scPharmaceuticals Inc. (NASDAQ:SCPH) Q4 2022 Earnings Call Transcript

scPharmaceuticals Inc. (NASDAQ:SCPH) Q4 2022 Earnings Call Transcript March 22, 2023

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 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 resins and uncertainties and other important factors that may affect 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 thank you to everyone listening to this afternoon’s call and webcast. This afternoon, I am pleased to provide an operational update on the initial stages of the FUROSCIX commercial launch before I turn the call over to Rachael Nokes, our newly appointed Chief Financial Officer for a review of our financials. While it has only been a few weeks since we announced the launch and commercial availability of FUROSCIX on February 20, initial interest among patients, providers and payers is very high, reflecting the important role that FUROSCIX can play in the heart failure treatment paradigm, either pre-hospital admission or post discharge. As we have said before, we believe FUROSCIX is a true game changer as it allows patients for the first time to access IV-equivalent furosemide based on similar systemic exposure in diuresis in the comfort of their own homes.

Our own proprietary research suggests that among heart failure specialists, cardiologists and nurse practitioners’ intent to prescribe FUROSCIX ranges between 93% and 96%, and intent to prescribe within six months ranges between 86% and 89%. This research underscores the openness to a different approach to the treatment of heart failure. We believe we are well financed and have assembled a highly experienced commercial team that hit the ground running, making contact with top-tier hospitals, clinics and physicians in their respective territories. I’m confident that we will see a strong uptake and quickly get FUROSCIX to the many heart failure patients who stand to benefit from it. Taking a step back, or for the benefit of those may be new to the story, in October of 2022 we received FDA approval for FUROSCIX, a proprietary formulation of furosemide delivered by an on-body infuser, the outpatient treatment ingestion to the fluid overload in adult patients with the 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 FUROSCIX Infusor will deliver only an 80-milligram dose. We believe this represents a significant advancement in the management of heart failure with the potential for improved outcomes for patients and material cost savings to health care payers, most notably the Centers for Medicare and Medicaid Services who represent Medicare, the single largest payer for heart failure-related medical services. Furosemide is the most widely used oral and parenteral diuretics available for patients with congestive heart failure. But the bioavailability of oral furosemide decreases and becomes highly variable during episodes of worsening symptoms. As symptoms worsen, patients are often hospitalized to be treated with IV Furosemide.

By contrast, FUROSCIX allows patients to access IV-equivalent furosemide based on similar systemic exposure in diuresis in the comfort of their own homes. FUROSCIX is administered subcutaneously with the West Pharmaceutical Services smart dose on-body drug delivery system technology, delivering an 80-milligram dose over a period of five hours. Heart failure is a significant financial pain point for both health care payers and hospitals, with the estimated that up to 90% of patients presenting to the emergency department with symptoms and worsening heart failure are admitted to the hospital, and 50% of these admissions may be potentially avoided. The average cost of a heart failure-related hospital admission for Medicare patient is nearly $19,000.

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It is no surprise that the centers for Medicare and Medicaid services has put significant resources in place to look for solutions to this problem. Treatment of heart failure is estimated to be 33% of annual Medicare Part A and Part B spending, a staggering $123 billion. Further, hospitals face significant reimbursement pressure under the current heart failure payment structure. The average length of stay for heart failure patients is 5.2 days, while CMS reimburses just 3.9 days under the current DRG. Hospitals also face exposure to financial penalties resulting from readmissions under the hospital readmission reduction program, which includes heart failures as one of its focused conditions. Our clinical development program is focused on the safety and efficacy of FUROSCIX as well as the pharmacoeconomic benefits to the system.

