scPharmaceuticals Inc. (NASDAQ:SCPH): Navigating Headwinds, Advancing Key Initiatives

Published on September 24, 2024 | Ticker: SCPH

Business Overview

scPharmaceuticals Inc. (NASDAQ:SCPH) is a pharmaceutical company focused on developing and commercializing products that have the potential to optimize the delivery of infused therapies, advance patient care, and reduce healthcare costs. The company's strategy is designed to enable the subcutaneous administration of therapies that have previously been limited to intravenous (IV) delivery.

scPharmaceuticals' approved product, FUROSCIX, consists of the company's novel formulation of furosemide delivered via West Pharmaceutical Services, Inc.'s on-body infusor, which delivers an 80 mg/10 mL dose over 5 hours. FUROSCIX was approved by the FDA in October 2022 for the treatment of congestion due to fluid overload in adults with New York Heart Association (NYHA) Class II/III chronic heart failure. FUROSCIX is the first and only FDA-approved subcutaneous loop diuretic that delivers IV-equivalent diuresis at home.

The company commenced the commercial launch of FUROSCIX in the first quarter of 2023. In the third quarter of 2023, scPharmaceuticals received positive feedback from the FDA on key long-term growth initiatives, including the potential expansion of the FUROSCIX indication to include NYHA Class IV heart failure patients and the development of an 80mg/1mL auto-injector. Additionally, the company received feedback on the potential expansion of the FUROSCIX indication to include treatment of edema due to fluid overload in patients with chronic kidney disease (CKD).

Financial Performance

For the full year 2023, scPharmaceuticals reported annual revenue of $13,593,000 and a net loss of $54,810,000. The company's annual operating cash flow was -$59,244,000, and its annual free cash flow was -$59,284,000.

In the first quarter of 2024, the company reported net revenue of $6,102,000, compared to $2,063,000 in the first quarter of 2023. The increase in revenue was due to a full quarter of sales in the first quarter of 2024 and an increase in demand for FUROSCIX further into the commercial launch, partially offset by a negative impact of approximately 10% on doses filled during the quarter due to the Change Healthcare cyberattack.

Cost of product revenues was $1,785,000 in the first quarter of 2024, compared to $605,000 in the first quarter of 2023, reflecting the increase in sales volume. Research and development expenses were $2,726,000 in the first quarter of 2024, up from $2,116,000 in the first quarter of 2023, primarily due to an increase in device development costs, employee-related costs, and clinical study costs. Selling, general, and administrative expenses were $17,447,000 in the first quarter of 2024, compared to $10,896,000 in the first quarter of 2023, mainly driven by an increase in employee-related costs, commercial costs, and patient support.

The company reported a net loss of $14,108,000 in the first quarter of 2024, compared to a net loss of $11,210,000 in the first quarter of 2023. As of March 31, 2024, scPharmaceuticals had $58,447,000 in cash and cash equivalents.

Operational Highlights

During the first quarter of 2024, scPharmaceuticals saw a continuation of positive trends in the commercialization of FUROSCIX. The company reported 17,736 doses written and 8,074 doses filled during the quarter, despite the impact of the Change Healthcare cyberattack and seasonal headwinds related to patient deductibles resetting.

The company has seen strong growth in unique prescribers, with 2,184 unique prescribers as of March 31, 2024, up 29% from 1,696 unique prescribers as of December 31, 2023. More than half of these prescribers have written multiple prescriptions, indicating increasing comfort with FUROSCIX among healthcare providers.

scPharmaceuticals has also made progress in expanding payer coverage for FUROSCIX. As of March 31, 2024, 70% of heart failure patients have access to FUROSCIX through fixed-tier copays of $100 or less, moving the company closer to the goal of 75% or more over time. The company continues to have productive discussions with commercial, Medicare Part D, and Medicaid payers to further improve access and affordability for patients.

Key Growth Initiatives

scPharmaceuticals is advancing several key long-term growth initiatives that the company believes will be critical to its future success:

1. Expansion of FUROSCIX indication to NYHA Class IV heart failure patients: The company filed for this indication expansion in early October 2023 and has been assigned a PDUFA date for August 2024. If approved, this would represent a meaningful expansion of the market opportunity, as NYHA Class IV patients are the most severe heart failure patients.

2. Development of an 80mg/1mL auto-injector: scPharmaceuticals recently initiated a pivotal pharmacokinetic study for this auto-injector, which the company believes could offer reduced manufacturing costs and environmental advantages compared to the current on-body infusor, as well as provide treating providers and their patients more treatment flexibility.

3. Expansion of FUROSCIX indication to include treatment of edema due to fluid overload in patients with chronic kidney disease (CKD): The company submitted a supplemental new drug application (sNDA) in early May 2024 seeking this indication expansion, which the FDA has confirmed would not require additional clinical studies, provided scPharmaceuticals can demonstrate an adequate pharmacokinetic and pharmacodynamic bridge to the listed drug, furosemide injection.

Liquidity and Capital Resources

As of March 31, 2024, scPharmaceuticals had $58,447,000 in cash and cash equivalents. The company has funded its operations to date primarily through the sale of common stock, preferred stock, and the incurrence of debt.

Based on the company's current operating plan, there is substantial doubt about scPharmaceuticals' ability to continue as a going concern for a period of one year from the date of issuance of the condensed consolidated financial statements. The company plans to continue to fund its operations through cash and cash equivalents on hand, as well as through future equity offerings, debt financings, and other third-party funding.

Risks and Challenges

scPharmaceuticals faces several risks and challenges that could impact its future performance, including:

- Dependence on the success of FUROSCIX and the company's ability to expand its indications - Potential delays or setbacks in the commercialization of FUROSCIX - Ability to manufacture FUROSCIX in the volumes required on a timely basis - Ability to expand sales and marketing capabilities or continue to enter into agreements with third parties to market and sell FUROSCIX - Limited operating history and no history of commercializing pharmaceutical products - Significant operating losses and the need to raise additional capital to fund operations

Outlook

Despite the headwinds faced in the first quarter of 2024, scPharmaceuticals remains optimistic about the long-term growth prospects for FUROSCIX and the company's pipeline of initiatives. The company is focused on continuing to drive adoption of FUROSCIX among healthcare providers, expanding payer coverage, and advancing its key growth initiatives, including the potential expansion of FUROSCIX's indications and the development of an auto-injector formulation.

With a strong cash position, a growing prescriber base, and a pipeline of promising initiatives, scPharmaceuticals is well-positioned to navigate the current challenges and capitalize on the significant market opportunity for FUROSCIX and its future product candidates.

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