scPharmaceuticals Inc.

Welcome to the SC Pharmaceuticals Second Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the Start key followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press Start then 1 on a touchtone phone. To withdraw your question, please press Start then 2. Please note, this event is being recorded. I would now like to turn the conference over to P.J. Callagher of LifeSci Advisors. Please go ahead.

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 or forward-looking statements within the meaning of the federal securities laws, including but not limited to statements regarding SC Pharmaceuticals expected future financial results, and management's expectations and plans for the business and for O6. 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. It 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 in 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, 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 a more detailed update on the 406 launch, and then Rachel Noakes, our Chief Financial Officer, for a review of our financials. We'll then open the call for your questions. The second quarter of 2023 represents our first full quarter of 406 commercial availability as we launched the product in late February. And while it is still early, the key indicators underlying demand including unique prescribers, total prescriptions written, and in-services completed by our field sales force, continue to reflect a positive trend. 4.06 is being well-received in the market, and treating physicians are quickly gaining comfort prescribing it to their heart failure patients who can benefit from it, thereby avoiding hospital admissions and readmissions that are costly to the system and inconvenient to patients. For the second quarter, we reported net revenue of $1.6 million. This despite the inventory normalizing at our specialty pharmacy partners from 17 weeks at the start of Q2 to approximately five weeks at the end of Q2. In addition, July was our best sales month launched to date, and our two main specialty pharmacy partners have already placed orders early in Q3. In terms of our gross and net discount from launch through the end of Q2, it is running at approximately 23%, which is well below the 35% long-term guidance that we guided to previously. We do anticipate that GTM will continue to increase over time as contracting with payers evolves. Steve will provide a detailed commercial update shortly, but in response to these positive demand trends, we continue to evaluate our field sales force and territories To ensure that for 06 is broadly accessible to heart failure patients, and they're treating physicians to that end. We add an additional 10 sales territories towards the end of the 2nd quarter. This brings our current field sales force to 54 territories and we anticipate seeing the positive impact of these additions beginning this quarter. In addition, based on the interest we have seen for forensics, we have identified the next tranche of territories, and we are actively recruiting to fill these positions by the end of this quarter. We anticipate seeing contributions from these latest additions in Q4. Shifting now to payers, we continue to have productive discussions with commercial, Medicare Part D, and Medicaid payers in a continuing effort to make furosics broadly available to patients at the most favorable terms possible. This involves not only securing initial coverage of furosics, but also working to have it placed on a formulary tier that would be affordable to most patients and not on the specialty tier. Reflecting our continued progress, recall that a Top 5 National Health Plan placed Ferocix on a preferred formulary status across all of its commercial plans effective June 1st. We remain in discussions with this plan regarding its Part D plans with the goal of securing similarly favorable formulary placement for its Medicare beneficiaries. In addition, we obtained national Medicaid coverage of Ferocix effective July 1, 2023. As mentioned, we are engaged with many other health plans, and we hope to have several more announcements like these in the months to come. We previously indicated that approximately 60% of all heart failure patients can access Ferocix under fixed-year copays of $100 or less, and we are reiterating our goal of 75% or more over time. We are making good progress towards this goal. The market opportunity for Ferocix is significant. And we believe it is worth reiterating. 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 furosics. If we assume $3,300 per episode, which is four doses of furosics, 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. At this early stage, we are seeing a wide range of doses of furosix per prescription, from 2 to 12, as this is at the discretion of the treating physicians, and some patients require more aggressive interventions than others. During the second quarter, we reported just over 5.2 doses per prescription. But we continue to believe that this number will trend towards four doses per prescription over time. Staying on the topic of market opportunity for a moment, just recently we received positive type C meeting feedback from the FDA regarding the potential expansion of the Ferosex syndication to include New York Heart Association Class IV heart failure patients in addition to Class II and III for which Ferosex is currently indicated. It is estimated that as many as 10% of all heart failure patients are considered class for, and of these, we estimated that as many as 40% may benefit from for us. So, if we are successful class for representing meaningful expansion of our market opportunity, when able to be prescribed to the sickest heart failure patients. And based upon the feedback that we received from the agency, we believe we can file for the class for indication without the need to conduct any additional studies. We plan to do so by the end of the year. Turning now to IP, I want to cover a key development with respect to our intellectual property estate. We recently announced the issuance of key U.S. patents covering the development of more concentrated formulations of furosemide. This enables the possibility of dosing flexibility of subcutaneous furosemide. We have completed initial solubility and stability studies on multiple formulations described in the patent properties. We've identified potential product candidates, and we have initiated IND-enabling studies. We also have patent applications pending that cover similar formulations for verosimide for the treatment of congestions in patients with heart failure and also edema in patients with chronic kidney disease. an entirely new potential indication that also represents a significant market opportunity for our company. Taken together, this additional IP is foundational to our Ferosix lifecycle management strategy. We are also pursuing similar patent protections outside of the United States. Before turning the call over to Steve, I want to provide an update on our key performance indicators and our plans moving forward. We anticipate signing direct purchase agreements with several integrated health systems Berosix will be shipped directly from our 3PL, Cardinal Health, to these IDN facilities, bypassing our three specialty pharmacies. As a result, those units that are shipped direct will not be captured in our prescription counts, which will no longer reflect all of the underlying demand. So we are reassessing the KPIs that we intend to provide going forward. We'll have a further update when we report our third quarter results in November. Finally, we were very pleased in June to announce that we've been added to the Russell 2000 index. Inclusion in its widely followed index will help raise visibility of our company and the key unmet need that Ferosix addresses along the heart failure care continuum. It was a reflection of the significant progress that we've made over the past 12 months, which resulted from tireless work on behalf of the entire team. At this point, I'll turn the call over our Senior Vice President of Commercials, Steve Parsons, for a deeper dive into our launch metrics. Steve?