scPharmaceuticals Inc.

Greetings, and welcome to the SC Pharmaceuticals third quarter 2022 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star, then zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Hans Wittstum. Thank you, Mr. Wittstum. You may begin.

Thank you, operator. Before turning the call over to management, I'd 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 SC Pharmaceutical's expected future financial results and management's expectations and plans for the business and furosics. The words anticipate, believe, estimate, expect, intend, guidance, confidence, target, project, and other similar expressions are used 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 SC Pharmaceutical's business, financial condition, and other operating results. These include, but are not limited to, the risk factors and other qualifications contained in SC Pharmaceutical's 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 on this conference call, including responses to your questions, are based on current expectations as of today, and SC Pharmaceuticals 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 SC Pharmaceuticals. John?

Thank you, Hans, and thanks to everyone listening to this afternoon's call and webcast, our first in the history of our company. I will begin with an operational overview, including a recap of recent developments, and Rachel Noakes, our SVP of Finance, will follow with a brief review of our financials. The October FDA approval of Ferosix, the first and only self-administered subcutaneous loop diuretic for the at-home treatment of congestion and chronic heart failure, represents the culmination of years of unwavering effort on behalf of the entire SC Pharmaceuticals team. We have successfully developed what we believe is to be a truly significant advancement in the management of heart failure. Ferosix offers a treatment option outside of the hospital, either pre- or post-admission. By reducing preventable hospital admissions and readmissions, we have the potential to effectively treat patients in the comfort of their own homes and potentially deliver significant cost savings for payers. Given that the benefits of Ferosix can accrue to multiple healthcare stakeholders, we anticipate positive uptake in our preparing for a robust commercial launch of Ferosix. It is worth noting that we are very pleased with the final approved package insert and label which we believe allows us to pursue the large population of New York Heart Association Class II and III heart failure patients who may stand to benefit from this novel treatment. For those who may be new to the SC pharmaceutical story, Ferrosix is our proprietary formulation of furosemide that is designed to be administered by an on-body infuser, West Pharmaceutical Services' proprietary smart dose on-body drug delivery system technology. Furosemide is the most widely used oral and parental diuretic available for patients with congestive heart failure. But the bioavailability of oral furosemide decreases and becomes highly variable during episodes of worsening symptoms. However, by enabling subcutaneous administration via the West Smart Dose On-Body Delivery System technology, we have been able to achieve greater than 99% bioavailability comparable to that of an IV bolus, which is typically administered in a hospital setting. So with furosix, the patient can receive IV-comparable treatment in the comfort of their own home when oral furosemide isn't sufficient. It has been estimated that up to 90% of patients presenting to the emergency department with symptoms of worsening heart failure are admitted to the hospital, and 50% of these admissions may be potentially avoided. Heart failure is therefore a significant pain point for healthcare payers. The average cost of a heart failure-related hospital admission for a Medicare patient is nearly $19,000, and heart failure is a top condition that is being targeted by the Centers for Medicare and Medicaid Services under its Hospital Readmission Reduction Program, or HRRP. Heart failure is also a significant burden to hospitals. The average length of stay is 5.2 days, while CMS reimburses just 3.9 days under the current DRG. Hospitals also face significant exposure to financial penalties resulting from readmissions under the HRRP program just referenced. So to demonstrate the magnitude of the cost savings that can potentially be realized with 406, we ran a prospective clinical trial, Freedom HF, the results of which we read out in July of last year. To summarize the key takeaways, Select patients who presented at the emergency room with a worsening heart failure event were treated with furosics at home as opposed to being admitted to the hospital. Heart failure-related costs were then tracked for 30 days. As compared to historically matched comparators, patients treated with furosics at a heart failure-related cost that were lower by an average of $16,995. Though this figure excludes the cost of furosics which had not been established at the time of the study completion, the conclusion is unchanged. By more aggressively treating patients outside of the hospital, where possible, significant health care costs can be avoided. Notably, this result was achieved with a very high level of statistical significance, and in fact, based on the results from a planned, pre-specified interim analysis conducted