A prospective clinical trial, FREEDOM-HF with our positive results in July of 2021. The study design 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 results of the study with 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 achieved at a very high rate of statistical significance with a p value less than 0001. All this analysis excludes the cost of FUROSCIX since pricing has not been established at the time of the study readout, the conclusion remains unchanged. More recently, we announced positive results from a 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 of day 30 relative to patients randomized to treatment as usual. We are pleased with the results of these two studies, which added significantly to the growing body of clinical and pharmacoeconomic evidence favoring FUROSCIX versus the current standard treatment protocol. The market opportunity for FUROSCIX is significant. In the U.S. alone, there are 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 suffering from heart failure if we include the other G7 countries. Turning now to the launch. We put a strong commercial team in place that is led by Steve Parsons, our Senior Vice President of Commercial. We have 40 field territory sales representatives fully trained and conducting face-to-face in services at hospitals, doctor’s offices and heart failure clinics, targeting the approximately 150 to 200 HCPs in 10 hospitals per territory, in surfaces provide HCPs with training and prescribing instructions for FUROSCIX designed to ensure office readiness. Demo kits trained patients have provided the completion of each in service. The focus on the in surface is crucial to ensuring effective use in training on FUROSCIX.

Our sales force has conducted approximately 307 in-services to date, with many of these in services lasting one to two as physicians desire to have training done throughout the entire office or clinic. This reflects the interest in FUROSCIX by health care providers. The sales team is a specialized force that can target top hospitals and clinics efficiently and effectively. They are focused on building strong relationships with the key constituencies at these clinics through an educational and consultive approach. Depending on the launch trajectory, we stand ready to add more reps in the field as needed to maximize clinic and patient access to FUROSCIX. In terms of distribution, we are pleased with the seamless 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 will be recognized as revenue in the first quarter. As a reminder, we recognize revenue when FUROSCIX moves from Cardinal to the specialty pharmacies. So Q1 revenue will reflect initial stocking at the specialty pharmacies. We have already seen initial patient prescriptions being filled and shipped to patients next day. 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 with patients and are available 24 hours to answer questions about the use of FUROSCIX.

From a marketing perspective, we have 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 inferences, print and electronic collateral and the development of both provider and patient websites among other critical tasks. In terms of reimbursement, we are pleased that all Medicare Part D and Medicaid beneficiaries will have reimbursed access to FUROSCIX since day 1 of the launch. We estimate that approximately 60% of all heart failure patients will have fixed tier co-pays of $100 or less. We continue to meet with many large national and regional Medicare Part D and commercial health plans and those discussions have been productive.

Our goal remains to achieve 75% of patients with access to FUROSCIX under fixed tier co-pays by the end of this year. Turning to our balance sheet. In November, we were able to add $50 million of gross proceeds through a public offering of common stock. This followed a $100 million secured debt facility that we announced with Oaktree Capital Management in October, $50 million of which was made available upon the signing of the agreement. The remaining $50 million will be made available in two additional $25 million tranches based on the achievement of prespecified commercial milestone. With these financings, we believe we are well funded to execute a very successful launch. Finally, in December, we announced the promotion of Rachael Nokes the position of Chief Financial Officer.

Rachael brings tremendous experience and leadership to the CFO role, and her promotion maintains organizational consistency and an important time for the company. We are excited to celebrate this well-deserved recognition of our expertise and contributions. I will now turn it over for her comments. Rachael?

Rachael Nokes: Thank you, John. As of December 31, 2022, we held $118.4 million in cash, cash equivalents, restricted cash and investments. Our year-end cash includes net proceeds from the successful $50 million equity offering that we completed in November, plus the first $50 million tranche under our debt financing agreement with Oaktree. We did use some of the proceeds from the Oaktree transaction to prepay all amounts due under the credit facility that was outstanding at the time. Now I will cover a few income statement items. We reported a net loss of $9.2 million for the fourth quarter of 2022 compared to a net loss of $7.3 million for the comparable period in 2021. For the full year 2022, we reported a net loss of $36.8 million compared to a net loss of $28 million for the full year 2021.

The reported full year net loss was favorable to our guidance range of a full year net loss of $38 million to $41 million. Research and development expenses were $2.3 million for the fourth quarter of 2022 compared to $4.5 million for the comparable period in 2021. The decrease was primarily due to a decrease in clinical study activities, device development costs and regulatory consulting. For the full year 2022, we reported research and development expenses of $15.5 million compared to $16 million for the full year 2021. General and administrative expenses were $7.2 million for the fourth quarter of 2022 compared to $2.2 million for the comparable period in 2021. The increase was primarily due to an increase in employee-related costs, commercial preparations and legal costs.

