scPharmaceuticals Inc.

Good afternoon, and welcome to SD Pharmaceuticals' fourth quarter and four-year 2024 earnings conference call. At this time, all participants are in listen-only mode. Following management's prepared remarks, we will hold a question-and-answer session. To ask the question at that time, please press star followed by 11 on your touchtone phone. As a reminder, today's conference is being recorded. I would now like to turn the conference call over to Nick Colangelo, Investor Relations, to cover forward-looking statements. Nick, please go ahead.

Thank you, operator. Before beginning this afternoon's earnings call, we would like to highlight the following 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 Pharmaceuticals' expected future financial results, management's expectations and plans for the business, the ongoing commercialization and marketing of FURO6, and the potential label expansion and other regulatory approvals of FURO6. 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 expressively disclaims any intent or obligation to update these forward-looking statements, except as required by law. With that, I will turn the call over to John Tucker, Chief Executive Officer of SC Pharmaceuticals. John, please go ahead.

Thank you, Nick, and thank you all for joining this afternoon's conference call. Today, we'll provide an overview of the company's core business and operational highlights for the fourth quarter of 2024, a commercial update from Steve Parsons, our Senior Vice President of Commercial, as well as an overview of our fourth quarter and full year 2024 financial results from our Chief Financial Officer, Rachel Mokes. We will then open the line for questions. Overall, although we're satisfied with the 406 commercial growth over the course of 2024, we were especially encouraged by what we saw in Q4, accumulating a net revenue of $12.2 million at the midpoint of the $12 to $12.3 million range that was previously announced in January. For the full year 2024, SC Pharmaceuticals generated $36.3 million in net 406 revenue, representing an approximately 167% increase in net revenue year over year, driven primarily by the increased awareness of furosics, further expansion into the class IV heart failure patient population, and increased reach and market penetration in Q4 due to our larger commercial sales force. The gross and net discount for furosics in the fourth quarter of 2024 was approximately 19% at the high end of the range we provided in January. The increase in GTN is primarily due to the continued payment of coverage gap rebates in Q4 and the impact of the Medicare redesign on inventory in the channel. We expect a long-run GTN discount for Ferosix to be in the range of 30% to 35% for 2025. As we have stated previously, while we do take a hit on our GTN with the Medicare redesign, we believe 406 is uniquely positioned to benefit from the $2,000 out-of-pocket maximum for Part D beneficiaries or for these patients enrolling in the smoothing option over the balance of the year. As we approach the end of the first quarter, we have seen evidence of more patients this month hitting their out-of-pocket caps or enrolling in smoothing than we did in either January or February. As a reminder and reflected in today's financial results, the ferocity demand and fill rate significantly increases when patients' out-of-pocket costs are lower. With the Medicare redesign fully implemented in 2025, patients will progress into catastrophic coverage faster, which should lower out-of-pocket co-pays, or they will enroll in the CMS smoothing program. With approximately 70% to 75% of our prescriptions filled by Part D beneficiaries, we believe the Medicare redesign will serve as a tailwind enhancing our commercial strategy, and supporting organic growth of furosix. As previously announced, on March 6, 2025, the FDA approved a supplemental new drug application for furosix to expand its indication to include the treatment of edema in patients with chronic kidney disease. Fluid overload, which occurs in over 700,000 cases annually, is one of the most prevalent symptoms of CKD and requires intervention. Given the opportunities to intervene pre-hospitalization or post-discharge, furosix has the potential to play a significant role in managing edema in patients living with CKD. This resonates strongly with nephrologists we have engaged with to date. Steve will provide an overview of our pre-commercial activities and expectations for the CKD launch in greater detail, though I do want to highlight that we expect to fully launch the CKD indication in April and already have seen prescriptions from nephrologists. Based on the awareness level we saw in our initial awareness trial and usage market research among nephrologists, as well as preliminary call points, we remain confident that the Ferosix expansion into CKD patients will prove to be a meaningful growth driver for the Ferosix franchise. Turning to the autoinjector, we are pleased to provide a positive update following additional shelf life testing. We have seen encouraging data with the enhanced silicone syringe in the testing conducted thus far. We are targeting a mid-year submission of the autoinjector SNDA pending the results of remaining testing. Though delaying the filing was disappointing, we remain confident this will be a critical advancement in our product pipeline. We are very pleased with the feedback we've received on the performance of Ferrosix in the market and believe that with the expanded sales force, the CKD indication, and the Medicare redesign, we are well positioned for 2025. With that, I will pass the line to Steve Parsons, SC Pharmaceuticals Senior Vice President of Commercial. Steve?

