Okay. Well, hello everyone. Thank you for attending. My name is Giselle Byer, and I'm with TD Cowen, and I'm pleased to introduce Phathom Pharma's Steven Basta, who will be presenting today.
Giselle, thank you very much. To the whole Cowen team, thank you for the invitation to be here. To our investors, we very much appreciate all of your support over the years. Phathom has been through a significant transition over the past year, focusing the company on the opportunity of treating gastroesophageal reflux with an intensity and focus and a call point that's now directed toward the GI specialist as our core call target. That has been paying dividends in terms of the continued growth and the efficiency that the organization's been able to generate. I'll walk you through a little bit of background on Phathom. Sanjeev Narula, our CFO, will join me for a discussion of the financials over the past year.
Obviously, some of the things we're going to be talking about are forward-looking statements with all of the natural uncertainties in that process. As a high-level overview, Phathom was created to in-license vonoprazan from Takeda Pharmaceuticals and to develop it for the gastroesophageal reflux opportunity in the U.S. We did that successfully. We have approval for three indications we'll discuss on the next slide. With a launch in late 2023, we are now two years plus into the launch. We've hit a milestone of 1.1 million prescriptions to date. Well north of 200,000 patients have received the product, that grows every day. We delivered $175 million in revenue, $175.1 million in revenue last year.
That was up from $55 million the year before, we are guiding to $320 million-$345 million in revenue for 2026. With 2026 being an important year for us. This is the year in which we're going to transition to operating profitability. On a pre-interest expense basis, we expect to deliver in the H2 of this year, Q3 and Q4, operating profitability. VOQUEZNA is a first-in-class product. It's a potassium-competitive acid blocker, which is a new mechanism of action in treating gastroesophageal reflux. This is actually the first new MOA introduced for gastroesophageal reflux in decades. The core advantage is that we can elevate pH in the stomach to a greater degree than had been previously available with prior modalities. That allows us to treat patients who are inadequately treated with prior therapeutic alternatives.
If a patient has been on a PPI, maybe has doubled their dose of PPI or is BID dosing with a PPI, and they're still in pain, that's our target patient, and that creates an enormous market opportunity for us. There are 22 million patients who are treated with prescription PPIs annually. There are about 65 million patients overall with gastroesophageal reflux. 40% of the patients who are on PPI therapy are still experiencing meaningful symptoms. That's our target market, is that 40% of the patients. A patient who's on a PPI who's fine is gonna keep on taking their generic PPI. There's no reason for them to switch. A patient who's experiencing significant pain, we can help. This is importantly the number 1 prescribed acid suppressant in Japan, where it was initially launched by Takeda.
We have the good fortune of bringing a product that helps patients tremendously into the U.S. market. Again, if you think about the evolution of this market, you know, the antacids have been available for a significant period of time, for many decades. H2 antagonists were introduced, work really quickly, have short half-life, don't have long-term effects. The PPIs were a fundamental improvement in the treatment of gastroesophageal reflux to the tune of a $12 billion-plus revenue stream for the class at peak, where there were 3 different products that achieved better than $3 billion in revenue. It's in that market size that we're launching VOQUEZNA in a market where 40% of the patients who are on PPIs are still experiencing pain.
That creates an opportunity with the first new MOA launch, with the introduction of VOQUEZNA to adequately treat those patients who have been in significant pain. Those patients predominantly end up in a GI practice. We'll talk a little bit about the patient journey. We believe $1 billion revenue opportunity potentially another $1 billion-dollar revenue opportunity in primary care practices. That really comes from natural cadence of how this patient journey evolves for patients starting in a primary care physician, going to a GI practice, and then going back to primary care. The core advantages, why does someone need VOQUEZNA when omeprazole's been available, you know, whether you were on Prilosec or Nexium or any of the PPIs? Why do you need VOQUEZNA? Because it provides rapid, potent, and durable pH elevation. Within hours of taking this product, pH in the stomach rises substantially.
