Q2 2025 Phathom Pharmaceuticals Inc Earnings Call
Hello and welcome to the fathom. Pharmaceutical second quarter 2025 earnings results call at this time. All participants are in a listen-only mode. After the presentation. They'll be a question and answer session to raise your hand to ask a question. Please press star 1 1 to lower your hand. Please press star 1 on again.
Please do please be advised that today's call is being recorded with that. I'd like to turn the call over to Eric Shelly fathom, set of investor relations. Please go ahead.
Thank you, operator.
Hello everyone, and thank you for joining us this morning to discuss about the second quarter 2025 results.
This morning's presentation will include remarks from Steve Basta our president and CEO and Robert Breedlove. Our VP of finance and principal accounting officer.
Just a couple of logistical items before we get started.
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 webcast and the slides will be reviewing can be found under the events and presentation 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 thousands control.
Actual results May materially differ from the forward-looking statements and any such risks, May materially adverse affect our business and results of operations, and the trading prices are found to come in stock.
A discussion of these statements in risk factors is available on the current Safe Harbor, slide as well as in the risk factor section of our most recent form 10K in subsequent SEC filings.
All forward-looking statements made on this. Call are based on the beliefs of father and as of this date and fathom disclaims any obligation to update these statements
With that, I will now turn the call over to Steve Bosa. Thousands president and CEO to kick us off.
Steve.
Thank you Eric and thank you to everyone joining us on the call today.
We believe this quarter marks a meaningful inflection point for fathom.
Let's begin with the key performance metrics.
launched through July, 25 over 580,000 for Quantum prescriptions have been filled
49% growth in 14 weeks since our last report.
in Q2 approximately 173,000 prescriptions were filled reflecting 36% growth over q1,
Commercial access remains north of 80% of lives covered.
With more than half of those requiring, only a single step, edit or less.
Blinkrx continues to be a resource for both patients with coverage and for patients denied coverage, who are then offered a cash pay option.
Approximately 68% of, Q2, of President prescriptions were filled through the retail Channel. This slight decrease in retail proportionality, this quarter is due to the roll out of a cash pay option for Medicare patients through blink RX
This is brought in incremental new patients and helps to instill confidence among HCPs. If more patients have positive access experiences, importantly, both covered and cash pay segments are growing at healthy rates.
Through July 18th.
More than 29,300 unique hcps. Have written. A filled. Forasna script.
Approximately 24% more than at the time of our q1 report.
Although we expect the number of total writers to continue growing
Our Focus beginning in Q3 this year, has shifted to driving more depth and frequency of writing more than to driving new writer conversions.
We've recently refreshed our sales force Target list to prioritize gastroenterologists.
Of note.
About 70% of all VNA prescriptions written to date. Have come from GIS.
even though we've actually been spending more than 60% of our sales time in the last 12 months on primary care, physician calls,
We are clearly seeing therefore a higher return from our sales calls on GIS.
Likely. This is because a greater percentage of PPI patients treated by GI still experience bird symptoms and need a new treatment option.
In Q2.
Gastroenterology writers on average wrote more than twice, the prescriptions per month as compared to primary care, physician writers, which illustrates that our GI sales calls are more productive than our PCP sales calls.
We believe that more time spent driving GI adoption will translate to accelerated revenue growth.
Starting in July.
Our new sales target list now includes nearly all gastroenterologists. We've removed from the target lists more than 20,000 PCP targets who had not yet started writing.
the net effect of now including all gastroenterologists. Then the removing of unproductive PCP targets.
To free up our reps' time to focus on GIS and increase call frequency with these high-potential writers.
This is a deliberate move to drive depth over breadth and to move prescribers up, the adoption ladder from trialists to consistent writers to daily adopters.
In making these changes, we are not discounting the significant. Future opportunity that exists to a pcps
Rather we anticipate.
Phase growth.
Step 1.
GIS are the core writers with high awareness of aquasana today.
Delivering a greater return per sales call.
