Q4 2025 Phathom Pharmaceuticals Inc Earnings Call

February 26, 2026

Speaker #1: Hello, and welcome to Phathom Pharmaceuticals, fourth quarter, and full year 2025 earnings results call. At this time, all participants are in the listen-only mode.

Operator: Hello. Welcome to Phathom Pharmaceuticals' Q4 and full year 2025 earnings results call. At this time, all participants are in a listen-only mode. After the presentation, there will be a question-and-answer session. To ask a question, please press star one one on your telephone keypad. Please be advised that today's call is being recorded. With that, I would like to turn the call over to Eric Sciorilli, Phathom's Head of Investor Relations. Please go ahead.

Speaker #1: After the presentation, there will be a question-and-answer session. To ask a question, please press *11 on your telephone keypad. Please be advised that today's call is being recorded.

Speaker #1: With that, I would like to turn the call over to Eric Sciorilli, Phathom's head of investor relations, please go ahead.

Speaker #2: Thank you, operator. Hello, everyone, and thank you for joining us this morning to discuss Phathom's fourth quarter and full year 2025 results. This morning's presentation will include remarks from Steve Basta, our president and CEO, and Sanjeev Narula, our chief financial and business officer.

Eric Sciorilli: Thank you, operator. Hello, everyone, thank you for joining us this morning to discuss Phathom's Q4 and full year 2025 results. This morning's presentation will include remarks from Steven Basta, our President and CEO, and Sanjeev Narula, our Chief Financial and Business Officer. A couple of notes before we get started. Earlier this morning, we issued a press release detailing the results we'll 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 we'll be reviewing can also be found on our corporate website under the Events and Presentation section. Before we begin, let me remind you that we'll 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 Phathom's control.

Speaker #2: A couple of notes before we get started. Earlier this morning, we issued a press release detailing the results we'll be discussing during the call.

Speaker #2: 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 we will be reviewing can also be found on our corporate website under the Events and Presentations section.

Speaker #2: Before we begin, let me remind you that we'll 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 Phathom's control.

Speaker #2: Actual results may materially differ from the forward-looking statements, and any such risks may materially adversely affect our business and results of operations, and the trading prices for Phathom's common stock.

Eric Sciorilli: Actual results may materially differ from the forward-looking statements, and any such risks may materially adversely affect our business and results of operations and the trading prices for Phathom's common stock. A discussion of these statements and risk factors is available in the current safe harbor slide, as well as in the Risk Factors section of our most recent Form 10-K and subsequent SEC filings. All forward-looking statements made on this call are based on the beliefs of Phathom as of this date, and Phathom disclaims any obligation to update these statements. Later in the call, we will be commenting on both GAAP and non-GAAP financial measures. Specifically, in the scope of this discussion, when we refer to cash operating expenses, please note we are referring to the non-GAAP form of this measure, which excludes non-cash stock-based compensation.

Speaker #2: A discussion of these statements and risk factors is available in the current Safe Harbor slide, as well as in the risk factors section of our most recent Form 10-K and subsequent SEC filings.

Speaker #2: All forward-looking statements made on this call are based on the beliefs of Phathom as of this date, and Phathom disclaims any obligation to update these statements.

Speaker #2: Later in the call, we will be commenting on both GAAP and non-GAAP financial measures. Specifically, in the scope of this discussion, when we refer to cash operating expenses, please note we are referring to the non-GAAP form of this measure, which excludes non-cash stock-based compensation.

Speaker #2: As always, detailed reconciliations between our non-GAAP results and the most directly comparable GAAP measures are included in this morning's press release. With that, I will now turn the call over to Steve Basta, Phathom's president and CEO, to kick us off.

Eric Sciorilli: As always, detailed reconciliations between our non-GAAP results and the most directly comparable GAAP measures are included in this morning's press release. With that, I will now turn the call over to Steven Basta, Phathom's President and CEO, to kick us off. Steve?

Speaker #2: Steve?

Speaker #3: Thank you, Eric. And thank you to our investors and analysts for joining our call this morning. Thank you even more to the Phathom colleagues for your diligence and dedication throughout 2025.