It rises to a mean pH that is meaningfully higher than is achievable with a PPI. That's the key to reducing pain. Pain in the esophagus is driven by acid coming up from the stomach. If you raise pH in the stomach, it's not as acidic, and any fluid that flows up is not going to be painful in the esophagus. It's that simple. It's durable. We have an eight-hour half-life with demonstrated 24-hour acid suppression, so it works for a full day. As you take VOQUEZNA, you can lower the acidity, raise the pH in the stomach over a full 24-hour period. That dramatically reduces the insult on the esophagus and reduces pain. If you think about the patient journey, the typical GERD patient starts by taking TUMS. If that solves it, great, you don't need to do anything else.
If you're still having heartburn, you go to your primary care physician, they'll naturally put you on omeprazole. If Prilosec solves your problem, great, you're done. It's the patient who's still in pain, who goes back to their primary care physician and is still in significant pain, needs a better treatment. Often, they're double-dosed or they're BID-dosed on a PPI. If that doesn't solve their problem and they're still in pain, they're going to be sent to a gastroenterologist to determine whether or not they have erosions, whether or not there's some other significant condition that they have, what is causing the pain in their esophagus. The patient who lands in a gastroenterology practice has already spoken with their primary care physician, has already tried PPIs, may have tried doubling their dose of PPIs, may have tried adding an H2 blocker and is still in pain.
That's exactly who needs VOQUEZNA. The shift that we made last year to focus on GI reflects this patient journey phenomenon, which is that the patient landing in a gastroenterology practice is the patient who most needs our product. They go to practice, they're scoped, treatment managed, so they may be switched. At that point, when they're under control, they're going to go back to primary care. That becomes our future opportunity. First, we're trying to convert those patients who are significantly in need, who are in GI practices. That's the path to the $1 billion in revenue. Again, we're already guiding to well north of $300 million this year. That's the path to the $1 billion in revenue is out of GI.
As those patients go back to their primary care physician and want a refill, and they're telling their physician how much better they feel when they're on VOQUEZNA, that's the path to educating primary care physicians to drive the next $1 billion in revenue. What we did last year, when the company had originally launched this product, there had been a heavy focus on going out to primary care because, you know, the majority of PPI scripts are actually written in primary care. Again, if you think about the core of the opportunity for us is the patients who are most in pain, they're in GI. There are 20 million prescriptions every year for PPIs written in GI practices. Last year, we pivoted the sales organization. We realigned sales targets. We realigned our incentive comp plan.
We changed territory alignments and geographies to focus the sales organization on being able to spend a significant portion of the time. Our target is to spend 70% of our sales calls in GI practices where those patients who are most in need can be found, and where the physicians are looking for a way to solve the symptoms that the patient is still experiencing that drove them into that practice. We went through that transition in the sales organization through the course of last year, culminating in Q4 and realigning all of the territories. We have filled the majority of the open territories. We are at nearly a full-strength sales organization today.
We go into 2026 with a stronger sales organization realigned to the right call point with target lists that are aligned to the right call point with clear messaging on the growth story for how do we take a physician through the growth cycle of adoption of VOQUEZNA integrating it into their practice. We're well-positioned for growth. When we talk about growth toward a billion-dollar opportunity, how do you think about that billion-dollar opportunity in GI? Simple math is the following. We did 273,000 scripts last year, so, or last quarter. So annualized, we're at north of a 1 million script run rate, doing well north of $300 million this year as our guidance point. If we get to 4-6 million prescriptions per year, that's $1 billion in revenue.
There are 20 million PPI prescriptions every year coming out of gastroenterology practices, either from the gastroenterologist or from the APPs that work in those practices. If we can convert 20%-30% of the total PPI volume that is being prescribed out of GI practices, that's $1 billion of revenue coming out of GI offices. It's that simple. That's the math. Again, why do we believe that's possible? Well, why do we believe that's possible is because almost every one of those patients got to the GI practice because they were in pain. That's the reason that a patient with GERD gets referred to a GI is because the primary care physician couldn't resolve their symptoms with PPIs. By definition, those are patients who have failed PPI and are still in pain and need something stronger.