Focusing on GIS is a clear and efficient path to our goal of growth and profitability.
In time.
Primary care. Physicians will hear from their gird patients. How much better? They feel on Vesna. They return from GI referrals.
We believe that our reps will then be able to more efficiently convert and grow PCP adoption.
We expect transitioning sales targets, will take time to show benefit in our sales rep. It takes several calls over months to move the needle with new Physicians.
Multiple times.
Leading to Greater writing frequency in our core customer segments.
2 notes on our reported metrics, may be helpful.
First, as we spend more time, with existing customers, to go deeper, our rate of converting new writers in future quarters will not be as high a priority.
We may elect their for to report different metrics in the future, rather than writer counts due to this change in focus.
Second regarding the prescription numbers. We've reported iqvia has implemented 2 recent restatements all weekly. RX data from launch through July. 4th have been revised.
The launch to date and Q2 TRX numbers that we are reporting today, therefore, incorporate IQV as weekly restatements.
And some internal estimates of monthly data.
The restatements have no impact on our actual revenues which are not derived from the IQ, the numbers.
Turning, for a moment to exclusivity.
We were pleased that we achieved the positive resolution to our citizens petition in early June.
The FDA has now officially updated, the orange book to reflect exclusivity for the broqueza, 10 milligram, and 20 milligram tablets through May of 2032.
It's important to clarify, regarding timeline, that this state of May 2032 marks the earliest point at which a generic, and it can be filed.
Assuming that we do not have an orange book listed patent, 1 year prior to that date.
Therefore, we believe that the actual entry point of a generic venora competitor should be no earlier than 2033, assuming a typical review cycle.
Pediatric exclusivity.
Potential future it and multiple rounds of and a review for generic filers could potentially extend our exclusivity window even further.
Confirming exclusivity into 2033 clearly enhances the NPV of the quest map.
Following the citizens petition decision.
We have also Revisited our development plans and near-term priority clinical studies.
we've recently decided to move forward with a phase 2 trial in eosinophilic esophagitis or eoe
Which we expect to begin Q4 of this year.
We believe requesta has the potential to be a first-line treatment in this indication for. Which ppis are commonly used today despite not being indicated for e.
Additionally, the Eerie program May provide a path to extend exclusivity by 6 months with future pediatric evaluation in this indication.
Robert will provide more detailed Financial updates shortly. But first, I'll highlight some key recent Financial progress.
We reported 39.5 million in revenue for Q2.
Which represents 39% growth over q1 Revenue.
We started to implement our cost-savings initiatives, mid-quarter in Q2, and I've already shown a 122 million reduction in Q2 non-gaap off X compared to q1.
We ended the quarter with approximately 150 million in cash.
Based on our operating plan with anticipated continued, Revenue growth and rigorous cost control efforts. We believe our current cash can be sufficient to reach profitability without requiring additional Equity financing.
Analysts consensus revenue for 2025 currently sits at approximately 160 million.
we expect that we can achieve Revenue north of current analyst estimates and are providing Revenue guidance of 165 to 175 million for full year 2025
We're also on track with our expense reduction activities.
We expect Q3 expenses to be below, 60 million for the quarter and our Q4 expenses to be below 55 million.
Including the incremental costs associated with starting, the eoe trial in Q4.
Recall that this guidance is intended, to reflect only cash operating expenses that excludes stock compensation stock based compensation and other non-cash items.
These expense reduction targets, reflect our disciplined approach to spending while continuing to invest aggressively in key areas, driving Revenue growth.
As a final note, we communicated last quarter that there could be a supply disruption in the Vesna triple pack.
The triple pack represents approximately 1% of our total revenue.
The supply issue pertains specifically to the clarifying tablets in the triple pack.
We are in an ongoing discussions with our supplier for these tablets and continue to actively monitor the situation. We have not experienced any commercial disruption to date. The V president of bottles and the booklet. The Duel packs are not impacted as they do not include chloroform.
We're prepared to quickly shift, our H pylori marketing emphasis fully to the Dual package needed.
