Q4 2024 scPharmaceuticals Inc Earnings Call
Yeah.
Speaker Change: Good afternoon, and welcome to Etsy Pharmaceuticals fourth quarter and full year 2024 earnings conference call.
At this time, all participants on a listen only mode.
Following managements prepared remarks, we will hold a question and answer session.
So I asked the question at that time. Please press star followed by one one on your Touchtone phone.
As a reminder, today's conference.
It's being recorded.
Speaker Change: I would now like to turn the conference call over to Nick Coe Angelo Investor Relations to cover what you can statements. Nick. Please go ahead.
Speaker Change: Thank you operator before beginning this afternoon's earnings call, we would like to highlight the following forward looking statements. All statements on this conference call other than historical facts are forward looking statements within the meaning of the federal securities laws, including but not limited to statements regarding <unk> pharmaceuticals expected future financial results management's.
Speaker Change: <unk> and plans for the business the ongoing commercialization and marketing of Euro six and the potential label expansion and other regulatory approvals of Euro six the words anticipate believe estimate expect intend guidance confidence target project and other similar expressions are used typically to identify such forward looking statements.
Speaker Change: These forward looking statements are not guarantees of future performance and may involve and are subject to certain risks and uncertainties and other important factors that may affect S. C pharmaceuticals business financial condition and other operating results.
Speaker Change: These include but are not limited to the risk factors and other qualifications contained in S. C pharmaceuticals in the report on Form 10-K quarterly reports on Form 10-Q, and other reports filed by the company with the SEC to which your attention is directed.
Speaker Change: Actual outcomes and results may differ materially from what is expressed or implied by these forward looking statements.
Speaker Change: Any forward looking statements made in this conference call, including responses to your questions are based on current expectations as of today, and let's say pharmaceuticals, expressively disclaims any intent or obligation to update these forward looking statements except as required by law.
Speaker Change: With that I will turn the call over to John Tucker Chief Executive Officer of S. C Pharmaceuticals, John Please go ahead.
Speaker Change: Thank you Nick and thank you all for joining this afternoon's conference call today, we will provide an overview of the company's core business and operational highlights for the fourth quarter of 2020 for a commercial update from Steve Parsons, Our senior Vice President of commercial as well as an overview of our fourth quarter and full year 2024 financial results from our.
Speaker Change: Chief Financial Officer, Rachel box, we will then open the line for questions overall, although we are satisfied with the Farone six commercial growth over the course of 2024, we were especially encouraged by what we saw in Q4 accumulating in net revenue of $12 2 million at the midpoint of the 12 to $12 3 million.
Speaker Change: That was previously announced in January for the full year 2020 for Etsy Pharmaceuticals generated $36 3 million in net <unk> revenue, representing approximately 167% increase in net revenue year over year, driven primarily by the increased awareness of <unk> for.
Speaker Change: Our expansion into the class four heart failure patient population and increased reach and market penetration in Q4 due to our larger commercial sales force.
Speaker Change: The gross to net discount for <unk> in the fourth quarter 2024 was approximately 19% at the high end of the range. We provided in January the increase in <unk> is primarily due to the continued payment of coverage gap rebates in Q4, and the impact of the Medicare redesign of inventory in the channel.
Speaker Change: We expect a long long run GTS discount for for us to be in the range of 30% to 35% for 2025.
Speaker Change: As we've stated previously we do take a hit on our GTS with Medicare redesign. We believe <unk> is uniquely positioned to benefit from the 2000 dollar out of pocket maximum for part D beneficiaries or for these patients enrolling in the smoothing option over the balance of the year.
Speaker Change: As we approach the end of the first quarter, we have seen evidence of more patients. This month hitting their out of pocket caps or enrolling in smoothing than we did in either January or February as a reminder, in reflected in today's financial results. The <unk>.
Speaker Change: Oh, six demand and fill rates significantly increases when patients' out of pocket costs are lower with the Medicare redesign fully implemented in 2025 patients will progress into catastrophic coverage faster, which should lower out of pocket co pays or they will enroll in the CMS smoothing program with approximately 70 to 75.
Speaker Change: Cent of our prescriptions filled by part D. Beneficiaries, we believe the Medicare redesign will serve as a tailwind enhancing our commercial strategy and supporting organic growth up for Essex.
Speaker Change: As previously announced on March six 2025, the FDA approved a supplemental new drug application for <unk> to expand its indication to include the treatment of edema in patients with chronic kidney disease fluid overload, which occurs in over 700000 cases annually is one of the most prevalent symptoms of CK two.
Speaker Change: And requires intervention given the opportunities to intervene pre hospitalization or post discharge for us success potential to play a significant role in managing edema in patients living with C. J D.
