scPharmaceuticals Inc. (NASDAQ:SCPH) Q1 2023 Earnings Call Transcript

scPharmaceuticals Inc. (NASDAQ:SCPH) Q1 2023 Earnings Call Transcript May 10, 2023

scPharmaceuticals Inc. beats earnings expectations. Reported EPS is $-0.3, expectations were $-0.36.

Operator: Greetings, and welcome to the scPharmaceuticals First Quarter 2023 Earnings Conference Call. At this time, all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, PJ Kelleher from LifeSci Advisors. Thank you. Please go ahead, sir.

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 meaning 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 and FUROSCIX. The words anticipate, believe, estimate, expect, intend, guidance, confidence, target, project and other similar expressions are used to typically to identify such forward-looking statements. 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 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 scPharmaceuticals.

John?

John Tucker: Thank you, PJ, and thanks to everyone listening to this afternoon’s call and webcast. 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 more detailed update on the early stages of the FUROSCIX launch, and then Rachael Nokes, our Chief Financial Officer for a review of our financials. We will then open the call up for your questions. Just 2.5 months since the FUROSCIX launch on February 20, we are pleased with our progress to date and early feedback suggests that FUROSCIX is being well received in the market. Notably, our commercial team continues to execute on an important leading indicator in-services with healthcare providers and have completed 518 through March 31 and have completed 743 total in-services as of April 28.

These initial in-service contacts can last up to two hours as treating physicians often want the entire office to be educated and trained on the use of FUROSCIX. As Steve will detail momentarily, these early efforts are working as intended as both unique prescribers and total prescriptions written are growing nicely. This supports our strong belief that FUROSCIX will quickly become a core part of the heart failure treatment paradigm, either pre-hospital admission or post-discharge, as it allows patients for the very first time to receive IV equivalent furosemide based on similar systemic exposure in diuresis in the comfort of their own homes. Not only is this beneficial to patients who would much rather be treated at home than in a hospital setting, but by avoiding hospital admissions and readmissions, significant cost savings can accrue to commercial, Medicare Part D and Medicaid payers as well as hospitals who face significant and worsening reimbursement pressure for their heart failure patients.

As a reminder, FUROSCIX is indicated for the treatment of congestion due to fluid overload in adult patients with New York Heart Association Class II and Class III chronic heart failure. FUROSCIX is not indicated for use in emergency situations or in patients with acute pulmonary edema. The On-Body Infusor will deliver only an 80 milligram dose of FUROSCIX. Last quarter we detailed two studies that we conducted that clearly demonstrate the potential financial benefits of FUROSCIX, one perspective study FREEDOM-HF focused on select patients who presented to the emergency room with a worsening heart failure event and were treated with FUROSCIX at home as opposed to being admitted to the hospital. The result of the study was that patients treated with FUROSCIX had heart failure related costs that were lower by an average of $16,995 versus historically matched comparators, and this result was achieved with a very high rate of statistical significance with a p value less than 0.0001.

While this analysis excludes the cost of FUROSCIX since pricing had not been established at the time of the study, the conclusion remains unchanged. And a second study the Phase 2 pilot study AT HOME-HF that compared FUROSCIX with a treatment-as-usual approach in chronic heart failure patients presenting to a heart failure clinic with worsening congestion requiring augmented diuresis. Among the key findings, subjects randomized to FUROSCIX had a 37% reduction in the risk of a heart failure hospitalization at day 30 relative to patients randomized to treatment as usual. The outcome of both studies provide a compelling picture of the benefits of FUROSCIX and further support the efforts of our commercial team as they work to educate treating physicians and their staff.

