SCPHARMACEUTICALS INC. The following discussion and analysis of our financial condition and the results
of operations should be read in conjunction with our financial statements and
related notes thereto included elsewhere in this Quarterly Report on Form 10-Q
("Quarterly Report") and our audited consolidated financial statements included
in our Annual Report on Form 10-K for the year ended
OVERVIEW
We are 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. Our strategy is designed to
enable the subcutaneous administration of therapies that have previously been
limited to intravenous, or IV, delivery. By moving delivery away from the
high-cost healthcare settings typically required for IV administration, we
believe our technology has the potential to reduce overall healthcare costs and
advances the quality and convenience of care. Our lead product candidate,
FUROSCIX, consists of our novel formulation of furosemide delivered via an
on-body infusor and is under development for treatment of congestion in patients
with worsening heart failure
We resubmitted our new drug application, or NDA, for FUROSCIX, with the
We have funded our operations from inception through
As of
IMPACT OF COVID-19
A new strain of novel coronavirus which causes a severe respiratory disease
("COVID-19") was identified in 2019, and subsequently declared a pandemic by the
To date, the third parties that perform our manufacturing, assembly, packaging
and testing of our products have generally remained operational. The extent of
the impact of the COVID-19 pandemic on the timing of the
COMPONENTS OF OUR RESULTS OF OPERATIONS
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Research and Development Expenses
Research and development, or R&D, expenses consist of the cost of engineering, clinical trials, regulatory and medical affairs and quality assurance associated with developing our proprietary technology and product candidates. R&D expenses consist primarily of:
• employee-related expenses, including salaries, benefits, travel expense
and stock-based compensation expense;
• cost of outside consultants who assist with technology development,
regulatory affairs, clinical trials and medical affairs, and quality
assurance;
• cost of clinical trial activities performed by third parties; and
• cost of facilities and supplies used for internal research and development
and clinical activities.
We expense R&D costs as incurred. Given the emphasis to date on our lead product candidate FUROSCIX, our R&D expenses have not been allocated on a program-specific basis. In the future, we expect R&D expenses to increase in absolute dollars as we continue to develop new products and enhance existing products and technologies. We anticipate that our expenses will increase significantly as we:
• pursue regulatory approval of FUROSCIX incorporating the SmartDose drug
delivery system;
• continue to advance our pipeline programs beyond FUROSCIX, including
ceftriaxone;
• continue our current research and development activity;
• seek to identify additional research programs and additional product
candidates;
• initiate preclinical testing and clinical trials for any product
candidates we identify and develop, maintain, expand and protect our
intellectual property portfolio; and
• hire additional research, clinical and scientific personnel.
General and Administrative Expenses
General and administrative, or G&A, expenses consist of employee-related expenses, including salaries, benefits, travel expense and stock-based compensation expense for personnel in executive, finance, commercial, human resources, facility operations and administrative functions. Other G&A expenses include pre-approval promotional activities, marketing, conferences and trade shows, professional services fees, including legal, audit and tax fees, insurance costs, general corporate expenses and allocated facilities-related expenses.