For the full year 2022, we reported general and administrative expenses of $20.6 million compared to $9.8 million for the full year 2021. The increase was primarily due to an increase in employee-related costs and commercial preparation costs. Based on our current operating plan, we expect our operating costs to increase in 2023 as we support the launch of FUROSCIX, including investments in marketing and a field sales force. As of December 31, 2022, and we had 34,257,916 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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Q&A Session

Operator: Thank you. Our first question is from Glen Santangelo with Jefferies. Please proceed with your question.

Glen Santangelo: Hi, thanks for taking my question. Hi John, I just want to follow up on some of the comments that you made in your prepared remarks. I think you were sort of talking about your interactions you’re having with the various Part D plans. And I — and if I heard you correctly, I thought you said that you hope by the end of this year, you hope to have maybe 75% of the patients under contract with a co-pay of less than $100 per. And I’m not sure if I heard all that correctly. I was wondering if you could just sort of walk us through again in a little bit more detail where you stand right now with all your Part D negotiations, just so I can sort of put it all in perspective? Thanks.

John Tucker: Glen, thanks for the question. This is John. I can ask Steve to fill in a little bit. Yes, so we’ve kind of stated a number of times that our goal for the end of the year — and it’s not just for Medicare Part D, it’s for all of our patients. And so again, we have a MIPS of Medicare Part D, which is the predominant payer, commercial. And then we also have Medicaid. So our goal is greater than 75% of all of the patients to have fixed tier copays under $100 by the end of the year. We do know now we’ve been very successful. We think there’s one very small plant that might have put us in the specialty tier. But our team has been really successful in keeping FUROSCIX out of the specialty tier in both commercial and Medicare Part D plans.

As you know, specialty tier incorporates coinsurance, which is what we want to stay away from. So we’ve been successful. we’ve been keeping it out, especially tier. We’ve also gone through the P&C at all, but one of the major plans and have had successful P&T meetings at all — and we’re still awaiting one plant to have that P&T. We’re still in active negotiations around rebates. The good thing is with the advantage — with advantaged Medicare Advantage, the patients will have fixed tier co-pays of under $100. So we’re still negotiating on moving those co-pays down. Our goal is to significantly a lower co-pay than $100. And we’ll rebate to get there, Glen. We’re not going to — we know the most important thing is patient affordability. So we’ll be rebating to — with the plans, and we’re negotiating with them now, to lower the co-pay and to add to that 60% that has co-pay that’s under 100 and try to actually get that up even higher than 75%.

That includes the commercial plans as well. And we can’t say a name, but we’ve had a recent big win there. We’re a preferred formulary status, which have been co-pays well under that $100 on one of the two or three largest plans on the commercial side. So I don’t know, Steve, if you wanted to add anything to that, that was a long answer.

SteveParsons: No, I think it’s accurate. We use $100 as the high watermark for the patients we’re talking about. 60% of the patients should be at 100 or less, many of them much less. Remember, of course, that in Medicare Part D, there’s a group of low-income subsidy patients. Those are dual eligibles. They’re lower-income Medicare patients, and they’ll have a co-pay of about $10 whether they get three doses, four doses, five doses, six doses. It’s the same co-pay. So we use $100 to be as the high water on about 60% of the patients. There’s still some others that we are pursuing in improved co-pay situation, but it’s a really good place to start.

John Tucker: And we’ve seen scripts come in for commercial, Medicaid and for and for Medicare Part D, and we fulfilled all of those. We filled those scripts for all three of those major, major payers in the market.

Glen Santangelo: All right. Well, I appreciate all the detail. Thanks. Maybe if I can just ask Rachael a quick follow-up question. In the prepared remarks, you also talked about the number of sales reps that you have currently, and I think I missed that number as well. So I was wondering if you could just sort of give us that. And then Rachael, I think you said that the Q1 revenues will probably be a little bit front-end loaded with some of the specialty pharmacy stocking and then you plan to make some additional investments in marketing and the sales force. I was wondering if you could just sort of — I get it, you don’t want to give any guidance at this point, but maybe could you just discuss a little bit about the cadence of how the year should look and give us a sense for if 1Q will be disproportionately high on the revenues and then will sort of tail off before we build up?

