Good afternoon. Welcome to the Jefferies London Healthcare Conference. My name is Dennis Ding, biotech and SpecPharma analyst at Jefferies. We have the wonderful pleasure of having Phathom Pharmaceuticals here with us. Thank you, guys, for joining. For people who are not super familiar with the company, can you just give us a brief background in terms of VOQUEZNA and what you're trying to accomplish there and where you are in the launch? Terrific. Dennis, thanks so much for the invitation to join you today. And I'm Steve Basta, CEO of Phathom. It's a pleasure to be here. At a really high level, Phathom is bringing to market, or has already introduced into the market, the next generation gastroesophageal reflux treatment. We've licensed the product from Takeda. It was clearly the number one treatment in the category in Japan. Fundamentally, VOQUEZNA, our product, produces better pH elevation in the stomach than is possible with any of the prior generation therapies. That produces an effect for a patient that significantly reduces pain and symptoms in a patient who is still experiencing symptoms despite being on a PPI. Our opportunity in the market is targeting the enormous PPI prescribing opportunity, but specifically targeting the 30%-40% of patients with gastroesophageal reflux who are on a PPI and are still experiencing symptoms. Those patients who are still experiencing significant discomfort, still experiencing pain, we offer them a better treatment. We have been growing really nicely. Did $55 million revenue in 2024, the first full year of launch. We have guided to $170 million-$175 million of revenue this year with nice sustained growth. We have, over the past six months, pivoted our strategy to focus much more intensely on the gastroenterology opportunity rather than on the primary care opportunity. I think for the next couple of years, that is the driver of our growth. Over time, we are going to be growing in both gastroenterology and then reintroducing the primary care strategy in the future. Got it. Perfect. Maybe just talk about the market. I mean, it sounds like millions and millions of patients, right? This could be a very, very large drug for Phathom. You touched upon this earlier around Japan and it being one of the number one selling drugs in GI there. Remind us what that is and what is really driving your confidence that we can have the same success here in the U.S. We actually think about the U.S. market a little bit differently from the Japanese market, but you're right that the Japanese opportunity is an excellent hallmark of just how good the drug is and how satisfactory it is for patients. There are points in time, by the way, over the past 10 years, and this drug was introduced in Japan in 2015. There are points in time over the past 10 years where this has been the number one prescribed drug in any category in Japan. It's that significant a therapy, and it's clearly the leading treatment for gastroesophageal reflux in the Japanese market. In the U.S. market, because of our market access requirements, it requires prior authorization prior to a patient getting access to the product. The positioning of the product is a little bit different. We're not going after the entire 100 million prescription opportunity in the PPI market. We're not trying to displace all PPIs. We're really going after the 30-40 million prescriptions that are going for patients that are still experiencing significant discomfort. That opportunity is still quite substantial, but it really reflects our utilization management, our prior authorization requirement that a patient has to have failed on a prior PPI in order to get VOQUEZNA. It's the patients who've been on PPI therapy. They've been on omeprazole. They've doubled their dose of omeprazole. Maybe they've added an H2 blocker. They're still experiencing pain. They go to a gastroenterologist for an evaluation. That patient is not going to be adequately served with a PPI. They need something stronger. That's when they switch. That market opportunity just in gastroenterology, to frame the size of the opportunity for the investor universe, there are 20 million PPI prescriptions per year that are written by either a gastroenterologist or a nurse practitioner or a PA in a gastroenterology practice. The vast majority of those patients are patients who were referred to a gastroenterologist because they were still experiencing significant enough pain that their primary care physician wanted them to go and get scoped to make sure there was not a more significant problem. Almost definitionally, the patient who lands in a gastroenterology practice and is a GERD patient referred there because of heartburn is a patient who needs our drug because the primary care physician would have already tried one or two PPIs and would have likely doubled the dose of their PPI before they ever sent them over to get scoped. That 20 million prescription universe opportunity, that's our initial target segment. We think there's a clear path to potentially reaching a billion dollars in revenue or a billion dollars plus in revenue in the GI market. Sort of how we think about that is that today in Q3, we were at a run