Q2 was a strong quarter for fathom.
We're executing on our strategy, delivering results and laying the foundation for long-term growth.
We believe we're on track to reach profitability in 2026.
Importantly, 30% to 40% of good patients still have symptoms while on PPI or other common treatments.
McQueen is rapid potent and durable acid, suppression profile provides a meaningful treatment option for these patients.
We receive numerous testimonials about the benefits of Aznet and how it's providing significant improvement in care for patients with Guard.
It's a privilege to be part of a team that is making a significant difference for many thousands of patients today and potentially Millions more patients in the years to come.
I'll now turn the call over to Robert to walk through the financials in more detail.
Thanks Steve and hello everyone. I appreciate you joining us today.
We are pleased with our results for the quarter and the progress. We have made both in terms of our Revenue growth and cost savings.
This morning, I'll be walking through our financial results for the second quarter of 2025. And I'll be commenting on both, gaap and non-gaap financial measures. As always detailed reconciliations between our non-gaap results. And the most directly comparable gaap measures are included in this morning's press release and will also be discussed later in my remarks.
As Steve mentioned, we reported net revenues of 39.5 million for Q2 2025 which represents a 39% increase compared to the prior quarter.
This Revenue growth was driven entirely by The increased adoption of okna reflecting the success of our ongoing commercial efforts.
As of quarter-end, wholesaler inventory levels remain consistent with historical norms, averaging approximately 2 weeks of supply.
Based on prescription Trends and our revised sales strategy. We are providing full year 2025 Revenue guidance of 165 to 175 million.
Our growth to net, discount rate for the quarter was within our expected range of 55 to 65%, and we expect the discount rate to remain within this range for the remainder of 2025.
Now, turning to operating expenses for Q2, we reported non-gaap research and development expenses of 7.4 million and non-gaap selling General and administrative expenses of 78.7 million.
Compared to the same period in 2024. These represent increases of 23% and 11% respectively.
This year-over-year increase in R&D was primarily due to 1 time Personnel related restructuring, charges while the increase in sgna, reflects continued, commercial investment in support of the vote now launched
As part of our previously, communicated cost-saving efforts, we achieved a meaningful reduction in spending this quarter compared to q1 of 2025.
total non-gaap operating expenses for Q2, 2025, or 86.1 million, which is a 1225
this decrease was driven by 18 million in savings partially offset by approximately 6,000 and 1 time restructuring related costs,
we are encouraged by this early progress and we anticipate more substantial reductions in the second half of the year.
To give some context our Q2 non-gaap operating expenses. Included approximately 15 million in pre-committed direct to Consumer advertising. Spend
7 million in Project costs. That could not be discontinued before Q3 and the aforementioned 6 million in 1 time, restructuring charges
We expect the reduction or elimination of spend in these areas to drive our continued, cost-saving efforts.
Accounting for these items. We expect Q3 non-gaap operating expenses to be below, 60 million, and Q4 non-gaap operating expenses to be below. 55 million.
Good stock-based compensation, and certain other non-cash items.
We encourage our analysts and investors to account for this nuance in their modeling.
Based on our Q2 results and anticipated. Second, half targets we are, lowering the upper range of our full year 2025 non-gaap operating expense guidance by 15 million.
To $290 million to $305 million.
For the quarter ended June 30th 2025, we reported gross profit of 34.5 million, which equates to a gross margin of 87% consistent with last quarter.
After accounting for quarterly cash expenses, we reported a loss from operations. Excluding stock-based compensation of $51.7 million.
That is a 30% Improvement compared to the previous quarter.
Our non-gaap adjusted net loss for Q2 2025 was, 56.5 million or 79 cents per share compared to a loss of 73.3 million or 1.25 cents per share for the same period in 2024 and a loss of 77.1 million or 1.7 cents per share for the first quarter of 2025.
