scPharmaceuticals - Q2 2023

Transcript

Operator (participant)

Good day, and welcome to the scPharmaceuticals second quarter 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a special conference specialist by pressing the Star key followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press Star, then 1 on the touchtone phone. To withdraw your question, please press Star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to PJ Kelleher of LifeSci Advisors. Please go ahead.

PJ Kelleher (Managing Director)

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 scPharmaceuticals, expected future financial results, and management's expectations and plans for the business and FUROSCIX. 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 scPharmaceuticals' business, financial condition, and other operating results.

These include, but are not limited to, the risk factors and other qualifications contained in scPharmaceuticals' 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 scPharmaceuticals 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 scPharmaceuticals. John?

John Tucker (CEO)

Thank you, P.J. Kelleher, and thanks to everyone listening to this afternoon's call and webcast. This afternoon, I am pleased to provide an operational update before turning the call over to Steve Parsons, our Senior Vice President of Commercial, for a more detailed update on the FUROSCIX launch, and then Rachael Nokes, our Chief Financial Officer, for a review of our financials. We will then open the call for your questions. The second quarter of 2023 represents our first full quarter of FUROSCIX commercial availability as we launched the product in late February. While it is still early, the key indicators of underlying demand, including unique prescribers, total prescriptions written, and in-services completed by our field sales force, continue to reflect a positive trend.

FUROSCIX is being well-received in the market, treating physicians are quickly gaining comfort prescribing it to their heart failure patients who can benefit from it, thereby avoiding hospital admissions and readmissions that are costly to the system and inconvenient to patients. For the second quarter, we reported net revenue of $1.6 million. This, despite the inventory normalizing at our specialty pharmacy partners from 17 weeks at the start of Q2 to approximately 5 weeks at the end of Q2. July was our best sales month launched to date, our 2 main specialty pharmacy partners have already placed orders early in Q3. In terms of our gross and net discount from launch through the end of Q2, it is running at approximately 23%, which is well below the 35% long-term guidance that we guided to previously.

We do anticipate that GTM will continue to increase over time as contracting with payers evolves. Steve will provide a detailed commercial update shortly, but in response to these positive demand trends, we continue to evaluate our field sales force and territories to ensure that FUROSCIX is broadly accessible to heart failure patients and their treating physicians. To that end, we added an additional 10 sales territories towards the end of the second quarter. This brings our current field sales force to 54 territories, and we anticipate seeing the positive impact of these additions beginning this quarter. In addition, based on the interest we have seen for FUROSCIX, we have identified the next tranche of territories, and we are actively recruiting to fill these positions by the end of this quarter. We anticipate seeing contributions from these latest additions in Q4. Shifting now to payers.

We continue to have protective discussions with commercial, Medicare Part D, and Medicaid payers in a continuing effort to make FUROSCIX broadly available to patients at the most favorable terms possible. This involves not only securing initial coverage of FUROSCIX, but also working to have it placed on a formulary tier that will be affordable to most patients and not on the specialty tier. Reflecting our continued progress, recall that a top 5 national health plan placed FUROSCIX on a preferred formulary status across all of its commercial plans, effective June first. We remain in discussions with this plan regarding its Part D plans, with the goal of securing similarly favorable formulary placement for its Medicare beneficiaries. In addition, we obtained national Medicaid coverage of FUROSCIX, effective July 1, 2023.

As mentioned, we are engaged with many other health plans, and we hope to have several more announcements like these in the months to come. We previously indicated that approximately 60% of all heart failure patients can access FUROSCIX under fixed-tier co-pays of $100 or $100 or less, and we are reiterating our goal of 75% or more over time. We are making good progress towards this goal. The market opportunity for FUROSCIX is significant, and we believe it is worth reiterating. In the US alone, there are estimated to be 6.7 million adults suffering from heart failure, resulting in 4 million heart failure events annually. Of those, we believe 2.1 million episodes can be effectively addressed by FUROSCIX.

If we assume $3,300 per episode, which is 4 doses of FUROSCIX, we have the potential to access a market opportunity that is nearly $7 billion. Again, this is in the US alone. There are a total of 15.8 million adults suffering from heart failure if we include the other G7 countries. At this early stage, we are seeing a wide range of doses of FUROSCIX per prescription, from 2 to 12, as this is at the discretion of the treating physicians, and some patients require more aggressive interventions than others. During the second quarter, we reported just over 5.2 doses per prescription. We continue to believe that this number will trend towards 4 doses per prescription over time.