Thank you, John. I'm pleased to share that since the beginning of the Ferocix commercial launch in February 2023, over 3,800 unique providers have prescribed Ferocix to their patients. This represents a 23% increase over the course of the fourth quarter compared to the third quarter. During the fourth quarter of 2024, We filled approximately 13,300 doses of Furosix, up 23% from the 10,800 doses in the third quarter of 2024. we've continued to see the average number of doses per prescription increase to 7.4 doses per prescription, largely due to the increased number of doses written for more patients with advanced heart failure in Class 4. As the chronic kidney disease prescriptions begin to be written, we anticipate the average number of doses written per prescription will stabilize, as we expect CKD patients will likely require five or six doses more comparable to the prescription size of the earlier stage heart failure patients. As John mentioned earlier in the call, we're expecting to start filling Ferosix prescriptions for CKD in April. Leveraging our expanded field sales force and learnings from the Ferosix heart failure launch, we have designed a focused commercial plan to cover the highest volume nephrology targets with smaller, more manageable territories for our sales reps. The smaller territories allow our reps to access the offices with the most CKD patients and make more visits to those prescribers than was possible with the larger geographies. Importantly, this approval will put us into a large segment of cardiorenal treaters where approximately 50% of patients have both CKD and comorbid heart failure and are being treated by nephrology specialists. we believe these patients represent an ideal population who could benefit from Ferosix. Our Ferosix direct patient services hub continues to reduce friction from the prescribing process, increasing ease of ordering and prescriber transparency. We're encouraged by the feedback we've received from healthcare providers on our patient services hub, streamlining their entire prescribing process from timely prior authorization to prompt patient copay reporting and successful delivery to the patient. We expect the new hub to contribute to our patient treatment volume growth over the long term. Lastly, there's been good feedback from the IDN and hospital systems that we're contracted with around their satisfaction with the prescribing process and efforts to streamline fluorosics access for their prescribers and patients. That concludes our commercial update. I will now hand the call over to Rachel Noakes, Chief Financial Officer of SC Pharmaceuticals, to review our fourth quarter and full year 2024 financial results. Rachel?

Thank you, Steve. Bureau 6 revenues for the fourth quarter of 2024 were $12.2 million compared to $6.1 million for the same period in 2023. For the full year 2024, Essie Pharmaceuticals reported $36.3 million in product revenue compared to $13.6 million for the full year 2023. This represents approximately 167% annual growth of net revenue generated by Furosix. The increase was due to an increase in demand for Furosix further into commercial launch. Cost of product revenues for the fourth quarter of 2024 were $4.0 million compared to $1.8 million for the same period in 2023. For the full year 2024, SE Pharmaceuticals reported $11.4 million in cost of product revenues compared to $3.8 million for the full year 2023. The increase was due to an increase in demand for Furosix further into commercial launch and related manufacturing costs. Research and development expenses were $3.2 million for the fourth quarter of 2024 compared to $3.3 million for the fourth quarter of 2023. This decrease in quarterly research and development expenses is primarily due to a decrease in pharmaceutical development costs offset by an increase in clinical study costs. For the full year 2024, Research and development expenses were $12.1 million compared to $11.8 million for the full year 2023. This increase in annual research and development is primarily due to an increase in clinical study costs, device development costs, and patent costs. The increase was partially offset by a decrease in pharmaceutical development costs, quality consulting, and shipping and storage costs. Selling general and administrative expenses for the fourth quarter of 2024 were $21.4 million compared to $16.2 million for the same period of 2023. This quarterly increase in selling general and administrative expense is primarily attributable to an increase in employee-related costs, commercial preparation costs, and patient support, as the pharmaceutical selling general and administrative expense for the full year 2024 was $77.6 million compared to $53.4 million for the full year 2023. This annual increase in selling general and administrative expense is primarily due to an increase in employee-related costs, commercial preparation costs, costs associated with financing transactions, patient support, professional service costs, and FDA user fees. The increase was partially offset by a decrease in insurance costs. For the fourth quarter of 2024, SE Pharmaceuticals reported a net loss of $18.8 million, compared to a net loss of $13.8 million for the fourth quarter of 2023. SE Pharmaceuticals reported a net loss of $85.1 million for the full year 2024, compared to a net loss of $54.8 million for the full year 2023. SC Pharmaceuticals ended 2024 with $75.7 million in cash and cash equivalents compared to $76 million in cash, cash equivalents, and short-term investments as of December 31, 2023. As of December 31, 2024, SC Pharmaceuticals had 50,095,689 shares outstanding. That concludes SC Pharmaceuticals' financial update and our prepared remarks.