And the expenses should that just be a constant build throughout the year? Any sort of color you can give us would be helpful. Thanks.

Rachael Nokes: Glen, this is Rachael. I’ll speak to the cost first. So what we were saying is that we expect that the Q1 or 2023 expenses to be higher to continue to increase from 2022 because we are putting that — we now have the full commercial infrastructure. So the full 40-person sales force as well as we continue to invest in marketing as well. So that was really a reflection of what to expect in 2023 versus 2022. And then regarding the revenue, John, I don’t know if you want to talk about that.

John Tucker: Sure. Let me turn to the expenses. So your question is, is it going to be linear from here. The reps started the end of January. So Q1 on the expense side is probably going to be lighter. And we do anticipate adding reps later in the year. We haven’t given time. So I wouldn’t say it’s directly linear because, again, Q1 will be a little lighter because the reps didn’t start until the end of January. But it should be pretty flat except for the addition of sales reps potentially as early as Q2. As far as revenue, we launched February 20. And in order to launch, you had to have inventory in our specialty pharmacies. So I think when you look at Q1 revenues, it will be predominantly that stocking inventory. We haven’t given guidance, but I wouldn’t think that stocking inventory would preclude revenue in Q2, Q3, Q4, all of that.

It’s just initial stocking inventory to make sure that the products there on the shelf when a physician puts a script in. So I hope that answers your question.

Glen Santangelo: Yes. That’s good. Thanks for the color.

Operator: Thank you. Our next question is from Nik Gasic with SVB Securities. Please proceed with your question.

Nik Gasic: Hi, everybody. This is Nik Gasic calling on for Roanna Ruiz. Congrats on the launch, and all your progress so far. And thanks for taking our questions. And maybe first on FUROSCIX. Could you give us a little more clarity around which external launch metrics you plan to share and which you’ll be focusing on the most?

John Tucker: Sure, Nick. This is John, and I’ll talk a couple. And maybe Steve, you can add to it. Some of the key things, we’ll start communicating as early as May Q1 earnings call would be kind of a number of new prescribers that are — have used FUROSCIX average length of script, which is a big thing for us, as I think we’ve said we anticipate 3% to 4%, so we’ll be able to report on that. It will still be early data, but it would give us some directional things. Steve, what other things are you thinking of communicating quarterly?

Steve Parsons: We’ll talk about the number of targeted heart failure hospitals and clinics that have activated with at least a couple of patients on therapy. We’ll talk about the number of unique patients that have been treated. So you can see the breadth of that. We’ll talk a little bit more about Medicare Part D, payer formulary wins and placement status as that arises as we have more information. And of course, .

John Tucker: Yes. So I think those are the things, Nik, and I. — and I’m going to quote that’s what we’re anticipating. We’re three weeks in data. I think we want to understand what’s the most beneficial things to communicate to the Street. And those are the things I think you’ll learn. Those are the things we’re planning on now. I think they could change in two months, but we just want to make sure we’re communicating what we think are the most telling things and the progress of the launch.

Nik Gasic: That’s very helpful. Also a quick follow-up as well. I was wondering if you could give us a sense of some of the commercial strategies you’ve been implementing to drive awareness among patients, subscribers, et cetera. Maybe which ones you’ve had the most success with so far?

John Tucker: Steve?

Steve Parsons: Yes. So we’re doing the traditional things, digital advertisements in the key targeted journals, journals associated with Heart Failure Society of America, heart failure nurses. Had launched the American College of Cardiology, sent out an e-mail blast announcing FUROSCIX availability to about 15,000 members that are dealing with heart failure. The Heart Failure Society of America did the same thing on our behalf. We’re continuing to do digital ads, banner ads announcing our campaign, announcing the availability of FUROSCIX. So it’s what big pharma does. It’s omnichannel marketing, like others do, just very, very targeted towards the folks that we are going after in the early launch period.

