Phathom Pharmaceuticals Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
March 7, 2024

There are 12 speakers on the call.

Operator

Hello, and welcome to the FASM Pharmaceuticals 4th Quarter and Full Year 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. After the presentation, there will be a question and answer session. Please be advised, today's conference is being recorded. With that, I would like to turn the conference over to Eric Schiarelli, Fathom's Head of Investor Relations.

Operator

Please go ahead.

Speaker 1

Thank you, operator. Hello, everyone, and thank you for joining us this morning to discuss Fathom's 4th quarter and full year 2023 results. This morning's presentation will include remarks from Terry Curran, our President and CEO Martin Gilligan, our Chief Commercial Officer and Molly Henderson, our Chief Financial Officer. Azmi Nabulsi, our Chief Operating Officer, will also be joining the team during the Q and A portion of today's call. Just a couple of logistical items before we get started.

Speaker 1

Earlier this morning, we issued a press release detailing the results we will be discussing during the call. A copy of that press release can be found under the News Releases section of our corporate website. Further, the recording of today's web can be found under the Events and Presentations section of our corporate website. Before we begin, let me remind you that we will be making a number of forward looking statements throughout today's presentation. These forward looking statements involve risks and uncertainties, many of which are beyond Fathom's control.

Speaker 1

Actual results can materially differ from the forward looking statements and any such risks can materially adversely affect the business, the results of operations and trading prices for Fathom's common stock. A discussion of these statements and risk factors is available on the current Safe Harbor slide as well as in the Risk Factors section of our most recent Form 10 ks and subsequent SEC filings. All forward looking statements made on this call are based on the beliefs of Fathom as of this date, and Fathom disclaims any obligation to update these statements. Also included today are non GAAP financial measures, which should be considered only as supplemental to and not a substitute for or superior to GAAP measures. To the extent applicable, please refer to the tables at the end of this morning's press release for reconciliations of these non GAAP measures to the most directly comparable GAAP measures.

Speaker 1

With that, I will now turn the call over to Terry Curran, Sazen's President and CEO, to kick us off.

Speaker 2

Teri? Thank you, Eric, and thank you to all those joining us on today's call. This is our first earnings call as a commercial company, and I'm excited to report on the progress we've made during both the Q4 2023 and the start of the calendar year 2024. In that short period, we've achieved many regulatory, manufacturing, financial and commercial milestones demonstrating the significant experience and dedication of our teams. In November, we set out with 3 initial goals for the early stages of launch: to communicate the Aquezna's clinical superiority versus the PPI, drive awareness with physicians and build access to commercial patients.

Speaker 2

Today, I'm proud to share that we're delivering on those goals. Prescribers have quickly recognized the Questa's differentiated and novel mechanism of action. Our reps are even sharing stories of physicians echoing the Questa's rapid, potent and durable acid suppression profile. Excitement is translating into demand with thousands of scripts being written since product became available. After over 30 years since the first PPI was approved, there is strong demand for something new.

Speaker 2

Further, the number of patients who have used the Questner is growing daily. For me, this is one of the most rewarding elements of our launch. Through our reps, employees and sometimes even friends and family, I'm hearing stories of long suffering patients who are experiencing noticeable improvement with the Quezna. We're working hard to ensure as many patients as possible can access the Quezna and share that experience. In fact, with our recent Express Scripts win, we're well on our way to securing wide spread coverage for commercial patients.

Speaker 2

These early indicators, along with the not present massive commercial success in Japan, have reinforced my belief in bequesna's bright future here in the U. S. With an erosive GERD market of approximately 7,000,000 U. S. Adults, positive feedback from physicians and patients and anticipated label expansions, we remain confident in our belief that that over 3,800 prescriptions have been filled for the Quezna products.

Speaker 2

For clarity, this includes scripts captured by IQVIA as well as those that were filled through BlinkRx. We specified filled because we have simultaneously been monitoring an estimate of total demand, which we believe paints a comprehensive picture of the early and growing position interest in writing the Quezna products. We estimate upwards of 14,000 total prescriptions have been written launch to date. We're pleased with this magnitude of total demand and see it as an indicator of what's on the horizon for the Quezna as we continue pursuing broad payer coverage. Last month, the quiz now was added to Express Scripts National Formularies for commercial patients.