Staying on the topic of market opportunity for a moment, just recently, we received positive Type C meeting feedback from the FDA regarding the potential expansion of the FUROSCIX indication to include New York Heart Association Class IV heart failure patients, in addition to Class II and III, for which FUROSCIX is currently indicated. It is estimated that as many as 10% of all heart failure patients are considered Class IV, and of these, we estimated that as many as 40% may benefit from FUROSCIX. If we are successful, Class IV will represent a meaningful expansion of our market opportunity and will enable FUROSCIX to be prescribed to the sickest heart failure patients. Based upon the feedback that we've received from the agency, we believe we can file for the Class IV indication without the need to conduct any additional studies.

We plan to do so by the end of the year. Turning now to IP, I want to cover a key development with respect to our intellectual property estate. We recently announced the issuance of key U.S. patents covering the development of more concentrated formulations of furosemide. This enables the possibility of dosing flexibility of subcutaneous furosemide. We have completed initial solubility and stability studies on multiple formulations described in the patent properties. We've identified potential product candidates, and we have initiated IND-enabling studies. We also have patent applications pending that cover similar formulations of furosemide for the treatment of congestions in patients with heart failure, and also edema in patients with chronic kidney disease, an entirely new potential indication that also represents a significant market opportunity for our company. Taken together, this additional IP is foundational to our FUROSCIX lifecycle management strategy.

We are also pursuing similar patent protections outside of the United States. Before turning the call over to Steve, I want to provide an update on our key performance indicators and our plans moving forward. We anticipate signing direct purchase agreements with several integrated health systems. FUROSCIX will be shipped directly from our 3PL, Cardinal Health, to these IDN facilities, bypassing our three specialty pharmacies. As a result, those units that are shipped direct will not be captured in our prescription counts, which will no longer reflect all of the underlying demand. We are reassessing the KPIs that we intend to provide going forward. We'll have a further update when we report our third quarter results in November. Finally, we were very pleased in June to announce that we've been added to the Russell 2000 Index.

Inclusion in this widely followed index will help raise visibility of our company and the key unmet need that FUROSCIX addresses along the heart failure care continuum. It is a reflection of the significant progress that we've made over the past 12 months, which resulted from tireless work on behalf of the entire team. At this point, I'll turn the call over to our Senior Vice President of Commercial, Steve Parsons, for a deeper dive into our launch metrics. Steve?

Steve Parsons (SVP of Commercial)

Thank you, John. As John indicated, the second quarter was our first full quarter of FUROSCIX's commercial availability, and we continue to be pleased with our progress. I will start with an update on our commercial team. We have said previously that we stand ready to add additional territories as demand patterns for FUROSCIX continue to emerge. As John indicated, toward the end of the second quarter, we added 10 territories, bringing our total field force as of today to 54 territories. It is important to note that the territories we added during Q2 were added towards the end of the quarter, and as such, will not contribute meaningfully until Q3, when the additional sales reps have been fully trained and are conducting face-to-face in-services at hospitals, doctor's offices, and heart failure clinics.

As John mentioned earlier, we have identified additional territories, and we are in the process of recruiting for those positions. We anticipate contributions from these additional territories beginning in the fourth quarter. Our sales force has conducted 1,129 in-services as of June 30th, compared to 518 as of March 31st. In-services provide healthcare providers with training and prescribing instructions for FUROSCIX that is designed to ensure office readiness. Demo kits to train patients are provided at the completion of each in-service. Our focus on the in-service is crucial to ensuring effective use and training on FUROSCIX. The results continue to be encouraging. From launch through June 30th, we've had 631 unique prescribers, which is up from 194 through March 31st.

For the second quarter ended June 30th, we had 1,163 total prescriptions written. Of those, 604 prescriptions were filled, and an additional 279 were pending. For the prescriptions that were still pending at the end of Q2, there's a portion that we're still in process with the payers and another portion that were approved and queued, waiting for direction from the prescriber on when to contact the patient. We continue to move pending prescriptions into the filled category with each day. For prescriptions that have been canceled, the reasons vary, ranging from the patient being unreachable or hospitalized or deceased prior to receiving FUROSCIX, and in some other cases, the patient copay was too high.

