scPharmaceuticals Inc. Price & Performance (SCPH)

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 within the meaning of the federal securities laws, including, but not limited to, statements regarding scPharmaceuticals 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 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 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 twenty twenty four 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 four zero six commercial growth over the course of 2024, we were especially encouraged by what we saw in Q4, accumulating a net revenue of 12,200,000.0 at the midpoint of the $12,000,000 to $12,300,000 range. It previously announced in January. For the full year 2024, SC Pharmaceuticals generated 36,300,000.0 in net Ferosex revenue, representing approximately 167% increase in net revenue year over year driven primarily by the increased awareness of four zero six 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 to net discount for Furosex in the fourth quarter twenty twenty four 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 the lung long run GTN discount for Ferosex 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 Medicare redesign, we believe four zero six 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 Ferrosix 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 FEROSIX.

As previously announced on March six, twenty twenty five, the FDA approved the supplemental new drug application for Furosex to expand its indication to include the treatment of edema in patients with chronic kidney disease, fluid overload, which occurs in over seven hundred thousand cases annually, is one of the most prevalent symptoms of CKD and requires intervention. Given the opportunities to intervene pre hospitalization or post discharge, fluorocept 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 today. 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 CK 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 four zero six expansion into CKD patients will prove to be a meaningful growth driver for the Furosex franchise. Turning to the auto injector, we are pleased to provide a positive update following additional shelf life testing.

We have seen encouraging data with the enhanced silicone syringe and the testing conducted thus far. We are targeting a midyear submission of the auto injector 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 FEROSIX 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 heroic commercial launch in February 2023, over 3,800 unique providers have prescribed Furosex to their patients. This represents a twenty three percent increase over the course of the fourth quarter compared to the third quarter. During the fourth quarter of twenty twenty four, we filled approximately 13,300 doses of Hurosex up 23% from the 10,800 doses in the third quarter of twenty twenty four. We've continued to see the average number of doses per prescription increase to seven point four doses per prescription largely due to the increased number of doses written for more patients with advanced heart failure in class four. As a 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 prescriptions for CKD in April.

Leveraging our expanded field sales force and learnings from the Ferozix 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 cardio renal treaters approximately fifty percent of patients have both CKD and comorbid heart failure are being treated by nephrology specialists. We believe these patients represent an ideal population who could benefit from Ferozix. Our Ferozix 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 were contracted with around their satisfaction with the prescribing process and efforts to streamline Furosex 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. Furosec's revenues for the fourth quarter of twenty twenty four $12,200,000 compared to $6,100,000 for the same period in 2023. For the full year 2024, SC Pharmaceuticals reported $36,300,000 in product revenue compared to $13,600,000 for the full year 2023. This represents approximately 167% annual growth of net revenue generated by Furosex. The increase was due to an increase in demand for Furosex further into commercial launch. Cost of product revenues for the fourth quarter of twenty twenty four were $4,000,000 compared to $1,800,000 for the same period in 2023. For the full year 2024, SC Pharmaceuticals reported $11,400,000 in cost of product revenues compared to $3,800,000 for the full year 2023. The increase was due to an increase in demand for Furosex further into commercial launch and related manufacturing costs. Research and development expenses were $3,200,000 for the fourth quarter of twenty twenty four compared to $3,300,000 for the fourth quarter of twenty twenty three. 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 $12,100,000 compared to $11,800,000 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 twenty twenty four were $21,400,000 compared to $16,200,000 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, patient support. SC Pharmaceuticals selling general and administrative expense for the full year 2024 $77,600,000 compared to $53,400,000 for the full year 2023. This annual increase in selling, general and administrative expense primarily due to an increase in employee related costs commercial preparation costs, costs associated with financing transactions, patient support, professional service costs, FDA user fees. The increase was partially offset by a decrease in insurance costs. For the fourth quarter of twenty twenty four, SC Pharmaceuticals reported a net loss of $18,800,000 compared to a net loss of $13,800,000 for the fourth quarter of twenty twenty three. SE Pharmaceuticals reported a net loss of $85,100,000 for the full year 2024 compared to a net loss of $54,800,000 for the full year 2023.

ScPharmaceuticals ended 2024 with $75,700,000 in cash and cash equivalents compared to $76,000,000 in cash, cash equivalents and short term investments as of 12/31/2023. As of 12/31/2024, SC Pharmaceuticals had 50,095,689 shares outstanding. That concludes Essie Pharmaceuticals' financial update. And our prepared remarks.

We will now open the call for questions. Operator?

Thank you. Wait for your name to be announced. To withdraw your question, please press 11 again. Please stand by while we compile the Q and A roster. Our first question comes from the line of Stacy Ku with TD Cowen. Your line is open.

Hi, team. Congrats on the year end, the CKD approval.

And thanks for taking our questions. So on the upcoming launch, for so on the upcoming CKD launch, big picture, can you 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 Can you discuss some of the early work that you have been doing in terms of reaching out to nephrologists? Then what are your expectations for the launch starting in April? Will access be seamless? Is there a dynamics here? And how do you expect adoption will turn out to the rest of the year? [indiscernible] do you expect this would impact HF adoption as well? Thank you.

