scPharmaceuticals Inc. (NASDAQ:SCPH) Q4 2023 Earnings Call Transcript
scPharmaceuticals Inc. (NASDAQ:SCPH) Q4 2023 Earnings Call Transcript March 13, 2024
scPharmaceuticals Inc. beats earnings expectations. Reported EPS is $-0.35, expectations were $-0.48. SCPH isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Greetings, and welcome to scPharmaceuticals Fourth Quarter and Full year 2023 Earnings Conference Call. At this time, all participants are in listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce PJ Kelleher, with LifeSci Advisors. Thank you. You may begin.
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 thanks to everyone listening to this afternoon's call and webcast to review our fourth quarter and full year 2023 results. 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 update on the FUROSCIX launch; and then Rachael Nokes, our Chief Financial Officer for a review of our financials. We will then open the call for your questions. The fourth quarter of 2023 represents our third full quarter of FUROSCIX commercial availability, as we launched the product in late February of 2023. Demand has continued to grow reflected in our key indicators, including number of doses, number of total prescribers and doses filled per prescription.
We believe FUROSCIX is meeting the needs of heart failure patients suffering from fluid overload and the continued positive trend in these KPIs demonstrates that specialists continue to gain comfort prescribing it. For the fourth quarter of 2023, we reported net revenue of $6.1 million representing a sequential increase of 61% from $3.8 million for the third quarter of 2023 and at the upper end of the range that we provided in our pre-announcement press release on January 4th. This was driven predominantly by doses shipped to patients through our specialty pharmacy network. We also had direct sales of FUROSCIX integrated delivery networks. In fact, our fourth quarter net revenue included a sizable order by one of the largest closed IDNs in the country towards the end of Q4.
Going forward, while we expect to have sales to IDNs every quarter, including in Q1 of this year, the size of these orders can vary. We'll cover this in more detail shortly. Before diving in further, I would like to note that in the Q4, we adjusted our KPIs from prescriptions to doses, as number of doses is the metric we use across our internal projections is more reflective of our current business, especially as the number of doses per prescriptions vary. Our gross-to-net discount from launch through the end of Q4 was running at approximately 18%, down from 21% through the end of Q3. We continue to expect the GTN discount to increase over time as contracting with payers and the marketplace evolves. We anticipate that the GTN discount Q1 of 2024 will increase relative to 2023 levels due to discounts we anticipate paying.
Inventory levels at the end of the fourth quarter at our specialty pharmacy partners were consistent with the inventory levels at the end of the third quarter. Shifting now to payers. We continue to have productive discussions with commercial, Medicare Part D and Medicaid payers in an ongoing effort to make FUROSCIX broadly available to patients at the most favorable terms possible. As mentioned earlier, in late October, we reached an agreement with one of the largest closed IDNs in the United States, providing unrestricted access to FUROSCIX without prior authorization over 8 million lives at a fixed co-pay ranging from $16 to $75. Also as of November 1st, 2023, FUROSCIX has been added on formulary as preferred brand, one of the largest government retired payer formulary, increasing the lives preferred access to FUROSCIX by an additional 1.1 million lives.
These favorable payer decisions, we've expanded the population of heart failure patients with access to FUROSCIX fixed co-pays of $100 or less to 70%, moving us closer to our previously stated goal of 75% or more over time. We are progressing with many other health plans and we hope to have more announcements like these in the months to come. At this point, I would like to provide an update on several long-term growth initiatives that we previewed last quarter that we view as critical for long-term growth strategy. In August, we announced favorable Type C meeting feedback from the FDA regarding the potential expansion for the FUROSCIX indication to allow for use in New York Heart Association Class IV heart failure patients. FUROSCIX has currently indicated for treatment of congestion due to fluid overload in adult patients with New York Heart Association Class II and Class III population.
We estimate that as many as 10% of all heart failure patients are Class IV and a meaningful percentage of these as many as 40% may benefit from FUROSCIX. Based upon the feedback that we received from the agency, we filed for the Class 4 indication early October of 2023. We've been assigned a PDUFA date for this audit. We are successful, we believe Class IV represent a meaningful expansion of our market opportunity to enable FUROSCIX to be prescribed to the most severe heart failure patients. Turning now to the 80mg/1mL auto injector that we are developing as an additional option in the on body infuser. We believe that an auto injector if approved will reduce manufacturing costs compared to the current on body infuser and confer environmental advantage.
We remain on-track to initiate a pivotal PK study in Q2 of this year and report results later this year. That, if successful, allow us to submit a supplemental new drug application to the FDA by the end of 2024. Finally, we announced feedback from the FDA pertaining to the potential expansion of the FUROSCIX indication include treatment of edema due to fluid overload in patients with chronic kidney disease or CKD. In its 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. CKD is a progressive disease characterized by worsening renal function over time, resulting in frequent episodes of fluid overload that are treated with loop diuretic.
It is estimated that 12 to 15 Americans are aware that they have kidney disease and 50% of patients with CKD do not have a diagnosis of heart failure. The fluid overload being one of the most common complications in CKD, which worsens with disease progression. We believe FUROSCIX could be beneficial to patients with CKD, who have worsening symptoms through the fluid overload and are not responding to oral loop diuretics. To that end, we plan to submit a supplemental new drug application with the FDA for the CKD indication in the second quarter of 2024. Now turning to the first quarter of 2024. Despite the normal Q1 headwinds caused by patient out of pocket deductibles resetting, we saw our highest dose demand in shipment for the first half of the quarter.
