scPharmaceuticals Inc. (NASDAQ:SCPH) Q3 2023 Earnings Call Transcript
scPharmaceuticals Inc. (NASDAQ:SCPH) Q3 2023 Earnings Call Transcript November 8, 2023
scPharmaceuticals Inc. misses on earnings expectations. Reported EPS is $-0.41 EPS, expectations were $-0.36.
Operator: Thank you for standing by. This is the conference operator. Welcome to the scPharmaceuticals Third Quarter 2023 Earnings Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to PJ Kelleher, LifeSci Advisors. Please go ahead.
PJ Kelleher: Thank you, operator. Before turning the call over to management, I would like to make the following remarks concerning forward-looking statements. All statements on this conference call, other than historical facts, are forward-looking statements within the meeting of the Federal Securities Laws, including, but not limited to statements regarding ScPharmaceuticals expected future financial results and management's expectations and plans for the business in FUROSCIX. The words anticipate, believe, estimate, expect, intend, guidance, confidence, target, project, and other similar expressions are typically used to identify such forward-looking statements. 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 ScPharmaceuticals’ business, financial condition, and other operating results.
These include, but are not limited to, the risk factors and other qualifications contained in ScPharmaceuticals Annual 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. Actual outcomes and results may differ materially from what is expressed or implied by these forward-looking statements. Any forward-looking statements made in this conference call, including responses to your questions, are based on current expectations as of today, and ScPharmaceuticals especially disclaim 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 ScPharmaceuticals.
John?
John Tucker: Thank you, PJ, and thank you to everyone listening to this afternoon's call and webcast to review our third quarter 2023 results. This afternoon, I am pleased to provide an operational update before turning the call over to Steve Parsons, our Senior Vice President of Commercial, for a more detailed update on the FUROSCIX launch and then Rachael Noakes, our Chief Financial Officer for a review of our financials. We will then open the call for your questions. The third quarter of 2023 represents our second full quarter of FUROSCIX commercial availability as we launched the product in late February. Demand has continued to grow, reflected in our key indicators, including number of prescriptions, number of total prescribers, and doses filled per prescription.
FUROSCIX is meeting the needs of heart failure patients, suffering from fluid overload, we believe specialists are quickly gaining comfort prescribing it. In the third quarter, we reported net revenue of $3.8 million, representing a sequential increase of 138% from $1.6 million for the second quarter of 2023. This was driven predominantly by unit shipped to patients through our specialty pharmacy network. Also captured in our net sales for the first time are the direct sales of FUROSCIX to multiple integrated delivery networks. As we mentioned last quarter, as sales to IDNs increase, we will be reassessing the KPIs that we report. Inventory levels at the end of the third quarter were consistent with the inventory levels at the end of the second quarter.
Our gross and net discount from launch to the end of Q3 is running at approximately 21%, down from 23% through the end of Q2. We expect this to increase over time as contracting with payers evolves. In response to positive demand trends, we added an additional 12 sales territories towards the end of the third quarter. This brings our current field sales force to 66 territories and we anticipate seeing the positive impact of these additions beginning in the fourth quarter. Shifting now to payers, we continue to have productive discussions with commercial, Medicare Part D, and Medicaid payers in a continuing effort to make FUROSCIX broadly available to patients at the most favorable terms possible. Indicative of our progress, in late October we reached an agreement with one of the largest closed integrated delivery networks in the U.S., providing unrestricted access to FUROSCIX without prior authorization to over 8 million lives at a fixed copay ranging from $16 to $75 per prescription.
Also as of November 1, FUROSCIX has added on Formulary as a preferred brand with one of the largest government retiree payer formularies, increasing the number of lives with preferred access to FUROSCIX by an additional 1.1 million lives. These payer decisions expand the population of heart failure patients to have access to FUROSCIX and moves us towards our previously stated goal of having 75% or more heart failure patients nationally with fixed co-pays of $100 or less. We anticipate that this could positively impact FUROSCIX co-pays as early as the fourth quarter. We are progressing with many other health plans, and we hope to have several more announcements like these in the months to come. Staying on the topic of payers for a moment, recall that we announced national Medicaid coverage for FUROSCIX effective July 1st.
We have since added an additional specialty pharmacy to our network to maximize access to FUROSCIX in the states that require a waiver that we can address the needs of Medicaid heart failure patients as quickly and efficiently as possible. Turning now to our life cycle management initiatives. During the third quarter, we received FDA feedback on three key initiatives that we view as critical to our long-term growth strategy. In August, we announced favorable Type C meeting feedback from the FDA regarding the potential expansion of the FUROSCIX indication to allow for use in New York Heart Association Class 4 heart failure patients. FUROSCIX is currently indicated for the treatment of congestion due to fluid overload in adult patients with New York Heart Association Class 2 and Class 3 chronic heart failure.
We estimate that as many as 10% of all heart failure patients are Class 4, and a meaningful percentage of these, as many as 40%, may benefit from FUROSCIX. If we are successful, Class 4 will represent a meaningful expansion of our market opportunity to enable FUROSCIX to be prescribed to the most severe heart failure patients. Based upon the feedback that we received from the agency, we filed for the Class 4 indication in early October. More recently, we received Type C feedback from the FDA pertaining to the development of an 80mg/1mL auto-injector intended to provide an additional option to the on-body infuser for treatment of congestion due to fluid overload in eligible adult patients who do not require hospitalization. We believe that an auto-injector, if successfully developed and approved, would reduce manufacturing costs compared to the current non-body infuser and confer environmental advantages.
