared to $1.6 million for the second quarter of 2020. Costs of product revenues were $2.3 million for the second quarter of 2024, compared to $2.4 million for the second quarter of 2023. The increase in both product revenues and cost of product revenues for the quarter ended June 30, 2024, was due to increased demand for Furo6 further into the commercial launch and related manufacturing.
Rachael Nokes: Research and development expenses were $2.7 million for the second quarter of 2024, compared to $2.9 million for the comparable period in 2023. The decrease in research and development expenses for the quarter ended June 30th, 2024, was primarily due to a decrease in pharmaceutical development costs offset by clinical study costs and employee-related costs. Selling General and Administrative Expenses were $17.5 million a second quarter of 2024 compared to $12.1 million for the comparable period in 2023.
Rachel Nokes: Thank you, Steve. As of June 30, 2024, we held $38.5 million in cash and cash investments compared to $76 million in cash, cash equivalents, and investments as of September 31, 2023.
Speaker Change: This excludes the funds we raise through the financing that John discussed earlier.
Speaker Change: Now I will cover a few income statement items. We reported a net loss of $17.1 million for the second quarter of 2024, compared to a net loss of $14.2 million for the second quarter of 2023.
Speaker Change: Product revenues were $8.1 million for the second quarter of 2024 compared to $1.6 million for the second quarter of 2023.
Speaker Change: Cost of product revenues were $2.3 million for the second quarter of 2024, compared to $0.4 million for the second quarter of 2023.
PJ Kelleher: It is now my pleasure to introduce your host, PJ Kelleher, investor relations. Thank you. You may begin. Thank you operator.
Speaker Change: The increase in both product revenues and cost of product revenues for the quarter ended June 30, 2024 was due to increased demand for Furo6 further into the commercial launch and related manufacturing costs.
PJ Kelleher: Before turning the call over to management, I would like to make the following remarks concerning poor looking statements. All statements on this conference call, other than historical facts, are poor looking statements within the meeting of the federal securities laws, including but not limited to statements from the government. Regarding AC Pharmaceuticals, expected future financial results. Management's expectations and plans for the business, the ongoing commercialization and marketing of forensics and the potential label expansion and other regulatory approvals of furrows.
Speaker Change: Research and development expenses were $2.7 million for the second quarter of 2024 compared to $2.9 million for the comparable period in 2023.
Speaker Change: The decrease in research and development expenses for the quarter ended June 30, 2024, was primarily due to a decrease in pharmaceutical development costs offset by clinical study costs and employee-related costs.
PJ Kelleher: The words anticipate, believe, estimate, expect, intend, guidance, confidence, targets, project, and other similar expressions are used typically to identify such four-looking statements. These four-looking statements are not guaranteed as a future performance and may involve in our subject to certain risks and uncertainties that are not important factors that may affect SC's 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 10K, quarterly reports on form 10Q, and other reports filed by the company with the SEC to which your attention is directed. Actual outcomes and results may differ materially from what is expressed or implied by these four-looking statements.
Speaker Change: Selling general and administrative expenses were $17.5 million for the second quarter of 2024, compared to $12.1 million for the comparable period in 2023.
Rachael Nokes: The increase in selling general and administrative expenses for the quarter ending June 30, 2024, is primarily due to an increase in employee-related costs, commercial costs, product samples, and patient services. As of June 30th, 2024, we have 36 million 139,800 and two total shares outstanding. That concludes the financial update. John.
Rachael Kelleher: The increase in selling general and administrative expenses for the quarter ending June 30, 2024 is primarily due to an increase in employee-related costs, commercial costs, product samples, and patient support.
Rachael Kelleher: As of June 30th, 2024, we have 36 million 139 thousand eight hundred and two total shares outstanding.
unknown: Thanks, Rachael. This concludes our prepared remarks. At this point, we will open the call for questions. Thank you. We will now be conducting a question in our position. If you would like to ask a question, please press star and then 1 on your telephone keypad. A confirmation tone will indicate your line is in the question. You may press star and then 2 if you would like to remove your question from the queue.
Rachael Kelleher: That concludes the financial update. John ? Thanks, Rachael. This concludes our prepared remarks. At this point, we will open the call for questions.
Speaker Change: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star and then 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.
PJ Kelleher: Any four-looking statements made in this conference call, including responses to your questions are based on current expectations as of today, and SC Pharmaceuticals expressively disclans any intent or obligation to update these four-looking statements, except as required by law.
unknown: For participants using speaking equipment, it may be necessary to pick up your handset before, It is requested that questioners keep to one question and won't follow us, One moment please, while we poll for questions. The first question we have is from Roanna Ruiz of Lyrinc Partners. Please go ahead. Great afternoon everyone. A quick couple of ones from me.
Speaker Change: You may press star and then 2 if you would like to remove your question from the queue.
John Tucker: It is now my pleasure to turn the call over to Mr. John Tucker, Chief Executive Officer of SC Pharmaceuticals. John? Thank you, PJ. Thank you to everyone listening to this afternoon's call and webcast to review our second quarter 2024 results. As a center of practice, I will begin with an operational update for turning the call over to Steve Parsons, our Senior Vice President of Commercial, for a more detailed commercial update on ferrosis, and then Rachel Knows, our Chief Financial Officer, for review of our financials.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: It is requested that questioners keep to one question and one follow-up. One moment, please, while we poll for questions.
Speaker Change: The first question we have is from Miranda Rees of Learink Partners. Please go ahead.
Roanna Ruiz: First, how much could the average number of doses per prescription for ferrosics actually increase with the new label for Class 4? And in addition to that, how are you thinking about clinicians, how fast they can prescribe ferrosics for Class 4 patients? Are there any hurdles or logistics that they might need to get through before they can really get off to the races and prescribe? Hi Roanna, this is John.