John Tucker: And if we were — as you know, we’re in a prelaunch brand awareness campaign. And actually, we’re able to measure that prior to launch, and we’re really impressed with what we saw with aided awareness on the brand name, and then unaided awareness as well. So it’s a good baseline. We’ve been very happy with the interest we’ve seen in the field. We’ve had phone calls into various people in the office asking if they could talk to a rep. We’ve had a number of inquiries on the website. We’ve had reps in the field that walked in and doctor will be — doctor’s office will tell them that they’re booked. And then we talked a little bit about what we’re doing and the nurse comes back. And says, we’re scheduling a lunch we have for tomorrow, will you come in and do an in-service.

These in-services are really key to us. We really think it’s just critical that these offices and clinics know exactly who to use FUROSCIX on and how to use it. So we’re teaching the doctor, teaching the staff on how FUROSCIX works, how to use it and as importantly, how to show patients. Now we want offices interacting with those patients and training them, but we’re also supporting the patients with instructions for use, with videos online, videos that they can access as well as calls from the specialty pharmacy based on — with any questions they have. So these in services have been great. The interest, the doctors are pulling in their entire staff. Sometimes we’re doing two or three sets of in services in an office that can last one to two hours at some of the biggest hospitals from Duke to State Western.

Northwestern, Emory, WashU, I mean just exactly where we want to be. So we’re really enthused with the awareness of the product when we launched and the enthusiasm to talk to us when we’re out there.

Nik Gasic: Very helpful. Thanks for all update. I’ll hop back in the queue.

Operator: Thank you. Our next question is from Stacy Ku with Cowen. Please proceed with your question.

Stacy Ku: Thanks so much for taking our questions. We did have a few. So first, you gave some background about that initial clinician outreach. Can you talk a little bit more about your goals and expectations and the clinician base? I believe you said in the past, it’s around patients for the 40 reps. So any additional details or timing would be appreciated. So that’s the first question. And then the second question is around your ability to, I’m guessing, track the FUROSCIX scripts from your three specialty pharmacies. So — can you just give some really early expectations for how this month is progressing. Are you happy? And I know you’ve talked about the stocking inventory. So how should we just be thinking about the bolus of initial patients especially for those clinicians that might be aware of FUROSCIX.

That’s our second question. And then third, you’ve talked about previously potential targets patients that are being captured before hospitalization as prevention, or post discharge just to see — to make sure they’re completely dry. So is there any, I guess, very, very early initial color on where these patients are coming from. Thank you so much.

John Tucker: Great, Stacy. Thanks, it’s John. So let me just sum up the questions, kind of the number of doctors we’re targeting and kind of initially, what are we hearing out there? And then three, kind of the patient types. So Steve, do you want to tackle those?

Steve Parsons: Yes. I think we shared previously, each territory have about a minimum of 150 targets, up to 200. They can add those as they’re making their way through the territory, learning more about who’s involved in patient care, who’s involved in initiating prescriptions. So anywhere from 6,000 to 8,000 would be our target list that we could see regularly. Of course, there’ll be outliers where we see occasionally. So people — but our commitment would be to see 150 very, very routinely many times a year, covering about 450 hospital communities. So all the doctors that are in and around that hospital on the campus in their medical buildings in their heart failure clinics. So that’s the targeting. We have spot RXs, we get to report every day.

We can see all the prescriptions every single day from our specialty pharmacy and all the different distribution centers. It comes into the central hub. And so far, we’re pleased. I’ve been saying — we’re seeing, as John said, we’re seeing Medicare prescriptions, they’re seeing Medicaid prescriptions, we’re seeing commercial prescriptions. And it’s — that’s what we hope to see.

John Tucker: Yes, it’s funny we’re — some of the things we’re seeing, we saw a prescription for 180 units the other day, which it’s too many really because we don’t want the plans to start looking at that and put in quantity limits on it. So we’ve been pleased by what we’re seeing from a demand standpoint as well. On the patient’s side, it’s interesting. And this is why sometimes it’s a little going to be careful what you see early. We are seeing like this, this group of patients where the doctors that know FUROSCIX is coming have kind of tee them up. And as soon as we detail them and service them. I think it’s important to note, Stacy, that you just can’t order FUROSCIX unless you’ve seen us, unless we’ve done it in service and detailed you on the drug.

