Good morning. Perfect. Thank you. Good morning, everyone. Welcome to our inaugural Healthcare Innovation Conference. My name is Yatin Suneja. I am one of the biotech analysts here at Guggenheim Securities. It is my pleasure to introduce our next presenting company, which is Phathom. From the company, we have a few executives here in the room, but with me, I have Terrie Curran, who is the CEO. We have Molly Henderson. She's the Chief Financial Officer. We also have here Martin, who is doing a lot of work on the commercial side. Martin Gilligan. Terrie, why don't you maybe make some opening comment, just talk about the company, how the launch has been going, some of the upcoming catalysts, and then we'll go into some of the Q&A discussion that I have prepared for you.
Sure. Good morning, everybody, and thank you for inviting us to the conference. It's great to be here. Phathom Pharmaceuticals, we've just completed our third quarter of 2024 in our commercial launch and absolutely thrilled with how the launch is going. As you know, we are launching into a very large category of the GERD market. There's 22 million patients in the U.S. that are diagnosed and treated with a script in the U.S. in this category, and the July approval of non-erosive GERD gave us access to the largest market or largest segment of that market. About 80% of the patients have non-erosive disease, so that's really been significant, had a significant impact on the trajectory of the launch, both the new indications and then the commercial access.
We now have 80% commercial coverage for Voquezna, which is a phenomenal position to be in this early in the launch and have implemented a direct-to-consumer campaign, which is driving patients in to request for Voquezna and ask more about their disease. There hasn't been any new innovation in this category for more than 30 years.
It's a highly symptomatic area. Patients are switching therapies, with 50% of patients switching within any given year. We know with the combination of the new indication, the access, and then the DTC, we're really seeing the growth of the scripts and very pleased with that. We will be initiating two new programs in the near term with eosinophilic esophagitis, where PPIs are utilized first line for EoE but are not approved. With the profile of Voquezna being rapid, potent, and durable, we believe that there's utility for EoE patients as well as pediatrics. We're really thrilled with how the launch is going.
There's clearly significant demand in this large market, and Voquezna is really starting very early in the launch but really starting to accelerate.
Got it. Very good. I mean, obviously a very strong third quarter. What was underlying that? It was just mostly driven by a NERD indication coming online. Was that or are there any bolus effect or just curious to understand, like, the dynamics within the solid 3Q print that you had last week?
I'm not sure I'd use the term bolus 'cause when I think of bolus, I think it's something that goes up and then it comes down.
Yep.
I think a couple things started to happen or a couple things did happen as we moved throughout the months of Q3. First, we had the non-erosive approval, which came towards the end of July. Then if you remember our earnings that we did in August, we announced that we had an increase in commercial coverage.
I think it was the combination of the two because that non-erosive is just so much larger patient base, and that's where we saw primary care physicians really engaging even more with Voquezna.
Got it. Is there, do you have ability to see NERD, like, indication-specific prescription?
How are you articulating that, you know, the sales is coming from or the demand is coming from NERD?
You could see a subset of that in the data, but it's also very back data.
Okay.
Backdated, excuse me. So it's, you know, looking way, way back in the past. What we did use as a marker is the 10 milligram. Now, the 10 milligram is also approved for erosive GERD as maintenance, but not so many patients were dropping down from 20 to 10. What we did see kind of to the marker of that is once we had the non-erosive approval, we did see a significant increase in the 10 milligram dose. And that's why we correlate it to non-erosive and then also the increase of primary care prescribers. And quite frankly, what we're hearing back from the field in terms of it being used in non-erosive.
Got it. How has been the prescription refill rate and persistent? Like, if you just comment on that, like, now you have drug on the market for a few quarters, like, where is it trending right now?
So the refills, we're seeing more physicians write and those that write are writing for more patients.
Then we're also seeing patients come back and actually getting refills. And the way we know that is one, you can see that in the data. And from a compliance and persistency perspective, we're seeing a trend to the numbers you would've expected, that we communicated at launch that probably the days of therapy on an annual basis would be anywhere from 140 to 160 days. And we see everything trending that way right now. So that tells us that the refills are occurring.
Got it. Got it. How is the split? I know I think the split has changed in there. It used to be a lot more contribution of Blink. Now that has come down to about 30%. How will that trend? I have used Blink. I've used your product. I think they're pretty good. They're on your case till you get the prescription. So just curious to understand how will that change?