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They also provide critical validation as we engage with payer pharmacy and therapeutic committees regarding reimbursement dynamics. On the topic of the payers, we continue to have productive discussions with commercial, Medicare Part D and Medicaid payers in a continuing effort to make FUROSCIX broadly available to patients at the most favorable terms possible. This involves not only securing initial coverage of FUROSCIX, but also working to have it placed on a formulary tier that would be affordable to most patients. We previously indicated that approximately 60% of all heart failure patients can access FUROSCIX under fixed tier co-pays of $100 or less, and we believe that over time we can increase this to 75% or more. Reflecting our continued progress, we are recently notified by a top five national health plan that FUROSCIX would placed in a preferred formulary status across all of its commercial plans effective June 1.

With regard this as a significant positive reimbursement development and we remain in discussions with this payer regarding its Part D plans with the goal of securing similarly favorable formulary placement for its Medicare beneficiaries. As mentioned, we are engaged with many other health plans and we hope to have several more announcements like this in the months to come. In addition, we are also recently informed that we’ll obtain national Medicaid coverage of FUROSCIX effective July 1, 2023. The market opportunity for FUROSCIX is significant. We believe it is worth reiterating. In the U.S. alone there estimated to be 6.7 million adults suffering from heart failure resulting in 4 million heart failure events annually. Of those, we believe 2.1 million episodes can be effectively addressed by FUROSCIX.

If we assume $3,300 per episode, which is four doses of FUROSCIX, we have the potential to access a market opportunity that is nearly $7 billion. And again, this is in the U.S. alone, there are a total of 15.8 million adults suffer from heart failure if we include the other G7 countries. At this early stage, we are seeing a wide range of doses of FUROSCIX per prescription from 2 to 12. As this is at the discretion of the treating physician and some patients require more aggressive interventions than others. Finally, we are well funded with more than $116 million of cash, cash equivalents and short-term investments as of March 31, providing us with ample resources to continue to execute on our commercial plan. At this point, I’ll turn the call over to our Senior Vice President of Commercial, Steve Parsons, for deeper dive into our early launch metrics.

Steve?

Steve Parsons: Thank you, John. As John indicated, while it has only been about 2.5 months since we announced the launch and commercial availability of FUROSCIX on February 20. We are pleased with our initial progress. I’ll start with an update on our commercial team. We currently have 41 field territory sales representatives with three additional reps expected to join by the end of May for a total of 44. They’re conducting face-to-face in-services at hospitals, doctor’s offices, and heart failure clinics. We stand ready to add more as demand patterns for FUROSCIX continue to emerge. Targeting approximately 150 to 200 healthcare providers and 12 hospitals per territory in-services provide healthcare providers with training and prescribing instructions for FUROSCIX designed to ensure office readiness.

Democrats transition provided at the completion of each in-service. The focus on the in-service is crucial to ensuring effective use and training on FUROSCIX. As John mentioned, our sales force conducted 518 in-services as of March 31 and completed 743 total in-services as of April 28. Many of these in-services are lasting one to two hours as physicians desire to have training done throughout the entire office or clinic. This reflects the interest in FUROSCIX by healthcare providers. This sales team is a specialized force that can target top clinics and doctor’s offices efficiently and effectively. They are focused on building strong relationships with the key constituencies at these clinics through an educational and consultative approach.

And while it’s still early, we will be ready to add more reps in the field as needed to maximize the clinic and patient access to FUROSCIX. The early results are encouraging through March 31, we had 194 total prescribers with a total of 381 prescriptions written and 161 prescriptions filled by the last day of the quarter. As of March 31, we had 152 prescriptions still pending. The vast majority of the balance of prescriptions pending are either due to prescriptions doctors have written that are queued and ready for patients or prescriptions still in progress with payers. We continue to move pending prescriptions into the filled bucket with each day. We have a small number of prescriptions abandoned and the reason for these cancellations are varied, ranging from patient being unreachable, hospitalized or deceased.

There have also been a small number where the patient’s copay was a little too high. As we’ve already seen so far in April, we would anticipate that the difference between prescriptions written and filled will narrow as FUROSCIX is placed on more health plan formularies, expanding access for patients and lowering patients out of pocket expenses. At the moment, the average number of doses per prescription is slightly higher than four, but we continue to believe four doses per prescription to be the right number long-term. In terms of distribution, as we indicated last quarter, we are pleased with the functioning of our distribution process thus far through our strategic partnership with Cardinal Health as our third-party logistics provider.