Looking ahead, we would anticipate that the difference between prescriptions written and prescriptions filled will narrow as FUROSCIX is better positioned on more health plan formularies, providing quicker access for the patients and lower patient out-of-pocket expense. During the second quarter, the average number of doses per prescriptions was 5.21, which is running higher than our expectation. We continue to believe 4 doses per prescription to be the right number long term. In terms of distribution, we continue to be pleased with the functioning of our distribution process thus far through our strategic partnership with Cardinal Health as our third-party logistics provider. Cardinal is working well with our 3 specialty pharmacy partners, including our main specialty pharmacy, BioMatrix. From a marketing perspective, we are engaged in broad, multi-channel market awareness campaign to drive brand awareness, adoption, and commitment.

This program encompasses many different activities, but some of the key ongoing activities include engagement and development of key opinion leaders, conference appearances, print and electronic collateral, and the development of both provider and patient websites, among other critical tasks. Overall, although we still have a lot of work to do, we are pleased with the continued progress and the trajectory that we are on. That concludes my update. I would now like to turn the call over to our Chief Financial Officer, Rachael Nokes, for a financial update. Rachael?

Rachael A. Nokes (CFO)

Thank you, Steve. We generated net product revenue of $1.6 million during the second quarter of 2023, and the cost of revenue was $0.4 million, yielding a gross profit of $1.2 million. Research and development expenses were $2.9 million for the second quarter of 2023, compared to $5.1 million for the comparable period in 2022. Decrease in research and development expenses for the quarter was primarily due to a decrease in clinical study and medical affairs costs, pharmaceutical development costs, and employee-related costs. Selling, general, and administrative expenses were $12.1 million for the second quarter of 2023, compared to $4.3 million for the second quarter of 2022.

The increase in selling, general, and administrative expenses for the quarter was primarily due to an increase in employee-related costs, commercial costs, and legal and professional service costs. We reported a net loss of $14.2 million for the second quarter of 2023, compared to a net loss of $9.7 million for the comparable period in 2022. As of June 30th, 2023, we held $102.9 million in cash, cash equivalents, and short-term investments, compared to $118.4 million as of December 31st, 2022. As of June 30th, 2023, scPharmaceuticals' total shares outstanding was 35,849,482. That concludes the financial update. John?

John Tucker (CEO)

Thanks, Rachael. This concludes our prepared remarks. At this point, we will open the call for questions.

Operator (participant)

Thank you. We'll now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. Our first question comes from Glen Santangelo with Jefferies. Please go ahead.

Glen Santangelo (Managing Director and Senior Equity Research Analyst)

Yeah, thanks for the details and taking my question. Hey, hey, John, I just wanted to follow up on, on something you said in your prepared remarks around July, because if we're sort of looking at the, the 2Q sort of total script, written and filled numbers and, you know, reconciling that with your last communication, which I think was sort of in early June, it looks like, you know, June maybe took a, a modest step down from... I'm sorry. Yeah, June took a modest step down from sort of where we were in May, but in your prepared remarks, you said July was the best month yet.

I'm just curious if you can give us a little bit more color about how things sort of trended from month to month and, if we should really be reading anything into that, or maybe it's, maybe it's still too early to, to matter, the month-to-month volatility, but any comments there would be helpful.

John Tucker (CEO)

Yeah, sure. Thanks, Glen. It's John. Yeah launches are, are, are unpredictable, lumpy, and again, it, it's still early. We had a huge run up from, from May to June. It, it, from April to May, if you remember, over 55%. We did see demand higher in, in June than May. We saw a lot of that come in at the, at the end of the, of the month, at the end of the quarter. A lot of those scripts were then filled in, in July. As I said in my remarks, July is, you know, we're off to a good start in Q3, and in July has been our... was our best month. A lot of scripts in June came in.

Last week of June were queued, but June demand was actually up quite a bit over May. The scripts just ended up getting, a lot of them getting filled in July.

Glen Santangelo (Managing Director and Senior Equity Research Analyst)

Yeah, and as a follow-up to that, if you look at 1,163 scripts written across 631 unique prescribers, right? That's, let's, you know, call it two scripts per provider.I know it obviously doesn't work out that way, but you're seeing a pretty broad number of unique prescribers. Or, can you maybe talk about where you are in your in-servicing initiatives? Are you pretty much done? I thought the plan was to be relatively done by that, with that about this time, but now you're adding sort of more territories. Like, how should we think about the physician education piece, where we are in that process and what we should be expecting in the third quarter?