Speaker Change: This resonates strongly with Nephrologists, we are engaged with to date.
Speaker Change: Steve will provide an overview of our pre commercial activities and expectations for the <unk> launch in greater detail, but I do want to highlight that we expect to fully launch the CK indication in April and already have seen prescriptions from Nephrologists based on the awareness level. We saw in our initial awareness trial and usage market research among nephrologists.
Speaker Change: As well as preliminary call points, we remain confident that the <unk> expansion into <unk> patients will prove to be a meaningful growth driver for the for US X franchise.
Speaker Change: Turning to the auto injector, we are pleased to provide a positive update following additional shelf life testing, we've seen encouraging data with enhanced silicon syringe in the testing conducted thus far we are targeting a mid year submission of the auto injector S. NDA pending the results of remaining testing those.
Speaker Change: So delaying the filing was disappointing we remain confident this will be a critical advancement in our product pipeline. We are very pleased with the feedback we've received on the performance of <unk> in the market and believe that with the expanded sales force. The C. J D indication and the Medicare redesign we are well positioned for 2025.
Speaker Change: With that I will pass the line to Steve Parsons FC Pharmaceuticals, Senior Vice President of commercial Steve.
Steve Parsons: Thank you John.
Steve Parsons: I am pleased to share that since the beginning of this euro six commercial launch in February 2023 over 3800 unique providers have prescribed <unk> to their patients. This represents a 23% increase over the course of the fourth quarter compared to the third quarter.
Steve Parsons: During the fourth quarter of 2024, we filled approximately 13300 doses of euro six up 23% from the 10800 doses in the third quarter of 2024, we've continued to see the average number of doses per prescription increase to 7.4.
Steve Parsons: Doses per prescription largely due to the increased number of doses written for more patients with advanced heart failure and class four.
Steve Parsons: As a chronic kidney disease prescriptions to begin to be written we anticipate the average number of doses written per prescription will stabilize as we expect CK D patients will likely require a five or six doses more comparable to the prescription size of the earlier stage heart failure patients.
As John mentioned earlier in the call, we're expecting to start filling for ROE six prescriptions for <unk> in April.
Steve Parsons: Leveraging our expanded field sales force and learnings from the <unk> heart failure launch we have designed a focused commercial plan to cover the highest volume nephrology targets with smaller more manageable territories for our sales reps with smaller territories allow our reps to access the offices with the <unk>.
Steve Parsons: <unk> patients and make more visits to those prescribers that was possible with the larger geographies.
Steve Parsons: Importantly, this approval will put us into a large segment of cardio renal treaters, where approximately 50% of patients have both <unk> and co morbid heart failure and are being treated by nephrology specialists.
Steve Parsons: We leave these patients represent an ideal population who could benefit from <unk>, our forensics direct patient services hub continues to reduce friction from the prescribing process, increasing ease of ordering and prescriber transparency.
Steve Parsons: We're encouraged by the feedback we've received from health care providers on our patient services hub streamlining their entire prescribing process from timely prior authorization to prompt patient co pay reporting and successful delivery to the patient.
Steve Parsons: Expect the new hub to contribute to our patient treatment volume growth over the long term lastly.
Steve Parsons: Lastly, there has been good feedback from the <unk> and hospital systems that were contracted with around their satisfaction with the prescribing process and efforts to streamline for Essex access for their prescribers and patients.
Speaker Change: That concludes our commercial update I will now hand, the call over to Rachel <unk>, Chief Financial Officer of SC Pharmaceuticals to review, our fourth quarter and full year 2024 financial results.
Steve Parsons: Rachel.
Rachel Box: Thank you, Steve curious X revenues for the fourth quarter of 2024 were $12 $2 million compared to $6 $1 million for the same period in 2023 for.
Rachel Box: For the full year 2020 for Etsy Pharmaceuticals reported $36 $3 million in product revenue.
Rachel Box: Compared to $13 $6 million for the full year 2023.
Rachel Box: This represents approximately 167% annual growth of net revenue generated by <unk>.
Rachel Box: The increase was due to an increase in demand for euro six further into commercial launch.
Rachel Box: Cost of product revenues for the fourth quarter of 2024 were four point million compared to $1 8 million for the same period in 2023 for the full year 2020 for Etsy Pharmaceuticals reported 11 $4 million and cost of product revenues compared to $3 8 million.
Rachel Box: For the full year 2023.
Rachel Box: The increase was due to an increase in demand for for Euro six further into commercial launch and related manufacturing costs research and development expenses were $3 $2 million for the fourth quarter of 2024 compared to $3 $3 million for the fourth quarter of 2023.
