scPharmaceuticals Inc.

Good afternoon and welcome to SC Pharmaceutical's first quarter 2025 earnings conference call. At this time, all participants are in a listen only mode. Following management's prepared remarks, we will hold a question and answer session. To ask a question at that time, please press star followed by one one on your touch tone phone. As a reminder, today's conference call is being recorded. I would now like to turn the conference over to William Ambassador Relations to come forward looking statements. William, 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 Pharmaceutical's expected future financial results, management's expectations and plans for the business, the ongoing commercialization and marketing of furosics, the potential label expansion and other regulatory approvals of furosics, decrease of quarterly net cash outflows for the balance of 2025, the rise of furosics dispenses as out of pocket expenses decrease and estimated reduction in COGS. 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. 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 10K, quarterly reports on form 10Q 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 disclaim any intent or obligation to update these forward looking statements except as required by law. With that, I will now turn the call over to John Tucker, Chief Executive Officer of SC Pharmaceuticals. John, please go ahead.

Thank you, William. And thank you to all for attending this afternoon's conference call. Today, we will provide an overview of SC Pharmaceuticals core business and operational highlights for the first quarter of 2025. I will then hand the call to Steve Parsons, Senior Vice President of Commercial for a 406 commercial update. Our Chief Financial Officer, Rachel Nolks, will then provide a financial update for Q1 before we open the line for questions. We truly believe, particularly in this environment, that SC Pharmaceuticals is better positioned than at any point in our history. For O6 is successfully penetrating a market where we had broad synergies across the healthcare ecosystem by keeping patients out of the hospital and at home, which is far greater from a quality of life and cost perspective for both the patient and the healthcare system. We are also expanding the market into chronic kidney disease and making progress on our auto injector, which we think will continue to transform the company, improve and expand the patient experience, and add materially to our O6 sales. In the first quarter of 2025, SC Pharmaceuticals generated 11.8 million in net revenue and filled approximately 13,800 O6 doses. As we have discussed, our net revenue generated in the first quarter is impacted by the typical seasonality factors, including deductible and Medicare beneficiaries -of-pocket cap resets. Despite these headwinds, we did see an increase in doses filled quarter over quarter. On our Q4 2024 earnings call two months ago, we highlighted the increasing number of Part D beneficiaries who hit their -of-pocket caps or enrolled in Medicare's copay smoothing program. Particularly in March of 2025, relative to January and February of 2025, we have seen an acceleration of this trend play out over the course of April and early May as more Medicare patients reach their $2,000 cap or enrolled in the copay smoothing program. Historically, we have observed increased prescribing of and improved fill rates for phorosis when patients have lower -of-pocket copays. This is what we have seen so far in Q2 and see it continuing to accelerate through the balance of the year. The gross to net discount for phorosis in the first quarter of 2025 was approximately 23%. Over the balance of 2025, we anticipate a blended GTN of approximately 30%. The increase in GTN is primarily attributable to the implementation of the Medicare Part D redesign, including the mandatory manufacturer rebates under the Inflation Reduction Act. We view the Medicare Part D redesign as a net tailwind in 2025, given the anticipated increase of phorosis fill rates and prescribing for Part D enrollees who are through to catastrophic coverage and have a $0 copay on any Part D prescription. In April 2025, we formally launched Phorosis in the Chronic Kidney Disease and we're pleased to announce that we began filling nephrology prescriptions in April. We believe prescribing by a nephrologist will be a meaningful growth driver for phorosis for a few core reasons. One, there are an estimated 700,000 additional patients that can be prescribed phorosis for their fluid management. Two, in the cardiorenal space, nephrologists are the primary diuretic managers for patients with CKD and heart failure. Three, the concentration of targets and their focus on fluid management. Lastly, we're able to provide a positive update on the autoinjector. Our additional shelf life testing of the high silicone syringe is progressing as expected and we are targeting filing the SNDA next quarter. We continue to believe that the autoinjector will be meaningfully important to the long-term phorosis growth trajectory with an estimated 70 to 75% reduction in COGS compared to the current on-body infuser and an increase in our penetration rates. Overall, we feel very positive about the long-term growth trajectory of phorosis over the course of 2025. Between the CKD indication expansion and the favorable COPE paradigm with Part D patients progressing into catastrophic coverage, we believe phorosis is well positioned to treat heart failure and kidney disease patients when they're experiencing fluid overload. With that, I will pass the line to Steve Parsons, SC Pharmaceuticals Senior Vice President of Commercial.