John Tucker (CEO)

Hey, Glen, this is John again. I'll turn it over to Steve. Then let me, let me comment first. You're absolutely correct. When we add new territories, those are virgin territories, so we need to do in-services just like at the beginning. You're gonna continue to see in-services moving forward. We've learned, you know, the in-services are absolutely vital to what we're doing. But the second, and the second and the third call are just as important to make this part of their practice. You know, we're still working on two things: expanding the number of writers, but making sure those writers that have written, you know, adopt it into their practice. That, and that just takes time and calls.

I mean, a lot of times we'll walk in, "Oh, yeah, I used that on a patient. They did really, really great. I forgot. thanks for reminding me. I'm gonna..." You know, we gotta keep doing that. as we said, you know, last month or two months ago, the product's doing great. I mean, the, the docs that have used it have had great results. The patients have had, have had great results. It's just getting it into their practice, getting it into their, their routine. The unique prescribers is interesting because in a lot of offices, there might be five or six doctors, but one nurse practitioner that does, does the writing.

Our goal is, is, you know, as we continue to add territories, continue to do in-services, expand the writer base, but also, make sure that we're, we're getting back in there, continuously reminding them, maybe re-in-service them again, to make sure that they're adopting it into their practice. Steve, do you want to add anything to that?

Steve Parsons (SVP of Commercial)

No, that captures it well. We'll continue to do in-services. You know, we, we don't count an in-service if we, we do a, a second one at the same location, Glenn. These are all unique locations when, when you see the number. If we have to do another one, to reach, you know, more, more providers, then, you know, we, we won't count that. If they ask us to go to a satellite location or if we open new accounts, even in our existing territories, we're gonna go back to the basics, the fundamentals, and do it the proper way. We'll always be doing in-services, you know, not nearly at the clip that we were to launch, but they'll always be a part of, of our execution.

Glen Santangelo (Managing Director and Senior Equity Research Analyst)

Okay, thanks for the comments.

Steve Parsons (SVP of Commercial)

Thanks, Glenn.

Operator (participant)

Our next question comes from Roanna Ruiz with Leerink Partners. Please go ahead.

Nick Jasik (Equity Research Associate)

Hi, good afternoon, everyone. This is Nicholas Jasik on for Roanna Ruiz. Thanks for taking our question. Maybe a quick one for John. I think in your prepared remarks, you mentioned direct purchase agreements. I'm just curious, what would the approximate contribution look like from these agreements? How do you expect this to evolve over time? I guess, you know, what sort of demand are you seeing from this channel right now? You know, what sort of impact could this have on, on your overall gross net going forward?

John Tucker (CEO)

There's a lot there, Nick, but let me, let me try it. I'll start with the end. The gross to net, you know, it, it depends on the discount we, we, we offer on-on those, on those, those IDNs. You know, we, we always thought the IDN is where the value proposition is the strongest, right? If you think about it, they, they kinda own that patient, and putting them on FUROSCIX and avoiding the hospitalization flows to the bottom line. We've always thought that the IDNs are a key part of, of our focus. We've had doctors that are affiliated with the IDNs write, write scripts now, but what, what we're...

We feel really confident it's gonna happen this quarter, is these agreements will, will end up having the product directly shipped to the IDNs, the hospitals within the IDNs, the pharmacies within the IDNs, and we're working on, on guideline structure there, where it's, it's really part of the treatment algorithm. It's hard to say what the impact. We've always thought that we'd have this business, so I, I don't think it's extra business on top of what we forecast internally. It, but it, it's coming in line maybe a little longer. These, these things are very complicated to work. It's not like walking into a cardiologist's office, detailing him, and having him write. There's a number of people you got to work at, at IDN, starting in cardiology, to purchasing, to pharmacy. We've been doing that work.

We think they're coming online, and, and we think it's not in our sales now, obviously, but they'll be, you know, hopefully coming online this quarter. On the GTN, I don't think, you know, we, we, we have the 23% GTN. We, we've said it's gonna go up. We, we still think it will. These will be part of that as these come online. We're gonna stay disciplined on our rebating strategy. We, we've stayed disciplined.