Speaker 2

In line with our goal, we secured placement with a single step edit through a generic PPI. As a result, the Quezna bottles access expanded to an estimated 60,000,000 commercially covered lives. We believe our ability to obtain commercial formulary placement with one of the nation's largest PBMs so quickly after approval indicates that our pricing and access strategy is resonating well with payers. We remain actively engaged with other major PBMs and health plans, and we expect further expansion of commercial coverage throughout 2024. Ultimately, as this coverage comes online, we anticipate the gap between total demand and field scripts will narrow significantly.

Speaker 2

As we continue to execute on the launch, our R and D team remains focused on advancing pipeline opportunities for vinoprazine. In December, we announced that the FDA had accepted our non erosive GERD daily dosing NDA and assigned the PDUFA target action date of July 19, 2024. We are now only 4 months away from that decision date. Nonarosid GERD represents the largest subcategory of GERD with an estimated 15,000,000 U. S.

Speaker 2

Adults diagnosed and treated for the disease annually. If approved, this indication will significantly broaden the Quezna's addressable population and, we believe, further accelerate uptake. The review of our application is proceeding as expected, and we continue to plan for July launch in this sizable indication. As for further development, we anticipate initiating a Phase III trial for as needed non erosive GERD and a Phase II trial for esophilic esophagitis later this year. We believe and continue to expand the total addressable market for the Quezna products.

Speaker 2

We're excited about these programs and anticipate sharing more information about our progress in the future. Later in the call, Molly will further detail our 4th quarter and full year 2023 financials, for which we reported revenues of 682,000 dollars and ended the year with $381,000,000 in cash. Overall, we believe our strong balance sheet will enable us to continue delivering on our launch and development strategies. I've previously stressed several foundational dynamics that are necessary for a potential blockbuster drug. These included a significant addressable market, clear unmet need among patients, demonstrated superiority and physician demand.

Speaker 2

The qualitative feedback from these early months of launch has bolstered our belief that these elements are present in the grid market. It now comes down to us executing on our strategy and this team is poised to deliver. These are exciting times for Fathom as we continue to make progress on both the commercial and development fronts. This year is sure to be filled with new milestones and will set the foundation for the future of the Bequisna. Our pursuit of becoming the number one prescribed acid suppressant in the U.

Speaker 2

S. Is off to a strong start, and we remain steadfast in delivering on our strategy of driving blockbuster potential through continued market expansion. I will now turn the call over to Martin to dive deeper into our launch progress. Martin?

Speaker 3

Thanks, Terry, and hello, everyone. I'd like to first echo Terry's comments that we're very happy with how the launch of Aquezna has started. We're progressing as anticipated and our pre launch research is being validated by the feedback we're hearing from physicians and patients. During today's call, I'll touch on both quantitative and qualitative elements from our launch. But I know many of you on this call are most keen to hear about our script data.

Speaker 3

So let's start there. Today, we're reporting script data as of February 23 from both Acuvia and Link Rx, which represents our latest available information. With the second half of our sales force entering the field in early January, this reflects about 7 weeks of our full promotional efforts. This has translated to achieving over 3,800 filled prescriptions, which have reached patients' hands. As our reps continue to promote to physicians and garner the backing of strengthened commercial coverage, we expect positive script momentum to continue.

Speaker 3

Additionally, our KPIs indicate that over 1200 unique prescribers have written the VEQUESTA script that has ultimately been filled. Among those writers, we are already seeing repeat prescribing, which builds our confidence that physicians recognize Vepresna's value for patients. We are encouraged by the initial breadth of this prescriber base and anticipate it will grow as we further engage with high volume targets. Another important metric that Terry mentioned was total demand. We estimate that upwards of 14,000 prescriptions have been written since the start of launch.

