President and CEO, as well as Molly Henderson, Chief Financial and Business Officer of Phathom Pharmaceuticals. So thank you, guys-
Thank you
-for being here this afternoon. So to start off, we're coming off the second full quarter of Voquezna launch, now with broad approved labeling for both erosive and non-erosive GERD disease. Before we get more into some of the details, could you help us best understand these distinctions within the treatment of gastroesophageal reflux disease, or GERD, overall?
Sure. Thanks, Matt. It's great to be here. GERD is a chronic disease that affects about 65 million patients in the U.S.
Okay.
It's caused by the contents of the stomach that flow back into the esophagus, and there's two types of GERD. There's non-erosive and erosive. So non-erosive patients don't have any erosions in their esophagus, whereas erosive esophagitis patients have erosions, but both have very similar symptoms, so dysphagia, heartburn, pain. You can't distinguish the type of GERD based upon symptoms, and importantly, the treatment for both is identical. So both are currently treated by proton pump inhibitors, is the standard of care.
Sure. I mean, is there a point, just thinking abstractly, is there a point where a patient feels they're beyond the need of just an over-the-counter therapy? I mean, you know, we've all taken antacids after dinner or a heavy meal. Is there a point where people really feel that there's sort of time to sort of escalate-
Yeah, absolutely
... the treatment?
It's interesting because of the patient population, the majority are actually treated by a prescription. The total volume in the U.S., 85% of the volume is through a prescription business. As you mentioned, patients often try over-the-counter medications first, H2RAs, PPIs. They don't find them successful, and so they go to a primary care physician. If they're still not being treated effectively, they'll be referred to a gastroenterologist, where they'll do an endoscopy.
Sure.
So there's a lot of switch within the category. About 50% of patients in any given year are switching their therapy because they're finding that PPIs are inadequate to control their symptoms.
Right. That makes sense. I mean, so as you mentioned, there's approximately 65 million people with GERD in the US market. About 22 million of those are diagnosed and treated adults. Fortunately, the majority of those patients are considered non-erosive patients. Of those that are diagnosed and treated, is there any sense of what proportion are working with a GI specialist as opposed to a primary care physician?
Yeah, I'll take that. So I think you would... The minority is probably with a gastroenterologist, when you just think about 22 million patients who are treated right now by physicians with prescription. You know, just when you run the numbers, it would be very difficult for everyone to get to a GI.
Sure.
So when they get to a gastroenterologist, they've typically, they've been to their primary care, who, by the way, is the largest patient manager of these patients. So they've been to a primary care. They've probably been on a PPI, probably had an OTC added on, maybe switched to another PPI, and the reason they end up at a gastroenterologist is they're just not getting better, and that's the opportunity for Voquezna. Right? So they're sent on to a specialist, because they may have erosions. They usually get that endoscopy to determine whether it's erosive or non-erosive. But there's just a lot of movement, as Terrie said, in the market, which is a great opportunity for Voquezna.
Mm-hmm. Absolutely. And then speaking of traditional GERD treatments, for the better part of the past several decades, people have really focused on the PPIs, the proton pump inhibitors, H2 blockers, or even antacids over the counter. How would you best characterize the differentiation of Voquezna as a novel P-CAB or small molecule potassium competitive acid blocker?
Sure, I'll take that. So the foundation of the differentiation is in the difference of the mechanism. Voquezna is the first P-CAB that's entering into the U.S. marketplace, and it binds differently to the proton pump. So it binds to both the active and the inactive pumps. That then translates to what we see in the clinic in terms of the differentiation. It's far more rapid in terms of the onset of action. We see separation from placebo within the first day and complete resolution of heartburn on day two. More potent, so we've demonstrated superiority in the healing of erosions for erosive GERD, but importantly, the maintenance of that healing. And we've also demonstrated superiority in the eradication of H. pylori. So more rapid, more potent, and more durable. So they're the three differentiators versus proton pump inhibitors.