Miranda Rees: Good afternoon everyone. A quick couple of questions from me.
Miranda Rees: first
Miranda Rees: How much could the average number of doses per prescription for furosics actually increase with the new label for class 4?
John Tucker: We will then open the call for your questions. I would like to begin this afternoon with a recap of the financing up to 175 million that we announced earlier this week, upon closing of these transactions, approximately $75 million was added to the company's balance sheet, which extends our cash runway through profitability. Through this financing, the company also has access to an additional 50 million through debt and or royalty facility. The financing is comprised of three parts.
Miranda Rees: and...
Speaker Change: In addition to that, how are you thinking about clinicians, how fast they can prescribe for O6, for class, for patients? Are there any hurdles or logistics that they might need to get through before they can really get off to the races and prescribe?
John Tucker: I'm going to have Steve answer those two questions, okay? Okay. It will be hard to predict what the impact on the average number of doses is across the whole population, but we do think Class IV patients will need nine doses or even up to 12 doses based on the severity of their symptoms, and we do think they'll get prescriptions more often than the average heart failure patient, as often as every month or every other month.
Speaker Change: Hi, everyone. This is John. I'm going to have Steve answer those two questions.
Steve Parsons: Yeah, so...
Steve Parsons: It will be hard to predict what the impact on the average number of doses is across the whole population, but we do think
John Tucker: First, 75 million senior debt facility, the perceptive advisors, of which 50 million was funded at closing, to repay 50 million of existing debt with no tree. An additional 25 million will be available, subject to the achievement of certain pre-specified commercial and regulatory milestones. The debt carries a five-year turn of which the first four years are interest only with a bullet repayment in year five. Facility lowers our interest rates and push out the amortization as compared to the retired or treat facility.
Steve Parsons: The class 4 patients will need 9 doses or even up to 12 doses based on the severity of their symptoms. And we do think they'll get prescriptions more often than the average heart failure patient.
Steve Parsons: as often as every month or every other month. So that could impact the average doses per prescription over a quarter.
Steve Parsons: So that could impact the average. And then back to how fast we will... Yeah, we should start to see prescriptions for heart failure in class four, you know, starting next week. Our sales lawyers will be trained to be in the field. We've been in contact with the payers and will make sure they update their systems to reflect PA to the label, and the label now will not limit the use of class, class locations.
Speaker Change: And then back to how fast will we...
Speaker Change: Yeah, we should start to see prescriptions for heart failure for class 4, you know, starting next week. Our sales force will be trained, they'll be in the field, we've been in contact with the payers to make sure they update their systems to reflect.
John Tucker: Second, synthetic royalty agreement of up to $50 million also with perceptive advisors. 25 million of the royalty financing was funded at close and the additional 25 million were made available, subject to the achievement of certain pre-specified commercial milestones. And finally, a public offering of approximately 50 million of equity led by leading life science investors. Together, we believe this financing extends our cash runway through profitability. Starting now to our launch progress, during the second quarter we generated sequential met revenue growth that we re-believe reflects increasing awareness and utilization of growth by cardiologists and heart failure specialists.
Speaker Change: PA to label, and the label now will not limit the use of class 4 patients, so...
Speaker Change: We're expecting to see it immediately.
Steve Parsons: So we're expecting to see it immediately as we get around to those doctors who have a constant treated population of class four patients, that is, heart failure specials and advanced heart failure. Makes sense. And thinking ahead to potential approval for CKD patients with edema, how are you thinking about possibly stepping up the field force size? You kind of alluded to considering growth there. What sort of metrics are you looking for to give you a signal that you should meaningfully expand the field force at that time?
Speaker Change: as we get around to those doctors who have a concentrated population.
Speaker Change: of Class IV patients, that's the heart failure specialists and the Advanced Heart Failure Clinics.
Speaker Change: [inaudible]
Speaker Change: Got it. Makes sense. And thinking ahead to potential approval for CKD patients with edema, how are you thinking about possibly stepping up the field force size? You kind of alluded to you consider growth there. What sort of metrics are you looking for to give you a signal that you should meaningfully expand the field force at that time?
John Tucker: As Steve will do so shortly, our leading invaders suggest that providers are increasingly more comfortable striving for us to their heart failure patients during critical intervention windows, which are pre-hospital admission or post discharge. We reported net revenue of 8.1 million, representing sequential growth of 33% as compared to the first quarter of 2024. Our growth net discount during the second quarter was approximately 8% down from 19 in the first quarter. We expect the GTN system to count to increase over time as contracting the payers' balls and IDN demand growth.
John Tucker: Yeah, so we're going to move to 90 reps. We're in the process of doing it right now, based on, you know, the increasing demand we've seen, especially into this quarter, and with the label expansion into Class 4. So that'll have us at 90 reps. With kidneys, we're going to go to probably 130 reps, and that will be based on how many nephrologists we want to cover and So, our thinking now is this will be one sales force, 130 reps, calling on, you know, cardiologists, heart failure specialists, and nephrologists. Got it.
Speaker Change: Yeah, so we're going to move to 90 reps. We're in the process of it right now, based on, you know, the increasing demand we've seen, especially into this quarter, and with the label expansion into Class 4.
Speaker Change: So that'll have us at 90 reps with...
Speaker Change: With kidney, we're going to go to probably 130 reps.
Speaker Change: And that will be based on how many nephrologists we want to cover and the cardiologists. So our thinking now is this will be one sales force, 130 reps, calling on cardiologists, heart failure specialists, and nephrologists.
John Tucker: Looking to the back half of the year, we currently anticipate our GTN to range from 10 to 15% to the next two quarters. Over the longer term, we continue to believe that a GTN in 30 to 35% range is appropriate, although there will be some variability from quarter to quarter as we can even expand our roster of payers and IDNs.