Well, I think, as you said, Blink works really well and it's met all its objectives for us. And the objective is to get patients, the doctor in attendant, a commercial patient to get on the Voquezna. And if they need the patient support, they can get that from Blink Rx. And as you said, Yatin, we've seen that decline since approval. Remember the first time we did an earnings call, we were at 50%, I'll call it an IQVIA, and then 50% being cash-based.
Through Blink Rx. And as you said, we've seen that evolve down to 30%, cash support through Blink Rx. We expect that to continue to evolve over time, continue to decline, but it'll be something that will always be there to support patients as we foresee in the short term and even going into the long term.
Got it. What about the gross-to-net dynamic, Molly, if you wanna comment there? I mean, our MATs suggest that, you know, I think the gross-to-net, at least on the retail side, is about 55%, but I'm just curious for you to articulate where it is and how it will trend next year.
We've always expected the range between.
Between 50% and 65% discount. To your point, over the last couple quarters, it's been around that, mid- to high-50s. With the upcoming change in enrollments and plans starting at the new year, we expect some volatility in gross-to-net. But we still feel confident we'll be within that range of 50% to 65% discount.
Got it. Also on the quarter, on the call, you said that there are certain metrics that you will stop sharing with us. Why that's the case? What are those metrics? And if you are not sharing those metrics, how do we like, what should we look at? Just the prescription? Please articulate that.
So, I think the metric that you're talking about is previously we had communicated demand-written scripts. And it was kind of interesting, Yatin, 'cause when we first did that back early in the year, the first response we got from you and your peers was, well, what does that mean? We've never seen anyone communicate something like this. And it was our intent. We wanted to be really transparent and share that the demand that was out there for Voquezna. And it was the absolute right thing to do back then and to continue up to this point because we were doing it because at the same time while doctors were writing, we didn't have the coverage that we have now. At that time, we had 38% commercial coverage, and now we're over 80%.
So what that did was that communicated a doctor's intent to prescribe Voquezna, whether it was filled or not filled. And now that we have that access, we've just decided that it has served its purpose. It's time to put it aside because now we're looking at key metrics being we have the commercial coverage, we're sharing the NRx's, and then we're sharing total prescriptions.
Got it. And you'll continue to share the IQVIA and Blink split?
Yes.
Sort of.
Yes.
Okay, anything particularly unique to fourth quarter? I mean, it's a holiday season, but people eat a lot also.
Just curious if there is any particular dynamic to keep in mind for this fourth quarter?
So this is our. We just launched. So this is our first year experiencing the fourth quarter, as well, going into the first quarter of next year. So, I mean, we're just cognizant of the fact that there's, you know, a couple days at Thanksgiving, a couple days during the Christmas New Year period. So we anticipate growth, but we're also waiting to see what happens during that period. I would expect that we would look very similar to the rest of the market, meaning the overall pharma market as to how our response.
But it's our first year.
Okay. Very good. And then, I think some very near-term questions that I got from investor just recently. So the first one is, I think prescriptions were down last week, and I couldn't figure out why they are. If you can articulate what was the reason. I thought it was a Halloween week, but what was the reason why the prescription were down?
I can't tell you why because if I could tell you why, then that wouldn't have happened. So, yeah, last week we had a down week for certain.
But is there a fundamental reason that was driving it?
No.
Okay.
No, we don't know of a fundamental reason, and things just happen in the marketplace. I mean, if you and some of them are and can be easily described, and some cannot. I go back to, you know, during those few weeks of the hurricane, we saw a dip, and we could tag it specifically to the states that were affected, and then it came back on board.
But right now there's not a defined reason about last week's scripts.
Okay. So the other question is there has been some update in the update in your 10-Q regarding the IP. So there is some confusion out there.
So if you can sort of clarify for us, where do you stand in terms of IP? How does the exclusivity apply to monotherapy combination, all of that for us?
Sure. So I'll take that, Yatin. So there's two parallel strategies in terms of exclusivity. The first is around regulatory exclusivity. So the NCE of Voquezna was granted five years for, or vonoprazan five years for NCE. And then for QIDP under the GAIN Act, that was extended to for 10 years. So that gets to 2032 for the moiety of vonoprazan. So that's on the actual compound. When the Orange Book was updated, so for the launch of erosive GERD, the FDA didn't include in the Orange Book the full 10 years. And so we've been in regular correspondence with the FDA for them to update that, and bring that to a resolution. So that was what we outlined within the filing. In addition to that, we also have intellectual property, which is very strong, which is out to 2030.