Rachel Box: This decrease in quarterly research and development expenses is primarily due to a decrease in pharmaceutical development costs offset by an increase in clinical study costs for.
Rachel Box: For the full year 2020 for research and development expenses were $12 $1 million compared to $11 $8 million for the full year 2023.
Rachel Box: This increase in annual research and development.
Rachel Box: <unk> is primarily due to an increase in clinical study costs device development costs and patent costs.
Rachel Box: Kris was partially offset by a decrease in pharmaceutical development costs quality consulting and shipping and storage costs.
Rachel Box: Selling general and administrative expenses for the fourth quarter of 2024, or 21 $4 million compared to $16 2 million for the same period of 2023.
Rachel Box: This quarterly increase in selling general and administrative expense is primarily attributable to an increase in employee related costs commercial preparation costs and patient support etsy pharmaceutical selling general and administrative expense for the full year 2024, with $77 6 million compared to <unk> 50.
Rachel Box: $3 $4 million for the full year 2023. This annual increase in selling general and administrative expense is primarily due to an increase in employee related costs commercial preparation costs costs associated with financing transactions.
Rachel Box: <unk> support professional service cost and FDA user fees.
Rachel Box: The increase was partially offset by a decrease in insurance costs for the fourth quarter of 2020 for Etsy Pharmaceuticals reported a net loss of $18 8 million compared to a net loss of $13 $8 million for the fourth quarter of 2023.
Pharmaceuticals reported a net loss of $85 $1 million for the full year 2024, compared to a net loss of $54 $8 million for the full year 2023.
Rachel Box: Etsy Pharmaceuticals ended 2024 with $75 $7 million in cash and cash equivalents compared to $76 million in cash cash equivalents and short term investments as of December 31 2023.
Rachel Box: As of December 31, 2020 for Etsy Pharmaceuticals had 50.095 million 689 shares outstanding that concludes Etsy Pharmaceuticals financial update and our prepared remarks, we will now open the call for questions operator.
Rachel Box: Thank you.
Speaker Change: Ladies and gentlemen, as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.
Rachel Box: To withdraw your question. Please press star one again.
Speaker Change: Please standby, while we compile the Q&A roster.
Speaker Change: Okay.
Speaker Change: Our first question comes from the line of Stacy <unk> with TD Cowen Your line is open.
Stacy: Hi team congrats on the year and the <unk> approval and thanks for taking our questions.
Stacy: So on the upcoming launch for <unk>, so on the upcoming <unk> launch.
Stacy: Big picture.
Stacy: Can you can you discuss the potential opportunity this represents for <unk> and <unk>.
Stacy: Then second then drilling down on the launch itself can you it's encouraging to see some early prescriptions coming in from Nephrologist. So can you discuss some of the early work that you have been doing in terms of reaching out to Nephrologists and then what are your expectations for the launch starting in April.
Stacy: We'll access be seamless is there additional payer dynamics here and how do you expect adoption will turn out to the rest of the year.
Stacy: And do you expect this would impact <unk> adoption as well thank you.
Stacy: Sure.
Stacy: Thanks for those questions I'll try to remember them all.
Stacy: So.
Stacy: Yes.
Stacy: The feedback from Nephrologists, we have been in some of the larger offices and a real limited basis keep in mind that even before we received the kidney indication.
Stacy: It was indicated for patients that have heart failure and CK D. So we did use that opportunity to go into some of the larger nephrology offices to establish a presence do some in services and we did see scripts for Nephrologists.
Stacy: Early on.
Stacy: Yes.
Stacy: Their heart failure patients. So we think it gives us it gives us a big a.
Stacy: A big leg up there having already identified that in services and some of those large offices, we did an awareness trial and usage study.
Stacy: Slide in cardiology before we launched baseline in nephrology before we launched it it was about <unk> <unk> higher in nephrology.
Stacy: We've been obviously working with the Kols we've.
Stacy: We've identified both national local and regional.
Stacy: And we've been out reaching to them we've been at the conferences. So we think we're going to be in a position to launch this and have a quicker uptake than in than in and cardiology.
Stacy: Cardiology, Steve I don't know John if you want to add anything to that I'm sorry.
Speaker Change: I'd just add that that in a when you're walking into a nephrologist office at least 50% of those patients also have concomitant covenant heart failure I think the other piece is that there's about 10000, nephrologist and 30000 cargo. So it's a much more concentrated.
Stacy: Okay.
Stacy: Area as well so all those things together get put us in a position where we believe that there is.
Stacy: Opportunity for.
Stacy: Early growth, yes, I think there was a question about.