Speaker Change: God, it's super helpful. Thanks.
unknown: Super helpful. Great, thank you. The next question we have is from Stacy Ku of Tidi Cohen. Please go ahead.
John Tucker: I would like to now provide an update on several long-term growth initiatives that we previewed last quarter that we view as critical to our long-term growth strategy. We announced that the FDA approved our Supplemental Hootrug application seeking to expand the ferro-6 level to include all heart failure patients, including most symptomatic patients, and those with the greatest limitation on physical activity categorized with New York Heart Association Class 4. Ferro-6 was previously indicated to the treatment of congestion due to flow over loan and adult patients with New York Heart Association Class 2 and Class 3 chronic heart failure.
Speaker Change: [inaudible]
Speaker Change: The next question we have is from Stacy Ku of TD Cohen. Please go ahead.
Stacy Ku: Hi, this is Vaish on behalf of Stacy. Congratulations on a stellar quarter and thanks for taking our questions. We have a couple.
John Tucker: By expanding the label to include New York Heart Association Class 4, which accounts for approximately 10% of heart failure patients and 30% of heart failure hospitalizations, we estimate that at many is 40% of these patients made potentially benefit from ferrosis. Given ferro-6's ability to improve signs and symptoms of congestion, which may lead to a reduction in unnecessary hospital admissions and re-admissions with the potential to improve patient-pollivated life while reducing overall and heart failure related health care costs, we believe I'll take among cardiologists and heart failure specialists who treat these very symptomatic patients could be meaningful.
Speaker Change: [inaudible]
Speaker Change: Hi, this is Vaish on for Stacey. Congratulations on a stellar quarter and thanks for taking our questions.
unknown: So first, I guess, following up on the previous question, some of your remarks, can you talk about some of your ongoing preparations for the expansion this month? What sort of level of enthusiasm are you hearing from KOLs? Do you expect some of the early adopters have already identified some key recurring class 4 patients to start prescribing? So, that's the first question. And then the second, so you've made some great progress in establishing your launch infrastructure.
Vaish: We have a couple. So first, I guess, following up on the previous question, some of your remarks, can you talk about some of your ongoing preparations for the expansion this month? What sort of level of enthusiasm are you hearing from KOLs? Do you expect some of the early adopters have already identified some key recurring class 4 patients to start prescribing?
Vaish: Um...
Speaker Change: So that's the first question. And then the second, so you've made some great progress in establishing your launch infrastructure.
unknown: So, could you talk a bit about that spill rate, how it's been performing for Q2, and then how do you expect it to improve with some of the improvements that you've made and what your expectations there are? Thank you. Okay, Vich.
Speaker Change: So, could you talk a bit about that spill rate, how it's been performing for Q2, and then how do you expect it's going to improve with some of the improvements that you've made and what your expectations there are?
unknown: Okay. Thank you, Vich. So, I'll answer the second question first and then turn it over to Steve for your question about Class 4 preparation.
Speaker Change: Thank you.
Speaker Change: Okay, thank you. I'll answer the second question first and then turn it over to Steve.
unknown: So, I think Steve mentioned in his prepared remarks that we did a change in our hub. Some of this was due to change healthcare, but we did move our hub to a hub that now has change healthcare and relay, so if anything ever cyber attacked one, we can filter the other one. But, you know, hub transitions are tough. We did get hurt in April with our fill rate, and that hurt us for the quarter.
Speaker Change: for your question about the Class 4 Preparation. So,
Speaker Change: I think Steve mentioned in his prepared remarks...
John Tucker: Turning now to the low volume auto-injector that has been development, we announced earlier this week positive top-line study results from a PK study which demonstrated that ferro-6 achieve primary pharmacokimetic and secondary pharmacodes dynamic end points. Some of the highlights from the study results include SCP-111 demonstrated bioavailability of 107.3 achieving the 90% confidence interval limit about 80 to 125%. Participants that received SCP-111 had similar urine output, urinary sodium excretion, and urinary potassium excretion at 6.8 in 12 hours compared to ID ferro-6.
Speaker Change: that we did a change in our hub. Some of this was due to the change in health care, but we did move our hub to a hub that...
Steve Parsons: Now has changed health care and relay so if anything ever cyber attack one we can go through the other one
Speaker Change: But, you know, pump transmissions are tough. They can hurt us in April with our fill rate, and that hurt us for the quarter. It could hurt our next sale, so it probably cost us...
unknown: It hurt our net sales. It probably cost us 5-ish percent of net sales shipped to patients because, again, once we lose that script, we lose that patient because of the acute event nature of the product. So, we saw a fill rate in the mid-to-high 40s for the quarter. It was really bad in April when we made that hub move.
Speaker Change: I wishβ
Speaker Change: Thank you.
Speaker Change: Peter Kelleher, John Tucker, Steve Parsons, PJ Kelleher, John Tucker, Steve Parsons, Peter
John Tucker: Participants were in the median pain score of 0 across all time-point success. The most common adverse events of that SCP-111 were localized at the injection site and systemic adverse events were consistent with those reported in the describing information for intravenous and oral ferro-6, at the end of the year. As we were stated previously, we believe an auto injector, if approved, or reduce a manufacturing cost compared to the current on-body diffuser, confer environmental advantages, and give treating providers and their patients treatment flexibility.
unknown: It was tough, but with the hub change, what we've seen in Q3, and, again, it's only five or six weeks here, but our fill rate has moved up dramatically, and that was the whole idea of making the change to the hub. So, a little short-term pain was pretty painful, but we've been able now to have a hub in place that is really seeing a dramatic increase in our fill rate. So, again, in the mid-to-high 40s for Q2, started out really low, and then for this quarter, you know, right now, we're closer to 60%, maybe a little over.
Speaker Change: It was tough, but with the HUD change...
Speaker Change: What we've seen in Q3, and again, it's only five or six weeks here.