Is it realistic for us to get 20%-30% of those patients? I believe it is. I'll show you in a moment part of why I believe it is. That's the path to the $1 billion in revenue. The $2 billion in revenue is all those patients cycle back to their primary care physician, tell their primary care physician how fabulous they feel that their pain is resolved, and we start growing primary care physician prescriber base, and that broadens to the $2 billion potentially in revenue. That's as simple as it gets in terms of our growth strategy. It's about executing, and this is what execution looks like. This is our top 300 writers, so the 300 HCPs that have written consistently and their growth quarter-over-quarter, it's not capping out.
Today, our top 300 GI writers actually have converted about 20% of their prescriptions to VOQUEZNA. When we estimate that we can do that across the entire GI universe, it's because we've already got 300 people who are basically at that rate. We need to get the next 10,000-15,000 writers to that rate, but we need to grow. There's a lot of work. This kind of growth trajectory takes a lot of dedicated blocking and tackling, repeated calls, repeated sampling, educating physicians, getting them to get feedback from their patients. That process happens iteratively in every office with every provider. As they get more experience with VOQUEZNA, as they get more feedback from their patients on how much better their patients feel, that's what drives growth. We've done it 300 times.
We think we can do it across the entire GI community. Overall, what that looks like is consistent growth in our covered prescriptions and in our cash pay prescriptions. The way that our cash pay prescription program works, if a physician sends a prescription through the Blink network, Blink will triage that script, adjudicate it. If it's covered, they'll submit it as a covered script, and they'll buy down the copay to $25. If it's not covered, they'll work with the physician to assist them to get the PA, and they'll provide nudges and reminders to try to get the PA through to try to get the prescription covered. If the plan doesn't cover it at all, then the patient's gonna be offered a cash pay price.
The intent of that program is to make it as easy as possible for a physician to prescribe the product with confidence that their patient is going to get access, so that they don't have to worry about whether or not this particular health plan covers it, and they don't have to figure that out before they have the conversation with the patient. Not a problem. Doc, just send the script to Blink Health. If it gets covered, your patient's gonna get a $25 copay. If not, they're gonna be able to buy it on a cash pay price. For the last portion where we're gonna go through the financials, I'll introduce our CFO, Sanjeev Narula, who will take you through a little bit of what the financial evolution of the company has been over the past year.
Thank you. Should I stand here?
You can just stand there, and I can flip the last slide.
All right. Folks, I got three simple messages to communicate, and I got two slides to talk about this. One is I think, very simply, company is on a solid rhythm in terms of delivering on promises. Every quarter, if you look back last few quarters, what they said they're gonna deliver, they actually delivered that and then come better, right? I think that's gonna show that to you. We managed the expense while continuing to grow the top line. I think the second message is, we have modified our cap structure, enhanced our cap structure, and now we have a situation where we have enough liquidity to deal with all our business needs and meet our debt obligations and our covenant obligations for this year, next year, and the year after that.
That issue is completely addressed. Third point I wanna talk to you about is the guidance. We've issued a solid guidance which shows a significant growth from 2025-2026 and then continue to manage our expenses. The chart that you're looking at, if you're gonna look at the chart, full-year revenue was $175 million. It actually came in towards the higher end of what our internal projections was and the kind of the guidance that we gave. The guidance we gave at the last time when we pre-announced $174.5 million-$175.5 million, that's where you are. The most interesting part of this chart is what I should Look at it. Look at the first quarter.
The revenue was $28.5 million, and our cash usage was $85 million. almost 3 times, more than 3 times of the revenue, we were using cash, right? With the strategy that Steve talked about, focusing on GI and getting the maximum productivity out of that and continuing to growing the top line. Last quarter, our revenue was $57.6 million, and our cash usage was $5 million. That's a significant change. You can see we're continuing to growing the top line, and we're almost there in terms of flipping the company from using cash to generating cash. That's why when I talk about the guidance, I wanna talk about that. That's a huge shift. That's a huge shift, and that should actually remove any concern folks may have had.