Mm-hmm, and you'd be taking it sort of exclusively. It wouldn't be in combination with any other therapy typically.
Yeah, most patients will take a P-CAB on its own.
Right.
And in the clinical trials, it was a standalone medication.
Sure.
Yeah.
Okay, and then with much reliance on traditional therapies and noted standard of care dissatisfaction and switching between different medications, GERD patients are expected to step through a generic proton pump inhibitor, for example. What proportion of GERD patients would you say fit this profile by the time they're meeting with a GI specialist and discussing daily oral tablet, Voquezna?
So I'll take it, and I actually heard two questions there.
Yeah.
So the first one is, you know, the patients who've been on PPI, so essentially, almost all everyone's been on a PPI. So the whole market's been on a PPI, and as I was describing earlier, there's that dissatisfaction, and physicians call it the PPI merry-go-round. A lot of switching, adding things on, so I think that's happened for most of it. That's really what we talk to physicians about for, regarding Voquezna is that, who's that patient? It's the patient who's come to you, and you've started them on a PPI, and yet they still have the symptoms, right? They're having breakthrough.
They're not sleeping at night. They're cautious about what they eat, and that's the Voquezna patient. So that dialogue, to the second part of the question, is really just starting to happen now. And we know from our research is that if a patient comes in and asks for Voquezna, they will get Voquezna from the physician. And we've also done research, it's called physician-patient dialogue. Where they, physicians agree, and the patient consent, for just general for the day visits, is to record interactions, and we hear physicians actually bringing up Voquezna to potential candidates and explaining what it is, and actually writing a prescription right there. So that's why I say it's a two-part question. So high-level dissatisfaction, everyone on PPI, and that dialogue has already started to happen in the office.
Very encouraging. I mean, one other thing, just anecdotally, from some conversations I've had with prescribers, there's sort of this perspective from the PPIs with the bone density or some of the issues with the with the fracture risk. Has that sort of been left in the past at this point, or what are kind of some high-level thoughts on that, just overwhelmingly?
Yeah, we haven't seen any issues, either in the clinical data or in the long-term safety database that's been generated out of Japan, called the Asian study.
Right.
There haven't been any indications of kind of fractures.
Sure
... with Voquezna.
Terrific. So I believe the most updated numbers from the quarter, there were 122,000 prescriptions written, with over 60,000 filled through both the retail pharmacies and the BlinkRx initiative. Can you describe how the fill rates have evolved over the past quarters, and how they're expected to develop near-term with continued commercial coverage efforts?
Yeah, it's a key metric that we're following, and I'll say is that this is why we feel we're having a really good launch. We've seen that evolution from our first reporting out publicly. We said that 28% of the scripts were getting filled, from what a physician wrote to actually what a patient gets. That grew the next quarter to be 41%, and now we're at 50%, and so, you know, that tells us two things. One, the demand is there.
Physicians want their patients on Voquezna, so, you know, this short in launch to have 122,000 scripts written is a really large number. The other thing I'll share is that that 50% number that we communicated was around the same time that we announced that we've had additional formulary coverage go up, and so our formulary coverage grew from 48% commercial lives have access to Voquezna to 77%. And so that happened at the same time. So I think while that we're happy with that 50% number, that was before the additional news came on.
So I would envision that going in the future, you're gonna see a closing of that gap of what a physician wrote to the patient actually getting on drug. Why that's important is our coverage that we have, that 77% commercial lives, it's quality coverage. Our contracts are based around one step through a PPI. If you think about what I said a few moments ago, all of the large market, everyone moving, everyone being on a PPI, that's the patient type we're describing to the physician, and it's also the one where we have our coverage based in.
[crosstalk ]
Target patient
... essentially.
Absolutely.
Then, how are your promotional efforts and DTC campaign resonating with physicians and consumers? Will these efforts continue to grow as the launch ramps up?
