scPharmaceuticals Inc. (SCPH) is a pharmaceutical company committed to transforming cardiorenal healthcare through patient-focused innovations. With a strong focus on optimizing the delivery of infused therapies, the company is poised to advance patient care and reduce healthcare costs.
Business Overview and History scPharmaceuticals LLC was formed as a limited liability company under the laws of the State of Delaware on February 19, 2013. On March 24, 2014, scPharmaceuticals LLC was converted to a Delaware corporation and changed its name to scPharmaceuticals Inc. The company was founded as 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 initial strategy was designed to enable the subcutaneous administration of therapies that have previously been limited to intravenous (IV) delivery. By moving delivery away from the high-cost healthcare settings typically required for IV administration, the company believed its technology had the potential to reduce overall healthcare costs and advance the quality and convenience of care.
In November 2017, scPharmaceuticals completed its initial public offering, raising $56.7 million in net proceeds. This provided the capital to advance the company's pipeline, including its lead product candidate FUROSCIX. Over the next several years, scPharmaceuticals focused on the development of FUROSCIX, including conducting clinical trials to establish its safety and efficacy.
A key challenge for scPharmaceuticals was obtaining regulatory approval for FUROSCIX. After years of development and clinical testing, the company finally received FDA approval for FUROSCIX 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. This was a major milestone for the company, as FUROSCIX became the first and only FDA-approved subcutaneous loop diuretic that delivers IV-equivalent diuresis at home.
In 2022, scPharmaceuticals achieved a significant milestone with the FDA approval of its lead product, FUROSCIX, for the treatment of congestion due to fluid overload in adults with New York Heart Association (NYHA) Class II-III chronic heart failure. FUROSCIX consists of the company's proprietary formulation of furosemide delivered via West Pharmaceutical Services' on-body infusor, which can administer an 80 mg dose over 5 hours. The product's approval was based on its ability to demonstrate IV-equivalent diuresis in clinical trials.
Building on this initial success, in 2024 scPharmaceuticals secured FDA approval to expand the FUROSCIX indication to include NYHA Class IV heart failure patients. This expansion allows the company to address the needs of a larger patient population, as Class IV heart failure patients are responsible for over 30% of heart failure hospitalizations despite comprising only approximately 10% of the overall chronic heart failure market.
The company has also made progress in developing an 80 mg/1 mL autoinjector for FUROSCIX, which could potentially reduce manufacturing costs and offer additional benefits compared to the current on-body infusor. In August 2024, scPharmaceuticals announced positive top-line results from a pharmacokinetic (PK) study of the autoinjector, demonstrating bioavailability of 107.3% and similar urine output and urinary sodium and potassium excretion compared to IV furosemide. The company is targeting submission of a supplemental new drug application (sNDA) for the autoinjector by the end of 2024.
In addition to the heart failure indication, scPharmaceuticals has made progress in expanding the potential use of FUROSCIX to the treatment of edema due to fluid overload in adult patients with chronic kidney disease (CKD). In May 2024, the company submitted an sNDA to the FDA for this expanded indication, and the application was accepted for filing in July 2024. The anticipated Prescription Drug User Fee Act (PDUFA) goal date for the CKD sNDA is March 6, 2025.
Financials and Liquidity
Financials For the fiscal year ended December 31, 2023, scPharmaceuticals reported net revenue of $13.59 million and a net loss of $54.81 million. The company's annual operating cash flow was -$59.24 million and free cash flow was -$59.28 million.
In the third quarter of 2024, scPharmaceuticals generated net revenue of $10.03 million, reflecting a 164% increase from the $3.80 million reported in the third quarter of 2023. However, the company's net loss for the quarter widened to $35.10 million, compared to $15.63 million in the prior-year period. This increase in net loss was primarily due to one-time charges related to the extinguishment of debt and the accounting for new financial instruments entered into in August 2024. The company's operating cash flow for the quarter was -$17.42 million, and free cash flow was -$17.43 million.
The increase in revenue was due to increased demand for FUROSCIX further into its commercial launch. Cost of product revenues increased to $3.31 million in Q3 2024 from $1.08 million in Q3 2023, also due to the higher sales volume.
Liquidity As of September 30, 2024, scPharmaceuticals had $91.50 million in cash and cash equivalents, a significant improvement from the $76.00 million in cash, cash equivalents, and short-term investments as of December 31, 2023. This enhanced liquidity position is the result of a transformative financing transaction completed in August 2024, which included a $75 million term loan facility and a $50 million revenue participation agreement, providing the company with the resources to fund operations through expected profitability.
The company's debt-to-equity ratio as of September 30, 2024, was 1.67. The current ratio stood at 8.08, while the quick ratio was 6.89, indicating a strong short-term liquidity position.
Product Segment scPharmaceuticals operates in a single product segment - Pharmaceuticals. The company's sole approved product is FUROSCIX, a novel formulation of furosemide delivered via an on-body infusor device. FUROSCIX was initially 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 III-IV chronic heart failure. In August 2024, the company received approval to expand the FUROSCIX indication to include treatment of edema in patients with chronic kidney disease (CKD).