Well, how can you grow revenue while cutting the expenses? Well, if you're spending the money which is not driving the revenue, then this is what you can achieve. That's why you see quarter after quarter, the revenue has grown up and the cash usage has come down from that perspective. Let's this thing. If we move to the next slide. This is our full-year guidance. If you look at it, revenue $320-$345 at a midpoint, $332 million. That's a growth of over $140 million even after adjusting. There's a little bit of an accounting adjustment we did, about $17 million-$20 million, that's why this number is a little bit higher. No change in the business.
Our gross to net is coming down, our COGS is going up a little bit. That's why you see slightly higher revenue than we would have if we hadn't done that accounting change. Anyway, to be transparent, that's why we're telling. That's still an 80% growth. From our 2025 actuals. Gross to net, very stable, consistent gross to net, we said 55%-59%. Our operating expense is $235 million-$255 million. $235 million-$255 million. At midpoint, that's 14% reduction from 2025 actual. You can see we're growing the top line more than we grew in 2025 in terms of absolute dollar, and we're loading the expenses.
What we said is we will generate operating profit from third quarter onwards, and we will do that for full year. We also said that we will generate positive free cash flow from 2027 onwards. You can see solid results and a solid growth from our 2025 actuals.
Thank you. In summary, we've righted the ship in terms of our financial profile. Clear path to profitability. We expect to have operating profitability in the H2 of this year, cash flow positive in 2027. We're on a solid growth trajectory, and we are executing on the plan we laid out a year ago. You know, a year ago, we said we were going to pivot the organization to focus on GI. We would bring down expenses. We would continue to grow the business in terms of the core focus on GI. The plan is working, and there is significant headroom for significant growth in the years to come. Thank you very much for the opportunity to join you today. Michelle, do you want to take questions if there are any? Yes.
What's the latest situation of the IP and when do you expect generation of the NDAs going forward for that?
Certainly. Thank you. The question that came in is what's our expectation on IP and generic entry timeline. While classically people talk about IP, in our particular case it's really about regulatory exclusivity. The way that our exclusivity works, our first approval was in a treatment pack for H. pylori. That's an anti-infective approval. Under the GAIN Act, which was approved, which was passed by Congress, the standard 5-year NCE exclusivity, it gets extended to 10 years for products that have a first anti-infective approval. The FDA confirmed last year that that 10-year exclusivity applies to all uses of VOQUEZNA, including our gastroesophageal reflux use, the molecule has that protection across all uses. Our NCE exclusivity extended by the GAIN Act means that an ANDA can't be filed for a generic product until May of 2032.
That's a first filing. Typical ANDA review timelines, the first round review is 10 months. Additional rounds are 8 months each. If any ANDA that gets filed has a 1-round review, that would be potentially an early 2033 launch. Most ANDAs take 2 or 3 rounds of review, so it could easily go into 2034 in terms of exclusivity. There is also an opportunity for us to extend exclusivity by an additional 6 months using the pediatric exclusivity extension. That's one of the core value opportunities in our EoE phase II trial. If that trial is successful, we would expect to have a conversation with FDA about getting a written request to include adolescent patients in our phase III program that could provide that potential 6-month extension. That's obviously dependent upon the outcome of the EoE trial.
May 2032 currently is the earliest date for a filing. 2033 or 2034 would be the expected dates for a generic launch. Any other questions? Yes.
What % of patients are getting repeat scripts? There's another one about in a second.
The question was around what % of patients are getting refills or getting repeat scripts. There are several different ways of looking at persistency. When we look at, you know, what % of patients will fill multiple scripts, that's the vast majority of patients. We actually tend to think about longevity, how many patients are maintaining their script refills over a 12-month period or an 18-month period. One of the analyses that we looked at, estimated that in the first 12 months that patients on average will fill 6-7 VOQUEZNA prescriptions within that first 12-month period. We are looking at different populations of patients and looking at what persistency looks like in different environments, but that's just sort of a ballpark of the fact that we get very good persistence on this product.