Hey, Fitz. It's John Tucker. Thanks for those questions. I'll try to remember them all. So [indiscernible] the feedback from nephrologists we've 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. We did use that opportunity to go into some of the larger nephrology offices to establish establish a presence, do some in services. And we did see scripts for nephrologists nephrologists early on for their heart failure patients.

So 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 obviously working with the KOLs. We've identified both national, local, and regional KOLs. And we've been outreaching to them. We've been at the conferences. So we think we're going to be in a position to launch this and have a quicker uptake than in cardiology. Steven or John, if you want to add anything to that. I'm sure I didn't hit all those.

I just add that that in a in a when you're walking into a nephrologist's office, at least fifty percent of those patients also have concomitant heart failure I think the other piece is that there's about ten thousand nephrologists and thirty thousand cardiologists. It's a much more concentrated area as well. So all those things together put us in a position where we believe that there's a there's an opportunity for early growth Yeah, I think there was a question about the impact of the launch. We'll do a full launch in the April. There'll be some revenue impact in Q2, but mainly in and Q4 where we see the lift from nephrology.

And the payer work we've done, there's 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 I've had no pushback on really on nephrology scripts that came in before as long as they were coded for 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 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 Jefferies. Your line is open.

Yes.

Thanks for taking my question.

Hey, Joel, I just wanted to sort of get your high level take on a couple of things. I mean, seems like 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 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 making a little bit you it a little bit harder to get adoption at which the pace with which you hoped. I 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 four and getting the CKD indication are all gonna help obviously in '25. But we'd love to get your take as to what really could accelerate the ramp here. [indiscernible] thanks for the question. Yeah, so I think I said in my in the opening remarks, satisfied with the year.

Although we're really pleased by what we 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 when we look at this year, and looking back at last year, the headwinds we had last year were really based on patients out of pocket. So you say access Access to physicians is a challenge for everybody. Need it to get around it. And we're doing that just like everybody else's. But it's really for patients access and when 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 pocket. This year, with the Medicare redesign, really think this works in our favor in that the patient cap out of pocket cap goes down all 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 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 this year. So when we talk about tailwinds, mean, again, redesign, yeah, you take a couple point hit, to your GPN. But I think what's key for us and why we're 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 were suffering through high co pays 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, 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 So we really think the redesign really plays out well for us. Obviously, the kidney launch But again, as I said, well, we're 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. 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 know if you can give us any sort of guardrails around that. And I would say the same for for sort of cash, right? I mean, got 76,000,000, but how would you assess the burn rate relative to maybe some incremental commercial costs you might need to incur to penetrate these nephrologists. 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 our commercial costs will go up just marginally here. Even if you added 20 reps, that that adds $1,000,000 a quarter that's it to your burn if you did that. So we really see that call it, the burn going down because OpEx stays fairly flat, and our revenue is going to continue to increase every quarter. So we said, based on our plan, our cash is good to get us all the way there. As far as giving guidance, it's hard I think, this year for everybody who's got one product in Medicare, 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 co pays, dollars 0 co pays for all of their drugs. It just opens up a huge opportunity for us. So it's hard it's hard for us to give guidance when that 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 700,000 more patients in doctors that are more accessible. And we have the tailwinds of the of the Medicare redesign. So when I look at where consensus is, I'm like, yeah, we're real positive. On that 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. Were paying 50% for last year. So we didn't have access to those patients. We have to those patients this year. And again, we've seen time and time again when patients have low co pays, two things happen. Bill rates go up, and docs write more drug. Those two things happen You're going to see really a dramatic dramatic change in our fill rate and then 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 Roana Ruiz with Leerink 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 four zero six now that you have two indications? And I was also curious, thinking about the Medicare redesign this year, how much education or awareness building might be needed to make sure physicians and patients are aware of some of the benefits that might come through for FARO6?

Great, Rona. Thanks, John. On the second part, so we've been out CMS's rule was October 15, the 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. 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 Rescript comes in, our hub will notify all patients, every patient, Here's the situation. You can enroll in smoothing. Based on where they are and how much of their out of pocket that they've 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 any of us and CMS included thought. From education, mainly to patients. And some of these patients, as you know, are older. Confused, maybe 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 when they call in. To 06 [indiscernible] 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 1020% that's required by Medicare this year So, these people with 65%, 70%, 75% rebates 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 all be 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, Furosex is approved, is covered. And co pays 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 co pays are going to be really good for furosec. So we're not looking to change our position. Would cost an awful lot to do it. And we don't think we need to.

We know some brands that are at a 50% to 55% base formulary discount, and they got the 20% added on top in Medicare. And they're sitting at a 7580% GTN. And what did they get that additional 20% They got nothing. Because they were already paying the 50% or 55% to be to have those low co pays. We get the low co pays this year. Now again, they have to work through it. But we're seeing that happening. We get the low co pays 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. [indiscernible] That's super helpful. And 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 Sometimes someone will try for eight, and sometimes someone will only do four if they have a client limit like a Medicaid or something. 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 nephrologists until I mean, we've had a couple of kidneys.