But we believe that the regulatory exclusivity will trump the IP.
So, the 10-year, which is five plus five, it is on the NCE.
Correct.
So if you get it for the combo or the Dual Pak, you should get it for monotherapy.
That is correct.
I just need no confusion there.
That's correct. And we've had multiple independent regulatory legal experts review the statute.
Have all come to the same conclusion that 10 years applies to the Voquezna moiety.
Okay. What are the steps that you need to take? Like, what does this resolution look like?
At what time point FDA will sort of update that, Orange Book?
Right. So the company's evaluating a number of different strategies to bring that to resolution to reflect what we believe is the accurate depiction of that exclusivity. There's no defined timeframe in terms of a process for the FDA to do that. So the company's reviewing a number of different options, including doing nothing, including a citizen's petition, or litigating. So we haven't as yet determined which of those steps we'll pursue, but we will communicate to external stakeholders when we do decide what that looks like.
Okay. Are there precedents where other drugs, you know, with QIDP status got that exclusivity and it was reflected in?
There are no precedents that look exactly like Voquezna.
Okay. But generally, QIDP gets attached to the regulatory exclusivity, right? So five plus five is generally how it works.
Correct. So it's actually granted to Voquezna.
It was granted and earned in 2022.
Yes.
From the FDA.
Okay. Any reason why FDA did not apply or did not?
We don't know. We know that they haven't made a decision. They haven't said no.
But we don't know what's their rationale for not updating that.
Okay. But you feel good. 2032 is there, and then you have other IP that gets you to 2030, but with QIDP's 2032.
We're very confident. In addition to that exclusivity, one thing that's often forgotten is that this compound is ideal for a switch.
So the OTC market and anti-secretory market is very large. It's about.
Over $3 billion in OTC alone, and this profile with its rapid, potent, and durable action, and this, you know, the safety database that we have would be an ideal switch candidate for very late in the life cycle, and but entering into that marketplace, that gives you terminal value.
Across the compound, which is often forgotten.
Interesting. Are there studies that you need to do in order to prove that to FDA that this is?
There are very small studies. The two determining factors are predominantly that the condition is able to be self-diagnosed by the patient. And this category is already OTC and that there's an abundance of safety data, which we already have, but we'll have be able to further support that as we get closer to that switch.
Okay. All right. So let's talk about 2025, how that year is gonna look like because obviously NERD opens up a very big market. So if you could sort of articulate for us how the cadence of launch is gonna look like for the next year. It seems like now you have 80% coverage, so I don't know if you're getting to 90% is gonna change much. It seemed like it's all gonna be driven by demand. So please help us understand how should we think about 2025.
So I'll take the part of your question was on the access front. So I think that we're really happy with that 80%. And you might see some you know point additions through there as large employers that are associated with plans pull through. But really we've got the large PBMs we have the major health plans and we've got one step through a PPI which was critical to our strategy.
So we feel that we've got the access we need to go forward. 2025's clearly gonna be a year of growth. We plan to continue the direct-to-consumer campaign that's working really well for us. Now, we would expect, in Q1, like the rest of the industry, especially in the, you know, January, maybe February, there was a softening of scripts that occur throughout the entire industry. We should be no exception to that.
But overall, when you look forward to 2025, with the access we have in place, primary care is starting to come on board writing, and the enthusiasm and the feedback that we're hearing from physicians, 2025 will be a year of growth.
Got it. Going back to 4Q and just trying to get a sense of where the consensus is. I think when we started the launch earlier, I think the consensus was around 40-ish. Now it has moved to closer to 50, maybe 51, which means that you've done very well. So what is your comfort level with the consensus that we have for 2024 and also 2025?
As Martin mentioned, the fourth quarter has a lot of holidays, and so certainly we expect an impact, but nothing outside of what you typically expect in the industry in a year of launch. That being said, we continue to feel comfortable with the full year 2024, and are excited, as Martin said, about looking into 2025.
Got it. Are you thinking about establishing a guidance, like a yearly guidance or a quarterly?
Maybe not quarterly, like a yearly guidance?
We're still only a few months into non-erosive. So we need to see a few more data points to be able to get confidence to be able to provide a range for next year.
Okay. NERD, obviously a lot more patients than EoE, but higher unmet need in EoE, I would say, erosive form. Just curious, at peak, how do you think the relative contribution will be for NERD and erosive?
The relative what?
Contribution.