Steven Basta: Thank you, Eric, and thank you to our investors and analysts for joining our call this morning. Thank you even more to the Phathom colleagues for your diligence and dedication throughout 2025. It was a transformational year for the company, and we're now set to execute our growth and profitability plan. Let me start by summarizing the key points Sanjeev and I will be discussing today. We had a successful Q4. We delivered on expectations for both revenue and cash operating expense levels, coming in at the better end of our guided ranges. We've taken key steps in the recent two months to enhance our capital structure, reduce our interest expense, and modify our outstanding term loan obligations.

Speaker #3: It was a transformational year for the company. And we're now set to execute our growth and profitability plan. Let me start by summarizing the key points Sanjeev and I will be discussing today.

Speaker #3: We had a successful Q4. We delivered on expectations for both revenue and cash operating expense levels, coming in at the better end of our guided ranges.

Speaker #3: We've taken key steps in the recent two months to enhance our capital structure, reduce our interest expense and modify our outstanding term loan obligations.

Speaker #3: As a result, we believe our cash on hand, along with anticipated future cash generated from operations, will be sufficient to satisfy all obligations under both our term debt and our revenue interest financing agreements.

Steven Basta: We believe our cash on hand, along with anticipated future cash generated from operations, will be sufficient to satisfy all obligations under both our term debt and our revenue interest financing agreements. We're on track and guiding to operating profitability beginning in Q3 of this year and for full year 2026. Our $320 million to $345 million revenue guidance for 2026 reflects our operating expectation of continued solid growth from our GI-focused strategy and includes an accounting-related classification change, which Sanjiv will cover in more detail. Our sales organization is positioned to deliver, and we're seeing clear signs that our GI strategy is working. I'm very proud of what our team accomplished in 2025. We believe we've set ourselves up for success, both financially and operationally.

Speaker #3: We're on track in guiding to operating profitability, beginning in Q3 of this year and for full year 2026. Our $320 million to $345 million revenue guidance for 2026 reflects our operating expectation of continued solid growth from our GI-focused strategy and includes an accounting-related classification change, which Sanjeev will cover in more detail.

Speaker #3: Our sales organization is positioned to deliver, and we're seeing clear signs that our GI strategy is working. I'm very proud of what our team accomplished in 2025.

Speaker #3: We believe we've set ourselves up for success both financially and operationally. Beginning the update today with our financial highlights for Q4 and full year 2025, our results are in line with our pre-announced estimates from January, an incrementally a bit better on expenses and on cash usage.

Steven Basta: Beginning the update today with our financial highlights for Q4 and full year 2025, our results are in line with our pre-announced estimates from January, and incrementally a bit better on expenses and on cash usage. We've delivered on the plan we set forth on our May earnings call and reiterated on our earnings calls in August and in October. Net revenues were $175.1 million for the full year 2025, representing 217% year-over-year growth. Q4 sequential quarterly growth was solid during a period of sales force alignment, as we had discussed on our October call. In August, we guided to $165 million to $175 million for 2025 revenue.

Speaker #3: We've delivered on the plan we set forth on our May earnings call and reiterated on our earnings calls in August and October. Net revenues were $175.1 million for the full year 2025, representing 217% year-over-year growth.

Speaker #3: Q4 sequential quarterly growth was solid, during a period of Salesforce alignment as we had discussed in our October call. In August, we guided to $165 million to $175 million for 2025 revenue.

Speaker #3: We updated that in October to $170 to $175 million, narrowing it to the top half of the range, and ultimately we delivered at the high end of that range.

Steven Basta: We updated that in October to $170 to $175 million, narrowing it to the top half of the range. Ultimately, we delivered at the high end of that range. Our Q4 revenue was $57.6 million, in line with our pre-release January estimate of $57 to $58 million. Cash operating expenses, excluding stock-based compensation, were $50.3 million for Q4, better than both the less than $55 million target we guided to and to our pre-announced range of $51 to $53 million. We delivered solid growth through the last three quarters of 2025, while cutting quarterly cash operating expenses by nearly 50%. Our net cash usage for Q4 of 2025 was approximately $5 million.