Speaker Change: But our fill rate has moved up dramatically. And that was the whole idea of making the change to the HUD. So a little short-term pain.
Speaker Change: It was pretty painful, but we've been able now to have a hub in place that is really seeing a dramatic increase in our fill rate.
Speaker Change: So again, in the...
Speaker Change: mid to high 40s for Q2.
Speaker Change: started out really low, and then for this quarter, you know, right now, we're closer to 60%, maybe even a little over for this month, 60% fill rate. So, we think that'll have a meaningful impact on our next sales this quarter.
John Tucker: Finally, we announced that FDA accepted our filing of supplemental drug application, seeking to expand the process level, treatment of a dean that did a fluid overload in patients with chronic kidney disease, or CKB. The FDA previously indicated that no additional clinical studies were required to expand the process indication to include CKB, if we can demonstrate an adequate PK, conformical dynamic bridge to the lifted drug, which is the fluorescent eye injection. CKB is a progressive disease characterized by worsening renal function over time, resulting in frequent episodes of fluid overload that are treated with luke diuretics.
unknown: For this month, 60% fill rate. So, we think that will have a meaningful impact on our net sales this quarter. Steve, do you want to answer the first question? I think the first question is about our preparation to take advantage of this indication expansion with heart failure specialists. They're a subset of the general cardiology practice.
Speaker Change: Steve, do you want to answer the first question? I think the first question around our preparation to take advantage of this
Steve Parsons: Indication Expansion with Heart Failure Specialists. They're a subset of the general cardiology practice. We know them well.
Steve Parsons: We know them well. We know where the advanced heart failure clinics and office locations are. We know who tried to use Furosiksa in class four early on and was frustrated by the PA, the prior author label that didn't allow that.
Speaker Change: We know where the advanced heart failure clinics and office locations are. We know who tried to use Furosikta in class 4 early on and was frustrated by the PA, the prior author label that didn't allow that. So,
John Tucker: It is estimated that there are 6.6 million Americans with CKB that are treated with luke diuretics, and it's made 50% of patients that say CKB do not have a diagnosis of heart failure. This resulted in potential incremental increase of 3.1 billion to the already existing 9.4 billion industrial market opportunity in heart failure, with fluid overload being one of the most common complications in CKB, which worsens with disease progression. We believe grossestly beneficial patients in CKB, but worsening symptoms due to fluid overload and are not responding to oral luke diuretics. The FDA declined to do today at March 6, 2025, if approved, we would make investments in our sales and commercial infrastructures to expand our reach to nephrologists.
Steve Parsons: So, I'm sure the reps have been anxious to go in there and give the good news. They'll be able to do that starting next week. We have to do a little training, we have to update some of our promotional materials and submit those, but everyone has a hit list of folks that they're going to go to first and often, and then we'll do some email blasts and stuff to reach people in a mass way. I am well prepared to do this.
Speaker Change: I'm sure the reps have been anxious to go in there and give the good news. They'll be able to do that starting next week. We have to do a little training. We have to update some of our promotional materials and submit those.
Speaker Change: We, everyone has a hit list of folks that they're going to go to first and often and then we'll do some email blasts and stuff to reach people, you know, in a mass way. So thank you.
Steve Parsons: It's a good opportunity. It's an unmet need. And, you know, we're going to fill it. Perfect. Thank you very much. The next question we have is from Chase Knickerbocker of Craig Hallam Capital Group. Please go ahead.
Speaker Change: Well prepared to do this. It's a good opportunity. It's an unmet need and we're going to fill it.
Steve Parsons: At this point, I will turn the call over to our Senior Vice President Commercial Steve Parsons for a deeper dive into our launch metrics. Steve? Thank you, John. As John indicated, we continue to be pleased with our progress since launch. From launch in February of 2023 through June 30th, 2024, we've had 2,713 unique prescribers that's up 24% from the 2,183 prescribers we had from launch through March 31st. We are encouraged by the prescriber growth in this quarter, and we believe this reflects our strategy of establishing a broad prescriber base.
Speaker Change: Perfect. Thank you very much.
Speaker Change: https://www.youtube.com
Speaker Change: The next question we have is from Chase Knickerbocker of Craig Harlem Capital Group. Please go ahead.
Steve Parsons: Importantly, one and half of these prescribers have written multiple prescriptions. During the second quarter, approximately 9,300 doses were filled. That's up 15% sequentially from approximately 8,100 doses in the first quarter of 2024. During the second quarter, the average number of doses per prescription filled was 6.3 doses, which remains higher than our long-term expectations, and up slightly from the 6.1 doses per prescription in the first quarter of 2024. With the label expansion to now include Class 4 heart failure patients, we anticipate that the average number of doses may rise further as those patients may need additional doses to treat more severe symptoms.
Chase Knickerbocker: Good afternoon. Thanks for taking the questions and congrats on a lot of recent progress here. Maybe just first to start, kind of parlaying off the hub change, can you just speak to kind of what the hub is doing differently, your new hub is doing differently to kind of drive that dramatic improvement? Obviously, some of it was just, you know, kind of maybe some of that change kind of hangover. But, you know, 60 plus percent is well above what we've seen at any point historically. So what are they doing differently that's really driving that improvement? Hey Chase, it's John.
Speaker Change: Good afternoon, guys. Thanks for taking the questions and congrats on a lot of recent progress here.
Chase Nicobalker: Maybe just first to start, kind of parlaying off the hub change.
Chase Nicobalker: Can you just speak to kind of what the hub is doing differently, your new hub is doing differently to kind of drive that dramatic of improvement? Obviously some of it was just...