We've had a couple of kidneys. Okay, I'm sorry.

That have come 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 Sowe with H. C. Wainwright. Your line is open.

Hi. Good afternoon. Can you 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 you know, how will this compare to when you first launched the product? Will you be able to maintain 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. Heavier at the beginning. When you first open up an account with the in services, getting it set up on the hub. But that 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. We think it just makes a more productive, rapid They're driving into Topeka and they can call on the cardiologist, the heart failure clinic, one or two naps. It It just It makes it way more efficient. Yeah, 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 in in in in February, that there might be slightly fewer touches [indiscernible] to some of the heart failure specialists? The cardiology, Steve, do want Yeah. I mean, we're going to continue to call on the best and most productive cardiologists who've adopted VEROSIX we'll 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 nonproductive 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 office and they tell us this is our domain. I mean we're the experts on fluid and cardio renal and the kidney is what diuresis. So we think we're going to be fine. We're going to cover a lot of heart failure patients who we would have tried to cover in a cardiology office. We'll now pick them up in a nephrology office in addition to the CKD patient. And Doug, think if we see that or feel that we react by 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. [indiscernible] 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 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 [indiscernible] and heart failure patients are you able to sort of distinguish between them as you sort of go in and promote? 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. You can get increased reach and frequency, on docs who are treating the same patient, We don't care which one of the docs starts cirrhosics as long as somebody does So it'll reinforce if the nephrologist starts the patient on for o six and the cardiologist is seeing, well, wow, yeah, maybe I need to use Turozygx on some of my other patients. Like there's an additive effect to it. It not duplicative.

Okay. Great. Thank you very much, guys.

Thanks, Ben.

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

Yes.

Hey, it's Nas on. 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 payers? Is it the same as heart failure? Or is there a different split there?

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 disease progression and lifestyle. They may be a little younger but they're still predominantly Medicare age 65 and older. There's a little bit more in Medicaid I think that impacts people with lower income sometimes progress and get sicker faster. But it's not it's not wildly different. Got it. Thank you. And my last question guess on a high level, roughly everything that's sort of been happening in DC and some potential disruption government, have you seen or are you expecting any disruptions in terms of payment for FEROSIX? 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 any disruption there from CMS either. Nothing we've heard, nothing we've seen. Thanks for taking my questions. Great. Thanks.

Thank you. Please stand by for our next question. Our next question comes from the line of Chase Nicobarker with Craig Hallum. Your line is open.

Good afternoon. Thanks for taking the questions. John, maybe just a follow-up on the redesign.

Mean, are you kind of already seeing an impact to fill rates and general demand in the quarter as a result? Are you seeing lower co pays Or is it going to take a couple of quarters to educate the patients on smoothing or for them to hit that lower $2,000 out of pocket?

There's a couple of things there. So we have seen recently more patients enrolled in smoothing. It's it depends on the plan. Some plans such as I probably list the plans where you can see that the patient is smooth, Some plans, all you see is a $0 copay. And have to assume that they're either smooth or that they've already reached their cap.

It was I think we've talked about it This is the first part of the quarter 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, 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 their they sign up for smoothing in March and they have a $200 payment. So it again started out slower than we had anticipated. [indiscernible] 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 co pays and affordable co pays than we saw in the first part of the quarter.

Got it.

And maybe just on Q1, Last year, that transition from Q4 to Q1 you still grew volumes. About 15%. Obviously, you've got a lot of drivers in the model this year. I mean, thoughts on kind of volume growth sequentially into Q1? And then on gross to net in Q1, I know 30% to 35% for the year. But you get to the bottom end of that range in Q1? Or is it more like 25%?

It's probably more like 25%. In Q1.

But I've 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 twenty five than it is to thirty. Now again, we think all the patients will be in catastrophic by the end of the year. And it'll be closer to that thirty thirty five. So 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. [indiscernible] just sitting here today to understand exactly what that 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 our best kind of thought right now based on our modeling is around 25%.

Got it. And then just a couple of quick ones. Maybe in Q4, you share the fill rate just to see how that's continuing to improve? And then just on gross margins and SG and A for 2025, is it the right way to think about SG and 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? [indiscernible] now is the way to do it. We'll let you know roughly It'll stay that area.

R and D might tick up a bit as we get through all the work on the auto injector and getting that filed here. Mid year. Forgot the first one. Fill rate. And the fill rate. Steve, 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, this is what gives us confidence for this year Co pays were low. Zero in many cases. We had a 58% fill rate in December. So we were know what can happen when patients get into good access situation. 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 fifty eight percent 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 the typical deductible reset. Patients haven't reached their out of pocket. 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.

Yes, I think that's encouraging. And just quick on gross margin, any thoughts on '25 Rachael, do you have any thoughts on the gross margin in '25 being different No, I don't anticipate it to be we're going to see a big impact on gross margin with the auto injector once that's introduced. [indiscernible] But probably not too much here, maybe a point or so. With volume as we work with WES. But again, the big impact on margins is the auto injector.

Got it. Thanks again.

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