Stacy: The impact of the launch.
Stacy: We'll do a full launch in midpoint of April.
Stacy: There'll be some revenue impact in Q2, but mainly in Q3 and Q4 will we see the lift from nephrology.
Stacy: And then the payer work we've done.
Stacy: It's the same brand it's all under the same N D. C code. So we have alerted Allah plans notifying them of the of the indication expansion.
Stacy: No no pushback on really on Nephrologist scripts that came in before as long as they were coded for for heart failure. So we think the payers they pick it up automatically based on their data feeds will have it all loaded by that by the time, we're out in the field with with the indication.
Stacy: Perfect. Thank you very much.
Stacy: Thanks.
Stacy: Please standby for our next question.
Speaker Change: Our next question comes from the line of Glen Santangelo with Jefferies. Your line is open.
Glen Santangelo: Yes, thanks for taking my question.
Glen Santangelo: I just wanted to sort of get your high level will take on a couple of things I mean, it seems like the company continues to make good solid sequential progress, but just sort of looking back the product's been commercially available for over two years now and just sort of knowing you I'm sure.
Glen Santangelo: You wish the slope.
Glen Santangelo: The ramp was even steeper than what youre seeing and so I'd love to just sort of get your retrospective looking back over the last year as to maybe what hurdles you've seen in place that are may be making.
Glen Santangelo: Make them, a little bit, making it a little bit harder to get adoption at which the pace with which you hoped.
Glen Santangelo: What else do you think it's more of a.
Glen Santangelo: An access issue prescribing issue user issue.
Glen Santangelo: Recognizing that obviously expanding the sales force.
Speaker Change: Getting class four and get into the CK D indication are all going to help obviously in 'twenty five but would love to get your take as to what really could accelerate the ramp here.
Speaker Change: Yes, Glen Haven, Thanks, Craig Thanks for the question, yes, so yes.
Speaker Change: I think I said in my opening.
Sam: Opening remarks Sam.
Speaker Change: Satisfied with year although.
Speaker Change: We're really pleased by what we what we saw in the fourth quarter and it wasn't just the numbers that was kind of our docs had really started positioning the product differently in their minds. So.
Speaker Change: When we look at this year and looking back at last year.
Speaker Change: Headwinds, we had last year, we're really.
Speaker Change: Based on pace.
Speaker Change: Patients' out of pocket, So you say access access to physicians.
Speaker Change: Challenge for everybody you need it to get around it and we're doing that just like everybody else's, but it's really for patients access and win when their co pays are really high in last year.
Speaker Change: Max out of pocket was 4000 and there was no smoothing. So you you had a headwind with patients' out of pockets.
Speaker Change: This year with the Medicare redesign, we really think this works in our favor in that the patient cap out of pocket cap goes down all the way to 2000, and so it's pretty much in half and the patients can enroll in smoothing now beginning of the quarter. There was a lot of confusion with the patients and the physicians about that how that.
Speaker Change: Work, but we're really starting to see the impact of that here.
Speaker Change: It's when we know from what we saw especially in December what we've seen whenever patient co pays are lowered that our fill rate goes up and our demand goes up it's like a halo impact over the physician. So if I could wave my one for last year and change one thing would have been.
Speaker Change: Hey, good patients have had this low out of pocket. They have this year. So we're really excited about about this year. So when we talk about tailwind.
Speaker Change: The redesign yes, you can take a couple point hit to your GPM, but I think what's key for us and why it might be a little different than some companies who are looking at this and just say, it's a hit to our net revenue it's not to ours, we werent paying these big rebates, we werent on preferred status anywhere.
Speaker Change: We are suffering through through high Copays last year and all of a sudden these co pays are going to go down and yes, we're going to have to pay.
Speaker Change: A small rebate to Medicare, but we didnt have 50% rebates out there to start with so where some companies are just taken the penalty of a mandatory rebate.
Speaker Change: Yes, we're taking a small penalty, but we're getting access to these patients where they have low co pays.
Speaker Change: And when the doctors know basis have low copays. They write more freely. So so we really think the redesign really plays out well for us obviously the kidney launch.
Speaker Change: But again as I said, well, where we're satisfied with 2024, we're not jumping up and down because there's so much more we can get and so much more we're going to do and I really think the tape.
Speaker Change: <unk> setup this year for us to do just that.
Speaker Change: Alright, Thats really helpful. I appreciate that maybe I just ask one quick financial follow up.
Speaker Change: Jonathan I understand why you all don't want to give guidance at this stage, but I am sure you pay attention to consensus estimates that have revenues up 130% next year and when you look at sort of this increase in the gross to net that you are talking about recognizing there's there's all these growth drivers I don't know if you can give us any sort of.