We will now open the call for questions. Operator?

Thank you. Ladies and gentlemen, as a reminder to ask the question, please press Start11 on your telephone, then wait for your name to be announced. To withdraw your question, please press Start11 again.

Please stand by while we compile the Q&A roster. Our first question comes from the line of Stacey Ku with TD Cohen. Your line is open.

Hi, team. Congrats on the year and the CKD approval, and thanks for taking our questions. So, on the upcoming CKD launch, Big picture, can you discuss the potential opportunity that this represents for Furo6? And then second, then drilling down on the launch itself, it's encouraging to see some early prescriptions coming in from nephrologists. So can you discuss some of the early work that you have been doing in terms of reaching out to nephrologists? And then what are your expectations for the launch starting in April? Will access be seamless? Is there additional payer dynamics here? and how do you expect adoption will turn out to the rest of the year? And do you expect this would impact HF adoption as well? Thank you.

Hey, Fitz, Sean Tucker. Thanks for those questions. I'll try to remember them all. So, yeah, the feedback from nephrologists, we have been in some of the larger offices on a real limited basis. Keep in mind that even before we received the kidney indication, it was indicated for patients that had heart failure and CKD. So we did use that opportunity to go into some of the larger nephrology offices to establish a presence, do some in-services, and we did see scripts for nephrologists early on, you know, for their heart failure patients. We think it gives us a big leg up there, having already identified, done in-services in some of those large offices. We did an awareness trial and usage study baseline in cardiology before we launched, baseline in nephrology before we launched, and it was about 3x higher in nephrology. We've been, you know, obviously working with the KOLs. We've identified both national, local, and regional KOLs. and we've been out reaching to them, we've been at the conferences. So we think we're gonna be in a position to launch this and have a quicker uptake than in cardiology. Steve, I don't know, or John, if you want to add anything to that. I'm sure I didn't hit all of it.

I'd just add that when you're walking into a nephrologist's office, at least 50% of those patients also have concomitant heart failure. I think the other piece is that there's about 10,000 nephrologists and 30,000 cardiologists. It's a much more concentrated area as well. So all those things together Give us a position where we believe that there's an opportunity for early growth.

Yeah, I think there was a question about the impact of the launch. You know, we'll do a full launch in midpoint of April. there'll be some revenue impact in Q2, but mainly in Q3 and Q4 where we see the lift from nephrology.

And the payer work we've done, you know, it's the same brand. It's all under the same NDC code. So we have alerted all of the plans, notified them of the indication expansion. We've had no pushback on really on nephrology scripts that came in before as long as they were coded for heart failure. So we think the payers, they pick it up automatically based on their data feeds. We'll have it all loaded by the time we're out in the field with the indication.

Perfect. Thank you very much. Thanks.

Please stand by for our next question. Our next question comes from the line of Glenn Santangelo with Jeffrey. Your line is open.

Oh, yeah. Thanks for taking my question. Hey, John, I just want to sort of get your high-level take on a couple things. I mean, it seems like, you know, the company continues to make good, solid sequential progress, but just sort of looking back, you know, the product's been commercially available for over two years now. And just sort of knowing you, I'm sure, you know, you wish the slope of the ramp was even steeper than what you're seeing. And so I'd love to just sort of get your retrospective looking back over the last year as to maybe what hurdles you've seen in place that are maybe, you know, making it a little bit harder to get adoption at the pace with which you hoped. And I don't know if you think it's more of a, an access issue, a prescribing issue, a user issue, recognizing that, obviously, expanding the sales force, you know, getting Class 4 and getting the CKD indication are all going to help, obviously, in 25. But we'd love to get your take as to what really could accelerate the ramp here.

