Okay. Good afternoon, everybody. Thank you for taking the time to join us. We're obviously excited to kick off the afternoon here with Phathom Pharmaceuticals. Joining us from the company, Terrie Curran, on my left, Martin Gilligan. Oh, who's the CEO. To her left is Martin Gilligan, who's the Chief Commercial Officer, and to his left is Molly Henderson, who's the Chief Financial Officer, and Eric Sciorilli. You want to raise your hand? He heads the investor relations function at the company. So if you have any questions, feel free to track either him or myself down. For those of you who I don't know, I'm Glen Santangelo. I cover a number of things here at Jefferies. In addition to spec pharma, I cover animal health, healthcare information technology, and some other things to be named later.
So, with that, why don't we start it off? Terrie, thank you for joining us. Obviously, it's been an exciting time at the company with the new launch, and so maybe just to start the conversation, I thought what might make sense is just to get an overall launch update from you, and then maybe we could turn it right over to Molly. I know earnings were a few weeks ago, but the ink is still not dry on that press release, so maybe I'll give you a minute or two just to sort of talk about the first quarter results.
Sure.
Then we'll dive right into it after that.
Thanks, Glen, and thanks for the invitation to the meeting. Yeah, it's been a very exciting time for Phathom. We launched the VOQUEZNA in Q4 of 2023, and into a very large market, with erosive GERD and H. pylori eradication. We're really excited that we launched with our full field force, in the first quarter. So we have 320 reps that are in the field that are calling on gastroenterologists and on PCPs. The VOQUEZNA is a first-in-class, best-in-class PCAB, or a potassium competitive acid blocker, and it's the first new innovation in over 30 years into this class. It's different to a PPI in that it binds to both the active and inactive pumps, and in so doing, from a clinical perspective, is more rapid, potent, and durable.
So the launch is off to a great start. We delivered over consensus at $1.9 million for Q1, which we had indicated we anticipated nominal revenue. And importantly, we were able to secure two payer contracts. And just to remind everybody, our goal is to displace PPIs as a standard of care. And from an access perspective, our goal is to have one step through a generic PPI. With both of these contracts, we have achieved that, so we're well on our way to building a blockbuster with this brand.
Okay. Molly, anything worth talking about in the first quarter that stuck out to you, at least relative to your initial expectations?
Yeah, sure. As Terrie mentioned, we reported revenues of $1.9 million, which exceeded what the consensus on the street was. It was in line with our expectations. As Terrie said, we expected nominal revenues because it was really our first full quarter of launch. And then the other KPI that I'll point out that we mentioned in the press release is that over 42,000 scripts have been written, launched to date, and that was as of April 29th. So we feel that is strong demand, and we're very excited and encouraged by what we're seeing there.
You know, Terrie, just to build on the comments you made, you know, with VOQUEZNA in erosive esophagitis, it's the first novel product in decades, and, you know, you're talking about the drug trying to replace the standard of care in PPIs. And so maybe it might be worth just taking 30 seconds to explain the difference between the PCAB versus the PPI and how-
Sure.
and how the drug is different.
Sure. So potassium competitive acid blockers are a different mechanism than PPIs. So both bind to the proton pump, but PCABs bind to both active and inactive pumps. So what this translates to from a clinical perspective is that they have a more rapid onset of action, they're more durable and more potent. And we demonstrated this in our clinical program, where we studied VOQUEZNA in erosive esophagitis, and we demonstrated superiority versus a PPI standard of care, and then also in H. pylori eradication, where we studied both dual therapy and triple therapy and demonstrated their superiority versus the standard of care. So this is the first compound entering into this very large marketplace that has demonstrated superiority.
And then importantly, we have a PDUFA in July for non-erosive disease, which is even, maybe double, over double that of erosive GERD. And there we are going to initiate a phase three program in on-demand dosing. We've completed the phase two, which was positive, and that is a novel way of dosing, for non-erosive disease in that patients can take it as needed or when they on demand or as needed. So that is different to PPIs. They cannot be dosed in that way.