Steve? Thank you, John. Since we launched Phorosix in early 2023, over 4,000 unique cardiologists and nephrologists have prescribed Phorosix to heart failure and now kidney disease patients. We expect the number of unique prescribers to increase steadily as we further penetrate cardiology and expand into the nephrology market. With our Salesforce expansion in the fourth quarter of 2024, the larger team and smaller territory size has resulted in greater reach and frequency to target and non-target prescribers and has increased demand for Phorosix. Our improved target coverage capabilities will be especially important as we launch Phorosix in chronic kidney disease in quarter two and add nephrology targets and continue our penetration further into heart failure. As John already mentioned, we are very positive about the balance of 2025. Our IDN distribution strategy is paying dividends and as we open new accounts every month and see reorders from some of the top systems in the country, targeting IDNs is a great compliment to our overall promotional efforts. Medicare patient -of-pocket costs move to $0 when patients reach the annual maximum threshold of $2,000. We see more and more heart failure patients and chronic kidney disease patients who are meeting this threshold as the year progresses. As a result, Phorosix dispenses will continue to rise as -of-pocket expenses decrease. I will now hand the call over to our Chief Financial Officer, Rachel Notes. Rachel.

Thank you, Steve. Product revenues were $11.8 million for the first quarter of 2025 compared to $6.1 million for the first quarter of 2024. Costs of product revenues were $3.5 million for the first quarter of 2025 compared to $1.8 million for the first quarter of 2024. The increase in both product revenues and cost of product revenues for the quarter ended March 31st, 2025, was due to an increase in demand for Phorosix further into the commercial launch and related manufacturing costs. SE Pharmaceuticals ended the first quarter of 2025 with $57.5 million in cash and cash equivalents compared to $75.7 million in cash and cash equivalents as of December 31st, 2024. Net cash outflows in the first quarter included certain incentive compensation payouts and an increase in accounts receivable from our customers. We expect quarterly net outflows to decrease for the balance of 2025 as revenues increase and other cash outflows normalize. We continue to monitor our exposure to tariffs as the market landscape changes. We currently do not expect a material impact on our supply chain costs and believe that our exposure would be mainly limited to the cost of the drug component of Phorosix. I will now pass the call back to John for concluding remarks.

In the first quarter of 2025, SE Pharmaceuticals delivered solid progress across our commercial, operational, and financial fronts and believe we are in the early stages of a Phorosix growth acceleration. We remain confident in our ability to scale effectively and deliver value for patients and shareholders alike. We will now open the call for questions. Operator?

Thank you. Ladies and gentlemen, as a reminder to ask the question, please press star one one on your telephone then wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Rowanna Ruiz with Leroy Partners. Your line is open. Hi,

afternoon everyone. A couple from me. So I wanted to start with the launch in CKD as of April. What signs of growing physician traction are you seeing in the field so far? And can you talk a bit about the features or characteristics of the newer patients that are getting Phorosix that also have CKD?

Hey Rowanna, it's John. I'll turn that over to Steve to answer the question, Steve.

Yeah, it's been very positive. We're getting every single day I see CKD patients prescriptions, new accounts, nephrologists, who are also using it in heart failure. So we're seeing that as well. It's meeting our early expectations. We expect good things from this specialty and so far they're delivering.

So I think Rowanna, we're seeing, what we see is nephrology. We don't see it indicated specifically for CKD or for heart failure. So we are seeing every day nephrology scripts and that's accelerated.

Got it, that helps. And I wanted to follow up and ask about the increase in sales to IDNs as well in the quarter. Do you think that could continue to subsequent quarters in 2025 and any other color you can give on the cadence of orders and things like that?

So this is John and Steve, I'll pass it to you in a second. Yeah, so we expect Q2 to be much bigger than Q1 in IDNs. It's a key component of our strategy. For a number of reasons, doctors can order off their EMR, goes right through that specialty pharmacy that's associated with the IDN. They can use it to facilitate a discharge. So we have a big emphasis there and we're continuing to see growth there. Someone said, did some of that cannibalize your other business? We're seeing both grow, especially in this quarter over last quarter, significant growth, the highest we've seen yet quarter over quarter or almost halfway through May. And it's being driven primarily outside of the IDNs but also IDN growth as well.

Got it, sounds good.

Thanks, Ron.

Please stand by for our next question. Our next question comes from the line of Stacey Kuhl with TV Cohen. Your line is open.