Speaker 3

We believe the significant amount of demand to be indicative of the high level of unmet need in the market. It demonstrates that patients are interested in trying something new and physicians are willing to rate bequestana. As you've heard us say historically, providing access to patients is key to converting demand. As with all new products, negotiating coverage with payers is an essential step in achieving a successful launch and this process often takes time. In anticipation, we established a patient support program through BlinkRx, which has meaningfully expanded patient access, resulting in an increased number of filled scripts.

Speaker 3

Early data shows the use of BLINKRX growing consistently accompanied by positive feedback. However, there are still physicians sending scripts to their patients' long established retail pharmacies. Although this has led to a proportion of early VAPUCEV prescriptions not being filled, we believe we are well positioned to convert more of these scripts over time. In the near term, our sales force continues to emphasize the availability of BLINKRX to physicians as it often represents the best option for getting VOPRESNA into patients' hands. And ultimately, future contracting with PBMs and health plans will increase payer access and narrow over the gap between total demand and filled scripts.

Speaker 3

In fact, with the VEQUESTA now in formulary at the first of the 3 major PBMs, we are already making progress on that front. The first major PBM contracting win was with Express Scripts, often referred to as ESI. About 3 weeks ago, we announced the positioning of Biquesna on ESI's national formulary. This was a key accomplishment for Fathom, expanding VEQUESNA's availability to roughly 23,000,000 additional commercial lives. Our team was able to secure non preferred brand status with a single step edit exactly as intended.

Speaker 3

The single step is with respect to use of generic PPI prescriptions within the last 130 days. These criteria will be evaluated at the pharmacy counter electronically avoiding any administrative burden for physician or office staff. Alternatively, if the patient used over the counter PPIs instead of prescriptions during that time period, they could also satisfy the single step by means of a prior authorization with attestation by their doctor. This latter avenue for access is a significant development as it means ESI patients could potentially access VIEQESNA as a first line treatment. As intended, this formulary position provides physicians a straightforward path to accessing VEQUESNA for the broadest patient population.

Speaker 3

Voquesna's total commercial coverage now reflects an estimated 60,000,000 commercial covered lives. Achieving this level of commercial access less than 3 months into product availability is fantastic, but we know there is still work to be done. We believe our progress so far bodes well for our other ongoing negotiations where we remain focused on securing VIEQESNA coverage with similar formulary position. We are confident in our strategy and believe it will continue to yield expanded coverage, resulting in an uptick in filled prescriptions throughout the remainder of 2024. Shifting to our promotional efforts, the sales reps continue to report back that VIEQESNET is generating enthusiasm with prescribers.

Speaker 3

Physicians are articulating patients' unmet need and recognizing VEQUESTA's value as treatment option. The reps are focused on their reach and frequency among our full call panel of approximately 52,000 targets. In parallel, we are working diligently to reach patients suffering from the conditions for which Vopresna is approved. In these early days, we are happy to see that we appear to be making an impact. To date, we've had over 185,000 visits to our consumer website and we're hearing from physicians' offices that patients are asking about VEQUESNA.

Speaker 3

Patient requests are a key component of our demand strategy and market research conducted with 200 of our target physicians, almost 80% stated they would grant Vipresna upon request for their erosive GERD patients. With this in mind, we plan to initiate a new branded consumer campaign, which has been met with positive and motivating feedback from test audiences. This campaign speaks directly to erosive GERD patients and their symptoms. Most notably, this will include TV commercials on popular streaming services. So if you suffer from a ROSA GERD, keep an eye out for VEQUESTA ads on your devices starting later this month.

Speaker 3

In closing, I'm extremely happy with the commentary we're hearing from prescribers and how it translates into demand. We are successfully executing our launch strategy with continued promotion to physicians, a broadened consumer campaign and expanded commercial coverage, we anticipate significant growth in filled prescriptions over the course of 2024. Our teams are energized and committed to our belief in the blockbuster potential for VEQUESTA. I'll now pass it off to Mollie to walk through our financial results. Molly?