to confirm the final sample size, and following input from statisticians, principal investigators, payer advisors, and health economics and outcomes research experts, Enrollment was terminated early at 24 subjects versus the original enrollment target of 34. The final analysis therefore included 24 subjects treated with Ferocix and 66 matched comparators based on seven variables associated with hospitalization. More recently, we announced positive results from a phase two pilot study at home HF. This study compared Ferocix with a treatment as usual approach in chronic heart failure patients presenting to a heart failure clinic with worsening congestion requiring augmented diuresis. The study enrolled 51 subjects, of which 34 received furosics and 17 received treatment as usual. Among the key findings, subjects randomized to furosics had a 37% reduction in the risk of a heart failure hospitalization at day 30 relative to patients randomized to treatment as usual. In addition, all predefined secondary endpoints measuring symptoms of congestion, quality of life, and functional status favored the furosics group. Needless to say, we were very pleased with the results of these studies, which added significantly to the growing body of clinical and pharmacoeconomic evidence favoring the furosics versus the current standard treatment protocol. Our presence at important medical meetings is key to our efforts to drive awareness of furosics as a new element of the heart failure treatment paradigm. To that end, last month we presented two posters at the 2022 Annual Scientific Meeting of the Heart Failure Society of America. This is among the most important, well-intended gatherings of heart failure experts each year. We also had a large Coming Soon campaign that allowed us the opportunity to drive both brand and name awareness in anticipation of the Fero6 launch. Turning now to the total addressable market, there are approximately 7.2 million heart failure patients in the U.S., who experience approximately 4.1 million heart failure episodes of fluid overload per year. Of these, we estimate 2.1 million episodes to be addressable by Ferosix. If we assume an average cost of Ferosix of approximately $3,300 per episode, the equivalent of four doses at a WAC price of $822 per dose, that yields an addressable market opportunity of $6.9 billion. So we believe there is a substantial amount of opportunity here, and we believe Ferosix, once launched, will be adopted rapidly. Turning now to our launch preparation activities, we are working towards a broad commercial launch of Ferosix in the first quarter of 2023. We have completed or are in the process of including several important activities associated with the launch. Beginning with distribution, we've identified Cardinal Health as our third-party logistics provider. We are building a limited specialty pharmacy network with Biomatrix serving as lead specialty pharmacy. In terms of reimbursement, we have held productive discussions with the largest provider of Medicare Part D plans. With our compelling pharmacoeconomic data, such as those that we obtained from our Freedom HF study, we have P&T committee meetings arranged with a number of the top payers this quarter. As we indicated previously, given the strong clinical and pharmacoeconomic case we made for Ferrosix, As a key component of an updated heart failure treatment regimen, we anticipate few obstacles in securing favorable formula replacement. From a marketing perspective, we rolled out our comprehensive Coming Soon campaign at both the recent Heart Failure Society of America annual meeting and the American Heart Association scientific sessions that generated encouraging interest. Our MSLs have been busy in the field and have already made contact with over 500 key opinion leaders in the heart failure space in 2022. Finally, in terms of sales team and infrastructures, we have hired a highly qualified VP of sales and what I regard as top tier regional sales directors. We also have contingent offers out to approximately 40 field territory sales representatives. We're advancing a comprehensive multifaceted launch plan that we believe positions us well to maximize our reach broadly both heart failure physicians and patients. To ensure that we have the resources available to support our launch and commercialization plan, we entered into a $100 million secure debt facility with funds managed by Oak Tree Capital Management on October 13, 2022, at which point $50 million became available to us immediately. The remaining $50 million becomes available in two $25 million tranches, each tied to the achievement of pre-specified commercial milestones. The debt facility carries an interest rate equal to the three-month secured overnight financing rate, SOFR, plus 8.75, with the interest rate capped at 11.75 per year. Following the achievement of $100 million in trailing 12-month U.S. net sales of 406, the SOFR premium will be lowered to 8.25%. The debt facility is expected to mature five years from funding and carries a 36-month interest-only period. We believe these terms are favorable to our company, and we are very grateful for the support of Oaktree at this transformational time. At this point, I'll turn the call over to our Senior Vice President of Finance, Rachel Noakes, for a review of our third quarter results and financial position. Rachel?