Cardinal is working well with our three specialty pharmacy partners, including our main specialty pharmacy, BioMatrix. Cardinal has shipped initial inventory to the specialty pharmacies, which is reflected in our first quarter revenue. As a reminder, we recognize revenue when FUROSCIX moves from Cardinal to the specialty pharmacies. FUROSCIX Direct, our reimbursement support hub, provides benefits investigations for physicians to determine insurance coverage and patient out-of-pocket costs. Our specialty pharmacy partners provide device training to patients and are available 24 hours a day to answer questions about the use of FUROSCIX. From a marketing perspective, we are engaged in a broad multichannel market awareness campaign to drive brand awareness, adoption, and commitment.

This program encompasses many different activities, but some of the key ongoing activities include KOL engagement and development, conference appearances, print and electronic collateral, and the development of both provider and patient websites among other critical tasks. Overall, although we still have a lot of work to do, we are pleased with our early progress and the trajectory that we are on. That concludes my update. I would now like to turn the call over to our CFO, Rachael Nokes, for a financial update. Rachael?

Rachael Nokes: Thank you, Steve. We generated net product revenue of $2.1 million during the first quarter of 2023 and the cost of revenue was $0.6 million, yielding a gross profit of $1.5 million. One quick note for Q1, the cost of revenue excludes inventory that was expensed prior to FDA approval in October of 2022. Research and development expenses were $2.1 million for the first quarter of 2023 compared to $4.3 million for the comparable period in 2022. The decrease was primarily due to a decrease in clinical study and medical affairs costs, employee related costs, device and pharmaceutical development costs and quality and regulatory costs. Selling, general and administrative expenses were $10.9 million for the first quarter of 2023 compared to $2.9 million for the first quarter of 2022.

The increase in selling, general and administrative expenses for the quarter ending March 31, 2023 was primarily due to an increase in employee related costs, commercial costs, and legal and professional service costs. We reported a net loss of $11.2 million for the first quarter of 2023 compared to a net loss of $7.7 million for the comparable period in 2022. As of March 31, 2023, we held $116.1 million in cash, cash equivalents and short term investments compared to $118.4 million as of December 31, 2022. As of March 31, 2023, scPharmaceuticals’ total shares outstanding was 35,769,073 shares. That concludes the financial update. John?

John Tucker: Thanks, Rachael. This concludes our prepared remarks. At this point, we’ll open the call for questions.

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Q&A Session

Operator: Thank you, sir. We will now be conducting a question-and-answer session. [Operator Instructions] The first question we have is from Glen Santangelo from Jefferies. Please go ahead.

Operator: The next question we have is from Roanna Ruiz from SVB Securities. Please go ahead.

Operator: [Operator Instructions] The next question we have is from Stacy Ku from TD Cowen. Please go ahead.

FUROSCIX:

Operator: The next question we have is from Douglas Tsao from H.C. Wainwright. Please go ahead.

Operator: [Operator Instructions] The next question we have is from Nazibur Rahman from Maxim Group. Please go ahead.

Operator: There are no further questions at this time. I would like to turn the floor back over to John Tucker for closing comments. Please go ahead, sir.

John Tucker: Okay. That concludes our call this afternoon. We hope you take away from this call that we are pleased with our progress to date and as we continue to execute on our commercial plan. We anticipate continued growth in the percentage of heart failure patients with affordable access to FUROSCIX, which we believe will translate into a nice trajectory for both prescriptions in revenue. We look forward to providing more information during our second quarter update in August. Thank you again and have a good evening.

Operator: Thank you, sir. Ladies and gentlemen, that then concludes today’s conference. Thank you for joining us. You may now disconnect your lines.