rate in GI of about 600,000 annualized scripts per year. That's not within the quarter. That's the quarter number annualized on a full year basis. That's about 3% of that 20 million script opportunity. If we can get to something on the order of 20%-25% of the total 20 million scripts in GI converted to VOQUEZNA versus PPIs, and again, all those patients have failed prior PPI therapy or virtually all of them have, if we can get gastroenterologists to convert 20% of that market, that's approaching $1 billion in revenue just in GI. There is extra revenue that comes in primary care. That is really how we're thinking about that opportunity is how do we grow utilization within every gastroenterology practice so that a significant portion of their patients are being converted over. Right. And to be clear, you are not competing against PPIs per se. Right now in the first line, they have to have failed at least one to get VOQUEZNA. That's right. We don't actually, I don't personally think of PPIs as competition in any way. I think of PPIs as the backdrop in the landscape that the landscape in which we operate is a universe in which everybody with gastroesophageal reflux has already used a PPI. And the only patients that we're talking about are patients who've already failed on a PPI. So it's not really a relevant competitive choice to say, "I'm going to put you on a different PPI because the last two that you tried didn't work." We're going to try it. That's not really a competitive solution. There's not a competing sales force outpitching PPIs as a solution to this. It's simply that the landscape in which we operate is a landscape where everyone who has been sent to a gastroenterologist has by and large used and failed a PPI, and now it's just a matter of educating them about the ability to convert to something better. It's really an underlying state kind of analysis. Yeah. So then I have a question around access and just, you know, I appreciate that ideally this would be used after a PPI, right? So failed one line of therapy. But based off of your conversations with payers and just the level of access that VOQUEZNA has currently, is that generally fair? Like patients just have to step through one PPI, or are there cases where they have to fail two or maybe even three, et cetera, and just, you know. The answer is yes to both parts of that. Yeah. For more than 50% of our coverage, we have north of 80% of commercial lives covered. For more than 50% of our coverage, it's a single step requirement that a patient has to have failed a single prior PPI. There are some payers that require that a patient's failed two PPIs, for example. There are exceptions to that. There are some patients who experience that exception, but the majority of our coverage is a single step. Okay. Got it. Steve, you've touched on this a couple of times just around GIs, the focus on gastroenterology, right? That has been a change in sales focus over the last 6 to 12 months. Talk a little bit about what drove that decision to move away from PCPs and just focus on GIs for the time being. That's exactly right. In the last six months, we have pivoted our sales organization. Early in the first year of launch, the company had been really much more thinking about the broader PPI market in primary care. 70% of our sales call time was going into primary care, and there was sort of a go, a mile wide and an inch deep kind of strategy to try to reach a broader universe of physicians. I joined in April, and in May, we announced a strategic shift where we were going to reallocate Salesforce time to spend much more time on the specialist who's seeing more severe patients. We are reallocating Salesforce time. We've realigned target lists. We have realigned territory maps so that our sales reps can spend going forward 70% of their time in GI rather than in primary care. The reason for that is multi-fold. One is the GI patient population needs this drug. That's where the preponderance of patients are that have the most significant need for this drug because almost by definition, if a patient got referred to a GI to get scoped to see if there's a problem, that's because they were still experiencing symptoms. In many cases, their physician has already tried pretty aggressive strategies where they've doubled their dose. They switched them to a second PPI. They've doubled the dose of the second PPI. It's still not working. That's when they send them to get scoped. That's a self-selected population that is highly in need of our drug, and the physicians have been receptive to our drug and are much more knowledgeable of our drug. The other element is when you looked at our internal metrics, we were getting 4x the productivity of scripts per sales call when we were calling on gastroenterologists versus when we were calling on primary care physicians. It's just more efficient. It's actually just a more efficient driver of growth if we can allocate our most valuable resource, which is our Salesforce time and the intensity of those conversations to the most productive prescribing base. That has been the strategic shift that we've taken over the past six months. In terms of the productivity for