This growth in demand has further accelerated in March. However, the impact of the cyber on tap unchanged healthcare began in the third week of February and is ongoing. This has caused the disruption in claims being processed resulting in delays in patients receiving shipments of FUROSCIX. With the unique position FUROSCIX has in the treatment of heart failure patients, we're concerned that we will not see all of these units shipped. We're actively working with our specialty pharmacy partners to ship as many of these units as possible. At this point, we do not know if and how much this will ultimately impact the quarter. We intend to provide a more detailed update when we report our first quarter results. 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 fourth quarter was our third full quarter of FUROSCIX commercial availability and we remain pleased with our progress. From launch through December 31st, we've had 1696 unique prescribers, up 52% from the 1119 unique prescribers from launch through September 30th. We're extremely encouraged by this growth as it reflects our strategy in 2023 of establishing a broad prescriber base. Importantly, more than half of these prescribers had written multiple prescriptions by the end of the year. During the fourth quarter, we had 13,542 doses written and 7,016 of those doses have already been filled. There were another 4,592 doses that were still pending as Q4 ended. We continue to report doses written and doses filled, because of the unique nature of how physicians prescribe FUROSCIX.
Many of our physicians write prescriptions for patients in anticipation of future need due to worsening fluid overload. While these prescriptions might not be filled in the month or quarter they are written, they do get filled when the patient needs treatment and we report those doses, when the patient receives them. It is important to note that, approximately 14% of our prescriptions were canceled during the fourth quarter of 2023. Recall that, pending prescriptions are not canceled, rather they are still in process with the payers, some are approved and waiting in queue, while others are still in prior authorization. We filled a significant portion of these pending prescriptions in the first few weeks of 2024, and we continue to fill more pending prescriptions written in Q4 into the filled category every day.
Now the prescriptions that are canceled are for various reasons, including unreachable patients, who are hard to contact, have been hospitalized for a small number that are deceased. Of those that are reached to cancel a high co-pay is the main reason given. We anticipate the cancel rate will continue to decrease with FUROSCIX as is expected to become better positioned on more health plan formularies, lowering patients out-of-pocket costs and providing quicker coverage decisions. During the fourth quarter, the average number of doses per prescription filled was 5.9 doses, which remains higher than our long-term expectations. Our sales force has conducted 2,331 in services as of December 31st, which is up from 1,806 in services conducted as of September 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's success and we regard the number of in services conducted each quarter, as an important leading indicator. We've said previously that, we stand ready to add additional territories as demand warrants. We plan on adding additional territories in advance of our Class 4 and chronic kidney disease initiatives. 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, conference presence, print and electronic collateral and the development of both provider and patient websites among other critical tasks.
We've begun reaching out to heart failure patients and their caregivers with patient education materials for FUROSCIX. Overall, we're pleased with our continued progress and the path we are on. That concludes my update. I like to turn the call over to our Chief Financial Officer, Rachael Nokes for a financial update. Racheal?
Rachael Nokes: Thank you, Steve. As of December 31, 2023, we held $76 million in cash, cash equivalents and investments, compared to $118.4 million as of December 31, 2022. Now I will cover a few income statement items. We reported a net loss of $13.8 million for the fourth quarter of 2023, compared to a net loss of $9.2 million for the fourth quarter of 2022. For the full year 2023, we reported a net loss of $54.8 million compared to a net loss of $36.8 million for the full year 2022. Product revenues were $6.1 million for the fourth quarter of 2023 and cost of product revenues were $1.8 million. For the full year '23 product revenues were $13.6 million and cost of product revenues were $3.8 million. We did not generate revenue during the fourth quarter or full year 2022 as FUROSCIX was approved in October 2022 and commercially launched in February 2023.
Research and development expenses were $3.3 million for the fourth quarter of 2023 compared to $2.3 million for the comparable period in 2022. The increase in research and development expenses for the quarter ended December 31, 2023 was primarily due to an increase in device and pharmaceutical development cost. The increase was partially offset by a decrease in employee related costs. Research and development expenses were $11.8 million for the full year 2023, compared to $15.5 million for the full year 2022. Decrease in research and development expenses for the full year 2023 was primarily due to a decrease in clinical study and medical affairs costs, employee related costs and quality and regulatory consulting costs. The decrease was partially offset by an increase in pharmaceutical development costs.
Selling, general and administrative expenses were $16.2 million for the fourth quarter of 2023, compared to $7.2 million for the comparable period in 2022. The increase in selling, general and administrative expenses for the quarter ended December 31st, 2023 was primarily due to an increase in employee related costs and commercial costs. For the full year 2023, we reported selling, general and administrative expenses of $53.4 million, compared to $20.6 million for the full year 2022. The increase in selling, general and administrative expenses for the full year 2023 was primarily due to an increase in employee related costs and commercial costs following commercial launch of FUROSCIX in February 2023 as well as an increase in legal costs. The increase was partially offset by a decrease in insurance related costs.
Based on our current operating plan, we expect our operating cost to increase in 2024, as we further support the launch of FUROSCIX and the development of the 80mg/1mL auto injector. As of December 31, 2023, we had 35,968,510 total shares outstanding. 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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