Yeah, Glenn Hayden, thanks for the question. Yeah, so, yeah, you know me, you know, I think I said in the opening remarks that satisfied with the year, although, you know, we're really pleased by what we saw in the fourth quarter. And it wasn't just the numbers. It was kind of how docs had really started positioning the product differently in their minds. So, you know, when we look at, you know, this year and looking back at last year, the headwinds we had last year were really, you know, based on, you know, patients out of pocket. So you say access, Access to physicians is a challenge for everybody. You need to get around it. And we're doing that just like everybody else is. But it's really for patients' access. And when their co-pays are really high. And last year, your max out-of-pocket was $4,000. There was no smoothing. So you had a headwind with patients' out-of-pockets. You know, this year with the Medicare redesign, we really think this works in our favor in that the patient cap, out-of-pocket cap, goes down all the way to $2,000. So it's cut pretty much in half, and the patients can enroll in smoothing. Now, beginning of the quarter, there was a lot of confusion with the patients and the physicians about how that worked. But we're really starting to see the impact of that. here is when we know from what we saw, especially in December, what we've seen whenever patients' co-pays are lowered, that our fill rate goes up and our demand goes up. It's like a halo impact over the physician. So if I could wave my wand for last year and change one thing, it would have been, hey, could patients have had this low out-of-pocket they have this year? So we're really excited about about this year. So, you know, when we talk about tailwinds, I mean, again, the redesign, yeah, you take a couple point hit to your GTN, but I think what's key for us and why we might be a little different than some companies who are looking at this and just say, it's just a hit to our net revenue. It's not to ours. We weren't paying these big rebates. We weren't on preferred status anywhere. We, you know, we were suffering through high copays last year, And all of a sudden, these co-pays are going to go down, and yeah, we're going to have to pay a small rebate to Medicare, but we didn't have 50% rebates out there to start with. So where some companies are just taking the penalty of a mandatory rebate, yeah, we're taking a small penalty, but we're getting access to these patients where they have low co-pays. And when the doctors know patients have low co-pays, they write more freely. So we really think the redesign really plays out well for us. Obviously, the kidney launch. But again, as I said, well, we're satisfied with 2024. We're not jumping up and down because there's so much more we can get and so much more we're going to do. And I really think the tailwind set up this year for us to do just that.

Right. That's really helpful. I appreciate that. Maybe I just ask one quick financial follow-up. You know, John, I understand why you all don't want to give guidance at this stage, but I'm sure you pay attention to consensus estimates that have revenues up 130% next year. And when you look at sort of this increase in the gross to net that you're talking about, recognizing there's all these growth drivers, I don't know if you can give us any sort of guardrails around that. And I would say the same for for short of cash, right? I mean, you got 76 million, but how would you assess the burn rate relative to maybe some incremental commercial costs you might need to incur to penetrate these nephrologists? And I'll stop there. Thanks.

Sure. So on the second question, when you look at our burn rate, again, When our revenue goes up, that burn rate's going down. And, you know, our commercial costs will go up just marginally here. Even, you know, if you added 20 reps, you know, that adds, you know, a million and a half a quarter. That's it to your burn if you did that. So we really see, you know, that the – call it the burn – going down because OpEx stays fairly flat and our revenue is going to continue to increase every quarter. So, you know, we said, you know, based on our plan, you know, our cash is good to get us all the way there. As far as giving guidance, you know, it's hard to I think this year for everybody who's got one product in Medicare, it's going to be a little difficult because you don't really know what the impact of the redesign is. Again, you know you're going to get mandatory rebates, but you don't know when a patient goes from initial coverage into catastrophic. But again, for us, the fact that the patients are going to have co-pays $0 copays, $0 copays for all of their drugs, it just opens up a huge opportunity for us. So it's hard for us to give guidance when that GTN is kind of not known. But if you look at last year, we increased 167% over the year before. we've increased our sales force by 30%. We've added an indication in CKD, which is 700,000 more patients in doctors that are more accessible. And we have the tailwinds of the, of the, of the, the Medicare redesign. So when I look at where consensus is, I'm like, yeah, we're real positive on that just, just because of those, those tailwinds. And I know there's a bit of a headwind with the GTN increasing. But again, for us, it's different. We did not have preferred status. We were paying 50% for last year. So we didn't have access to those patients. We have access to those patients this year. And again, we've seen time and time again, when patients have low co-pays, two things happen. fill rates go up and docs write more drugs those two things happen you know um it's really gonna you're gonna see um really a dramatic a dramatic change in in our fill rate and then in in demand that's awesome thanks for the comments thanks glenn please stand by for our next question

Our next question comes from the line of Rowena Ruiz with Leary Partners. Your line is open.