the sales reps in this GI area, are we there yet in terms of like have we reached peak productivity yet, or is there way like, should we be looking for that in 2026 as they kind of go along? I think that's a really important point that there's a staged transition that we've taken the Salesforce through to be able to allocate their time to gastroenterologists. The last step of that transition, we've just implemented this quarter. Step one was to communicate to the sales reps that we wanted to spend more time in GI than in primary care. We did that in May. Step two was to start changing the compensation structure so that it didn't disproportionately incentivize going into primary care, but it balanced rewarding reps for going into gastroenterologists. Step three, which we did in the July quarter and the July to September quarter, we rolled out in July a new set of targets for each of the sales territories, which included all the gastroenterology targets and took out primary care targets that had never written a script. Unproductive call time was going into a number of physicians that were not writing. We took those out and we added in the remainder of the GIs. We still had misaligned sales territories. The territories had been aligned initially on total PPI volume, not on PPI volume within gastroenterology. Once we remapped what the distribution of gastroenterologists is in October, we realigned the territory geographies. This is a staged process because you need to run this through an orderly process that allows the reps to build relationships with their new customers. That last step of realigning the territory targets we did in October. With that realignment, we have a few open territories. We are recruiting those open territories and we will have the full force in place by Q1. It is a staged process. We should start to see the effects of that transition in the coming months. What we're already seeing that's really been quite heartening is through all of those transition steps, we've maintained our growth rate. That's basically a product of anytime you take a Salesforce through some transition, it can create some noise in the process. The offset to that is the improved productivity in GI. The GI sales calls are working and that's driving a meaningful traction in our growth rate that is more than offsetting the process of realigning the Salesforce. Now, as we get into Q1 and we get to a full strength sales organization fully aligned around GI, that positions us to move forward even more aggressively. I think that's a totally fair point, right? Because you have materially shifted the strategy, yet when you track scripts over the last three to six months, they've been pretty steady, like steady growth, I mean. And that's really encouraging to see. Okay, perfect. Then remind us this year what happened around the GAINS Act and the Citizen Petition and just how you're thinking about exclusivity. I know that that was a big debate earlier in the year, but I think we're on the other side of that, which is great for you guys. I think we are on the other side of that, and I think it's helpful to provide investors with sort of a clarity on that. For those who may not be familiar with our exclusivity strategy, the core to getting long enough exclusivity for this product hinged on using the GAINS Act as an opportunity to extend exclusivity. The path to doing so was our first approval was for treatment for H. pylori. It's an infectious disease treatment that qualifies for an extra five years of exclusivity. You get the five-year NCE exclusivity, you get an extra five years on top of that, and the FDA confirmed that for H. pylori PAKs. When the molecule was approved for gastroesophageal reflux, there was some ambiguity about how FDA was going to apply that longer exclusivity period to this drug for all indications. We clarified that in June. So we filed a citizens petition, prosecuted that with FDA. FDA clarified in June that they are applying the same exclusivity timeframe that they had previously applied to the H. pylori PAKs now to all indications for VOQUEZNA. So that provides us exclusivity through May of 2032 that prevents an end of filing for a generic product until that date. Now that's filing. That's not when a drug would be introduced. Typical end of review times are at a minimum 10 months, but typically you get two rounds of review, so it's often 18 months plus. So that could take you through 2033 and potentially even into 2034 to run through the end of review timeline until a generic launches. We have one more extension of exclusivity potential, which is that we could get an extra six months of pediatric exclusivity. That's tied to our strategy to do an EoE phase two trial. If that trial's successful and FDA provides us a written request to include pediatric patients in phase three, we could qualify for an additional six months. That potentially moves the exclusivity window well into 2034. We think we're confidently into 2033, maybe through 2033 in terms of exclusivity today, depending upon the generic review timelines with a potential going into 2034. No, that's really important because it sounds very minor, six months to a year, but