And, Martin, maybe if you could just talk about the market overall for a second. How big is it? How many scripts are written? How many people-
Sure
... sort of seek treatment annually?
So it's a very large market in the U.S. There's more than 22 million patients with GERD in the U.S. alone, and that's broken down into non-erosive and erosive GERD. So 15 million have non-erosive GERD, and around 7 million have erosive. It's a large prescription market. 85% of the volume of PPIs in the U.S. are prescribed. So if you look at the number of scripts in the U.S., there's 110 million scripts for PPIs that are written every year, so very, very large market. So right now, we are indicated for erosive GERD and then entering into this very large opportunity of the 15 million patients with the PDUFA in July.
... You know, one of the things that I always took comfort in is the fact, right, the drug is already launched in Japan, and could you maybe talk about Takeda's experience with this drug and maybe talk about, you know, the market opportunity there versus here, and the difference in the patient TAM, and if that's in any way analogous of how we should maybe think about the market opportunity in the United States?
Sure. So, Takeda launched, TAKECAB is the brand name of vonoprozan in Japan, into a very similar market in that the market was largely genericized, with a similar, obviously, the profile that we have here in the U.S. They didn't have superiority data like we have here in the U.S. label. With that, they were able to become the number one product in Japan, generating more than $850 million annually. So they're market leader there in Japan, with more than 35% market share. The market in Japan is a third the size of the U.S. market.
So, we believe with a very strong label here in the U.S., with superiority in both healing as well as maintenance of healing of erosive GERD, as well as eradication of H. pylori, and similar market dynamics. We have the potential to really build a blockbuster in this category.
Well, there's obviously a pricing difference, right, for your product versus traditional PPIs, right? So that brings, you know, coverage to mind, right? So Martin, I don't know, or Terrie, whoever wants to talk about it, you've had some coverage wins that you've announced. Maybe if you can talk about sort of the coverage you have at this point, and maybe the feedback that you've received from the managed care companies.
Yeah. So right now, Glen, we have 48% of all commercial lives are covered. And that equates to about 72 million people in the U.S. who have access to VOQUEZNA through their through their payer and through their formularies. So how do we start out with that? So the, I think the two notable are Express Scripts came really early in our launch. Typically, it takes about six to nine months to really see access take hold and for contracts to be executed, but Express Scripts came very early in February, and then that was followed in the last month with Cigna. And what's unique about those is that it... First of all, it fits very much with our strategy, and our strategy strategy is one step through a PPI.
As Terrie mentioned, it's a really large market. Patients are circling through the market. There's a lot of switch, there's a lot of movement and adding on of therapy, and so the majority of patients will have met that criteria, and it's completely fitting for VOQUEZNA to really disrupt the market. And then what we're doing is we're looking forward to future plans coming up.
Right. So at least in terms of the contracts that you've already written, the step-through was really just through the PPI, which maybe a lot of people have already done, and so maybe it's not as big of a barrier as one might think. Are there-
Mm.
Is there anything else that we need to be thinking about in terms of barriers?
Yeah, so, really, thus far, we don't see that as a barrier and, you know, what we're not seeing is tied to specific diagnosis, additional forms to be filled out. So we're not seeing any barriers as a physician would incur. All of these approvals really much are happening, you know, virtually in the pharmacy when they can see that the patient's been on a PPI. The other nice thing about VOQUEZNA with Express Scripts and Cigna is if for some reason the patient has not been on a prescription PPI, if they've been on an OTC, what happens is the physician can attest to the fact that the patient's been on an OTC PPI, and then it's approved.
Hmm. All right. Is it fair to say that you're in conversation with the other managed care companies and PBMs that you currently don't have?
Yeah.
Is there a way to characterize that? Do you feeling like at least the conversations are productive?
Yeah. So I think they're productive. I would expect that in Q3 we should see some additional formulary coverage. And again, going right back to our strategy, those discussions are all centered around the patient who's had experience on a PPI.
Right. Terrie, any sort of qualitative feedback you're getting from the physicians at this point?