As with past quarters reconciling items, between gaap and non-gaap results. Included, non-cash stock-based compensation non-cash, interest related to our Revenue, interest financing liability and non-cash interest expense related to the amortization of debt discount.
lastly as of June 30th, 2025 our cash and cash equivalents totaled approximately 150 million
Based on our current Revenue Outlook and operating forecast. We expect our current cash balances can support operations through the point of achieving profitability in 2026, excluding stock-based compensation, and without the need for additional Equity financing,
We are encouraged by our results and remain confident in our ability to deliver strong Revenue growth and maintain disciplined expense management, through the second half of 2022.
With that, I'll now turn the call back over to Steve for his closing remarks Steve.
Thank you, Robert. And thank you again to everyone for joining us today.
As you've heard throughout the call, we are executing with discipline and momentum.
Mna continues to demonstrate growth and we believe our strategic pivot to focus on gastroenterologists will enable an acceleration of that growth.
This targeted approach will deepen engagement with our highest-value prescribers and create an opportunity for increased adoption.
At the same time we are delivering on our commitment to financial discipline.
We believe we have a clear path to profitability in 2026. We're building a business that is not only growing, but growing responsibly
With exclusivity anticipated into 2033 and our eoe Phase 2. Trials set to begin later. This year, we believe we are laying the groundwork for long-term value creation.
To our patients.
Our team and our shareholders. Thank you.
Your trust, fuels our mission, we remain focused on our goal of delivering meaningful value through disciplined execution and durable growth.
I will now turn it over to the operator to facilitate a Q&A session. Operator?
Thank you, ladies and gentlemen, if you have a question or a comment at this time, please press star, 1, 1 1 on your telephone. If your question has been answered. You wishing with yourself from the queue, please press star 1. And again, we'll pause for a moment while we compile, our Q&A roster.
Our first question comes from Kristen kusco with care. Hold, your line is open.
Hi, good morning. Congrats on a great quarter and for your victory in the citizen petition, good to put this behind you now. So, in terms of the ways that you're going to drive more depth and frequency of writing prescriptions, can you give us a little bit more color about how the sales force will Target that? And how much of real world practice right now? Is some of these Physicians trying it in a few of their patients first? Hearing how well it is. And then recommending it to more patients under care.
Drops out north of 20,000 primary care, physicians that we were calling on that, just hadn't converted and hadn't written. Now, we've obviously got a significant number of primary care physicians, who have converted. But we were spending a lot of time trying to drive first adoption from Physicians that would then write slowly what we're seeing instead. Is we look at our metrics is that there is a very strong correlation between call frequency and frequency of prescribing within the gastroenterology Community. Um, we had previously only been calling on sort of the top half of the gastroenterology Community this out. Based upon prescribing, we've now added all gastroenterologists into the call into the call pattern into the target list for the sales reps. And we are driving multiple sales calls per month in to the chi gastroenterology accounts that allows our sales team to spend enough time in the offices, to get to know, every prescriber in that.
That office to build Comfort. Build awareness, build experience with the product through sampling and through education of Physicians, that allows for an evolution of writing habits to much higher frequency writing
Our internal metrics, when we look at, you know, what happens as we spend more time in physicians' offices, clearly indicate that's a strategy that works. The tactics of spending time, building those relationships, and providing that education grow utilization. Even in our top cast rental yard, patient volume shows growth even among the top accounts. In the broader gastroenterology community, where there's been some adoption, there isn't yet daily or weekly writing practice among all of those physicians. We're going to be able to achieve that by spending more time in those offices. So, it's time in relationships that drives depth and frequency. The real-world impact of that is that, as physicians get more comfortable with the product, they prescribe it more often. As they prescribe it more often, it creates a self-reinforcing positive psychology that emerges because they hear from their patients how much better they feel.
And that creates an acceleration. Um, we also think that there's going to be a bit of a
broad Community Based effect within gastroenterology that. As we get more gastroenterologists to write, they talked to more of their colleagues who also have positive experiences and that creates an uplift within that entire community.
Thank you so much.
1 moment for our next question.
Our next question comes from Joseph Stringer with Native & Company. Your line is open.