FUROSCIX is the first and only FDA-approved subcutaneous loop diuretic that delivers IV-equivalent diuresis at home. In clinical studies, FUROSCIX demonstrated 99.6% bioavailability and 8-hour urine output of 2.7L, similar to IV furosemide. The company estimates the total addressable market opportunity for FUROSCIX in the U.S. is $12.5 billion across chronic heart failure and CKD.
Currently, FUROSCIX is only sold in the United States.
Growth Initiatives and Outlook scPharmaceuticals is pursuing several key growth initiatives to drive the expansion of its FUROSCIX franchise:
1. Expanding the FUROSCIX indication to include NYHA Class IV heart failure patients: The company's successful sNDA for this indication allows it to address a larger patient population with more severe symptoms, who are responsible for a disproportionate share of heart failure hospitalizations.
2. Developing the FUROSCIX autoinjector: The positive PK data announced in 2024 suggest that the autoinjector could potentially offer manufacturing cost savings and additional benefits compared to the current on-body infusor. The company is targeting sNDA submission for the autoinjector by the end of 2024.
3. Pursuing the CKD indication for FUROSCIX: The sNDA submitted in 2024 for the treatment of edema due to fluid overload in adult CKD patients represents another significant growth opportunity for the company, with a PDUFA goal date of March 6, 2025.
4. Expanding the sales force and commercial infrastructure: scPharmaceuticals has been steadily increasing its sales force and sales territories, which, combined with the expanded indications, is expected to drive further growth in FUROSCIX prescription volumes and net revenue.
5. Leveraging the Medicare Part D redesign: The company believes it is uniquely positioned to benefit from the upcoming changes to the Medicare Part D program, which are expected to reduce patient out-of-pocket costs for FUROSCIX and potentially lead to increased prescriptions and improved fill rates.
Guidance and Future Outlook scPharmaceuticals has provided guidance on several key metrics for FUROSCIX:
- For the balance of 2024, the company anticipates the FUROSCIX Gross-to-Net (GTN) discount to stay in the 10-15% range, consistent with previous guidance. In Q3 2024, the FUROSCIX GTN discount was 15.7%, slightly above the high end of the guided range.
- Looking ahead to 2025, scPharmaceuticals expects the FUROSCIX GTN discount to increase up to 35% by the end of the year, driven by the Medicare Part D redesign. However, the company believes the impact of the higher GTN discount will be more than offset by lower patient co-pays resulting from the Medicare Part D changes.
- scPharmaceuticals is projecting a 65% fill rate for FUROSCIX in 2025, a significant increase from the current fill rate of around 54-55%. This higher fill rate is expected to be driven by the Medicare Part D redesign, which will reduce patient out-of-pocket costs and improve affordability.
With these growth initiatives in place and positive expectations for the impact of the Medicare Part D redesign, scPharmaceuticals is poised to continue its momentum in the cardiorenal healthcare market, transforming the delivery of diuretic therapy and improving patient outcomes.
Risks and Challenges While scPharmaceuticals has made significant progress, the company faces several risks and challenges that investors should consider:
1. Regulatory approval and commercialization risks: The company's future growth is heavily dependent on the successful regulatory approval and commercialization of its product candidates, including the FUROSCIX autoinjector and the CKD indication. Delays or setbacks in these processes could impact the company's financial performance.
2. Competitive landscape: Although FUROSCIX currently has no direct competitors, the company may face challenges from alternative therapies or future competitors that could emerge in the cardiorenal treatment market.
3. Reimbursement and pricing pressures: Securing favorable reimbursement and maintaining pricing for FUROSCIX will be critical to the product's commercial success. Changes in the healthcare landscape or payer policies could adversely affect the company's financial results.
4. Manufacturing and supply chain risks: Disruptions in the company's manufacturing or supply chain, including those related to the COVID-19 pandemic or other global events, could impact the availability and distribution of FUROSCIX.
5. Reliance on key personnel: The loss of key members of scPharmaceuticals' management team or its inability to attract and retain talented employees could hinder the company's ability to execute its growth strategies.
Despite these risks, scPharmaceuticals' focus on patient-centric innovations, its growing commercial footprint, and its strong financial position position the company well to navigate the challenges and capitalize on the significant opportunities in the cardiorenal healthcare market.
Conclusion scPharmaceuticals is a pharmaceutical company that is revolutionizing the delivery of cardiorenal therapies through its patient-centered innovations. With the approval and ongoing commercialization of FUROSCIX, the company has established a strong foundation for growth. Its pipeline of product enhancements, including the autoinjector and the CKD indication, as well as its strategic financing, provide the resources and momentum to continue transforming the treatment landscape for heart failure and kidney disease patients. As scPharmaceuticals navigates the regulatory and commercial challenges, its commitment to advancing patient care and reducing healthcare costs positions it as a compelling investment opportunity in the evolving cardiorenal healthcare space.