Speaker Change: Guardrails around that I would say the same for for sort of cash right. I mean, you got $76 million, but how would you assess the burn rate relative to maybe some incremental commercial costs you might need to incur two to penetrate these nephrologists and I'll stop there. Thanks.
Speaker Change: So.
Speaker Change: On the second question.
Speaker Change: When you look at our burn rate again, when our revenue goes up that burn rates going going down.
Speaker Change: Our commercial cost will go up just marginally here, even if you added if you added 20 reps.
Speaker Change: That adds a million and a half a quarter that's eight to your burn if you did that so we really see.
Speaker Change: That the call it the burn.
Speaker Change: Going down because opex stays fairly flat on a revenue is going to continue to increase.
Speaker Change: Every quarter so.
Speaker Change: We said.
Based on our plan.
Speaker Change: Our cash is good to get it get us all the way there.
Speaker Change: As far as giving guidance, it's hard I think this year for everybody.
Speaker Change: <unk> got one product in Medicare is going to be a little difficult because you don't really know what the impact of the redesign is again, you know youre going to get mandatory rebates, but.
Speaker Change: You don't know when a patient goes from initial coverage into catastrophic but again for us.
Speaker Change: The fact that the patients are going to have co pays zero dollar co pays zero dollar co base for all of their drugs.
Speaker Change: This opens up.
Speaker Change: A huge opportunity for us so it's hard it's hard for us to give guidance.
Speaker Change: When that that GTA and it is not known but if you look at last year.
Speaker Change: We increased 167% over the year before.
Speaker Change: We've increased our sales force by 30%, we've added indication and CK D, which is 700000 more patients and doctors that are more accessible and we have the <unk> of the <unk>.
Speaker Change: Of the Medicare redesign so when I look at where consensus is unlike we're real positive on that just because of those those tailwind and I know, there's a bit of a headwind with the GCN, increasing but again for us. It's different we did not have preferred status where pay.
Speaker Change: And 50% for last year. So we didn't have access to those patients we have access to those patients. This year and again, we've seen diamond time again when patients have low co pays two things happen fill rates go up and docs right more drug those two things happen.
Speaker Change: It's really going to youre going to see.
Speaker Change: Really a dramatic dramatic change in our fill rate and then in demand.
Speaker Change: That's awesome thanks for the comments.
Brian: Thanks, Brian.
Speaker Change: Please standby for our next question.
Speaker Change: Yes.
Speaker Change: Our next question comes from the line of ROE Ana <unk> with Leerink partners. Your line is open.
Speaker Change: Great afternoon, everyone. A couple from me so could you talk a bit about your thoughts on whether you could possibly push for more favorable payer coverage for <unk> now that you have two indications and I was also curious thinking about the Medicare redesign this year, how much education or.
Speaker Change: Awareness building, we needed to make sure physicians and patients are aware of some of the benefits might come through for for FX.
Speaker Change: Great. Thanks, John.
Speaker Change: Yes on the second part so we have been out.
Speaker Change: CMS is rural was October 15 last year, they were supposed to notify the patients CMS and their plans and their pharmacies of patients that we're going to go into catastrophic I can tell you I think I told you at the conference last week.
Speaker Change: From what we could see that didnt happen or the patients were confused so.
Speaker Change: We've been out educating the doctors that we obviously can't talk directly to patients, but we've been out educating doctors about the smoothing opportunity.
Speaker Change: And the staff and whenever a scrip comes in our hub will notify all patient every patient here's a situation you can enroll and smoothing it based on where they are and how much of their out of pocket that they they've already spent that they can enroll in smoothing, but your cap I think.
Speaker Change: You do that all of your drugs that have zero dollar co pay so we really we really think.
Speaker Change: Yes, it probably had a slower start than any any any of bots and CMS included thought from education.
Speaker Change: Mainly to patients in some of these patients as you know our older confused maybe maybe think its a scam or something so we've spent a lot of time and it's not just us I think every pharmaceutical company that's selling in Medicare is out there talking to doctors and staff and educating them.
Speaker Change: The best Education really takes place when when they when they call in to one 804 six direct and.
Speaker Change: And get get educated by our hub on their auction, Steve do you want to talk maybe a little bit about.
Speaker Change: The payers.
Speaker Change: Yes.
Speaker Change: We like our position with the payers this year, our coverage, particularly when the patients get to catastrophic enable zero dollar co pay.
Speaker Change: There's a lot of pharma companies have gotten themselves in trouble with offering big discounts that stack on top of the mandatory 10, 20% that's required by Medicare This year.