Speaker #3: Our Q4 revenue was $57.6 million in line with our pre-release January estimate of $57 to $58 million. Cash operating expenses, excluding stock-based compensation, were $50.3 million for Q4, better than both the less than $55 million target we guided to and to our pre-announced range of $51 to $53 million.

Speaker #3: We delivered solid growth through the last three quarters of 2025 while cutting quarterly cash operating expenses by nearly 50%. Our net cash usage for Q4 of 2025 was approximately $5 million.

Speaker #3: That's $64% lower than Q3 and consistent with our expectations of reaching operating profitability beginning in Q3 2026 and cash flow positivity in 2027. We've taken significant steps to enhance our capital structure.

Steven Basta: That's 64% lower than Q3 and consistent with our expectations of reaching operating profitability beginning in Q3 2026 and cash flow positivity in 2027. We've taken significant steps to enhance our capital structure. Our goals were, one, to reduce any financing overhang or potential risks stemming from repayment obligations or cash covenants, and two, to reduce our interest expenses. In 2025, we got the fundamentals of our business in order, growing revenue and reducing expenses. That improved financial profile enabled us to complete a successful equity offering in January and renegotiate our debt terms as we announced today. We have modified our term loan agreement to extend the maturity date, which had previously been December of 2027. We've extended it to February 2029, and we've reduced our interest expense obligation and reduced the total outstanding principal amount.

Speaker #3: Our goals were, one, to reduce any financing overhang or potential risks stemming from repayment obligations or cash covenants, and two, to reduce our interest expenses.

Speaker #3: In 2025, we got the fundamentals of our business in order, growing revenue and reducing expenses. That improved financial profile enabled us to complete a successful equity offering in January and to renegotiate our debt terms as we announced today.

Speaker #3: We have modified our term loan agreement to extend the maturity date which had previously been December of 2027. We've extended it to February 2029, and we've reduced our interest expense obligation and reduced the total outstanding principal amount.

Speaker #3: As a result of these capital structure enhancements, we believe our current cash plus the cash that we're expected to generate from operations in the coming years will be sufficient to meet all obligations under both our term loan and our revenue interest financing agreements.

Steven Basta: As a result of these capital structure enhancements, we believe our current cash, plus the cash that we're expect to generate from operations, in the coming years, will be sufficient to meet all obligations under both our term loan and our revenue interest financing agreements. Sanjeev Narula will provide further details on these items and take you through our 2026 guidance. I'm very proud of our operating and financial progress these last 12 months. The entire Phathom team is dedicated to our objectives of growing revenue while being disciplined on expenses. We're exhibiting strong momentum, which we expect to carry forward throughout 2026. A few quick notes on our commercial progress. I said before, how fortunate we are to be able to positively impact the lives of so many patients.

Speaker #3: Sanjeev will provide further details on these items and take you through our 2026 guidance. I'm very proud of our operating and financial progress these last 12 months.

Speaker #3: The entire Phathom team is dedicated to our objectives of growing revenue, while being disciplined on expenses, we're exhibiting strong momentum, which we expect to carry forward throughout 2026.

Speaker #3: A few quick notes on our commercial progress. I said before how fortunate we are to be able to positively impact the lives of so many patients.

Speaker #3: Through February 13th, over $1.1 million for Quesna total prescriptions have been filled, to more than 230,000 patients. We believe we're just starting to penetrate an enormous market.

Steven Basta: Through 13 February, over 1.1 million Voquezna total prescriptions have been filled to more than 230,000 patients. We believe we're just starting to penetrate an enormous market. About 65 million patients have gastroesophageal reflux, of which 40% experience inadequate symptom relief from PPIs. About 273,000 prescriptions were filled in Q4 alone. 174,000 of these were covered prescriptions, growing 21% quarter-over-quarter, and representing approximately 64% of the total prescriptions filled in Q4, while 99,000 were filled as cash pay prescriptions. Covered prescription volume drives our revenues, while cash pay prescription volume improves physician perception of access and makes it easier for physicians to prescribe Voquezna with confidence that their patients will be able to get the drug. Most importantly, both paths enable us to help patients in need of Voquezna.