when you're at a billion dollars. Or more. Or more. Or possibly. That matters a lot, right? So as you think about the peak sales opportunity, Steve, you mentioned a billion dollars multiple times, but like I wonder when do you expect that VOQUEZNA to hit that billion dollars, right? Like are we talking about like 2032, 2034, or could that actually be kind of. Sanjeev, do you want to take this as a financial forecast question? Sanjeev just joined as the new CFO, and I'm going to let him. Thank you. Thank you. Again, Sanjeev, I just joined about eight weeks ago. Listen, it's obviously a guidance question. We can't talk to you about that, but I think what's fair to say, you see the trajectory of growth last couple of quarters. You would see continued trajectory of growth as we go forward, and it is only a matter of time. I think the important thing that Steve talked about is the focus on GIs, which is about 70% of the call points. Not to forget that primary care will also account for about 30% of the call points. I think it's a near-term horizon, whether it's two years, three years, we're going to hit that, we're going to hit that billion dollars. Okay. Okay, that's helpful. That's assuming just mostly GIs. If you guys do reinvest and kind of go into PCPs again at a later date, do you consider that upside or is that? Right now, even if today with this strategy, it's not that we are not calling on primary care. I think Steve clarified that we're calling to the primary cares who are prescribing it earlier or who are the high prescribers. We continue to call on them, and then we continue to do that. A full-scale primary care launch like we had before is something which is out there in maybe 2027, 2028. Right now the focus is going to be wherever we're most productive with the primary cares. Okay. There's also natural carryover of prescriptions from the GI practice to the primary care practice. The same patient, those 20 million prescriptions annually in GI, that's not the same patients each year because patients do not spend multiple years in the GI practice. If they've got gastroesophageal reflux, they get referred in, they get scoped. If they have Erosive Esophagitis, they'll get scoped again after they've had significant treatment with VOQUEZNA, most likely because it works really well for Erosive Esophagitis. Once their erosions have healed, they're going to be sent back to a primary care physician. If they do not have Erosive Esophagitis, then their treatments are going to be adjusted until they're not feeling any discomfort, and then they're going to be sent back to a primary care physician. If a patient is cycling through a GI practice and then being referred back, we have an opportunity to continue capturing that patient's scripts, but in a primary care setting that is additive on top of the GI penetration. When we've indicated that there's a billion dollars of potential in GI, that's out of that 20 million script volume in GI. There's also just natural carryover that a whole bunch of those patients are going back to primary care and are going to, I mean, I got to tell you as an NF1, when I switched to VOQUEZNA, it's night and day different from being on a PPI. This is a meaningfully different experience. It's so much better that you just don't feel discomfort. I used to worry about eating spicy foods. I used to worry about whether or not wine was going to cause discomfort. None of that happens on VOQUEZNA. Patients are not going to want to switch back. If you've switched and you're not experiencing pain, you don't want to switch back. You want to stay on this drug. That is going to lead hopefully to really good persistence over time. Maybe on that point, like talk a little bit about persistence and maybe it's a little bit early because I think we're still in year two of the launch, but how has that tracked beyond maybe at like one year and then at two years just in terms of persistence? We're just starting to capture data on year two. I mean, again, we're only, we're not even 24 months into the launch yet. We're just starting to capture year two data, and we'll have a much better picture on that in the next year or two. Again, just A, the experience with PPIs is that you get really good persistence. I think there's a potential we get even better persistence with VOQUEZNA because these are patients who are more significantly in pain than the average PPI patient. They are even more motivated to solve the problem and to maintain the solution of the problem. Again, just personalizing the experience. I mean, this is very typical for a patient. Our product works really well for 24 hours, but it starts to wear off in day two. If you've got significant heartburn, day two, you start to notice that your heartburn's returning, you want to take your pill. The persistence really comes from the reinforcement of the fact that this eliminates pain. Pain is a remarkably potent reinforcer of behavior that will drive persistence of this therapy over time. Yeah. And then over the medium to long term, I know you provided some color on steady state growth and that discount. Can you remind us what that is and where the pushes and pulls on that? Could