Speaker 4

Thank you, Martin, and hello to everyone on the call. I'm happy to share our Q4 and full year 2023 financial results with you today. This is a momentous earnings call for Fathom as it is the first time we are reporting net revenues for our requesne products. Although revenues reflect about a month of launch activity, we are pleased with the initial results. I'd like to note 2 items before going into the numbers.

Speaker 4

First, during this call, we will not be providing financial guidance regarding projected annual revenues, spend or earnings as we are still early months of launch. Additionally, I will be commenting on both GAAP and non GAAP financial measures. Supporting schedules with detailed reconciliations between non GAAP measures and their most directly comparable GAAP measures will be discussed later in my section and can be found in this morning's press release. Now turning to the numbers. For the Q4 of 2023, we reported net revenues of $682,000 driven by the initial stocking of wholesalers in December.

Speaker 4

This reflects a partial quarter of sales given that VEQUESNA bottles became commercially available as of November 28 and VEQUESNA packs as of mid December. Additionally, we reported gross profit of $515,000 for the Q4 of 2023, which equates to a gross margin of approximately 76%. The cost of revenues includes royalties owed to Takeda and excludes certain inventory costs, which were expensed prior to receiving FDA approval. Note that the royalties owed as part of our revenue interest financing agreement are not captured in cost of revenues, but rather in other interest expense. Moving down the P and L to our spend, we reported non GAAP R and D expenses of $6,100,000 for the Q4 of 2023 compared to $14,300,000 for the same period in 20 22.

Speaker 4

As for SG and A, we reported non GAAP 2022. On a full year basis, we reported non GAAP R and D expenses of $37,600,000 for 2023 compared to $65,900,000 for 2022. And for SG and A, our non GAAP expense was $85,200,000 for 2023 compared to $82,400,000 for 20 22. On a full year and quarterly basis, the decrease in R and D expenses was primarily related to lower clinical trial costs as we concluded our Phase 3 non erosive 3rd daily dosing trial during 2023. Regarding SG and A, our increase in spend was driven by the build out of our commercial infrastructure and initiation of marketing activities in support of the commercial launch of VOQESMA.

Speaker 4

Additionally, the most significant reconciling item between GAAP and non GAAP OpEx expenses for the periods was non cash stock based compensation, largely associated with the vesting of performance shares upon the approval of a ROSA GIRTT. Other non GAAP reconciling items include non cash interest on our revenue interest financing liability and non cash interest expense related to the amortization of debt discount. Turning to EPS. We reported GAAP net loss for the Q4 of 2023 of $79,600,000 or $1.39 loss per share compared to $55,000,000 or $1.33 loss per share for the Q4 2022. Non GAAP adjusted net loss for the Q4 for 2023 was $46,000,000 or $0.80 loss per share compared to $42,200,000 or 1 point 2022.

Speaker 4

As of December 31, 2023, cash and cash equivalents were $381,000,000 This includes $175,000,000 received during the Q4 of 2023 from our revenue interest financing agreement upon the approval of ROSAFF GARDEN. Also during the Q4, we announced the expansion of our existing term loan facility with Hercules Capital. The amendment provides access to more favorable terms and an additional $100,000,000 in non dilutive capital subject to achievement of certain revenue milestones. With this amendment, we now have a total of 160,000,000

Speaker 5

dollars available via our debt facility.

Speaker 4

We believe we are in a solid financial position and reaffirm our expectation that we have cash runway through the end of 2026 based on our current operating plan, expected product revenues and funds available under our term loan. Lastly, as we shared previously, we expect nominal revenues during these 1st couple of quarters of launch while payer coverage is materializing. Additionally, I mentioned our 4th quarter 2023 revenues mostly represented inventory stocking by wholesalers. We expect the sell through of the stocking to take place during the Q1 of 2024, reinforcing our previous comments regarding nominal revenues during these first couple of quarters of launch. With that, I'll now turn the call back over to Terri for closing comments.

Speaker 4

Terri?