Speaker Change: There's people with 65% to 70% 75% rebates.
Speaker Change: Sure.
Speaker Change: We're happy that we didn't do that they are in competitive categories and they need to because only one brand is going to do well the other brands will be.
Speaker Change: You'll have to step through the main preferred brand to get to another brand.
Speaker Change: I'll have to do that patients are on oral generic diabetics now and when that's not enough to US is approved is covered.
Speaker Change: Co pays.
Speaker Change: They're good for some patients now other patients it's going to take a while but for the balance of the year. We really think co pays are going to be really good for <unk>. So we're not looking to change our position there.
Speaker Change: Would cost an awful lot to do it and we don't we don't think we need to.
Speaker Change: We know some brands that are that are at a $50 to 55%.
Speaker Change: Based formulary discount and they got to 20% of added on top in Medicare and Theyre sitting at 70, 580, 80% GTS and what did they get for that additional 20%.
Speaker Change: Nothing because they were already paying to 50 or 55% to be to have those low co pays we get the low co pays this year now again, they have to work through it but we're seeing that happening we get the loco pace without having to spend that 50% rebate. So we again, we took some pain last year obviously.
Speaker Change: With some of these high out of pocket for these patients.
Speaker Change: But we didn't give the shop away by giving those giant rebates and I think we're in a better position for that.
Speaker Change: Yes, that's super helpful and last one for me I think you mentioned earlier in the <unk> patients.
Speaker Change: Might likely needs five to six doses.
Speaker Change: Was curious if you're already seeing that in the early nephrologist prescriptions or any trends that you're noticing out of the gate.
Speaker Change: There's been a few.
Speaker Change: That is true and is there thereabout.
Speaker Change: Thereabout six sometimes terminal driver eight sometimes seminal were only do for Dave or client limit like Medicaid or something but.
Speaker Change: It's averaging around five or six and those are going to keep in mind. Those are not <unk> patients. Those are heart failure patients written by Nephrologists until may.
Speaker Change: Maybe if I had a couple of kidneys, we've got a couple of cadence okay, I'm, sorry that have come in in the last in the last week.
Speaker Change: That are averaging about the same.
Speaker Change: Got it thanks for clarifying.
Speaker Change: Thank you.
Speaker Change: Please turn them back on the question.
Speaker Change: Our next question comes from the line of Douglas Tsao with H C. Wainwright. Your line is open.
Douglas Tsao: Hi, Good afternoon can you guys hear me.
Speaker Change: Yes, we can hear you Doug Okay. So just curious I mean, I think you touched on a little bit as we head into the Cta D. Launch obviously, you expanded the sales force, but I'm just curious from a sort of promotional standpoint towards sort of frequency of interaction or detail.
Speaker Change: How will this compare to when you first launched the product will you be able to maintain this sort of higher rate of interaction that you've established and heart failure since the sales force expansion.
Speaker Change: Yes.
Speaker Change: The lifting is a little heavier and heavier at the beginning when you first open up an account with the in services getting them setup on the hub.
Speaker Change: But that.
Speaker Change: Over call that decreases so we do think we can keep the frequency in heart failure, we need as we launch it into Nephrologists. So we're not.
Speaker Change: We're not concerned about that.
Speaker Change: We think it just makes them more productive rapid theyre driving into Topeka and they can call on the cardiologists to harp airplane again, one or two night. So it just it just.
Speaker Change: It makes it way more efficient so yes, we're not when we look at kind of how the territories are built we're not concerned about that.
Speaker Change: So does that suggest that given the need to do the in services for <unk> over <unk>.
Speaker Change: Into Q.
Speaker Change: There might be.
Speaker Change: And the fewer touches.
Speaker Change: To some of the heart failure specialists the cardiology.
Speaker Change: Steve.
Speaker Change: We're going to continue to call on the best and most productive cardiologists, who have adopted euro six.
Speaker Change: We will have no problem covering those it is true there is a little bit of a trade off to add thousands of nephrologists youre going to have to leave a few of the nonproductive cardiologists to the side, but.
Speaker Change: You heard earlier, the Nephrologists are seeing patients, who have heart failure and chronic kidney disease. They share the patient with some of the cardiologists that we might not go to anymore, but we're going to pick up that patient in the nephrology office and and we might get more heart failure prescriptions, because we are in.
Speaker Change: So many more nephrology office and they tell us.
Speaker Change: This is our domain I mean.
Speaker Change: Here are the experts on fluid and cardio renal and the kidney is what.
Speaker Change: Diuresis so.
Speaker Change: We think we're going to be fine.