Speaker Change: Peter Kelleher, John Tucker, Steve Parsons, PJ Kelleher, John Tucker, Steve Parsons, PJ
John Tucker: Thanks for the question. I'll have Steve answer how the hub is different than the old hub. Yes, so our launch hub was all manual. Everything was faxed in paper order, and that reached a kind of a critical limit for us. We didn't think they could grow with us, and then we had the problems with that. Everything was going through chains.
Speaker Change: Hey Chase, it's John . Thanks for the question. I'll have Steve answer how the hub is different than the old hub.
Steve Parsons: Yes, so our launch hub...
Steve Parsons: was all manual. Everything was a faxed in paper order.
Speaker Change: And, you know, that reached a, you know, kind of a critical limit to us. We didn't think they could grow with us, and then we had the problems with that. You know, everything's going through change. They have one, you know, one processor, and we needed two. The new hub is all online. It can be all online.
Steve Parsons: They had one processor, and we needed two. The new hub is all online. It could be all online.
Steve Parsons: Our sales force has conducted 3,324 in-services from launch through June 30th, that's up from 2,938 in-services from launch through March 31st. In-services provide important training to offices on the prescribing process of the erosics and this ensures office readiness.
Steve Parsons: The docs can submit their orders. They immediately see that it's been received. They immediately see that the prior auth has been submitted, that it's been approved, what the copay is, that it's been shipped to the patient, and they love all of that and it encourages them to prescribe more, but also things are getting filled well and faster. If something was missing that the doctor needed to provide for the prior auth to go through, a clinical notice sometime, they can see that.
Speaker Change: The docs can...
Speaker Change: You know, submit their orders. They immediately see that it's been received. They immediately see that the prior office has been submitted, that it's been approved, what the copay is, that it's been shipped to the patients, and they love all of that.
Speaker Change: and it encourages them to prescribe more, but also things are getting filled.
Speaker Change: well and faster. If something was missing that the doctor needed to provide for the prior off to go through
Steve Parsons: There's a chat function where our case managers at the hub are speaking to the office, medical assistants and RNs. Everything's just more modern, more optimal, and it's been effective. We're very happy. We're very encouraged by that. It seems like it's still early days.
Speaker Change: a clinical note of some kind, they can see that. There's a chat function where our case managers at the hub are speaking to the office.
Steve Parsons: As we open more new accounts, the execution of erosics success as we open and we regard and we regard number of in-services conductage quarter as an important leading indicator. Regarding our field sales force, we have said previously that we stand ready to add additional territories as demand warns. As demand continues to grow, we plan to add 22 territories for a total of 90 territories by the end of the third quarter. This will support the expanded label and increase our reach and frequency with more targeted cardiology and some nephrology specialists that treat chronic kidney disease patients who also have comorbid heart failure.
Speaker Change: Medical Assistants and RNs and so everything's just more modern, more optimal and it's it's been it's been effective so we're very happy we're very encouraged by that.
Steve Parsons: I mean, just maybe speak to your optimism that that continues to get better as, as you know, physicians get more and more confident with the new hub. And then just second, you know, John or Steve, what should we think about for kind of the cadence of growth to net changes? You kind of said we still expect kind of 30 to 35% longer term. I mean, if we look at that next year, do we get there just on some of the Medicare changes that are upcoming? Or does that assume that we contract with some of these larger PDP, you know, Medicare Advantage plans? Thanks.
Speaker Change: It seems like it's still early days. I mean, just maybe speak to your optimism that that continues to get better as, as you know, physicians get more and more confident with the new hub. And then just second, you know, John or Steve, what should we think about for kind of the cadence of growth to net changes? You kind of said we still expect kind of 30 to 35% longer term. I mean, if we look at that next year, do we get there just on some of the Medicare changes that are upcoming? Or does that assume that we contract with some of these larger PDP, you know, Medicare Advantage plans?
John Tucker: So on the second question about GTN, we do expect it to go up in the second half of this year, driven a lot by IDNs. So we're seeing more IDN business, and it's a discount versus WAC, so that will have an impact on our GTN for the balance of this year. I think we think it's gonna be in, so let's talk quarters, Q3, 10 to 15%, and Q4 in the same range.
Steve Parsons: At the beginning of the second quarter, we made the decision to change our patient services hub. This transition took several weeks to get up and running effectively. But by the end of the quarter, the hub was operating very well and has been an asset in increasing the number of field doses for Q3 and into the future. From a marketing perspective, we continue to execute a broad multi-channel marketing campaign to drive brand awareness, adoption, and commitment.
Speaker Change: Thanks.
Speaker Change: So, I'm not on a bit.
Speaker Change: The second question on the GTN, so...
Speaker Change: We do expect it to go off in a second half of this year, driven a lot by the IDN.
Speaker Change: So, we're seeing more IDN business and, you know, it's discount versus WAC, so that will have an impact on our GTN for the balance of this year. I think we think it's going to be in sort of...
Speaker Change: First little stock quarters, you know, two, three, you know, ten to fifteen percent cubed forward in the same range. So I think we can model it that way. Then I think next year things change. You have mandatory rebates with Medicare, you know, kind of in the
Steve Parsons: Our marketing encompasses many different activities including a significant patient awareness component. Other ongoing activities include engagement and development of key opinion leaders, conference presence, message evolution, and medical education programs among other critical tasks. We plan to have a very large presence at the Heart Failure Society of America conference coming this September in Atlanta. Overall, we are pleased with our continued progress and we are excited about the opportunity and the path ahead.
John Tucker: So I think we can model it that way. Then I think next year, if things change, you have mandatory rebates with Medicare, in the early stage and then in a catastrophic stage. So, and we'll be doing supplemental rebates with the Medicare payers as well. So we still think that long-term, and I mean long-term being next year, you could be in a 30 to 35% GTN. And we think next year sets up well, like spectacular for us, because with the redesign, patient copays are capped, they're gonna smooth it, so it'll be about $166.