Yeah, I think the feedback that we've had from physicians is just tremendous in terms of both the efficacy and the patient experience. So we're getting calls and emails from physicians that have utilized the VOQUEZNA in patients, that they've tried other alternatives and haven't been successful in healing their ulcers, and they've been able to heal patients. We're also hearing from patients that are sending in you know, letters and emails to us. So the clinical experience that we're seeing in the field is really playing out and supporting the label in terms of the superiority and rapid onset of action and potency.
All right. So Molly, let's put some numbers behind this. I think what you've said all along, right? I mean, it's obviously early in the launch process to give any guidance, but I think you said very specifically that revenues in the first half would be not that significant until the coverage came in, and then we'd see an expected ramp in the second half. You know, based on sort of Martin's comments, does... The way you sort of characterize it, does that still sound about right, or would you characterize it a little bit differently when we think about the cadence of the revenue this year?
No, that's right. I think certainly we always expected back half loaded, to your point, because of access as well as non-erosive approval. So those two items are still major catalysts to drive that inflection on the, on the top line. So yep, that's been our thesis going in, and we continue to believe so.
All right. Now, I don't want to pressure you for guidance, so I'm not trying to do that, but are we at least in a few zip codes of how things are sort of trending? At least when I look at consensus for this year without-
... from an annual perspective-
Yeah, right.
It looks like consensus is right around those low 40s, $40 million-$45 million, and we've said publicly that we're comfortable with that range.
Okay. All right, good. All right, let's dive into the launch metrics a little bit. You know, how many scripts have been dispensed and, you know, based on the total demand, right, how many scripts written versus dispensed seems to be a little bit of a delta. Could you just remind everybody, you know, what those two numbers look like and maybe what creates that difference between... Obviously, not all scripts written are always gonna be filled, but maybe what sort of creates that barrier to that script getting filled?
Yeah. So I think, Molly mentioned earlier that what we know is, at the last time we reported, there's been a total of 43,000 prescriptions that have actually been written by a physician. And then the number we know that's actually been dispensed is 17,500. So, what we've done is we've come out and given that written number. I think there's not. I'm not sure what companies have actually shared that written versus filled. So what it tells us is that demand is actually there. We know that gastroenterologists and primary care physicians intend to put their patients on VOQUEZNA. And we were just talking a few moments ago, Glen, and the question that you had about access, that differential really is about the coverage.
And, so what we know is, as coverage comes more and more on board, you'll start to see a narrowing of those two numbers. So both numbers will grow-
Yep.
And then over time, you'll see a narrowing.
Well, I don't wanna specifically call out Express Scripts, but since you brought it up as a contract, that's sort of you've had since the first quarter. I mean, when you look at your scripts written versus filled within those that have that PBM as part of their insurance, are you is the thesis sort of playing out as you would expect?
Absolutely. So there's two ways we know that, is that, that number of 43,017.5 that gap is smaller than we had reported previously, earlier in the year. So the gap is starting to close.
Yep.
As I just said, as we have as more comes on board, that'll go more. And then there's also a, a system that IQVIA has, which is called... It's basically a claims database that shows the percent of prescriptions that actually get through the system, and we're tracking that over time. And you can see, as more formulary wins come on board, there's more that gets through the system. So we can look at it from a multiple, multiple ways.
Terrie, could you remind us the pricing on the product?
Yeah. It's $650 for a 30-count bottle, and it's given once a day, and that's the WAC.
Once a day. Perfect. Okay. All right, you know, can we talk about the fulfillment through traditional pharmacy or BlinkRx and the differences between the two, just so everybody's kind of clear?
Yeah, no, that's a good thing to back up on. So, just to be clear, VOQUEZNA can be accessed through all retail pharmacies and channels. But we've partnered with a company called BlinkRx, which is a digital fulfillment center or a virtual pharmacy. So why did we did that? Our goal was to make sure that if a physician wrote a prescription for VOQUEZNA, they had the best opportunity for that patient to get their VOQUEZNA filled. So I always liken it to, you know, being on a highway, and in this case, it's a digital highway. When a prescription comes in to BlinkRx, and the doctor can find that exactly on their prescription, electronic prescribing, they can either go to a retail pharmacy or to BlinkRx.