Hi, good morning, thanks for taking our question. Congrats on the quarter, just giving you a 2025 Revenue guide of 165 to 175 in your comments on uh anticipated acceleration Revenue over the next few quarters.
Given your focus attraction with GI Specialists is, is that acceleration already baked into the current Revenue guide. Or, uh, do you think this could be a driver to the upside?
Um, I think absolutely long term, it's a driver to the upside. What is hard to predict is how quickly it comes into our um, Revenue numbers. Um, and what I'm describing there is just, you know, as we add a significant number of new gastroenterology targets to the sales force, they start making sales calls but we know that it can in some cases take 7 10, 12 sales calls before a physician starts writing and then it takes another several calls for them to start changing habits and to grow their habits. Now, that timeline is different for every physician and for some, of these Physicians, they've already had a fair number of sales calls,
So what I expect that we're going to see is that it may take 1 or 2 or 3 quarters before the new targeting strategy. Really starts to show a consistent acceleration in growth and revenue but I I think again our own metrics would suggest that that is going to happen but it doesn't happen with the first sales call. It happens with multiple repeated visits to the office that happened gradually over a period of months.
So um, in terms of our Revenue guidance, I mean the reason that we've provided guidance in a Range that is above where analysts currently are, that's my expectation, is that we're going to be in that 165 to 175 range. Um, and
Believe that longer term, we're going to get acceleration. Whether the acceleration comes within this time frame of the next 2 quarters or it's early in 2026. It's very hard for us to predict the date at which this new strategy really drives traction.
Great. Thank you for taking our question.
For our next question.
Our next question comes from Annabelle. Sammy with Stifle, your line is open.
Um hi. Uh thanks for taking my question and um thank you for the details on how your targeting the GI um docs. Um I guess my question is um and it, it makes total sense that you're focusing on the prescribers and at some point that transitions into the primary care writers. Um, but I am curious, uh,
the, the the
Gas. The the acid control Market became Blockbuster category, um I believe through the primary care market. So do you have any sense at what what is the Tipping Point between? Um, you know, the frequency of writing of the Gastro and when that starts tipping into the primary care? Um what does that transition to get uh prescribing started in the primary care setting. Um so I guess that's the first question you know at what point does that that sort of is there an inflection point um that switches
Over to the primary care, being the primary writers there.
And um, maybe secondly, um, I I did notice that you started this program to tap into the Medicare Medicaid. Um, population. Um, is that going to uh, over time, impact your gross, net? Some more. How much is going to start having to go through blink? I guess, I'm trying to understand the longer term dynamics of tapping into that market. Thanks.
so, um,
so in thinking about sort of the evolution from GI the primary care, um,
In your question, there's almost a presumption that we have to be in primary care for this to be a blockbuster product. I don't actually think that's true. I think that there is well north of a billion dollar Revenue potential in ghee alone.
And that's also built on the precedent of the PPI experience that. Um, there are multiple PPI who reached that, reach north of a billion dollars of Revenue in ghee before they made a broadening, push into primary care. So there is sort of past history.
In the reflux Market that adoption first in ghee has been a well-worn strategy that multiple products have used and that's driven the broader adoption. And the GI Market is a meaningful Market in and of itself. It's also where there is the greatest concentration of Need for our product.
So if you think about the broad population of patients in a primary care office, the portion of patients who are experiencing the most discomfort from their heartburn, who are experiencing the most pain, get referred to GIS. So the distribution of patients in ghee, needing a more potent reflux treatment is higher and is going to drive faster acceleration. So my expectation is this becomes a blockbuster product in ghee alone and then the PCP Market is meaningfully additive. We have, you know, significant Revenue potential and significant runway in ghee. So I don't, I don't perceive ghee as a starting point and then it transitions to a primary focus on PCP. I view ghee as a constant growth driver, and then PCP, to be meaningfully additive, and expanding the market to add significant revenue on top of the GI opportunity.