Did you make a decision about an on-demand trial to see if you get any of that?
We haven't yet. The question was around whether or not we want to do an on-demand phase III trial. We've completed an on-demand phase II trial, which demonstrated, positive statistical significant data that you can use the product as needed. That's not the dominant use state today. The dominant use state today is in patients who have, you know, more severe GERD symptoms that require daily use. There's the potential of expanding the population to patients who only want to take a treatment as needed rather than taking a treatment daily. We're in the midst of doing a market assessment to determine that market opportunity and how that would be positioned and what kinds of claims, and then we'll make the decision about whether or not to do that trial after the assessment.
The FDA maybe talked a little bit recently about over-the-counter medicines.
Well, yeah, there absolutely is an over-the-counter market for gastroesophageal reflux treatments. All you have to do is walk into CVS and take a look up the Prilosec and Nexium, you know, wall of GERD treatments that exists. A number of those opportunities. There is an enormous OTC market for these treatments. Obviously, our core business is on the prescription side, and we don't wanna reposition this product as an OTC product. As a lifecycle management question of is there an opportunity for OTC beyond the Rx timeline, and what does that look like? That is an active assessment that we're doing as to how one would think about doing that. That's not imminent. That's not something we're thinking about doing today. As you think about the long-term lifecycle beyond 2033, 2034, what does that look like?
There's absolutely an OTC opportunity with a multi-hundred million dollar market for some of these products.
From, like, an HCP perspective, like, what are the biggest hurdles you're facing or what are the biggest reservations from HCPs that are that show the reluctance for them to switch to the VOQUEZNA from the previous PPI medications?
When HCPs learn about VOQUEZNA and learn what it actually does for their patients, there is a very rapid process within the GI community of embracing the clear clinical value proposition. It's clear to gastroenterologists that many of their patients are landing in their office because they're still in pain, and landing in their office after they've taken PPIs. There's a strong sense that the need state is out there. If they don't know about VOQUEZNA's clinical data yet, and they haven't had personal experience with it, they don't know how much better than a PPI is it. Sampling becomes very important for us. The education process of allowing a physician to get feedback from their patients becomes a critical part of the adoption cycle. It's not just about convincing a physician to prescribe the product.
It's actually about having them get feedback from their patients about how much better they feel. That's what convinces a physician that this is a fundamentally different outcome for their patient. The next step is actually solving the confidence and access question. That they know that if they write a PPI script, that'll go through really quickly. They're not certain what the PA hurdle is going to be or which insurance companies are going to cover it, which insurance companies are not going to cover it. There's an education process, first with the physician around how much better their patient feels when they're on VOQUEZNA, then with the physician about the fact that we can assure them that their patients are going to be able to get access to the product if they send the prescription to BlinkRx.
Particularly for commercial patients, they will either get the $25 copay if their commercial insurance is covering it, or they're gonna get access to the cash pay price. Last year, we turned on the cash pay option for certain government pay patients as well, so that it's a much more broadly available opportunity. That reduces any uncertainty that the physician might have about whether or not their patient's gonna get access, which is a common question regarding any branded therapy.
Are there patients who go back to the PPI use after trying VOQUEZNA? If so, what are the reasons?
I'm not certain that I can answer the question for any individual patient or what are the reasons. Obviously, there's no drug that has 100% persistence. Yes, there will be patients who, at some point, stop taking VOQUEZNA. That could be because their copay is more expensive than they want. It could be because their heartburn is not as bad as it was before, and they're adequately served on a PPI. That's speculative on my part regarding any one particular patient. Each patient may have their own journey. We actually get very good persistence that a very high % of patients do maintain their treatment. In fact, we have recently been looking at data that shows that a significant number of patients who stop restart therapy.
There will be patients who go off, maybe because it's easier to get their PPI, but then they find that the experience on VOQUEZNA is so much better that they restart. That's actually a meaningful number of patients as well.