Speaker 2

Thank you, Molly, and thank you again to everyone joining us on today's call. Fathom's accomplishments in 2023 were nothing short of amazing, and I'm extremely proud of this team. As we round out Q1 and approach Q2, our primary focus is set on securing formal replacement with payers. We've made great progress on that front so far and anticipate expanded commercial coverage throughout the year. As for the back half of twenty twenty four, we believe the planned launch of non erosive GERD daily dosing in July, pending FDA approval will serve as another key catalyst for driving adoption.

Speaker 2

We believe the Quezna represents a blockbuster opportunity and this launch is off to an exciting start. The enthusiasm here at Fathom is tremendous, and there is much to look forward to in 20 appreciate your continued interest and support. I'll now turn it over to the operator to facilitate a 10 minute question and answer session. Operator?

Operator

Thank you. And our first question comes from the line of Yatin Suneja with Guggenheim. Your line is open. Please go ahead.

Speaker 6

Hey, guys. Thank you for taking my question. A couple for me. Could you just talk about the reason for not filling the script other than the coverage? And how long does it takes for blank Rx patients to get the coverage?

Speaker 3

Yes. So Yatin, this is Martin and I'll take that question. So in terms of the coverage, I'll just reiterate how happy we are with the Express Scripts win. As we've talked about in the past, our objective was to get one step through a PPI, which opens up the broadest market. And I think the additional thing here that we walked away with is that if a patient has only been on an OTC, the physician can do it attestation and then they should have access to VAPESNA.

Speaker 3

So we anticipate that, since it was just announced and just became available, we'll start to see an increase in the number of scripts that are getting through the system. And then we would also envision that given this win and it seems to fit with our strategy, we're very far along in negotiations with other major payers. So we would start to see that coming on board, probably during as we enter into Q2 and then going to the rest of the year. The other thing I'll just say is what we've actually been able to do is in terms of supporting that is with BlinkRx. I think you heard me mention that a couple of times.

Speaker 3

Our goal there was really to make sure that first of all customers had a good experience. We wanted to address the lack of coverage early on. We also wanted to make sure that commercial patients and on VEQUESNA, they got on VEQUESNA as the physician intended. And then the other thing that was really important to us was that the program that we set up that the refills are realized that once patient converted from patient support over to commercial coverage that went through normal channels.

Speaker 6

Got it. And then just maybe a follow-up and a really quick one. I understand you are in the early phase of a launch and not providing sort of guidance. But could you just talk about your comfort with the consensus out there, which is around $40,000,000 $45,000,000 And then also if you can talk about the GTN dynamics, where we are and how do you think it's going to evolve and where do you expect to end up in 2024? Thank you.

Speaker 4

Sure. Hi, Yatin. I'll take that. It's Mali. So overall, as you said, we're not providing specific guidance as it relates to our revenues other than reinforcing our previous commentary that we expect very nominal revenues for the 1st couple of quarters of launch as we're building payer coverage and working through the stocking that we that I alluded to in Q4.

Speaker 4

As it relates to GTN, we are not commenting necessarily on where we are based upon the discussions we have ongoing with the payers. But what we have said previously and we'll continue to provide some frame of guidance around is the run rate. And what we've said is that we expect between 50% 65% on a normalized basis from a steady state. So those are the only pieces that we're providing guidance on at this point as we're so early in the launch.

Operator

Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Joseph Springer with Needham and Company. Your line is open. Please go ahead.

Speaker 7

Hi, good morning. Thanks for taking our questions. You gave some very helpful info on the contribution to field scripts from BLINKRX since launch. But just curious if you can comment on the relative proportion so that BLINK IQVIA split, was it higher or lower in 4Q 'twenty three than what it is in the Q1 of this year to date? And maybe as a follow-up to that, can you provide any qualitative guidance on how you see that relative split trending as the launch goes on and of course more coverage is secured.

Speaker 7

Would you expect that to trend down and reach a steady state level at some point?

Speaker 3

Yes. Good morning. Good morning, Joey. So I'll take the first part of your question. I think there were 2 parts there.

