SVB Securities upgraded scPharmaceuticals (NASDAQ:SCPH) to “outperform” from “market perform” and raised its price target to $11 from $6 after FDA approval of Furoscix for treatment of congestion in chronic heart failure. The stock closed at $4.02 on Oct. 10.
Analyst Roanna Ruiz, Ph.D., writes that with the approval, the company is “transitioning to commercial launch story.”
She said her upgrade reflected removal of a key overhang on the stock and recognition of a new debt facility with Oaktree Capital Management that meaningfully improves the cash runway ahead of Furoscix’s U.S. launch in the first quarter of 2023.
With two prior complete response letters for Furoscix largely in the rear-view mirror, “we believe investor focus should shift from regulatory matters to launch execution and Furoscix’s potential sales ramp,” Dr. Ruiz said.
“Although the stock did not behave as we had expected on the favorable FDA approval news, this may have been due to a ‘sell the news’ dynamic from cautious investors grappling with tough macro-environment factors, and investors absorbing the terms of the Oaktree debt financing agreement, among other reasons,” she added.
While the timeline for launch shifted slightly to the first quarter next year from the fourth quarter, “we think this may not be a big setback as it could instead enable more time to build physician awareness and tee-up payer formulary decisions for Furoscix in the new calendar year,” Dr. Ruiz pointed out.
She said management indicated that the launch delay was more procedural, as the FDA had recently asked for a packaging adaptation, which requires re-printing of materials.
“And in our view, scPharma’s cash outlook would improve as it receives $50-million on signing of its Oaktree debt agreement, on top of its cash position of about $56-million as of the second quarter of 2022,” Dr. Ruiz said.