If it's a commercial patient, they get covered then. That's a covered script. And if it's a Medicare patient, then they need the cash pay option. Blink can provide the cash pay option. So it just makes it easier for a healthcare professional to adopt the product and to do so broadly in their practice.
Okay, great. Thank you for the caller. Appreciate
1 moment for our next question.
Our next question comes from yatin. Senator with Guggenheim, your line is open.
Hey guys, thank you for taking my question. Congratulations, very nice quarter and I must add impressive above consensus guide because it's really helpful for us in light of all the cost cutting that you're doing. So the question for me is um, 2-fold number 1? Where exactly? Are you cutting cost and how might that impact? Grow growth trajectory behind me. And then when you talk about the 55,
Um, Million Dollar Cash complex in 42. Should that be considered a steady state as we go into 2026 or maybe just help us understand? How should we think about that? Because if that's the number, we think you could become profitable when the sales reach, you know, somewhere in the 70 to 75 million range. So just wanted to check, you know, if if we are in the right top up there, thank you so much.
Perfect. Yeah, and thanks for the questions. I think those are going to be helpful and clarifying to a number of folks, um, as they're thinking about modeling this for the future. So first, where we're cutting costs to get to the 60 million in Q3, and the 55 million in Q4 comes from several categories. Um, the first and the biggest, you know, cost savings is actually eliminating our direct consumer promotional program. That becomes a big line item savings um and for context there on sort of how we're doing that and not impacting revenue is, you know, my own assessment of that program and our internal metrics would suggest that program was just run prematurely that we ran that program at a time. When there is not yet, broad adoption in the Primary Care community and if a DTC program is to work, it is intended to activate patients, to drive them, to primary care. But we don't have enough primary care physicians, who are yet, right?
And so we were driving patients to physicians who don't know the drug and who aren't prescribing it, and we just weren't getting a return on it.
So by reducing that spend, we're not expecting an adverse impact on Revenue. We actually think that instead, we're going to see more uplift in Revenue because of the retargeting strategy on geez, which improved sales force productivity. So, that's the first sort of most significant area. Um, the we did do a small restructure,
During a modest percentage of total um uh headcount restructuring. That will provide some savings as well. There are significant number of savings that come from third-party vendor contracts, that we are adjusting in. Just across the board, we're creating fiscal discipline in how we are driving third-party spend. So whether it's a marketing related vendor, that is developing marketing materials, where we can do things more cost-effectively using AI or using internal resources rather than using that side vendor. There's significant Savings in that process. So just the board in a number of areas we've identified primarily third-party vendor costs that could be reduced and not adversely impact Revenue. So um we are seeing that already, take effect as Robert described, we effectively reduce costs by 18 million from q1 to Q2 in terms of Opex. Now, that was offset by restructuring charges of 6 million that we took in, but
you see already from q1 to Q2 a significant operating reduction. Recognized those operating savings were implemented mid-quarter. So we're already at that, you know, substantially toward that reduced run rate because we realized those cost savings for the second half of the quarter. We've got clear, line of sight visibility to get to the 60 million in Q3 and to get to the 55 million Target in Q4, um, with, you know, a rigorous investment still in our core sales tactics.
55 million number, um, there could be some things that we choose to do that. Either our Revenue enhancing activities or the clinical trial activities. Obviously, we're starting our eoe study in Q4 that's built into the 55 million number. Um, but that also obviously will also have expenses into next year, so there may be some things that we add the C the 2026. Number might be a slightly higher run rate than that 55 million. We haven't communicated exactly what that magnitude is because we haven't built out our operating plan in that level of detail yet for 2026. Um, but it will be substantially below where the company had been over past quarters.
Very helpful. Thank you.
1 moment for our next question.
Our next question comes from Paul Choi with Goldman Sachs, your line is open.
Paul, your line is open. You can ask your question.
Hi, thank you. Uh, congratulations on all the progress. Um, it's good to see you guys in going back into the clinic as well for, for eoe. Um, can you maybe comment just a little bit on what?