Sometimes it's a little painful when, you know, you're seeing high copays because we're not giving those gigantic rebates, but we, we think the, the plan long term works, where, we're showing the value of the product, we're showing the utilization going through these plans, and, they're PA in it, and that costs them money, and then they're dispensing it, and they're not getting rebates. We, will stay disciplined like that with the IDN. I do think from where we are in, in talking to the, the major ones, that they'll come in under what our, what our rebate, the, the maximum rebates we were thinking would be. We feel it'll, it'll, it'll contribute and, and won't really impact the GTN.

Steve Parsons (SVP of Commercial)

Helpful. Thanks, John. Then maybe, quick question on, inventory. I think you mentioned you're down to 5 weeks by the end of the quarter. Just wondering how you expect, those inventory dynamics to play out, towards the end of the year, I think, 2024?

John Tucker (CEO)

Yeah. Thanks, Nick. Yeah. As I said, we, we kinda normalized it down to 5 weeks. We, we think we're gonna stay around here. You know, anytime you're in a launch, it's, it's just unpredictable from, from day to day, week, week to week, so they tend to keep a little bit more inventory early in a launch like right now. Eventually, you know, they'll probably get down to the maybe by the end of the year or early next year to the 2 to 3 week, but it's, it's hard, you know. It's, it's up to them. You know, we obviously stay in contact with them, but we've got a number of different locations, and with minimum order requirements, they could be sitting, you know, at any time with, with a lot or a little inventory.

We do think that that 5 weeks kind of normalizes, maybe works down another 1 or 2 weeks through the end of the year. I think that's probably where, where it stays.

Steve Parsons (SVP of Commercial)

Helpful. I'll hop back in the queue. Thanks, John.

John Tucker (CEO)

Great. Thanks.

Operator (participant)

Next question comes from Stacy Ku, with TD Cowen. Please, go ahead.

Stacy Ku (Director and Senior Research Analyst)

Thanks so much for taking our questions, and congrats on the quarter. We have a few. First, the clinician feedback from these heart failure specialists have been very positive in, in our checks. What are you seeing in terms of adoption patterns for practices that maybe weren't involved in the clinical trials or maybe from more community settings? Where are we in terms of the broader awareness of Farxiga? That's the first question. Then just some follow-up on some of the metrics you provided. Thanks so much for the details. Given your improvements in payer coverage, are you willing to provide any expectation or guidance for the expected kind of fulfillment rate that we're gonna see by year-end?

Last, if you're willing to provide some other would you be able to talk about maybe those, within those adopting clinicians, maybe what you're seeing in terms of the average number of prescriptions? Any anecdotal feedback would be helpful there. Thanks so much.

John Tucker (CEO)

Hey, Stacy. I'll start a couple of those and then turn it over to Steve. On the fulfillment rate, you know, we didn't have, we only had, the big, commercial payer on June 1st, so I think that's continued to impact the fulfillment rate. Medicaid came online July 1, which is not reflective in this fulfillment rate at all. We have seen the fulfillment rate tick up since June 30th. We think it will continue to do so, as we move forward, as payers come online. It's a couple other things in fulfillment rates. It's also, as Steve spoke to, doctors filling out the start form right.

If we have to go back to them two, two or three times or they're delayed some of those patients end up being hospitalized, and we lose the patient. The fulfillment rate will, will, will really be dictated by how, how things go with the payers, both in, in getting copays down, we, we've talked a lot about that, as well as improving fill time, so we don't have that lag where the patient could, could end up being hospitalized. Also with, with, with doctors and, and with us. We, we gotta continue to work with our doctor's offices to make sure that they know exactly what the plan's gonna need for them to, to fill the script.

We have seen the fulfillment rate start ticking up, and we think as payers come online and education continues that will continue. Steve, do you wanna talk a little bit about the engagement at the, at the docs, the heart failure specialists?

Steve Parsons (SVP of Commercial)

Yeah. Most of the people that we are engaging with now weren't, weren't part of any early utilization. They weren't part of the trials, as you, as you described it. Those were early adopters in, in, in the March timeframe. Now it's, it's regular docs, it's, you know, people who are dealing with this problem of patients with too much fluid and feeling badly and asking for some extra help. The adoption is, is broadened. You know, we're in academic places, we're in private practices, we're in communities. It's really across the board. I think you asked about the average number of prescriptions per, per, per prescriber.