Yeah. So the DTC campaign's going really well, started in the spring. I always say physicians are consumers as well. They're seeing the same ads, whether it be on their laptop, their phone, or on television, that their patients are seeing. I mentioned earlier about patients coming in and asking for drug. We, since we've launched the campaign, we've seen a significant increase, I mean, very remarkable. From the day we started the campaign, visitors to the website, it just skyrocketed, and it continues to grow over time.
So it tells us that we're reaching the right people. But when we went out and did market research with physicians who had already prescribed, of those we surveyed, 24% of those physicians said that they already had a patient come in and ask for Voquezna. So they were proactive about it, and then the physician prescribed it. So we believe the campaign has great legs for us. It's a great campaign, communicates the differentiation, we believe it's real motivating.
Very exciting. So kind of thinking about the growth, an important nuance to labeling is the noted superiority to lansoprazole or PPI in the maintenance rates of healed erosive esophagitis. From your GI interactions, how has this resonated with prescribers, and what do you view as the key levers to greater GERD market penetration, and even displacing PPIs?
Sure
... ideally?
Yeah. So, that's our goal, is to displace PPIs as the standard of care. You know, I think there's a couple of key catalysts for that. The first was establishing a new class. This is the first new class that's entered this marketplace in more than 30 years, and that really resonates with physicians as well as consumers. As you mentioned, Matt, the demonstrating superiority versus the standard of care resonates with not only prescribers but also with patients and payers. That was a really important part of our value proposition, was demonstrating that superiority, and moving forward-
Which is on label-
Is, yeah-
By the way
... exactly. And it was the superiority was demonstrated not only just the healing but also the maintenance of that healing. So that's really critical piece of the clinical profile. I think moving forward now, we've established, you know, the label, the mechanism, and the differentiation on label. As Martin mentioned, it was really critical for us to gain commercial access.
So this early in launch, to have 78% commercial coverage with one step, and it's a relatively simple, and the majority of cases in electronic look back at the pharmacy step, that will really open up the category now that we have approval of the non-erosive indication, which is the largest segment of the population. I think the other key lever is DTC. And we've launched the Kick Some Acid campaign. And this is a very patients are highly symptomatic. It's a chronic disease. They haven't had any alternatives to PPIs for 30 years. And so-
They've clenched.
They've, they-
Yeah
... they, they're searching. We can really target patients with our DTC, whether it would be in terms of television or online. So that's really important to drive and increase the level of awareness. As Martin mentioned, we know that if patients ask for Voquezna, 80% will be granted. So that's a key lever. And then the last piece is around the pipeline. We are planning to initiate an on-demand or as-needed phase three program. We did demonstrate success in the phase two program. This is, again, additional differentiation versus a proton pump inhibitor. So PPIs can't be used in an on-demand fashion or as needed because of their PK/PD. They take three to five days to reach steady state.
Whereas Voquezna, because of its mechanism, can be used in that way. So again, we demonstrated success in our phase two. We plan to initiate a phase three, and from research, this indication will drive more patients to switch from PPIs, both prescription PPIs, as well as OTC PPIs, when they. It's something that really resonates with patients. And then the second clinical program that we'll initiate is studying eosinophilic esophagitis and a pediatric population. So PPIs are used first line in an EoE before biologics, but they're not approved, and so our strategy there is to initiate a phase two in EoE and demonstrate effectiveness in that population and position that pre-biologic, so to again to displace PPIs first line for EoE.
Very exciting, and based on the prescriber mix having favored gastroenterologists as the highest decile of focus for commercial launch, at what point in Voquezna commercialization could you foresee primary care physicians adding an important contribution to near-term growth?
Yeah, so I think they already are.
Okay.