Position feedback is, and that sort of space between generic ppis and other, uh, uh, conventional therapies and, and the transition into biologics and just sort of what Physicians would, uh, look for, uh, for an intermediate therapy potentially such as an opera Zam there. And my second question is, can you maybe just sort of comment on how you're thinking about the, the timing for the PDF?
Patrick study, it's been sort of something that's been in, in there in the background. I'm just wondering, it's, it's something you would consider starting in in 2026. Thanks for taking our questions.
I'm sorry. Which study was that that you were asking about Paul the second 1. Uh pediatric to get the additional exclusivity period. Yes.
Got it. Okay. So, um,
The.
So in thinking about the eoe opportunity, I think you've hit up on both elements of thinking strategically about the eoe opportunity. There's 1 element of it, which is the eoe market in and of itself represents an incremental Revenue opportunity for us. There's a second element of it, which is that the eoe strategy, potentially provides us a path to a written request and the Pediatric exclusivity strategy. So the
The.
First part of it in terms of the market opportunity. Today, PPI therapy is first-line therapy in eoe patients. Even though there isn't a large clinical trial, that is demonstrated efficacy. There are enough case reports that are enough published, um, experienced studies. There's enough experience on the part of Physicians, um, and mechanistic data, that shows that modifying acid in the stomach, has a beneficial impact on eoe, both the histology and the symptoms in that condition. That that standard PPI therapy has become standard of care. First line treatment.
There is a meaningful opportunity to disrupt that and have no present potentially become the first line treatment rather than um ppis with meaningful. Clinical data that represents a significant large data. Set that shows, efficacy shows the magnitude of improvement. There are case reports from Japan, that show significant Improvement in mythology, with an open that underlying data set. Supports the thesis that we are going to be able to have a fundamental positive impact on these patients through venora and therapy. And there's a possibility that this is as you describe an intermediate step, the first line therapy is ppis and then patients graduate from 0%. There's also a possibility that this becomes the first line therapy and changes the nature of the treatment Paradigm over time as we get clinical data that it actually gets adopted more broadly. But that's to be determined down the road as we get the clinical data from the stud.
Studies. But but that represents the meaningful upside Revenue opportunity. The second half of the value. Proposition of eoe is as you described the Pediatric exclusivity extension. This first trial is going to be an adults only. So this is not going to provide the Pediatric specificity extension, but it is intended to lead to an end to phase 2 meeting and a conversation with FDA about a written request and our past conversations with FDA. They've indicated. This could be a potential.
Pediatric indication that would warrant, um, that discussion. And so they're, we're making no commitments about it because we don't have a commitment from the FDA in this regard, but we have had conversations where there's a possibility of getting a
Request associated with the phase 3 program for you. That would provide that 6-month exclusivity extension. So that path will be determined at the end of The Phase 2 trial.
1 moment for our next question.
Our next question comes from fat, with evercore isi, your line is open.
Oh, hi. This is James on for, and thanks for taking all questions. Uh, 2 questions, if I may, uh, the first, the first question is on xus strategy, I think the drop pricing letter was sent to a selected 17 companies, not the broad industry and the scope looks like it's going to be eliminated within just Medicaid. So we don't know if this will change later, but at least for now the impact on your business business. Likely very small. So, how are you thinking about your strategy in the xus market? And secondly, when I was looking at some of the historic data presented at the medical conferences, there were about 22% patients cycle through 2 lines of BPI, and another 14 to 17 cycle through, uh, more than 3 lines of PPI. I guess my question is, uh, is this a result of the requirement on the step edits? Or is this just a pattern of how the doctors are prescribing MCA? And is it going to change when where more and more patients? Switch to progress now? After just 1 line of PPI, thank you.