Speaker Change: Early Stage and then in a catastrophic stage. So, and we'll be doing supplemental rebates with the Medicare payers as well. So, we still think.
Speaker Change: That long term, and I mean long term being next year, you could be in a 30-35% GTN. Now we think next year sets up well, like spectacular for us because
Steve Parsons: This concludes my update.
Rachael Nokes: I'd now like to turn the call over to our Chief Financial Officer, Rachel Nubz for a review of our financials. Rachel. Thank you, Steve. As of June 30th, 2024, we held $38.5 million in cash and cash investment compared to $76 million in cash, cash explosion, and investment as of December 31st, 2023. This excludes the funds we raised through the financing that John discussed earlier.
Scripps: Scripps. With the redesign, patient copays are capped. They're going to smooth it so it'll be about $166. So where we've lost Scripps is when a patient has a high copay. So...
John Tucker: So where we've lost scripts is when a patient has a high copay. So, we really think next year with the cap at $166, our flow rate continues to go off now. We mentioned it was in the, you know, for August anyway, it's in the 60s, little 60s.
Scripps: We really think next year, with the capping at $166, that our fill rate continues to go up. Now, we mentioned it was in the, you know, for August anyways, it's in the 60s, low 60s. You know, we'll...
John Tucker: You know, no brand's going to get above 80, 85%. We always will have a little gap because we have those scripts that are written, and the doctors kind of put them on hold. But we think once those get filled, and they do get filled, if we fill them all the time, that we can get to 80%. Part of that is the copay when that resets next year and some of the progress we're making with the plan. Some of it is continued improvement in the hub. Again, it hurt us in April, but it's helping us now. So it was the right move.
Rachael Nokes: Now we will cover a few income statement items. We reported a net loss of $17.1 million for the second quarter of 2024, compared to a net loss of $14.2 million for the second quarter of 2023. Product revenues were $8.1 million for the second quarter of 2024, compared to $1.6 million for the second quarter of 2023. Costs of product revenues were $2.3 million for the second quarter of 2024, compared to $2.4 million for the second quarter of 2023. The increase in both product revenues and cost of product revenues for the quarter ended June 30th, 2024, was due to increase demand for fewer or six further into the commercial launch and related manufacturing costs.
Scripps: It's no brand going to get us both.
Scripps: 80, 85 percent. We always will have a little gap because we have those scripts that are written and the doctors kind of put them on layaway. So we think once those get filled and they get they do get filled, we fill them all the time, that we can get to 80 percent.
Scripps: Part of that is the copay when that resets next year and some of the progress we're making with the plan
Scripps: Some of it is continued improvement in the hub. Again, it hurt us in April , but it's helping us now, so it was the right move. But there's still things you'll learn, there's things that reps can do better in the field with the doctors, there's things the doctors can do better.
John Tucker: But there's still things you'll learn. There's things the reps can do better in the field with the doctors. There's things the doctors can do better. But we think that's gonna continue to move up, Chase. Got it. Yeah. And John, maybe just the last one and I'll hop back in the queue.
Rachael Nokes: Research and development expenses were $2.7 million for the second quarter of 2024 compared to $2.9 million for the comparable period in 2023. The increase in research and development expenses for the quarter ended June 30th, 2024, was primarily due to a decrease in pharmaceuticals development costs, offset by clinical study costs and employee related costs.
Scripps: But we think that's going to continue to move up, Chase.
John Tucker: But do you think that it's going to take some time for Medicare beneficiaries to fully kind of understand the changes that happen next year? Will they quickly grasp that, you know, their copays are essentially now capped monthly and, you know, the incentives are kind of different? Asked another way, do you think it can get to that 80, 85 percent range fairly, fairly quickly once that change happens? Or how do you think about that? Yeah, I don't think it happens overnight with, you know, patients and physicians. So we have education.
Chase Nicobalker: Got it. Yeah, and John maybe just last one and I'll hop back in the queue, but do you think that it's going to take some time?
Speaker Change: to kind of for Medicare beneficiaries to fully kind of understand the changes that happen next year. Will they quickly grasp that, you know, their co-pays are essentially now capped monthly?
Rachael Nokes: Selling general and administrative expenses were $17.5 million for the second quarter of 2024 compared to $12.1 million for the comparable period in 2023. The increase in selling general and administrative expenses for the quarter ended June 30th, 2024, was primarily due to an increase in employee related costs, commercial costs, product samples and patient support.
Speaker Change: and you know the incentives are kind of different. Asked another way, do you think it can get to that 80-85% range, you know, fairly quickly once that change happens, or how do you think about that?
John Tucker: We're going to be doing to patients, I mean, excuse me, physicians about, you know, copays and how they've changed. But, you know, it's not going to change overnight. But we do think, you know, through the year, it's going to it's going to get better, you know, as as as it rolls out and more patients understand how it works and physicians understand how it works. But we'll be educated. I think it'll go up pretty significantly once everyone gets in the catastrophic. Yeah. After 2000, there won't be any copay drag friction.
Speaker Change: Yeah, I don't think it happened overnight.
Speaker Change: with
Speaker Change: and physicians. So we have education. We're going to be doing to patients, I mean, to
John Tucker: As of June 30th, 2024, we have $36 million, $139,800,000 to total shares outstanding. That concludes the financial update, John. Thanks, Rachel.
Speaker Change: You know, Corbets and how they've changed, but-
Speaker Change: It's not going to change overnight, but we do think, you know...
Speaker Change: For the year, it's going to get better, you know, as it rolls out and more patients understand how it works and physicians understand how it works.
Operator: This concludes our prepared remarks at this point who will open the call for questions. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please raise a star and then one on the telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and then two if you would like to remove your question from the queue.
Speaker Change: I think it will go up pretty significantly once everyone gets into catastrophic after 2000. There won't be any copay, drag, friction.