I mean, primary care, especially for non-erosive, primary care is, as I said earlier, a key patient manager. They're the decision-maker. They're the one dealing with the patients who are... when they first come in, and they get the diagnosis of GERD, and then, as I said before, as we're cycling through, they're the ones making the decision of, you know, the switching that's happening. So they're really key, but you're right, that so early on in our launch, the deciles, at the highest level, were the gastroenterologists. So gastroenterologists, as a group, prescribe lower amount of PPI versus primary care, but on an individual basis, right, as an individual gastroenterologist, they're highly productive, and that's what puts them in the decile 10. So they tend to be clustered up at the higher levels but those primary care physicians have started to prescribe.
Their use is growing both in terms of the number of primary care who start to prescribe and their refills, but then also associated with them are their nurse practitioners and physician assistants. This is a category that's a very symptom-driven disease, and both the primary care and the GI often make the NP/PA in the office as the key patient manager, including diagnosis, and they really are attracted to the Voquezna profile. What they're seeing is that the patients they've started is that it's a very fast onset, as Terrie said, and symptoms patients are coming back saying, "My symptoms were relieved really well and really fast. And so they're a key component of our launch as well.
And then I guess just to add to that, another key thought there is that the labelling is for erosive and non-erosive, so if you're a primary care physician, there's no need to rely on the question of, "Do I need an endoscopy to prove that it's erosive or non-erosive?
Absolutely.
It's kind of inconsequential because the label covers both, essentially.
Yeah, and I think the way that played out is, as soon as upon, approval you saw more primary care doctors writing, and you also saw an increase in the utilization of the 10-milligram dose, which is the starting or the labor dose-
Right
... for non-erosive. So that tells us that there were some primary care physicians, while they manage erosive GERD patients, the majority of the population they manage is non-erosive. It really was kind of, you know, all gloves off and moving forward for them.
I mean, just thinking biologically, if you don't treat the non-erosive, will that always progress to erosive or not necessarily?
No, not necessarily.
Okay.
It does not mean that if you let that acid sit, long enough, that it ultimately leads to erosions. Everyone thinks that I thought that. I think the other thing, too, is, severity of disease is not necessarily tied to symptomatology either. So it's a very individualized disease, and that's why patients take such an active role. It's important for them. Up to this point, when a patient goes to the doctor's office, and they say, "How are you doing?" Doctor, they, the patient and the doctor didn't have much to talk about, right? Because of the same old drugs. Now, new conversations start happening. "How are you doing?" "Oh, okay, well, there's not something new we can talk about.
Mm-hmm. Very exciting. So also, I wanted to mention, congrats obviously on the recent capital raise. Can you provide a bit more context on the strategy behind the financing?
Sure. So really what precipitated that was some inbound interest from top holders. So we took stock of where we are and thought, "Wow, with all of these engines running, wouldn't it be great to shore up the balance sheet and really allow us to execute as we approach the end of the year?" So we did that. Recently, as you mentioned, we raised $130 million, mostly through a very targeted long-only group of investors. And what that's now given us is the opportunity to say we have the cash to get us through to cash flow positivity. And that includes the drawdown on our debt facility, and also assumption on our top line. But we feel really good about our cash position and glad we were able to execute on that.
Great. And in our remaining moments here, I just wanted to ask: What are you most excited about for Voquezna progress in erosive and non-erosive disease during the coming quarters? Obviously, the trials are coming, but what are you most excited about, just overall?
Sure, so I'm really thrilled that we're heading into the end of the Q3 and the Q4 in such a strong position ... and that our strategy to displace PPIs is really playing out. You know, we began this journey five years ago. And since then, we've been able to now launch the first-in-class, best-in-class P-CAB with superiority. Now, with the commercial access and the DTC driving demand, we're really positioned to see acceleration into this quarter and through Q4, which puts us in a great position, as we've said, to deliver $3 billion, over $3 billion at peak for the product. So really looking to the remainder of the year and delivering on what we set out to do and bringing this new drug to patients, and then kicking off the additional programs to add more value to the platform.
Terrific. Well, it's been great from my seat to see the progress, and congrats again. So thank you to the Phathom Pharmaceuticals team for joining us, and thank you, everyone, for joining us as well.