We plan to report data from a pivotal PK study in 2024, and if successful, we are targeting the submission of a supplemental new drug application to the FDA by the end of 2024. Finally, we announced feedback from a Type D meeting with the FDA pertaining to the potential expansion of the FUROSCIX indication to include treatment of edema due to fluid overload in patients with chronic kidney disease or CKD. In this feedback, the FDA confirmed that no additional clinical studies are needed to expand the indication, provided that we can demonstrate an adequate PK and pharmacodynamic bridge to the listed drug, which is furosemide injection 10 mg/ml. CKD is a progressive disease characterized by worsening renal function over time, resulting in frequent episodes of fluid overload that are treated with loop diuretics.
It's estimated that 12 million to 15 million Americans are aware that they have kidney disease and 50% of patients with CKD do not have a diagnosis of heart failure. With fluid overload being one of the most common complications in CKD, which worsens with disease progression, we believe FUROSCIX to be beneficial for patients with CKD who have worsening symptoms due to fluid overload and are not responding to oral diuretics. We plan to advance FUROSCIX as we work towards our goal of introducing a new treatment option for CKD patients with edema as efficiently as possible. At this point, I'll turn the call over to Senior Vice President of Commercial, Steve Parsons, for a deeper dive into our launch metrics. Steve?
Steve Parsons: Thank you, John. As John indicated, the third quarter was our second full quarter of FUROSCIX's commercial availability, and we are pleased with our progress. Our results continue to be very encouraging in Q3. From launch through September 30, we've had 1,119 unique prescribers, almost doubling from the 631 acquired through June 30th. During the third quarter, we had 1,579 total prescriptions written, and 877 of those prescriptions have already been filled. There were another 442 that were still pending as Q3 ended. Pending prescriptions are not canceled. They are still in process with the payers. Some are approved and waiting in a queue, while others are in prior authorization. We continue to fill more pending prescriptions written in Q3 into the filled category every day.
There are some prescriptions that get canceled for various reasons, including unreachable patients who are hard to contact, have been hospitalized, or a small number that are now deceased. Of those that are reached who cancel, a high co-pay is the main reason given. In Q3, the percent of FUROSCIX prescriptions filled increased to 55% from 52% in Q2. We anticipate that the fill rate will continue to increase as FUROSCIX is expected to become better positioned on more health plan formularies, lowering patients out of pocket costs, and providing quicker coverage decisions. During the third quarter, the average number of doses per prescription filled was 5.6, which remains higher than our long-term expectations. Our sales force conducted 1,806 in-services as of September 30th compared to 1,129 as of June 30th.
In-services provide important training to offices on the prescribing process for FUROSCIX and this ensures office readiness. As we open more new accounts, the execution of in-services remains fundamental to FUROSCIX success. We've said previously that we stand ready to add additional territories as demand warrants, and we did so at the very end of Q3. We added 12 territories, bringing our total field force as of today to 66 territories. It's important to note that the territories we added during Q3 were added towards the end of the quarter, and as such, did not contribute meaningfully to future results. The new sales representatives are now trained and conducting face-to-face selling in cardiology offices. From a marketing perspective, we are engaged in a broad multi-channel marketing campaign to drive brand awareness, adoption, and commitment.
This program encompasses many different activities, but some of the key ongoing activities include engagement and development of key opinion leaders, cardiology conference presence, print and electronic collateral, and the development of both provider and patient websites among other critical tasks. We've also begun reaching out to heart failure patients and their caregivers with patient education materials for FUROSCIX. Overall, we are very pleased with our continued progress and the path that we are on. That concludes my update. I would like to turn the call over to our Chief Financial Officer, Rachael Nokes, for a financial update. Rachael?
Rachael Nokes: Thank you, Steve. We generated net product revenue of $3.8 million during the third quarter of 2023, and the cost of revenue was $1.1 million, yielding a gross profit of $2.7 million. Research and development expenses were $3.4 million for the third quarter of 2023, compared to $3.7 million for the third quarter of 2022. The decrease in research and development expenses for the quarter ended September 30th, 2023, was primarily due to a decrease in employee-related costs in clinical study and medical affairs costs. The decrease was partially offset by an increase in device and pharmaceutical development costs. Selling, general and administrative expenses were $14.1 million for the third quarter of 2023 compared to $6.3 million for the third quarter of 2022.
The increase in selling general and administrative expenses for the quarter ended September 30th, 2023, was primarily due to an increase in employee related costs and commercial costs. We reported a net loss of $15.6 million for the third quarter of 2023 compared to $10.2 million for the third quarter of 2022. We ended the third quarter of 2023 with $90.2 million in cash, cash equivalents, and short-term investments compared to $118.4 million as of December 31, 2022. Finally, as of September 30, 2023, SC pharmaceuticals total shares outstanding with 35,859,045 shares. That concludes the financial update. John?
John Tucker: Thanks, Rachael. This concludes our prepared remarks. At this point we will open the call for questions.
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