that be revisited at a later time once volumes start kind of decelerating? Yeah, sure. Gross-to-Net actually has been very consistent for the company because the access is very stable. As Steve pointed out, over 80% of commercial lives are already under contract for that. That being stable, Gross-to-Net has performed very stable for the last three quarters if you look at it. The original guidance for the company was 55-65%. I narrowed the guidance for fourth quarter because of the stability of the gross margin. We narrowed it to 55-60%. Now, not giving the guidance for next year, but I do not expect a significant change in the access because we got very good access and therefore I do not expect a significant change in the Gross-to-Net percentages. There is obviously going to be pushes and pulls inside that, but we got enough things going on within that that I feel very comfortable about how this is going to evolve in a short to medium term. Okay. And in terms of coverage, VOQUEZNA is covered through commercial insurance, but not Medicare. Is that right? Not officially through Medicare, although there are some Medicare Part D plans that will in fact cover it. We get some percentage of Medicare scripts through, but it's a smaller percentage than commercial. Okay. Okay. Yeah. Because when you guys report your data, there's always a proportion of cash pay. That's right. Right through BlinkRx. That's right. It's actually a fairly material proportion of the overall script volume. I'm just wondering, is there any way over the next few years where you could convert that cash pay to, I guess, a revenue-generating prescription that's covered? And if that's a priority for you over the medium term. There are several ways that those cash pay scripts actually benefit us in a meaningful context. We do not actually think about it as a percentage of the overall number as though there is a split between the two. We actually think about growing all scripts, and we are going to be growing covered scripts, and we are going to be growing cash pay scripts, but we are fine with whatever growth rate we can achieve. We want to maximize the growth rate in each category. We are not trying to focus on engineering what the ratio is. We are just trying to grow both. The reason that is beneficial is several-fold. If it's a commercial patient who has a high deductible plan, for example, and therefore gets our cash pay option because their insurance wasn't going to cover it, then later in the year, some of those patients, once they've worked through their deductible, we're going to be resubmitting every month for a coverage decision, and we might get covered for the last two, three, four months of the year. We may actually get a covered script reimbursement level at some later point. You want to get that patient started. Now, with Medicare patients, it's not possible to do that. With Medicare patients, if they go on cash pay, they're on cash pay for the year. The next year, it's possible that their plans may have changed. They might have signed up for a different provider for their Part D plan, and so there may be a possibility, but during that calendar year, they can't switch. The more important consideration is really the broader GI community and primary care community experience of physicians prescribing this product. We want a physician to not hesitate at all to prescribe this product. If they're uncertain whether their patient's going to get access to it at low cost, then they're hesitant about prescribing it. We take that away by offering the cash pay option, and we make it easy for a physician to write the script. If it gets covered, the patient's going to get a $25 copay price, and that's going to make a lot of sense. It's going to be easy for a patient to get access. If the patient doesn't get the product covered, they're still going to have access to the product at a $50 cash pay price, and the physician can write the script, can send it to BlinkRx without worrying that their patient is going to come back and say, "Oh my God, doc, this was so expensive. I can't get access to it." That makes it easier for a physician to choose to prescribe. The whole point of the program is to make it as easy as possible for a physician to choose to prescribe and to grow total script volume. Yeah. I think there are two other points to this one. One is the patient perspective. If a patient gets on a cash pay prescription and has got a great experience in that, he's going to go back to his primary care or GI, talk about the drug. That's the positive reinforcement a healthcare provider will feel. The second thing, the way to look at it is we're not cannibalizing our covered business through cash pay. They're both independent of each other, and they both are growing. Financials are obviously based on the covered prescription. As long as that is growing and cash growing, we feel great about kind of the overall experience that we get both for patients and the doctors. Yeah. Makes total sense. We're running out of time, but thank you guys so much for being here. Looking forward to a great 2026. Dennis, thanks so much. Thank you. Thank you very much. Thank you. Thank you.