So you can’t get FUROSCIX in a direct form without having engaged with us. We are going to make sure that the usage is appropriate and that the patients have a good experience. So we’ve had a lot of these in services. They’ve gone well. The reps, to be able to see their whole territory, it’s after we conduct all the in services, we’ll probably be on a four or five week cycle. So we haven’t even got to all of our doctors yet because these calls are taking one to two hours. But that’s what’s most important to us right now. So if you go back to the patient types, it is these patients that kind of have it in the queue, they all call them in and say, we have something for you now. And actually put them on drug there. So — and then obviously, patients coming in on sick visits, patients that are coming back after being discharged from the hospital and patients that they know are going to be in and out of the hospital or need IV treatment every month, a couple of days a month.

They’re going ahead in prescribing FUROSCIX those patients. So it’s kind of the patient type we thought maybe with the slight caveat that we didn’t quite expect the bolus of patients that the doctors had queued, ready to go when we walked in. But — so that’s where we are. I hope I answered — we answered your questions. Steve, I’ll let —

Stacy Ku: That’s very helpful. And just to confirm, before you had said in your prepared remarks, you said one to two hours for your services. And then you said 300 something is the number of clinics that you now service. Just to make sure since you — it sounds like you’re really taking the time to make sure. Is that correct?

John Tucker: So that’s not all the falls we have. We’re going to about 3,000 cycles. But to set up the in-service, you’re going to walk into the doctor’s office and schedule the in-service. Now we have had opportunities where we walked in and we drop right into an in-service. But typically, you want to schedule a line churn in surface because it’s not a minute call. Now these calls, we’ll start making more and more calls as the in-services start in servicing all the offices. But it’s really a key metric for us is these in surface. So we’ve done about 3,000 calls and over 300 in service to date.

Stacy Ku: Okay. Thank you for that clarification.

Operator: Thank you. Our next question is from Douglas Tsao with H.C. Wainwright. Please proceed with your question.

Douglas Tsao: Hi, good afternoon. And thanks for taking the questions. So John, maybe as a follow-up. And I guess when you think about in service, what is the key goal of that? And are you changing or potentially changing behavior for a way that physicians might or thought about using the product, but then they have the in-service and they have a better understanding of how to best deploy FUROSCIX.

John Tucker: So, I’ll let Steve answer that. I will say this, one thing that’s been interesting is that we always say it’s going to take a couple of calls to change a doctor’s behavior. We’re seeing doctors in immediately after or in service with the script. So a lot of them are waiting for this and are aware of it. But that’s one thing that I think we’ve seen. And again, I think it has to do with the depth of the in-service and the knowledge of the patients. And the fact that we’ve said it all along, they’ve used IV strength furosemide in their entire career. So this isn’t kind of a new molecular entity. But Steve, do you want to talk more about?

Steve Parsons: No, I think that’s a good insight. We have changed people’s minds on where they think they would use as they’ve broadened it. I think everybody comes into the FUROSCIX experience with, okay, I know exactly where I think I’m going to use it. I can think of a few patients. And then after spending an hour with us or two hours with us and nurses weighing in, saying things that doctors don’t necessarily hear every day, medical assistance, the advanced practice providers, we have broadened their consideration pool for who FUROSCIX can help. And so the change in behavior remains to be seen, but the change of mind is definitely taking place. And it’s getting broader. So that’s been a good experience.

Douglas Tsao: And how can you — so it’s going from what to what, most commonly?

Steve Parsons: Some doctors think this is going to be great to use after someone has been discharged in the hospital to prevent a readmission. Some doctors think the best way to avoid a readmission is to never have an admission in the first place. And so they’re catching them on the front end. Some doctors are asking us about could they finish the job a little earlier at home once they’re stabilized in the hospital? So I can’t say. Everybody has the same opinion, Doug. It’s just when they hear our full story, I think we opened their mind to all three of those potential use cases.

Douglas Tsao: Okay. Great. Thank you so much.

Steve Parsons: Thanks Doug.

Operator: Thank you. Our next question is from Naz Rahman with Maxim Group. Please proceed with your question.