If we receive FDA approval for FUROSCIX incorporating the next generation
SmartDose drug delivery system, we anticipate that our G&A expenses will
increase as we continue to build our corporate and commercial infrastructure to
support the development and commercial launch of FUROSCIX in
Results of Operations
Comparison of Three Months Ended
The following table summarizes our results of operations for the three months
ended
Three Months Ended June 30, Increase
2019 2020 (Decrease)
Operating expenses:
Research and development $ 5,496 $ 5,139 $ (357 )
General and administrative 1,839 2,537 698
Total operating expenses 7,335 7,676 341
Loss from operations (7,335 ) (7,676 ) 341
Other expense (14 ) (1 ) (13 )
Interest income 463 21 (442 )
Interest expense (369 ) (639 ) 270
Net loss $ (7,255 ) $ (8,295 ) $ 1,040 Research and development expenses. R&D expenses were
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offset by a
General and administrative expenses. G&A expenses were
Other expense. Other expense was
Interest income. Interest income was
Interest expense. Interest expense was
Comparison of Six Months Ended
The following table summarizes our results of operations for the six months
ended
Six Months Ended June 30, Increase
2019 2020 (Decrease)
Operating expenses:
Research and development $ 12,020 $ 9,285 $ (2,735 )
General and administrative 4,162 5,040 878
Total operating expenses 16,182 14,325 (1,857 )
Loss from operations (16,182 ) (14,325 ) (1,857 )
Other expense (22 ) (32 ) 10
Interest income 953 245 (708 )
Interest expense (723 ) (1,275 ) 552
Net loss $ (15,974 ) $ (15,387 ) $ (587 ) Research and development expenses. R&D expenses were
General and administrative expenses. G&A expenses were
Other expense. Other expense was
Interest income. Interest income was
Interest expense. Interest expense was
LIQUIDITY AND CAPITAL RESOURCES
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Overview
We have funded our operations from inception through
We expect to incur substantial additional expenditures in the near future to
support our ongoing activities and our plans to obtain regulatory approval for
FUROSCIX incorporating the next generation SmartDose drug delivery system. We
believe our existing unrestricted cash is sufficient to fund our operations
through at least the next 12 months from the date of this quarterly report. We
expect our costs and expenses to increase in the future as we prepare for and,
if approved, commence
• the potential FDA approval of FUROSCIX; • the costs and expenses of establishing ourU.S. sales and marketing infrastructure; • the degree of success we experience in commercializing FUROSCIX, if approved; • the revenue generated by sales of FUROSCIX, if approved, and other products that may be approved; • the pricing and reimbursement of FUROSCIX, if approved, and of other product candidates that may be approved; • the costs, timing and outcomes of clinical trials and regulatory reviews associated with our product candidates; • the emergence of competing or complementary technological developments; • the extent to which FUROSCIX, if approved, is adopted by the healthcare community; • the number and types of future products we develop and commercialize; • the costs of preparing, filing and prosecuting patent applications and maintaining, enforcing and defending intellectual property-related claims; • the impact of COVID-19 on our operations; and • the extent and scope of our general and administrative expenses.
Additional financing may not be available on a timely basis on terms acceptable to us, or at all. We may raise funds in equity, royalty-based or debt financings or enter into additional credit facilities in order to access funds for our capital needs. If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution in their percentage ownership of our company, and any new equity securities we issue could have rights, preferences and privileges senior to those of holders of our common stock. If we raise additional funds through royalty-based financing arrangements, we will likely agree to relinquish rights to potentially valuable future revenue streams and may agree to covenants that restrict our operations or strategic flexibility. Any debt financing obtained by us in the future would cause us to incur additional debt service expenses and could include restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and pursue business opportunities. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, we may terminate or delay the development of one or more of our products, delay clinical trials necessary to market our products, or delay establishment or expansion of sales and marketing capabilities or other activities necessary to commercialize our products.
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CASH FLOWS
The following table summarizes our sources and uses of cash for each of the
periods presented:
Six Months Ended
June 30,
(in thousands) 2019 2020
Net cash (used in) provided by:
Operating activities $ (10,029 ) $ (13,705 )
Investing activities - (40,469 )
Financing activities 18 60,410
Net (decrease) increase in cash, cash equivalents and
restricted cash $ (10,011 ) $ 6,236
During the six months ended
During the six months ended
During the six months ended
There was no cash from investing activities during the six months ended
Net Cash Provided by Financing Activities
During the six months ended
During the six months ended
OFF-BALANCE SHEET ARRANGEMENTS
We currently have no off-balance sheet arrangements.
CONTRACTUAL OBLIGATIONS
There were no material changes in our commitments under contractual obligations,
as disclosed in "Management's Discussion and Analysis of Financial Condition and
Results of Operations" contained in our Annual Report on Form 10-K for the
fiscal year ended
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Management's discussion and analysis of our financial condition and results of
operations is based on our financial statements, which have been prepared in
accordance with
JOBS ACT ACCOUNTING ELECTION
In
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