Chase Knickerbocker: Great, thanks guys. Thanks, Chase. At this time, there are no further questions, and I would like to turn the floor back over to John Tucker for any closing comments. Thank you. Okay, that concludes our call this afternoon. We are very pleased with our second quarter results, and our leading indicators remain strong. Additionally, the financing that we announced is truly transformational for our company and provides the capital necessary to execute our 406 commercial plan while also pursuing long-term growth initiatives.
Speaker Change: Yeah.
Speaker Change: Great. Thanks, guys.
Casey: Thanks, Casey.
Operator: For participants using speaking equipment, it may be necessary to pick up your handset before pressing star keys. It is requested that question is kept to one question and one follow-up. One moment, please, while we pull for question.
Casey: At this time, there are no further questions and I would like to turn the floor back over to John Tucker for any closing comments.
John Tucker: Thank you.
Speaker Change: Okay, that concludes our call this afternoon. We are very pleased with our second quarter results and our leading indicators remain strong. Additionally, the financing that we announced is truly transformational for our company and provides the capital necessary to execute our 406 commercial plan while also pursuing long-term growth initiatives.
Joanna Rees: The first question we have is from Joanna Rees of Learing Partners. Please go ahead. Great. Afternoon, everyone. A quick couple of ones for me. First, how much could the average number of doses per prescription for ferrosics actually increase with the new label for class four? And just to that, how are you thinking about clinicians, how fast they can prescribe ferrosics for class four patients? Are there any hurdles or logistics that they might need to get through before they can really get off to the races and prescribe?
Chase Knickerbocker: I look forward to a successful year and providing our next quarterly update in November. Thank you again and have a good year. Ladies and gentlemen, today's conference concludes. Thank you for joining us. You may now disconnect your lines. Kelleher, John Mohr, John Mohr, John Mohr, John Mohr, [music]
Speaker Change: I look forward to a successful year and providing our next quarterly update in November . Thank you again and have a good evening.
Speaker Change: Ladies and gentlemen, that concludes today's conference. Thank you for joining us. You may now disconnect your lines.
Speaker Change: kaydeterminations, Steve Marshaw, Steve Thomson, John Jekyll, Steve Lawson
John Tucker: The hybrids, John, I'm going to have Steve answer that.
Steve Parsons: Those two questions, okay. Yes, so it will be hard to predict what the impact on the average number of doses is across the whole population. But we do think the class four patients will need nine doses or even up to 12 doses based on the severity of their symptoms. And we do think they'll get prescriptions more often than the average heart failure patient. As often as, you know, every month or every other month. So that could impact the average dose of prescription over a quarter.
Steve Parsons: And then back to how fast will we? Yeah, we should start to see prescriptions for heart failure for class four, you know, starting next week. Our sales will be trained to be in the field. We've been in contact with the payers, make sure they update their systems to reflect the P.A, to label, and the label now will not limit the usage of class, class four patients. So we're expecting to see it immediately as we get around to those doctors who have a concentrated population of class four patients. That's the heart failure, especially on the advanced heart failure, and Clicks.
Joanna Rees: Got it. Makes sense. And thinking ahead to potential approval for CKD patients with a DEMA, how are you thinking about possibly stepping up the field for size? You kind of alluded to you consider growth there. What sort of metrics are you looking for to give you a signal that you should meaningfully expand the field for us at that time? Yeah, so we're going to move to 90 reps. We're in the process of a right now, based on, you know, the increasing demand, which we especially into this quarter and with the label expansion in the class four.
Joanna Rees: So that'll have us at 90 reps with with Kidney, Toronto, we're going to go to probably 130 reps. And that will be based on how many nephrologists we want to cover and the cardiologists. So our thinking now is this will be one sales force, 130 reps, calling on, you know, cardiologists, heart failure specialists and nephrologists. Got it. Super helpful.
Joanna Rees: Thanks. Great.
Operator: Thank you.
Vesh: Next question we have is from Stacy Kuh of TD Cohen. Please go ahead. Hi, this is Vesh on for Stacy. Congratulations on the stellar quarter and thanks for taking our questions. We have a couple. So first, I guess following up on the previous questions from the field remarks, can you talk about some of your ongoing preparations for the expansion this month? What sort of level of enthusiasm are you hearing from KOL?
Vesh: Do you expect some of the early adopters have already identified some key recurring class four patients to start prescribing? So that's the first question. And then the second, so you've made some great progress and establishing your launch infrastructure. So could you talk a bit about that still rate, how it's been performing for Q2 and then how do you expect this going to improve with some of the improvements that you've made and what your expectations there are? Thank you. Okay, Vesh. Okay. Thank you, Vesh.
John Tucker: I'll answer the second question first and then turn it over to Steve for your question about the class four preparation. So I think Steve mentioned in his prepare remarks that we did a change in a hub. Some of those who fear the change out there. We did we didn't move our hub to a hub that now has changed out here and relayed. So if anything ever cyber attack one, we built through the other one.
John Tucker: But you know, I'm transisting their top league adverts in April of our fill rate and that was for the quarter. It could hurt our next day. I'll probably cost us five to 1% on net sales unit shift to patients because again, once we lose that script, we lose that patient. Because of the acute event nature of the product. So so we saw fill rate in that in the 40 in the mid to high 40s for the quarter, which really that in April, when we made that hub move, it was, it was, it was tough, but with the hot change, what we've seen in Q Q3.
John Tucker: And again, it's only five or six weeks here, but our fill rate is moved up dramatically and that was the whole idea of making the change to the hot. So a little short term pain was pretty painful, but we've able now to have a hub in place that is that is really seeing a dramatic increase in our fill rate. So so again, in the mid to high 40s for Q2 started out really low. And then for this quarter, you know, right now we're closer to 60% and being a little over for this month, 60%. So, so they've got a meaningful impact on our net sales support.