Speaker #3: About $65 million patients have gastroesophageal reflux, of which 40% experience inadequate symptom relief from PPIs. About 273,000 prescriptions were filled in Q4 alone. 174,000 of these were covered prescriptions growing 21% quarter over quarter, and representing approximately $64% of the total prescriptions filled in Q4, while 99,000 were filled as cash pay prescriptions.

Speaker #3: Covered prescription volume drives our revenues, while cash pay prescription volume improves physician perception of access and makes it easier for physicians to prescribe for Quesna with confidence that their patients will be able to get the drug.

Speaker #3: Most importantly, both paths enable us to help patients in need of a Quesna. Additionally, in November, we turned on a good Rx offering providing an alternative payment option for patients filling the Quesna prescriptions sent to retail pharmacies.

Steven Basta: Additionally, in November, we turned on a GoodRx offering, providing an alternative payment option for patients filling Voquezna prescriptions sent to retail pharmacies. Looking forward, we have confidence in 2026 growth. We just completed our national sales meeting, and the sentiment from the field is terrific. We start March with more than 285 of our 300 sales positions currently filled, a nearly full-strength sales organization. Our strategy to drive depth and frequency of calls to gastroenterologists is solid, and we believe it will ramp utilization and writing frequency among GIs treating GERD. 2026 will be an important year for us as we drive sales growth and transition to profitability. Overall, we continue to deliver as we guided on each of our previous earnings calls.

Speaker #3: Looking forward, we have confidence in 2026 growth. We just completed our national sales meeting, and the sentiment from the field is terrific. We start March with more than 285 of our 300 sales positions currently filled and a nearly full-strength sales organization.

Speaker #3: Our strategy to drive depth and frequency of calls to gastroenterologists is solid, and we believe it will ramp utilization and writing frequency among GIs treating GERD.

Speaker #3: 2026 will be an important year for us as we drive sales growth and transition to profitability. Overall, we continue to deliver as we guided on each of our previous earnings calls.

Speaker #3: Our 2025 results ended at the better ends of our revenue and cash operating expense guidance ranges we communicated, and we believe we're on track to transition operating profitability beginning in Q3 of this year and to reach cash flow positivity in 2027.

Steven Basta: Our 2025 results ended at the better ends of our revenue and cash operating expense guidance ranges we communicated. We believe we're on track to transition operating profitability beginning Q3 of this year and to reach cash flow positivity in 2027. We've taken important steps to enhance our capital structure and mitigate any covenant or repayment concerns. The sales force is nearly full strength and energized following our national sales meeting. We're well positioned to execute and deliver on our strategy in 2026. I'll now turn the call over to Sanjeev to take you through our detailed financial updates.

Speaker #3: We've taken important steps to enhance our capital structure and mitigate any covenant to repayment concerns. The Salesforce is nearly full-strength and energized following our national sales meeting.

Speaker #3: We're well positioned to execute and deliver on our strategy in 2026. I'll now turn the call over to Sanjeev to take you through our detailed financial updates.

Speaker #1: Thank you, Steven. Hello, everyone. I'm pleased to report our Q4 and full-year 2025 results today. I'm encouraged by the changes we made throughout 2025 and excited about what's on the horizon for 2026 and beyond.

Sanjeev Narula: Thank you, Steve. Hello, everyone. I'm pleased to report our Q4 and full year 2025 results today. I'm encouraged by the changes we made throughout 2025 and excited about what's on the horizon for 2026 and beyond. We have a lot of important updates on the financial front. Let me get right into it. Steve provided some top-level highlights for the quarter, and I'll provide additional color commentary. Our revenues for Q4 of $57.6 million were consistent with pre-release and demonstrated 16% sequential quarterly growth. Aligned with the full year, the quarter also came in at the very top end of our guidance. As always, covered script volume primarily drive our revenue, while contribution from cash scripts and inventory dynamic remain minimal inconsistent.