Contribution. I think it's been pretty consistent. What we've said is that, you know, the majority of the market is non-erosive. Matter of fact, I think the non-erosive is anywhere between 70%-80% of the GERD patients. So I think the major contributor to that will be the non-erosive patient, and then the balance being erosive GERD. And then H. pylori will probably be less than 10%.
Okay. You are seeing some uptake there in H. pylori?
We've identified a core group of prescribers that have really taken to Voquezna, and they are definitely repeat writers. And I mean, offer something different besides just the fact that it's superior, superior compared to the PPIs.
It's also in a pack that makes it very convenient for the patient to adhere to.
Got it. Got it. Where are we on the prescriber base right now? Like, how will that grow? And where you are also on this, on the buildout of the sales, is that sort of done or you need to add more because of the NERD and the expansion?
Okay. I'll take the prescriber base first. Our base we're calling on 52,000 physicians.
Which is made up of gastroenterologists and primary care, and then the nurse practitioner and physician assistants that call on them. Up until recently, gastroenterologists were the fastest adopters or new writers of Voquezna, which wasn't a surprise because they knew about P-CABs for many years before we arrived. They knew Voquezna was coming. They were comfortable with the mechanism of action. What we saw is primary care physicians have now started to come on board, especially as we enter non-erosive, so matter of fact, in Q3, when you take a look at new writers alone, it was the first time that the new writers, primary care surpassed gastroenterologists as unique new writers. So that tells us a couple things. You're getting more comfortable, and then the non-erosive approval, so now let's go back to the physician base I mentioned is 52,000.
We have a footprint of 320 sales force reps, and we feel really confident in that. I mean, it's the right footprint. We're reaching the highest volume physicians. They're calling both on, within their geography, the gastroenterologists and the primary care, and that's important because they have a network, those physicians between each other or amongst each other, and then our reps kind of at the center of that.
Got it. Got it. Any view on the ex-US opportunity?
So we have decided to outlicense the ex-US opportunity, so Europe and Canada. So we're evaluating potential partners there and evaluating the economics.
Okay. Do you think you need to do more clinical work or just?
No.
The package you have to submit?
No. We included in our phase three clinical program for all of the indications with European sites, and we consulted with the EMA when we were designing the protocols, and so that's ready. We haven't filed in the EU because we wanted to select a partner first because the IP begins when you get approval in Europe, and so we wanted to identify a partner and align on the strategy for the European markets.
Okay. Very good. And then on the two studies that you are thinking of initiating, maybe first on EoE, like, what exactly are you trying to achieve? What are like some benchmark that we should look at?
Sure. So for eosinophilic esophagitis, PPIs are utilized first line in EoE prior to biologics. And so strategically, our objective would be to position Voquezna in that position first line, prior to a biologic. And so we're looking at designing a protocol that's similar to others in this disease state where we're looking at histological endpoints. And the view is to displace PPIs in that first line, front line position for eosinophilic esophagitis, for both adults as well as adolescents.
Okay. What about the other study that you are?
So the other study that we're evaluating right now is looking at an on-demand regimen for Voquezna in non-erosive disease. We did complete and publish, actually was presented recently at the ACG, the phase two on-demand, which is a novel dosage regimen. PPIs can't be used on-demand because of their PK/PD, whereas Voquezna with its rapid onset of action is effective within the first couple of hours.
So we had proposed a study in the phase three setting. We're now evaluating the actual real-world use of the Voquezna in NERD. What we've heard in clinical practice is that the profile of the Voquezna is even more impressive than the clinical data. So what we're hearing from doctors is it works really fast.
It works through symptoms. It treats symptoms throughout the night, and they can see the utilization in an on-demand setting. In fact, some of the latest white papers, physician papers have incorporated a recommendation for on-demand. So what we're doing is really evaluating now real-world use over the next couple of months to see whether that study has a solid ROI.
Got it.
Return on investment before we proceed with the phase three.
Okay. Very good. Maybe just final question, on the balance sheet. Molly, how is it looking? It seems like you can get to profitability or break even with the current cash, but help me understand.
That's right. We feel good about our cash position. I think to your point, we feel that we have the cash runway to get us through to cash flow positivity, which includes a drawdown of our debt facility, and obviously a certain assumption on revenues and expenses.
Got it. Got it. Well, very good. I think that's all I had for you guys.
Thank you.
Thank you so much.
Thank you.
Thank you.
Appreciate it.
Thank you. Thank you.