Hard to say that, you know, you, you can do simple math and look at 1,163 and divide it by unique prescribers. There are some doctors who've only done one so far. They started later in, in, in June. There's others that have done multiple, multiple prescriptions. You can characterize it as, like, everybody averages two. You know, it's, it's across the board. Within an, within an office, you know, sometimes they all funnel to, to, to, you know, one or many prescribers. Not really sure how, how, how to precisely answer that question. You know, that's, that's what we're seeing.

Stacy Ku (Director and Senior Research Analyst)

Okay. Thank you.

John Tucker (CEO)

Thanks, Stacy.

Operator (participant)

Our next question comes from Doug Tsao with H.C. Wainwright & Co. Please go ahead.

Douglas Tsao (Managing Director of Equity Research and Senior Healthcare Analyst)

Hi, good afternoon. Thanks for taking the questions. Just, I, I'm curious, John, what's the average fulfillment time right now that you're currently experiencing from when a script is written to, to when it's being shipped?

Steve Parsons (SVP of Commercial)

Yeah. This, this is Steve. I'll, I'll take that. I'm, I'm closer to, you know, day-to-day reports. You know, I'm not evading. It's a very difficult thing. I think you've heard, you know, some doctors, you know, want it right away. They, they mark off expedited 24-hour review on, on the form they submit, and, and we get those out pretty quickly. There's other doctors who, you know, submit in advance. They want an answer, you know? They wanna know, is the... Is this gonna be covered, what's the copay gonna be? You know, we, it gets approved, we put it in a queue. It's really all over the place.

We do have prescriptions that are very old that eventually get filled, and then we have prescriptions that come in and go back out the same day. To, to have, like, an average wouldn't really do you justice because of all the, you know, the variability in how, how the offices want to use the product.

John Tucker (CEO)

I think if you looked at a median, Doug, it's probably better than a mean on this because.

Douglas Tsao (Managing Director of Equity Research and Senior Healthcare Analyst)

Okay.

John Tucker (CEO)

As Steve said, like, we, we filled, we filled scripts from March, last week, right? Just it were queued up, and the patient got in trouble, and the doc said, "Send it," right? If you if you, if you look at kind of a median, you're probably looking at, and it depends on a Friday, obviously, it's not gonna ship probably till Monday or Tuesday. It's probably about two days, two and a half days on median. Again, there's a lot of them that either the payer is requiring information from the doc, or or it's queued, and it it could go, you know, one month later. It's, it's, it's... We, we're, we're looking at it.

We have scripts that Steve said go out the same day. We have a specialty pharmacy that does courier service and big MSA, and those scripts get written in the morning, get cleared, and go that afternoon. That's, you know, again, it has to be within a, an MSA.

Steve Parsons (SVP of Commercial)

Yeah.

John Tucker (CEO)

The plan has to approve it quickly, but that happens as well. It's kind of all over the board. It's really hard to look at that other than you know, looking at what's, because when we really can't see if it's queued or not in how we, we read it. I, I wish we had a more precise answer.

Douglas Tsao (Managing Director of Equity Research and Senior Healthcare Analyst)

Sure.

John Tucker (CEO)

That, that's where we are.

Douglas Tsao (Managing Director of Equity Research and Senior Healthcare Analyst)

I'm curious, John, what proportion of the scripts that are being written are, you know, sort of being requested to be sort of on an expedited basis? I think you said, like, if a script is written on a Friday, it can't, probably is not gonna go out until, you know, Monday or Tuesday. Ultimately, given the nature of the product, will you be able to sort of provide 7-day-a-week coverage?

John Tucker (CEO)

Yeah. Steve, you wanna?

Steve Parsons (SVP of Commercial)

I mean, we have a program if the doctor really, really needs the patient to have it over the weekend. We have what's called a Quick Start Program, and so we, we ship something on Saturday morning. You know, whether the payer has processed it quickly enough or not, we'll, we'll ship them product to, to get them through the weekend. We do that 1 time for a patient because after that, there's usually a prior authorization that's been approved, and things can go quickly the second time they need it. It's really only that first time you're using it, that there's any potential delay. Any doctor really who needs it the next day, we have a Quick Start Program. It's 1 dose, but it gets them through that day and gets them, you know-

John Tucker (CEO)

Yeah. The docs have samples as well, for those patients. Between the quick start and the sample for an expedited doctor, we've covered that, covered that gap.