Nazibur Rahman: Hi, everyone. Congrats on the recent launch. And thanks for taking our question. Just on your target hospitals and target ACPs, could you give some color on what percentage of them you’ve already reached out to? And it obviously sounds like the in-service — in-service points are key. But could you also talk a little about what the response rate has been to for your digital promotion efforts?

John Tucker: Naz, it’s John. Let me turn that over to Steve. So Steve, do you want to?

SteveParsons: So the way we target is it’s hospital-based and then it’s all the doctors around that hospital, what we call heart failure community. So we have decile 10 hospitals. We have decile 9 hospitals. We have decile 8, all the way down. We’re focused on the decile 7 through 10. On the decile 10, I think we hit 90% of them so far, with calling on doctors who are in and around the community. And decile 10 hospital has the most heart failure admissions and discharges in the United States relative to their peers. I think at decile 9s were like high 80% reach. And again, we’re not selling into the hospital. It’s where we go fishing. It’s where all the patients are. And so we talk to all the specialists in and around there.

So we’ve — gets us probably high 70s. I mean we’re — our strategy has been to focus there first. and try to hit all the doctors associated, affiliated with those hospitals where we know they’re taking care of heart failure patients with fluid overload. So that’s been the focus so far. I can’t tell you exactly what the reach to every individual target physician is so far. But I can tell you the focus on those deciles.

John Tucker: So we’ve made over 3,000 calls. Our target list is 8,000, but probably 6,000 are realistic docs. So — but I wouldn’t say that 3,000 means we’ve hit 50%. Because a lot of these calls — it tends to make the call, get the in-service. We’re really focused on the big clinics and the big prescribers early. So if we had to make an estimate right now on what percentage of our target universe, we’ve said, I’d say it’s in the 40% range of our total target. And again, that will keep expanding out. But Naz, it’s really important. We’re 3.5 weeks in from our — from the data. And we need these in services. It’s obviously key. We’re looking at the hit rate from an in-service to a prescription versus just a call, and it’s vastly different. So that’s why we know these in-services are really important.

Nazibur Rahman: Right. And I have just one follow-up question on the actual reimbursement. I understand it’s very, very early days. But relative to scripts being written, do you have an idea of what’s kind of been the fill rate for the scripts been? How many of them required prior at, like how many of the prior outs like seems to go through? And also like what happens when a patient gets a lot of medical necessity because medical necessities go through roughly seamlessly?

John Tucker: So we have seen the prior out as we anticipated and even in our negotiations with the payers, both commercial and Part D. It’s the right medicine. They should have failed on oral diuretics, so they shouldn’t be sitting here. So that’s the prior auth we’re seeing is that it’s — they have to have failed on oral diuretics. And it’s electronic look back. So it depends on the plan on how fast scripts are going through. Some of them are right off the bat instantaneously. Some of them, if it’s a PA, it might take time. Medicare is a 24-hour turnaround time. We’re working with the promotional plans, some of them are fast and little marked so fast. But a lot of times with any new product — and we’re looking at 3, 3.5 weeks with a new product.

You’re going to go through a PA, you’re going to go through people getting comfortable with it. I think as we move forward, formulary status has come online that they’ll even be quicker. But again, it’s just plan by plan right now.

Nazibur Rahman: Got it. And do you — do all medical necessity go through?

John Tucker: Yes. Yes, medical exceptions. We don’t have to have the letters of medical necessity written. But if it is a prior offset is initially denied and then there’s an appeal process, a very clear appeal process. Usually, they’re asking for just more information than the doctor provided the first time — face sheet, history and physical whether they’ve gotten any labs done, things like that, that they didn’t — just didn’t get — they satisfy that. And more often than not, it’s approved.

Nazibur Rahman: Got it. Thanks for taking my questions.

John Tucker: Thank you.

Operator: Thank you. There are no further questions at this time. I’d like to turn the floor back over to John Tucker for any closing comments.

John Tucker: Great. Well, thank you very much. Appreciate it. We look forward to updating everybody as we move forward. And everyone, have a great evening. Thank you very much.

Operator: This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.