Great afternoon, everyone. A couple from me. So could you talk a bit about your thoughts on whether you could possibly push for more favorable payer coverage for Ferocix now that you have two indications? And I was also curious, thinking about the Medicare redesign this year, How much education or awareness building would be needed to make sure physicians and patients are aware of some of the benefits that might come through for furosics?

Great, Rona. Thanks, John. Yeah, on the second part, so we've been out, you know, CMS's rule was October 15th of last year. They were supposed to notify the patients, CMS and their plans and their pharmacies of patients that were going to go into catastrophic care. I can tell you, I think I told you at the conference last week, from what we could see, that didn't happen or the patients were confused. So we've been out educating the doctors. Now, we obviously can't talk directly to patients, but we've been out educating doctors about the smoothing opportunity and the staff. And whenever a script comes in, our hub will notify all patients, every patient, here's the situation. You can enroll in smoothing. you know, based on where they are and, you know, how much of their out-of-pocket that they've already spent, that they can enroll in smoothing, but your cap, and if you do that, all of your drugs have $0 co-pay. So we really think that, yeah, it probably had a slower start than any of us in CMS included thought from education, mainly the patients, and some of these patients, as you know, are older, maybe think it's a scam or something. So we spend a lot of time, and it's not just us. I think every pharmaceutical company that's selling in Medicare is out there talking to doctors and staff and educating them. But the best education really takes place when they call in to 1-800-406-DIRECT and get educated by our hub on their options. Steve, do you want to talk maybe a little bit about the payers?

Yeah, we like our position with the payers this year, our coverage, particularly when the patients get too catastrophic and they have a $0 copay. There's a lot of pharma companies that have gotten themselves in trouble with offering big discounts that stack on top of the mandatory 10% and 20% that's required by Medicare this year. So there's people with 65 70 75 rebates um you know we're happy that we didn't do that they're in competitive categories and they need to because only one brand is going to do well the other brands will be you know you'll have to step through the main preferred brand to get to another brand we don't have to do that patients are on oral generic diuretics now and when that's not enough cirrhosis is approved is covered and uh co-pays You know, they're good for some patients now, other patients, it's going to take a while. But for the balance of the year, we really think copays are going to be really good for furosics. So we're not looking to change our position. It would cost an awful lot to do it. And we don't think we need to.

We know some brands that are, you know, at a 50 to 55%. base formulary discount, and they got the 20% added on top in Medicare, and they're sitting at a 75, 80% GTN. And what did they get for that additional 20%? They got nothing because they were already paying the 50 or 55% to have those low copays. We get the low copays this year. Now, again, they have to work through it, but we're seeing that happening. We get the low copays without having to spend that 50% rebate. So we, again, we took some pain last year, obviously with some of these high out of pockets for these patients, but we didn't give the shop away by giving those giant rebates. And I think we're in a better position for that.

Yes, that's super helpful. Last one for me, I think you mentioned earlier in the CKD patients, they might likely need five to six doses So I was curious if you're already seeing that in the early nephrologist prescriptions or any trends that you're noticing out of the gate.

There's been a few. That's true. And there's, there are about six. You know, sometimes someone will try for eight and sometimes someone will only do four if they have a quantity limit like a Medicaid or something. Yeah. But it's averaging around five to six.

Yeah. And those are, keep in mind, those are not CKD patients. Those are heart failure patients written by a nephrologist until, I mean, maybe we've had a couple kidneys. We've had a couple kidneys, okay, I'm sorry, that have come in in the last week that are averaging about the same.

Got it. Thanks for clarifying.

Thank you. Please stand by for our next question. Our next question comes from the line of Douglas South with HC Wainwright. Your line is open.

Hi, good afternoon. Can you guys hear me? Yes, we can hear you, Doug. Okay. So just curious, I mean, I think you touched on it a little bit, but as we head into the CKD launch, Obviously, you expanded the sales force, but I'm just curious from a sort of promotional standpoint or sort of frequency of interaction or detail, how will this compare to when you first launched the product? Will you be able to maintain the sort of higher rate of interaction that you've established in heart failure since the sales force expansion?