Douglas Tsao (Managing Director of Equity Research and Senior Healthcare Analyst)

Okay. Great. Thank you so much.

John Tucker (CEO)

Thanks, Doug.

Operator (participant)

Our next question comes from Nazibur Rahman with Maxim Group. Please go ahead.

Nazibur Rahman (VP and Senior Equity Research Analyst)

Hi, everyone. Congrats on the progress so far. I just have a few questions regarding your positive Type C meeting. First of all, could you kind of give us more color on what's the difference between the Class III and Class IV patients? Also, why do you think FUROSCIX is only applicable in about 40% of those patients instead of, let's say, a larger percentage of those Class IV patients? Finally, in those Class IV patients, how many doses of FUROSCIX do you think those patients will need compared to what you currently think is, like, 4 for the Class II and 3?

Steve Parsons (SVP of Commercial)

I'm gonna have John, John answer some of that question, but I think, on the 40%, that's just kind of our estimate on a market share, not really what we. How many of them are qualified for it. You know, some of them, we know are gonna be, you know, in acute pulmonary edema and have to go to the hospital. We think a large majority of them will, will, will, will need treatment, and FUROSCIX is appropriate form. As far as dosing, you're right. We would, we would think that they would probably need more doses, but that will be governed a bit by, by managed care.

If they put quality limits on, let, let's say, quantity limits, let's say it's, it's a script for 4, but they'll, they'll have to get another script for 4 the next, next week or, or, or 2 weeks later. We do think that's probably those are probably higher utilization patients than per month, than, than the 2s or 3s. John, do you want to get a little bit of light on the-

John Tucker (CEO)

Yeah.

Steve Parsons (SVP of Commercial)

On the meeting with the FDA?

John Tucker (CEO)

Yeah, sure. The big difference between New York Heart Association classifications all the way to 1 through 4, really is based upon the amount of, of exercise in which a patient can tolerate. As you go to Class IV, the amount of exercise with certain degrees of, of exertion, becomes less, less tolerated. The problem with New York Heart Association classification, it's great for clinical trials when you really have, when you have a specific way in which to measure that. As you get into clinical practice, it becomes so subjective about how this is done. This was really the basis of the, of the discussion back and forth with the FDA about why, despite that we included mainly Class II and III patients in our clinical trials, that they agreed that we would be able to expand into Class IV.

As the pharmacokinetics between IV and subcutaneous is not expected to be different amongst that population. That was the, the data and the argument that which we made to the, to the agency. To answer your question directly, it's all based upon how much exercise a person can, can tolerate, with heart failure.

Nazibur Rahman (VP and Senior Equity Research Analyst)

Got it, thanks. I guess one last question on this is, in regards to the filing, the FDA filing, is this something you would expect a 6-month review cycle for, or are you expecting, like, a 1-year review for this?

John Tucker (CEO)

We would not expect a 1-year review. You know, I think we, there's a couple different avenues here. Probably 6 months. We think there might be a way to, to, to shorten that. Again, we're not putting in any clinical data at all. It's really just, you know, some of the device, the device documentation. I'm not trivializing how long that takes to do, but, but it's, it's a pretty straightforward review, so we wouldn't think it's a, like a full 10-month review or anything like that.

Nazibur Rahman (VP and Senior Equity Research Analyst)

Got it. Thanks for taking my questions.

John Tucker (CEO)

Thanks, Naz.

Operator (participant)

There are no further questions at this time, so this concludes our question and answer session. I would like to turn the conference back over to John Tucker for any closing remarks.

John Tucker (CEO)

Thank you. That concludes our call this afternoon. We hope you take away from this call that we are very pleased with our progress to date, as we continue to execute on our commercial plan, we anticipate continued growth in the percentage of heart failure patients who have affordable access to FUROSCIX, which we believe will translate into a nice trajectory for both prescriptions and revenue. We look forward to providing more information during our third quarter update in November. Thank you. Have a great evening.

Operator (participant)

The conference has now concluded. Thank you for attending today's presentation. You may now-