Steve Parsons: Steve, do you want to answer the first question? No, I think the first question around the preparation to take advantage of this indication expansion with heart failure specialist, there are subset of the general cardiology practice. Because we know them well. We know where the advanced heart failure clinics and office locations are. We know who tried to use HERO-6SA in class four early on and was frustrated by the PA, the prior author label that didn't allow that.
Steve Parsons: So I'm sure the reps have been anxious to go in there and give the good news. They'll be able to do that starting next week. We have to do a little training. We have to update some of our promotional materials and sit at those. But everyone has a hit list of folks that they're going to go to first and often, and then we'll do some email blasts and stuff to reach people in a mass way. So well prepared to do this. It's a good opportunity. It's an unmet need. And we're going to fill it.
Vesh: Perfect. Thank you very much.
Chase Knickerbocker: The next question we have is from Chase Knickerbocker of Craig Highland Capital Group. Please go ahead. Thanks for taking the questions and congrats on a lot of recent progress here. Maybe just first to start, kind of partly not the hub change. Can you just speak to kind of what the hub is doing differently? Your new hub is doing differently to kind of drive that dramatic improvement. Obviously some of it was just kind of maybe some of that change kind of hangover. But 60 plus percent is well above what we've seen at any point historically. So what are they doing differently that's really driving that improvement? Chase, John, thank you for the question.
John Tucker: I want to speed answer how the hub is different than the old hub. Yeah, so our launch hub was all manual. Everything was a fact in paper order. And that reached kind of a critical limit to us. We didn't think they could grow with us. And then we had the problems with everything going through change. They had one process there. And we needed to. The new hub is all online. It can be all online.
John Tucker: The docs can submit their orders. They immediately see that it's been received. They immediately see that the prior off has been submitted. That it's been approved what the co-pay is. That it's been shipped to the patients. And they love all of that. And they encourage is them to prescribe more. But also things are getting filled well and faster. If something was missing that the doctor needed to provide for the prior off to go through a clinical notice sometimes.
John Tucker: They can see that is a chat function where our case managers at the hub are speaking to the office medical assistance and RNs. And so everything's just more modern, more optimal. And it's been it's been effective. So we're very happy. We're very encouraged by that.
Chase Knickerbocker: It seems like it's still early days. I mean, just maybe speak to your optimism that that continues to get better. As you know, physicians get more and more confident with the new hub.
John Tucker: And then just second. You know, John or Steve, what should we think about for kind of the cadence of growth to net changes? You kind of said we still expect kind of 30 to 35% longer term. I mean, if we look at that next year. Do we get there just on some of the Medicare changes that are upcoming? Or does that assume that we contract with some of these larger PDP Medicare advantage plans?
John Tucker: Thanks. So on the second question on the GTN, so we do expect it to go off in a second half of this year, driven a lot by the IDNs. So we're seeing more IDN business and it's discounted versus whack, so that will have an impact on our GTN for the balance of this year. I think we think it's going to be in sort of stock quarters, you know, 2, 3, you know, 10 to 15% Q4 in the same range.
John Tucker: So I think we can model it that way. Then I think next year things change, you have mandatory rebates with Medicare in the early stage and then in the catastrophic stage. So and we'll be doing supplemental rebates with the Medicare payers as well. So we still think that long term, and I mean long term being next year, you could be in a 30 to 35% GTN. And we think next year sets up wealth like spectacular course because with the redesign, patient co-pay is a calf.
John Tucker: They're going to smooth it, so it'll be about $166. So where we lost scripts is when a patient has a high co-pay. So we really think next year with the capping at $166 that our flow rate continues to go off now. We mentioned it was in the, you know, for August, anyway, it's in the 60s, low 60s. You know, well, no brand is going to get above 85%. We always will have a little gap because we have those scripts that are written and the doctors kind of put them on layaway.
John Tucker: So we think once those get filled, and they do get filled, we fill them all the time, that we can get to 80%. Part of that is the co-pay when that we set next year and some of the progress we're making with the plan. Some of it is continued improvement in the hub. Again, it hurt us in April, but it's helping us now. So it was the right move. But there's still things you learn, there's things the reps can do better in the field with the doctors. There's things the doctors can do better. But we think that's going to continue to move on. Chase. Got it. Yeah.
Chase Knickerbocker: And John, maybe just the last one, and I'll hop back in the queue. But do you think that it's going to take some time to kind of, for Medicare beneficiaries, to fully kind of understand the changes that happen next year? Will they quickly grasp that their co-pays are essentially now capped monthly? And the incentives are kind of different. That's another way. Do you think it can get to that 80%, 85% range fairly quickly once that change happens?
Chase Knickerbocker: Or how do you think about that? Yeah, I don't think it happened overnight with patients and physicians. So we have education. We're going to, you know, be doing the patient, I mean, the assuming physicians about, you know, co-pays and how they've changed, but you know, it's not going to change overnight. But we do think, you know, through the year, it's going to get better, you know, as it rolls out and more patients understand how it works and physicians understand how it works. But we'll be educating. I think it'll go up pretty significantly once everyone gets in the catastrophic. Yeah, after 2000, yeah, it's going to be an appropriate drag friction. Thank you. Great. Thank you. Thanks, Chase.
John Tucker: At this time, they are now further questions and I would like to turn the floor back over to John Tucker for any closing comment. Thank you.
John Tucker: Okay, that concludes our call this afternoon. We are very pleased with our second quarter results and our leading indicators remain strong. Additionally, the financing that we announced is truly transformational for our company and provide the capital necessary to execute our ferrosyx commercial plan while also pursuing long-term growth initiatives.
John Tucker: I would like forage this successful year and providing an next quarterly update in November. Thank you again and have a good evening.
Operator: Ladies and gentlemen, that concludes today's conference. Thank you for joining us. You[inaudible]