Speaker 3

Yes, so what we see is that the utilization of BLINKRX is growing over time, which is exactly what we intended and we communicated to you all and are strongly communicating to physicians that it's the best opportunity, for ensure patient gets access to Vopresna. So you would assume that since the launch that continues both in 2023 up until this point that the utilization of Link Rx grows. I do just want to clarify though for you an important point in terms of the filled scripts. So as you take a look and you think about the scripts that you're seeing in IQVIA, those were actually filled at retail. Anything else that we're saying above and beyond that was actually part of the fills that took place at Link Rx.

Speaker 3

So we would envision to the second part of your question is that split will remain consistent and then we'll start to change and shift more over to retail as we get more wins in.

Speaker 7

Great. Thank you so much for the color.

Operator

Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Paul Choi with Goldman Sachs. Your line is open. Please go ahead.

Speaker 8

Great. Thank you and good morning everyone. I just want to maybe follow-up a little bit on the previous question with regard to the pace of conversion between Blink and Field Scripts and so forth. And just I guess as you think about that ratio over the course of the next 12 to 18 months, do you all expect it to evolve more linearly or do you sort of see step function changes as coverage is added here including like when such as the recent Express Scripts ad? And then I had a pipeline question.

Speaker 3

Yes. So, Paul, I'll take that question again. So I think that you'll see that change over time based upon access. So early on in the very early weeks of launch, obviously, we had no access. So what went into BLINK was clearly filled from a patient.

Speaker 3

They received the prescription and they used our patient support program. Going forward, as we have more access and there's more wins with payers, when those scripts come in, they'll be immediately identified as having commercial coverage and will be filled at retail.

Speaker 8

Okay, got it. And then a pipeline question, the EOE program is really interesting. I noticed in the press release you guys referenced PPI as off label or unapproved treatment. But I'm just curious how you're thinking about the study population, particularly in the recent light of budesonide being approved for that population as well as Dupixent. And so I'm just curious, are you thinking about this study as a treatment naive population or a post steroid, post biologic population as your initial study population and maybe subsequent studies and other populations down the road?

Speaker 8

Thank you very much.

Speaker 2

Hey, Paul. Thanks for your question. I'll kick it off and then I'll pass over to ASMI. So we're finalizing the protocol for the ismophilic esophagitis Phase 2. We're really excited about that.

Speaker 2

And as you know, PPIs are utilized first line but are not approved. And so our positioning in the treatment paradigm would be prebiologic first line. And so that's what we're pursuing there. And we intend to initiate that Phase 2 by year end. But maybe, Azmi, do you have any other comments?

Speaker 5

Yes. I mean, we're definitely targeting first line. We're looking at broader population because remember, this is a Phase 2. So we need to understand the performance in different population segments. But the intent is to be first line pre biologic as patients will start with a similar treatment that hopefully will be able to show its effective.

Speaker 6

Thank you.

Operator

Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Umer Raffat with Evercore. Your line is open. Please go ahead.

Speaker 9

Hi, guys. Thanks for taking my question. I have a couple here, if I may. First, could you remind us there was some confusion on whether the uptake in IMS, especially what was observed in January, was that a function of IMS just doing a better job capturing blink or was that completely exclusive? Maybe a different way of answering that is, the significant sort of acceleration we saw almost tripling in TRx heading into January, February, Was that also seen in the prescriptions to date you guys saw?

Speaker 9

And I have a couple of follow ups.

Speaker 3

Yes. Good morning, Umer. So I think what your question was specifically asking about the IQVIA data and anything uptick or anything else in January. What that is, is any script that has gone through a retail channel is being picked up by IQVIA. So, that's all scripts realized through, normal retail channels.

Speaker 9

It's all scripts. But I guess just to clarify, the acceleration seen in prescription pickup, which is over a doubling of TRx, Was that something also observed in the prescriptions fill rate you guys were seeing as well, the overall prescriptions?

Speaker 3

Yes, yes. We're seeing the same patterns between BLINK and anything that's filled by BLINK and anything that's filled by BQUVIA. But what you're seeing on a weekly basis through IQVIA are all scripts that are filled through retail means.