Hey, good afternoon. Congrats on the quarter and thanks so much for taking your questions. So first question is a bit of a follow-up. So we understand it's still really early days but maybe can you talk about the CK launch and how it's progressing in comparison? So relative to the early heart failure launch for Perosix, so maybe talk about some initial signals that gives you confidence in the launch. So that's the first question. Then the second question is on reimbursement. Can you talk about access for both heart failure and maybe talk about the early experience for CKD patients? What has been the feedback there? And then last question, a little bit of a kind of detailed question. What percent of your Medicare for Perosix patients have signed up for the smoothing? Are you able to kind of help raise the profile of this option? Is there high awareness now? Just help us understand kind of the cadence of signups. Thank you so much.

Thanks, Stacey. Maybe I'll handle the last one. So

the CKD launch and the adoption is way faster than it was in heart failure. It's not even close. When we call on people, we're getting prescriptions the same day that we call on them. And multiple prescriptions are happening from these offices. I feel like there must've been some pent up demand. They were waiting for us to come to them. They give us comments that, why didn't you call on us for heart failure too? We have heart failure patients. So it's been very good. When we get in and talk to them, they are responding. They can think of patients. And so the comparison, it's much faster.

And then as far as the smoothing question, Stacey, so it's hard for us to look at the data we see and know if they've smoothed or not. With one of the four major PBMs, we do see it. The other three, we are blinded to it, but we are able to look at copays. So we are seeing, especially in April, May, and even in March, at the end of March, more patients with $0 copays in Medicare, which tells us one of two things. They've either gone through their $2,000 out of pocket, they've already hit that, or they've elected for smoothing. That has accelerated our fill rate. To give you an example, in Q1 was around 46%. In April, it was 55%. That is due to either smoothing, more patients in smoothing, or probably more patients getting through their cap. There are CKD patients, there are heart failure patients. I don't think we have enough data on nephrology right now to answer your second question, to say they've smoothed more or smoothed less. Again, we only see about 25% of the plan smoothing, but we do see similar low copays, again, in the last two months, of CKD patients and heart failure patients. And

I think you asked about reimbursement. Reimbursement is the same as it is for heart failure. The prescriptions are mostly going through with the simple prior off. We're not noticing any additional rejections or need for appeal. The copays are about the same. So not noticing anything different about a patient with an indication of CKD versus heart failure when it comes to reimbursement.

Incredibly helpful, thank you.

Thanks.

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

Hi, good afternoon. Thanks for asking questions. I'm just curious, with the Part D redesign, we heard from one company that sort of suggested that they have visibility when patients get used up their out of pocket expense and moving into catastrophic, or sort of the point where they get full coverage. Do you have that? And so are you able to therefore then direct patients to go ahead and get script filled?

So we have it. Again, we look at the copays that come in. Our hub will talk to the patients and we'll be able to alert them what their copay is. We also receive CMS claims for patients that are in catastrophic because they're listed in catastrophic because again, the rebate is different. But real time at the doctor's office, unless they can get the hub on the phone immediately and run that benefit verification, we wouldn't know that. But again, what we do at the hub is, as soon as we know the patient copay, we'll alert the patient. If it's a large copay, we'll automatically offer them smoothing that we can enroll them in smoothing and have to go through the plan. But we'll give them the form from the plan, give them the phone number for the plan. We're also out promoting the smoothing to doctors. I think doctors were, as I talked about in March, a little confused at the beginning. I think they understand it now and they're more active on their patients where they feel they're probably gonna have a high copay and actually encouraging them to enroll. We have the forms at the doctor's office. So we're seeing more and more smoothing patients every day. Again, the data we see, we see the zero dollars. We have the hub that speaks to the patient and understands if the patient has gotten through their out of pocket.

Okay, that's helpful. And then just in terms of the CKNE launch, I'm just curious, are you largely now seeing patients who sort of have the comorbidity in kidney disease and heart failure or are you seeing evidence of patients who only have CKD getting prescriptions for O6? Thank you.

Thanks, Doc, Steve.

Yeah, so we do definitely see patients with CKD only as their indication. That's clear. But there's also a lot of patients who have CKD and heart failure coming from nephrology. That we weren't getting before because we weren't calling on nephrology. So it's a double bonus for us because now we're calling on them for chronic kidney disease and they have a lot of heart failure patients. But there are CKD only indicated patients that are getting cirrhosis.

Okay, great, that's very helpful. Thanks, Doc.