When it goes to BlinkRx, that highway, if they're a commercial patient, takes them down a pathway. And if the patient has a commercial coverage already, it's on their formulary, what BlinkRx will do is they pass that off to one of their partner pharmacies, and that prescription is picked up by IQVIA. So when we talk about the numbers being in IQVIA versus cash, that's picked up by IQVIA. If the patient is a commercial patient and does not yet have coverage, so that formulary hasn't triggered yet, they're offered VOQUEZNA at a $50 price for the month, so a cash price. And then that prescription, we report out on a quarterly basis as coming from BlinkRx, so it's separate.
So we're doing a couple things here, as I mentioned before, is we wanna make sure that patients have the best opportunity to get VOQUEZNA. The other thing that works very well for both us and the patient is every time that patient comes back for a refill, that claim is pinged again. And once that patient's insurance converts to being fully covered, they then go through, I'll call a more traditional model of being sent over to, the retail channel, where two things happen. It's picked up by IQVIA, but then also, they're kind of not in that continual patient support. And when a lot of drugs launch, they have a patient support program that's very hard for that patient to get out of from an operational standpoint. And because this is all electronic, it happens instantaneously.
Hmm. All right, maybe, maybe just two more questions along this line. Can we talk about the gross to net on the product today? And I'm sure that's rapidly, obviously, changing with all these contracts that you're signing. And for these, you know, patients that are already under contract, can we talk about the copay that they have to pay and how that might be evolving and what the goals of the company are?
Sure. I'll start with the gross to net, and we can touch a little on copay. So actually, a good segue. So as you're thinking about the channels, whether it's through Blink or through retail, which is reported by IQVIA, it's also important to look at the different WACs. So Blink, as Martin said, is $50, whereas IQVIA is $650 minus all the distribution, rebates, costs, gets the Blink component to be very nominal contribution from a revenue perspective. The majority comes through the IQVIA channel. So from a gross to net perspective, we've said on a steady state, we would expect that mostly again, through that IQVIA channel, to be in the range of 50%-65%. We haven't provided any more specificity, as we're in negotiations with the payers.
But at this point, we're not expecting to be significantly different than that range. And again, keep in mind that that's all inclusive, so that's distribution costs, rebates, copay, all components that factor into that 50%-65%. And then maybe just touching on the copay amount, we do have a pay as low as $25, so that ties into that estimate for gross to net.
Okay. All right, could we maybe talk about the label expansion opportunity, Terrie? I know that's obviously super exciting. I mean, you gave the difference in the magnitude between non-erosive and erosive, right? So will you just remind people-
Sure.
that opportunity and the timing on that.
Yeah, so we're absolutely thrilled that we have our PDUFA coming up very shortly of July 19, for the non-erosive indication. And as you indicated, that's 15 million patients in the U.S. that are diagnosed and treated with a prescription annually for that indication. We actually just received the draft label. So the discussion with the FDA is progressing very well, and we're highly confident in the approval in July. And importantly, we will be able to utilize or leverage our existing sales force footprint, because of the very high crossover between the prescriber base for erosive disease and non-erosive. So the field force that we have in place will be able to hit the ground running and be promoting the non-erosive indication.
And then importantly, the access that we are securing now for the bottle presentation, we anticipate that will also incorporate the non-erosive indication. So we expect to see some significant upticks in revenue moving into the Q3 with both the access wins that Martin spoke about, but also the approval of non-erosive GERD.
Okay. All right, I don't wanna put you on the spot, but I heard at another conference, and I think you do go to those—peak sales opportunity of $3 billion. And I guess if we just take Takeda's experience in Japan and say we have three times the number of people, right? I mean, I guess that's maybe overly simplistic math, but, you know, when you think about that $3 billion number from, you know, $1.9 million this quarter, it's pretty—it's a pretty big runway. So how do you all think about that peak sales opportunity? And, you know, then we'll talk about, you know, what you do from an organization to try to, you know, steepen that ramp as much as you possibly can.