um,
So uh, let's take each part of that separately. So the the first part on the xus strategy, um, at the current time, we're just focused on the US market. We are not spending significant amount of time thinking through what our launch strategy would be in Europe or in Canada. We have rights to uh venora for 3 territories for the US for Europe and Canada. Um, all of our commercial activities are focused on the us. All
Of the sort of focus of how do we drive our business focused on us? Um, us the European and Canadian opportunities represent potential upside opportunities but they also come with a complications in the current market that you described which is all of the issues around most favorite Nations pricing Etc. And um so we're just not at this point. Anticipating any near-term activities in terms of our own launch in the European market. We have in the past had conversations with potential European Partners around the potential launch. We might elect to do that at some point in time, but that's not a current strategy. Um, but but always a possibility that we might explore the um,
The sort of second half of your question around sort of whether patients Fail, 1, PPI 2, PPI or 3 PPI prior to getting the no presan that evolves over time as Physicians, get more and more comfortable with this therapy. So what you're seeing in terms of patients who have been on 2 peas for 3,
CPI. It's actually just a reflection of the fact that 30 to 40% of patients, on PPI therapy are still experiencing pain.
So it's interesting when we do market research and we look at what Physicians report about, who the patients are that are appropriate for an operon. Some of them indicate a patient who's failed, 1 round of PPI therapy, some indicate patients, failed 2 rounds of PPI therapy. Some indicated patient is on PPI therapy and also adds and assets. Some indicate a patient who is on, you know, PPI therapy in now is double dosing. All of those are manifestations of exactly the same phenomenon which is a patient who's been on PPI therapy and is still experiencing heartburn.
That's our core patient.
All of those strategies are different things that Physicians have tried or recommended to patients that they try to manage their ongoing heartburn, but the phenomenon is exactly the same which is you've got a patient who's on a PPI who's not adequately, resolving their heartburn and they need something more, they need something better. That's the patient. We're going to try to switch.
and it will just vary by physician practice um as to whether they have been through 2 or 3, PPI therapies over the time um over time where I think that goes is
It gravitates toward when you fail 1. PPI why am I switching you from a mepro to esomeprazole? That's not going to really do anything. If you're failing on a methodology, you should be switching to our drug.
That Evolution and thinking is going to come over the course of the coming years of physician experience with this drug.
Thank you very much.
1 moment for our next question.
Our next question comes from Matthew caughfield with AC reight, your line is open.
Blinkrx cash. Pay amount. Thanks again.
So it's hard for us to predict what the future steady state average will be. Obviously, we are seeing both channels growing.
And so retail. And by the way, some of the retail filled scripts actually have gone through blink and then went to Retail Pharmacy. So we're seeing both the covered retail scripts growing and the blank cashpay scripts growing. We don't try to manage the business to manage what that ratio is. We try to grow all scripts and both channels will continue growing. And so our conversations with Physicians are around driving prescription growth.
And the guidance to a physician is if you just send it to blanket, it'll be easy. If it's a commercial script and it gets covered. You know, they'll help you with the PA, they'll run the process to try to make sure that um that this can run through smoothly. And so it's streamlines the process for getting a patient, the script if it gets covered and it also streamlines the process for getting the patient the option to pay cash if it's not covered. And so that's a win-win for the physician and for the patient. Um, so we're just trying to drive overall script volume and we don't we don't try to manage to a ratio, we just try to grow both and and
We don't consciously say we're growing cash, or we're growing.
Prescription or we're growing covered. We are growing scripts and then allowing the best outcome for the patient um and for insurance coverage in that process.
So there's not an active attempt to try to adjust those. Um, was there a second? After your question that I missed in that process?
No, that was very helpful. Yeah. The second part was just, if there's a sense of the average blink, RX cash payment amount that patients could be paying in that category.
Oh, so blink. The standard Cash, pay amount that they pay $50.
Gotcha. Okay. So a patient will be offered a $25 co-pay if they get insurance coverage so that they um have a lower co-pay if they're covered. But if they're if their insurance plan is not covering the product, then they're offered the $50 cash pay option.
Got it. Very helpful. Thank you guys, and great to see the progress again.
And I'm not showing any further questions in the queue and as such, this does conclude today's presentation, we thank you for your participation. You may all disconnect and have a wonderful day.