Douglas Tsao: Going to cover a lot of heart failure patients, we would've tried to cover in our cardiology office will now pick them up and Nephrology office. In addition to the <unk> patient and Doug I think if we.
Douglas Tsao: We see that our steel that we react by.
At that point, expanding the Salesforce, we still want to see how what the lift looks like they're what the good territory looks like before we commit to doing that but thats clearly our plan is is to add to the group.
Douglas Tsao: We originally had planned to put it all in one sales force I think our thinking is starting to evolve a little bit maybe there'd be a separate nephrology sales force, but I think we need to get out there for a quarter or so and see and see if that makes sense.
Speaker Change: Okay, Great that's really helpful.
Speaker Change: I'm just curious because I know there is a lot of overlap between the kidney and heart failure patients.
Speaker Change: Are you able to sort of distinguish between them.
Speaker Change: As you sort of go in and promote and what I mean by that is do you worry that there's sort of some duplicative effort because you're promoting to the cardiologist and then youre also promoting to the same nephrologist and he sort of already thinking about those patients.
Speaker Change: I don't look at it.
Speaker Change: <unk>.
Speaker Change: When you can get increased reach and frequency.
Speaker Change: On docs, who are treating the same patient, we don't care, which one of the Doc starts for <unk> as long as somebody does.
Speaker Change: And it will reinforce if that nephrologist starts to patient <unk> and the cardiologists as CMO Wow, Yeah, maybe maybe I need to use <unk> on some of my other basically.
Speaker Change: This is an additive effect to it it is not duplicative.
Speaker Change: Okay, great. Thank you very much guys.
Speaker Change: Thanks Kurt.
Speaker Change: Please standby for our next question.
Speaker Change: Our next question comes from Jason Mccarthy with Maxim Group. Your line is open.
Jason Mccarthy: Hey, Thanks for taking my question just a couple the first one is on <unk> in terms of the reimbursement paradigm could you kind of walk us through what the split is between commercial versus government.
Speaker Change: Government cares. This is the same as a heart failure or is there a different split there.
Okay.
Speaker Change: It's pretty close I mean, its not young people who've progressed to chronic kidney disease is still something that comes with the age and disease progression and lifestyle.
Speaker Change: They may be a little younger, but there is still predominantly.
Speaker Change: Medicare aged 65 and older.
Speaker Change: There's a little bit more in Medicaid I think.
Speaker Change: That impacts people with.
Speaker Change: Lower income, sometimes progress and get sicker faster.
Speaker Change: But it's not it's not wildly different.
Speaker Change: Got it. Thank you and my last question I guess on a high level.
Speaker Change: Rather than having that sort of been happening in DC and some potential disruptions and government have you seen or are you expecting any disruptions in terms of payment for <unk> have you seen any of that or expecting any of that from any of the government plans.
Speaker Change: We haven't seen anything we don't expect anything.
Speaker Change: I speak with the with the <unk> review and approval they met all of their timelines and communicated with US all the way through so we don't anticipate any.
Speaker Change: Any any disruption there.
Speaker Change: From from CMS, either nothing we've heard nothing we've seen.
Speaker Change: Thanks for taking my questions.
Speaker Change: Great. Thanks.
Speaker Change: Thank you.
Speaker Change: As a reminder, ladies and gentlemen, Thats star one to ask the question.
Speaker Change: Please standby for our next question.
Speaker Change: Our next question comes from the line of Jason <unk> with Craig Hallum. Your line is open.
Speaker Change: Good afternoon, thanks for taking the questions.
Speaker Change: John maybe just a follow up on.
Speaker Change: The redesign are you kind of already seeing an impact to fill rates in general demand in the quarter. As a result are you seeing lower co pays.
Speaker Change: Or is it going to take a couple of quarters to educate the patient on smoothing.
Speaker Change: Or for them to hit that lower $2000 out of pocket.
Speaker Change: There's a couple of things there so we have seen.
Speaker Change: Recently more patients enrolled in smoothing and it's it depends on the plans some plans.
Speaker Change: Such as price unless the plans, where you can see that the patient is smooth some planes plans all <unk> zero dollar co pay and you have to assume that the either smooth or that they have already reached their cap.
Speaker Change: It was I think we've talked about it.
Speaker Change: <unk>.
Speaker Change: Part of the quarter.
Speaker Change: There was a lot of confusion for patients they didn't understand what smoothing was.
Speaker Change: All of their deductibles and out of pockets reset at the $2000 level and again there was there wasn't from what we could see.
Speaker Change: And I think we've confirm this with other other companies that there was it.
Speaker Change: Many patients in our in our world that had enrolled in the smoothing now we have seen recently those co base go down we're seeing zeroes.