Speaker 9

Okay, got it. That's great. Now the next one is really around some of the stuff, the data points you guys shared. So we know by IQVIA, the total prescriptions reported so far are just under 2,000 or so. You guys implied 3,800 have been filled.

Speaker 9

Is it reasonable to assume that the IQVIA to blink ratio is about 1 to 1 right now? Is that reasonable?

Speaker 3

Yes, I think it's a pretty good assumption, Umer.

Speaker 9

Got it. And I guess the last point would be, how do you think about the prescriptions being filled up? Is that because of some payment issue? Because presumably through Blink, people are able to pay $50 or $75 and get it. So why would there be 10,000 or so prescriptions not picked up?

Speaker 3

Yes. So physicians have obviously when they're writing a prescription, have the ability to send it anywhere and that's a really important point that Vopressa is available at all retail pharmacies. Blink overall is a new service that we are creating change at the same time. What we're seeing is utilization growing at Blink. We're seeing a weekly demand growing at BLINK, meaning there's new physicians coming in and there's repeat physicians coming in.

Speaker 3

So we would expect over time as more physicians start to use BLINK, you might see that gap start to narrow. Simultaneously, as we have more wins, the gap is also going to narrow. So there is we're in early weeks of the launch, HUMOR. So there's a lot of variation that we're seeing in the midst of a launch. And then in a very positive side, we'll see more variation in things such as this going forward.

Speaker 9

Okay, excellent. Thank you very much.

Speaker 3

You're welcome.

Operator

Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Matthew Caufield with H. C. Wainwright.

Operator

Your line is open. Please go ahead.

Speaker 10

Great. Hi, good morning, guys. And congrats on the launch progress. So based on the current erosive labeling, do you have a sense of whether any non erosive patients or patients that are possibly unconfirmed, if their disease is erosive or non erosive are included in the current script launch numbers, either EQuIVIA sorry, EQuIVIA or the BLINKRX numbers?

Speaker 3

Yes. Thanks for the question. Right now, well, not even right now, we're not tracking by indication, but I guess what I should make really clear is we're also not promoting for non erosive. So at the same time, we're not measuring any non erosive utilization.

Speaker 10

Okay. That's helpful. And then just one quick follow-up. So with the range of the 14 ks scripts written to date and the 3,800 plus that were filled, Is that spread at least at this stage in line with what you would have expected for this part of launch?

Speaker 3

Yes. Just to clarify, did you say nationwide?

Speaker 5

Yes.

Speaker 3

Yes. No, we're seeing uptick similar uptick similar across the U. S. We're not seeing differences by area to country regions. And so we have the representatives are calling on 52,000 physicians.

Speaker 3

And they're all getting very similar positive feedback receptivity and we're seeing uptake across all of the different targets that we're calling on. We're really pleased with the demand. I mean, we see 14,000 scripts. As I mentioned earlier, or I should say written scripts, and as I mentioned earlier that we only had our full sales force in place only 7 weeks ago. It really shows that the unmet need is there.

Speaker 3

We're hearing feedback from physicians that they're seeing patients already who it worked quickly within hours, healing results that happened in a very short period of time.

Speaker 10

Okay, great. Thank you and congrats on the progress.

Operator

Thank you. And one moment for our next question. And our next question is going to come from the line of Chase Knickerbocker with Craig Hallum. Your line is open. Please go ahead.

Speaker 11

Good morning, everyone. Obviously, great to see with the ESI win. I guess, Martin, what's your confidence level in kind of recreating the structure there, particularly around how the PA is structured? Pretty simple PA process if it's a simple automated pull, if they were on Rx PPIs in the last 6 months or so and then a simple attestation on the OTC PPIs. Is that something that you think you can recreate kind of on the OTC PPIs.

Speaker 11

Is that something that you think you can recreate kind of broadly in all your contracts?

