scPharmaceuticals Inc.

Greetings and welcome to SD Pharmaceutical's fourth quarter and full year 2023 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. 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.

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 SU Pharmaceuticals' expected future financial results and many expectations and plans for the business and for OSICS. 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 FCC 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 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 Parson, our Senior Vice President of Commercial, for a more detailed update on the Ferosix launch, and then Rachel Noakes, 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 Ferosix 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 406 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 preannouncement 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 Ferosix to 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 fourth quarter, we adjusted our KPIs from prescriptions to doses, as the number of doses is the metric we use across our internal projections and is more reflective of our current business, especially as the number of doses per prescription varies. Our gross net discount from launch to the end of Q4 was running at approximately 18%, down from 21% to 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 Ferocix 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 Ferocix without prior authorization to over 8 million lives at a fixed copay ranging from $16 to $75. Also, as of November 1st, 2023, Ferocix has been added on formulary as preferred brand, one of the largest government retired payer formulary, increasing the number of lives with preferred access to Ferocix by an additional 1.1 million lives. With these favorable payer decisions, we've expanded the population of heart failure patients with access to furosics with 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 strategies. In August, we announced favorable type C meeting feedback from the FDA regarding the potential expansion of the fluorosix indication to allow for use in New York Heart Association class 4 heart failure patients. Fluorosix is currently indicated for the treatment of conjecture due to fluid overload in adult patients with New York Heart Association class 2 and class 3 chronic heart failure. We estimate that as many as 10% of all heart failure patients are class 4 and a meaningful percentage of these, as many as 40%, may benefit from furosis. 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 August. We are successful. We believe Class 4 will represent a meaningful expansion of our market opportunity to enable furosis to be prescribed to the most severe heart failure patients. Turning now to the 80 mg by 1 ml auto-injector that we are developing as an additional option to the on-body infuser. We believe that an auto-injector, if approved, would reduce manufacturing costs compared to the current on-body infuser and confer environmental advantages. We remain on track to initiate a pivotal PK study in Q2 of this year and report results later this year. That, if successful, will 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 PROSIX indication to 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 diuretics. 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, with fluid overload being one of the most common complications in CKD, which worsens with disease progression We believe cirrhosis could be beneficial to patients with CKD who have worsening symptoms through the fluid overload and are not responding to oral loop diarrhea. For that end, 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 doctor goals resetting, It's 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-attack on changed healthcare began the third week of February and is ongoing. This has caused disruption in claims being processed, resulting in delays in patients receiving shipments of cirrhosis. With the unique position cirrhosis has in the treatment of heart failure patients, we're concerned that we will not see all of these units ship. 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 metric. Steve? Thank you, John.