Yeah. Sure. So we're really confident in the $3 billion at peak. Both looking at the Takeda experience and then based upon the label that we have been able to secure, demonstrating superiority in the U.S., and then the feedback that we're getting from the clinical experience in the field, and the feedback that we're getting from clinicians. This is the first new mechanism or first new compound that gastroenterologists and PCPs have had to treat GERD in more than 30 years, and there's no competition. There's a high unmet need. There's a lot of churn in this marketplace. About 50% of patients switch their therapy.
So all of the dynamics are there for a blockbuster opportunity: large market, high unmet need, highly differentiated product, and moving from, you know, smaller to very large indications in the next 12 months. So we're, we're very excited about the opportunity and, really pleased with how the access is playing out.
Molly, maybe could we just quickly talk about the balance sheet, right?
Sure.
I think $322 million in cash last quarter, which gives you runway, I think you said, through into 2026, right? So no real financing issues. Anything related to the financing that's worth sort of calling out?
Yeah. So to your point, we feel good. We ended the quarter, as you said, with over $320 million. Also of note, at the end of last year, we renegotiated our debt facility. What that resulted was an additional $100 million that's available under that facility. It pushed out the principal payments to the end of 2027, and also significantly reduced the interest. So we saved over $20 million in interest expense. So with that expanded facility, we feel comfortable we have runway through 2026.
Yeah. Terrie, I think up front you said... Hold on, I wrote it down. 300 and how many reps in the field? Hold on, let me find my sheets.
320.
320, sorry. And so how do you think about the field sales force today? Is it the right number? And then, Martin, I don't know how you think about DTC in terms of utilizing some of that cash, right, to commercialize the product a little bit more aggressively.
Yeah. So on the field side, we believe that that is the right field footprint. We're reaching 155,000 physicians in the—from decile 10 down to five, so they're the high-prescribing PPI physicians. And the way the geographies are structured is those reps are seeing both GIs and PCPs. So we believe that the 320 is what we need for the indications that we've launched and then moving into a non-erosive disease.
So, Glen, we've complemented it in two ways. One is we also do digital outreach omni-channel to physicians, but then, as you said, DTC. So we launched our campaign at the very end of March, and then we extended that campaign into broadcast television during, at the very end of April. So we've gone out with a campaign to patients that we know is differentiating, it's motivating, and it really separates VOQUEZNA away from the PPIs. And we've already seen that we've had just a tremendous uptake in the number of visitors to our websites, where we're driving all of those patients to. And we're hyper-targeting and really reaching those patients that have erosive GERD right now.
Terrie, the company has rights outside the U.S., obviously, in Canada and Europe, and so, you know, on that opportunity?
Yeah. So our base case is that we'll outlicense in Europe and Canada. So we're evaluating the economics in Europe. In Europe, exclusivity doesn't begin until you get approval. So that will be 10 years in Europe.
Okay. All right, well, I'm shown we have 10 seconds left, so why don't I turn it back to you, Terrie. What, what sort of message do you wanna leave the investors with? I mean, I don't know if you wanna sum it up and sort of bring it home, but what, what, what sort of message you wanna leave people with?
So we're at a really exciting pivot point for the company and heading into a number of key catalysts that are really gonna drive revenue in the third and fourth quarter. With access expanding and DTC being implemented, and then most importantly, the approval of non-erosive right around the corner in July, three tremendous catalysts that are gonna set us on the path to building that blockbuster.
It's interesting, and I'll close, but, you know, we have five companies in our coverage universe that launched a product in the last year. It's interesting where we see interest and where we haven't seen the interest yet, and it feels like you guys are just on the precipice, right, of that-
Mm-hmm
... of that pivot. So it seems, obviously, like a very exciting time to be looking at the company. But thank you all, Terrie, Martin, Molly, Eric, we really appreciate you guys coming, and we'll stop it there, and thank you all for your time.
Thank you.
Thank you.
Thank you very much.