Speaker 3

Yes. So the Chase, I would say that the confidence that scripts will go through for Express Scripts National Formulary is we're absolutely confident of that. What I'll also say is, and I believe Terry mentioned this in her opening remarks, we've really progressed with the large payers, in terms of getting access for VEQUESNA. And all of those discussions are centered around the same strategy as one step through a PPI. And I think as we've always spoke about before, is that is the largest segment given that the majority of patients are already on a PPI and there's a lot of switching from we really were successful in getting the broadest population possible.

Speaker 3

Okay. And then just we really were successful in getting the broadest population possible.

Speaker 11

But then particularly around that kind of the PA the structure of the PA there and how it functions, that's something that you think you can recreate on the other large formularies? And then also I just want to dig in a little bit on the characteristics of the early writers so far. Are they largely GI docs? Should we think of them as higher volume? Obviously, it's just a couple scripts filled per prescriber today.

Speaker 11

Just some color there would be helpful.

Speaker 3

Yes. So I'll take the first part of the question in terms of the OTC, the PA associated with that. So listen, this is clearly something that's on the table for discussion. And our best case was and will always be one step through a PPI. I would take that addition of a PA for an OTC patient is beyond the best case.

Speaker 3

So I feel really confident about our best case and very hopeful that we can also get that additional PA. In terms of utilization thus far, our sales force has been very focused on calling on the highest volume physicians in the category. And as you can imagine, when you lay all that out, the majority of them who fit in the highest volume are gastroenterologists. So as a result, what we're seeing out of the gate is our largest group of prescribers or GIs. However, I'll say what's really nice in there is they've got a real strong base in those offices of nurse practitioners or physician assistants.

Speaker 3

We're seeing uptake among them. They're actually often both first line prescriber as well as those who are accountable for switches. And then we're just starting to see prescriptions amongst primary care as we start reaching out to that group.

Speaker 11

Got it. That makes sense. And then lastly, just one for Molly. Quite a bit of stock based comp in the quarter. Is that kind of one time new employee sort of stock comp?

Speaker 11

And then that's it for me. Thank you.

Speaker 4

Yes. Hi, Chase. Yes. So that related to the PSUs associated with the approval of erosive GERD. So 19.3 of that was I'd characterize as a one time event.

Speaker 11

Great. Thanks,

Operator

Thank you. And one moment for our next question. And our last question is going to come from the line of Yatin Suneja with Guggenheim. Your line is open. Please go ahead.

Speaker 6

Thank you. Just one follow-up, which is around the spend rate, obviously, with DTC campaign. Just curious if you can articulate how should we model the spend in 2024? Thank you.

Speaker 4

Yes. So we're not providing any additional commentary as it relates to guidance on spend, Yatin. But what we can say with confidence is that the spend that we're anticipating for DTC is well within our guidance for the cash runway, and we feel comfortable that we still have runway through 2026.

Speaker 5

Very good. Thank you.

Operator

Thank you. This does close today's question and answer session. Ladies and gentlemen, this also does conclude today's conference call. Thank you for participating and you may now disconnect. Everyone have a great day.

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Key Takeaways

  • In the first seven weeks of its commercial launch, Vequesna achieved 3,800 filled prescriptions and an estimated 14,000 prescriptions written by over 1,200 unique prescribers, reflecting strong physician demand.
  • Fathom secured placement on the Express Scripts National Formulary with a single-step edit through a PPI, expanding coverage to an estimated 60 million commercial lives and allowing OTC users to access the drug via a simple prior authorization.
  • The FDA has accepted the NDA for non-erosive GERD with a PDUFA date of July 19, 2024, and Fathom plans to launch in that indication upon approval while also initiating Phase III trials for as-needed use and Phase II trials in eosinophilic esophagitis.
  • Q4 2023 net revenues were $682,000 driven by initial wholesale stocking, with a 76% gross margin, $381 million in cash, and a non-dilutive debt facility providing runway through the end of 2026.
  • To bridge payer coverage gaps, the company’s BlinkRx patient support program has driven script fills and will be complemented by an upcoming DTC consumer campaign, including streaming TV ads targeting GERD sufferers.
AI Generated. May Contain Errors.
Earnings Conference Call
Phathom Pharmaceuticals Q4 2023
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