Yeah, the lifting is a little heavier. I mean, heavier at the beginning when you first open up an account with the in-services, getting them set up on the hub. But that, you know, over calls, that decreases. So we do think we can keep the frequency in heart failure we need as we launch it into nephrologists. So we're not concerned about that. You know, we think it just makes a more productive rapid. They're driving into Topeka, and they can call in the cardiologist, the heart failure clinic, and one or two naps. It just makes it way more efficient. So, yeah, we're not – when we look at kind of how the territories are built, we're not concerned about that.

And so does that suggest, though, given the need to do the in-services for CKD over the – you know, in 2Q –

that there might be uh slightly fewer touches in to some of the heart failure specialists the cardiology oh steve yeah i mean we're we're going to continue to call on the best and most productive cardiologists who've adopted for o6 we will have no problem covering those It's true, there's a little bit of a trade-off to add thousands of nephrologists. You're going to have to leave a few of the non-productive cardiologists to the side. But you heard earlier, the nephrologists are seeing patients who have heart failure and chronic kidney disease. They share the patient with some of the cardiologists that we might not go to anymore, but we're going to pick up that patient in the nephrology office And we might get more heart failure prescriptions because we're in so many more nephrology offices. And they tell us, you know, this is our domain. I mean, we're the experts on fluid and cardiorenal. And the kidney is what, you know, diuresis. So we think we're going to be fine. You know, we're going to cover a lot of heart failure patients who we would have tried to cover in a cardiology office. But we'll now pick them up. in a nephrology office in addition to the CKD patient.

And, Doug, I think if we see that or feel that, we react by, you know, at that point expanding the sales force. We still want to see what the lift looks like there, what the good territory looks like. before we commit to doing that. But that's clearly our plan is to add to the group. We originally had planned to put it all in one sales force. I think our thinking has started to evolve a little that maybe there'd be a separate nephrology sales force. But I think we need to get out there for a quarter or so and see if that makes sense.

Okay, great. That's really helpful. And I guess I'm just curious because I know there is a lot of overlap between the kidney and heart failure patients. Are you able to sort of distinguish between them as you sort of go in and promote? And what I mean by that is, do you worry that there's sort of some duplicative effort because you're promoting to the cardiologist and then you're also promoting to the same nephrologist and he's sort of already thinking about those patients?

I don't look at it as duplicative. When you can get increased region frequency on docs who are treating the same patient, we don't care which one of the docs starts furosics as long as somebody does. And it'll reinforce if the nephrologist starts the patient on furosics and the cardiologist is seeing, well, wow, yeah, maybe I need to use furosics on some of my other patients. There's an additive effect to it. It is not duplicative.

Okay, great. Thank you very much, guys. Thanks, sir.

Please stand by for our next question. Our next question comes from the line of Jason McCarthy with Maximum Group. Your line is open.

Hey, it's Nazan. Thanks for taking my question. Just a couple. The first one is on CKD. In terms of the reimbursement paradigm, could you kind of walk us through what the split is between commercial versus like

government tears isn't the same as heart failure or is there a different split there it's it's pretty close i mean it's not young people who progress to chronic kidney disease it's still something that comes with age and and disease progression and lifestyle and you know that they may be a little younger but they're still predominantly um Medicare age, 65 and older. There's a little bit more in Medicaid, I think, that impacts people with lower incomes sometimes progress and get sicker faster. But it's not wildly different.

Got it. Thank you.

And my last question, I guess on a high level, relative to everything that's sort of been happening in D.C. and some potential disruptions in government, have you seen or are you expecting any disruptions in terms of payment for ferocity? Have you seen any of that or expecting any of that from any of the government plans?

We haven't seen anything. We don't expect anything. I can speak with the CKD review and approval. They met all of their timelines and communicated with us all the way through. So we don't anticipate any, you know, any disruption there from CMS either. Nothing we've heard, nothing we've seen. Thanks for taking my questions. Great.

Thanks. Thank you. As a reminder, ladies and gentlemen, that's Star 11 to ask the questions. Please stand by for our next question. Our next question comes from the line of Chase Knickerbocker with Craig Hallam. Your line is open.

Good afternoon. Thanks for taking the questions. John, maybe just to follow up on the redesign. I mean, are you kind of already seeing an impact to fill rates and, you know, general demand? in the quarter as a result? Are you seeing lower copays? Or is it gonna take a couple quarters to educate the patients on smoothing or for them to hit that lower $2,000 out of pocket?