Thank you. Ladies and gentlemen, that's star 11 to ask the question. Please stand by for our next question. Our next question comes from the line of Chase Nickerbacher with Craig Hallam. Your line is open.

Good afternoon. Thanks for taking the questions. Just first, quick housekeeping. Can you share the doses per script in Q1?

7.4 was the average doses per script, so it was up again from Q4. I look at it monthly. I don't see it going much more than that. It's kind of stabilized around seven, but that's what it was in Q1 here in Q2. It's not going to eight. It's staying right around there. So we might have hit some kind of normal dose number now around that, around seven to 7.4.

What was it in Q4, Steve? And then just any linkling on...

Sorry, 6.8, I think, is what it was in Q4. Did you say anything?

Any initial linkling on what we're gonna see from CKD patients as far as doses per script?

It's been similar. It's been similar so far,

Chase. Got it. And then just maybe following up on an earlier question. I mean, obviously, it's good to see the improvement in fill rate in April. Can you maybe just kind of share some more specifics if you can just on kind of the percentage of patients where you were seeing either smoothing or already at their -of-pocket maximums in Q4 versus what you're seeing in April and kind of if that's kind of the big piece of that driver in April as far as that improvement.

You mean from Q1 to April?

I do, sorry.

Yeah, yeah.

Yeah, I mean, there is, it's a noticeable difference of the number of zero dollar co-pays here in Q2. April and May is continuing. We had some trouble in January and February with high co-pays. I mean, there's no secret about that. And it is night and day. So, we know, we just know from that that people are getting to either sign up for smoothing or they've reached their -of-pocket cap. And that's only gonna increase. I mean, nobody's going backwards from zero dollars. You know, those patients can get for projects again and again this year for zero dollars.

Yeah, I mean, so, you know, we've seen an improvement in the fill rate. Again, I said 55% in April, but we also, and I think we've spoken about this before, the difference you see in prescriptions written when doctors can write them. I mean, we're, you know, we talked about the acceleration from Q1 to Q2. What we're seeing, you know, halfway through the quarter is dramatically higher increase in doses shipped than we've seen quarter over quarter. Again, we're only halfway through the quarter than we've seen before. But it's driven by two things, obviously driven by that much higher fill rate, but also driven by the number of scripts that are actually being written. And again, I think the scripts being written follows that fill rate up. If docs have confidence that patients can get it, and docs now know about the smoothing. They know we're out there educating. They know about the lower patient -of-pocket. And so I think they have more confidence that these scripts will get filled and their patients will get therapy. So again, it's a marked difference between, really we started seeing some of this in March. March was a decent month for us, but it's accelerated in April. The jump in doses filled from March to April was the biggest one month we've had and continue to see that growth in May.

Got it. On that front, last quarter you gave us some, just kind of overview thoughts on kind of where the street was. And you performed in line, do a little bit better than that in Q1. If we look at street estimates still around 74, 75 million, it implies kind of, call it mid 30% kind of growth sequentially on a revenue basis. Can you just kind of speak to your thoughts there and sounds like you're seeing an inflection in volume in the first couple months, but maybe just kind of speak to current trends.

Yeah, so again, we have seen that inflection again started, chase really in March and then second half of March and then into April and it's carried through to May. So I think where we feel comfortable about the full year, we feel comfortable about this quarter Q2. We knew the headwinds we were gonna face in Q1. I mean, we know we have a GTN headwind, we saw that the GTN headwind in Q1, which knocked down our revenue versus Q4. We have a little bit more here, but we think we're gonna weigh more than growth through that. Are we gonna have an extra three or four points in GTN hit this quarter? Probably it starts stabilizing after that, but the growth rate we're seeing, and again, it's halfway through the quarter, but it's accelerated through April into May and from March into April. So we're bullish on this quarter, we're bullish on this year. Obviously these trends have to continue, but if you think about copays, they can only go down from here. They cannot go up. They're capped at 2,000. These are heart failure patients, chronic kidney disease patients that are on a lot of different drugs. So we're gonna continue to enroll them in smoothing when that makes sense, but for a lot of these patients, they're gonna be blowing through that cap. And so we really feel bullish about the balance of the year.

Appreciate those thoughts, Sean. Thanks, guys.

Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. That concludes the SC Pharmaceutical First Quarter, 2025 Earnings Conference Call. I would now like to turn the call back over to the company for any closing remarks.

Well, thank you once again for joining us. We look forward to keeping you updated on our progress as we believe we are well positioned for success in 2025. Thank you.

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.