Speaker Change: And then we're seeing what I would call a stub payment where the patient base $200 why would they pay $200.
Speaker Change: They just hit their out of pocket cap or sign up for smoothing and margin $200 payment. So it.
Speaker Change: Again started out slower than we had anticipated with the smoothing in the knowledge that the physician and the patient level, but again, what we've seen.
Speaker Change: In the last few weeks here has been way more.
Speaker Change: These zero dollar co pays and affordable co pays than we saw in the first part of the quarter.
Speaker Change: Got it.
Speaker Change: And maybe just on <unk>.
Speaker Change: In Q1.
Last year that transition from Q4 to Q1, you still grew volumes.
Speaker Change: About 15 ish percent.
Obviously, you've got a lot of drivers in the model. This year I mean, any thoughts on kind of volume growth sequentially into Q1, and then on gross to net in Q1.
Speaker Change: I know, 30% to 35% for the year.
Speaker Change: Do you get to the bottom end of that range in Q1 or is it more like 25%.
Speaker Change: It's probably more like 25% in in Q1.
<unk>.
Speaker Change: But I got to be careful on that because.
Speaker Change: What's impossible for us to know right now is if a patients in catastrophic on our initial stage so.
Speaker Change: We are modeling it we work with our consultants to model. It we think it's closer to that 25 than it is to 30 now again.
Speaker Change: We thank all the patients will be in catastrophic by the end of the year and it'll be closer to that 30 35. So so.
Speaker Change: Every company has their there.
Speaker Change: The headwinds in Q1 around patient deductibles resetting copays resetting.
Speaker Change: All of that.
Speaker Change: We still will grow in Q1 on units shipped.
Speaker Change: Hard to sit here today to understand exactly what that.
Speaker Change: What that net GPM discount is going to be I mean, we model. It all the time, we work with our consultants, but until a claim comes in for a patient you don't know if that patient.
Speaker Change: Where they are how many doses they receive which can change that but.
Speaker Change: China.
Speaker Change: Right now based on our modeling is around 25%.
Speaker Change: Got it and then just a couple quick ones.
Speaker Change: In Q4 could you share the fill rate just to.
Speaker Change: See how that is continuing to improve and then just on gross margins and SG&A for 2025.
Speaker Change: Is it the right way to think about SG&A to kind of annualized Q4, or maybe some directional help there and then should we see some gross margin improvement in 2025 just on volume.
Speaker Change: Yes, so I think clients G&A I think annualized in Q4 right now is the way to do it we'll let you know.
Speaker Change: Sure.
Speaker Change: Roughly it will stay that area.
Speaker Change: Our R&D.
Speaker Change: R&D might tick up a bit as we get through the.
Speaker Change: All the work on the auto injector and getting that that filed here.
Speaker Change: Mid year.
Speaker Change: So we got the first mover.
Speaker Change: And the fill rates, Steve you on top of a delay.
Speaker Change: Yes.
<unk>.
Speaker Change: Good news Bad news.
Speaker Change: Fill rate overall for Q4.
Speaker Change: Is it just a tick higher than Q3, 53% unchanged not not.
Speaker Change: Dramatically better but in December.
Speaker Change: In December is it what gives us confidence for for this year co pays were low.
Speaker Change: Zero in many cases, we had a 58% fill rate in December. So we were we know what can happen when patients get into a good access situations. So that's why we have <unk>.
Speaker Change: Good feelings about this year because patients will get to that at some point at different times for different patients and that and if more patients rolling smoothing again their co pays or zero dollars in again.
Speaker Change: Over 58% in December which we think is one of the reasons. We're so confident this year that that fill rate goes up again Q1, youre going to have.
Speaker Change: The typical deductible reset patients have reached their out of pocket.
Speaker Change: It didn't smooth.
Speaker Change: But we think again based on what we've seen when patient co pays are low we know the fill rate goes up and we know demand increases.
Speaker Change: We're already seeing that demand increase in March.
Speaker Change: Yes, I think that's encouraging and just just quick on gross margin any thoughts on 25 there.
Rachel Box: Rachel do you have any thoughts on the gross margin and 25 being different.
Rachel Box: I don't anticipate it to be we're going to see a big impact.
Rachel Box: Margin.
Jeremy: Thanks, Jeremy.
Rachel Box: But.
Speaker Change: Not too much here, maybe a point or so with volume.
Speaker Change: We've worked with west but.
Speaker Change: Again, the big the big impact on margins is the auto injector.
Speaker Change: Got it thanks, Ken.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, im showing no further questions in the queue.
Speaker Change: That concludes today's conference call. Thank you for your participation you may now disconnect.
Speaker Change: Okay.
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