There's a couple things there. So we have seen recently more patients enrolled in smoothing and it depends on the plan. Some plans such as, I probably shouldn't list the plans, where you can see that the patient is smooth, Some plans, all you see is a $0 copay, and you have to assume that they either smooth or that they've already reached their cap. It was, I think we've talked about it, the first part of the quarter, you know, there was a lot of confusion for patients. They didn't understand what smoothing was. all of their deductibles and out-of-pockets reset at the $2,000 level. And again, there wasn't, from what we could see, and I think we've confirmed this with other companies, that there wasn't many patients in our world that had enrolled in the smoothing. Now, we have seen recently those co-pays go down. We're seeing zeros. And then we're seeing what I would call a stub payment where the patient pays $200. Why would they pay $200? Oh, they just hit their out-of-pocket cap or they sign up for smoothing in March and they have a $200 payment. So it, again, started out slower than we had anticipated. with the smoothing and the knowledge at the physician and the patient level. But again, what we've seen in the last few weeks here has been way more of these $0 copays and affordable copays than we saw in the first part of the quarter.

Got it. And maybe just on Q1, you know, last year, that transition from Q4 to Q1, you know, you still grew volumes about 15, you know, ish percent. You know, obviously you've got a lot of drivers in the model this year. I mean, any thoughts on kind of volume growth sequentially into Q1 and then on growth to net in Q1? I know 30 to 35 percent for the year. But do you get to the bottom end of that range in Q1 or is it more like 25 percent?

It's probably more like 25% in Q1. But I got to be careful on that because what's impossible for us to know right now is if a patient's in catastrophic or initial stage. So we're modeling it. We work with our consultants to model it. We think it's closer to that 25 than it is to 30. Now, again, We think all the patients will be in catastrophic by the end of the year, and it'll be, you know, closer to that 30, 35. So, you know, every company has their headwinds in Q1 around patient deductibles resetting, co-pays resetting, all of that. We still will grow in Q1 on units shipped. Hard to sit here today to understand exactly what that is. what that GTN discount is going to be. I mean, we model it all the time. We work with our consultants. But until a claim comes in for a patient, you don't know if that patient, where they are, how many doses they receive, which can change that.

But, you know, our best kind of thought right now based on our modeling is around 25%.

Got it. And then just a couple quick ones. Maybe in Q4, could you share the fill rate just to see how that's continuing to improve? And then just on gross margins in SG&A for 2025, is it the right way to think about SG&A to kind of annualize Q4 or maybe some directional help there? And then should we see some gross margin improvement in 2025 just on volume?

Yeah, so I think, honestly, I think annualizing Q4 right now is the way to do it. We'll let you know. You know, roughly, it'll stay that area. R&D might tick up a bit as we get through all the work on the auto-injector and getting that filed here mid-year.

I forgot the first one. In the fill rate. Steve, you want to talk about the fill rate?

Yeah, so...

Good news, better news. Fill rate overall for Q4 was just a tick higher than Q3, 53% and change. Not anything dramatically better, but in December, in December, this is what gives us confidence for this year. Copays were low, zero in many cases. We had a 58% fill rate in December. So we were We know what can happen when patients get into a good access situation. So that's why we have good feelings about this year because patients will get to that at some point at different times for different patients.

And as more patients roll in smoothing, again, their co-pays are $0. And again, over 58% in December, which we think is one of the reasons we're so confident this year that that fill rate goes up. Again, Q1, you're going to have You know, the typical deductible reset, patients haven't reached their out-of-pockets, and if they didn't, smooth. But we think, again, based on what we've seen, when patient co-pays are low, we know the fill rate goes up, and we know demand increases. And we're already seeing that demand increase in March.

Yeah, I think that's encouraging. And just quick on gross margin, any thoughts on 25 there?

Rachel, do you have any thoughts on the gross margin in 25 being different?

No, I don't. Yeah, I don't anticipate it to be. You know, we're going to see a big impact on the gross margin with the auto-injector once that's starting to get introduced.

But probably not too much here. Maybe a point or so with volume as we work with Wes. But, again, the big impact on margin is the auto-injector. Got it. Thanks, Ken.

Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. That concludes today's conference call. Thank you for your participation. You may now disconnect.