Speaker #1: We have a lot of important updates on the financial front, so let me get right into it. Steve provided some top-level highlights for the quarter, and I'll provide additional color commentary.

Speaker #1: Our revenues for Q4 of $57.6 million were consistent with pre-release and demonstrated 16% sequential quarterly growth. Aligned with the full year, the quarter also came in at the very top end of our guidance.

Speaker #1: As always, covered script volume primarily drive our revenue, while contribution from cash scripts and inventory dynamic remain minimal and consistent. Our gross unit for Q4 came in at the high end of $55 to 60% range we provided last quarter, as a result of shifting rebading mix.

Sanjeev Narula: Our gross-to-net for Q4 came in at the high end of 55% to 60% range we provided last quarter as a result of shifting remaining mix. Our full year gross-to-net was within our expectations. Our gross margin remained consistent in Q4 and full year at approximately 87%. After accounting for quarterly cash expenses, we reported a loss from operations, excluding stock-based compensation, of approximately $320K, a 95% improvement compared to Q3. As you can see, this is a meaningful change in the operating profile of our company. As always, please refer to this morning's press release for reconciliation between non-GAAP measures and their most directly comparable GAAP measures. Q4 cash operating expenses were about $50 million, notably favorable than the less than $55 million guidance we set forth earlier last year due to continued expense discipline.

Speaker #1: Our full year gross unit was within our expectations. Our gross margin remained consistent in Q4 and full year at approximately 87%. After accounting for quarterly cash expenses, we reported a loss from operations excluding stock-based compensation of approximately $320K.

Speaker #1: A 95% improvement compared to Q3. As you can see, this is a meaningful change in the operating profile of our company. As always, please refer to this morning's press release for reconciliation between non-gap measures and their most directly comparable gap measures.

Speaker #1: Q4 cash operating expenses were about $50 million, notably favorable than the less than $55 million guidance we set forth earlier last year due to continued expense discipline.

Speaker #1: Similarly, our full year cash operating expenses of approximately $284 million came in at the low end of the range we provided on our Q3 call.

Sanjeev Narula: Similarly, our full-year cash operating expenses of approximately $284 million came in at low end of the range we provided on our Q3 call. We ended the year with about $130 million in cash and cash equivalent, which roughly reflects a $5 million cash usage in Q4 and signals a very clear path to operating profitability this year. Now let me turn to the enhancement of our capital structure. In January, we improved our capital structure via oversubscribed equity offering. Today we're announcing a modification of our term debt. As a result of these deliberate steps, we believe we now have a cost-effective and sustainable capital structure to meet our business needs and all of our debt obligations. The offering raised $130 million in gross proceeds, which brought our cash balance just north of $250 million at the start of the year.

Speaker #1: We ended the year with about $130 million in cash and cash equivalents, which roughly reflects a $5 million cash usage in Q4 and signals a very clear path to operating profitability this year.

Speaker #1: Now let me turn to the enhancement in our capital structure. In January, we improved our capital structure via an oversubscribed equity offering, and today we're announcing a modification of our term debt.

Speaker #1: As a result of these deliberate steps, we believe we now have a cost-effective and sustainable capital structure to meet our business needs and all of our debt obligations.

Speaker #1: The offering raised $130 million in gross proceeds, which brought our cash balance just north of $250 million at the start of the year. I'm pleased to announce today that we have successfully modified the terms of our outstanding term facility which we believe greatly benefit the company going forward.

Sanjeev Narula: I'm pleased to announce today that we have successfully modified the terms of our outstanding term facility, which we believe would greatly benefit the company going forward. We reduced the remaining principal to $175 million outstanding and paid certain end of term fees and accrued paid in kind amounts from the original agreement. In total, we used approximately $56 million of our cash balance to streamline this facility. Additionally, we were successful in lowering the interest rate from 12% to 9.85%. Lastly, we extended the loan maturity date from December 2027 to February 2029. Partial monthly repayments will begin in 2028, which are anticipated to reduce the outstanding principal as well as our interest expenses. We expect we will be generating positive operating cash flow beginning in 2027 in advance of these repayment obligations.

Speaker #1: We reduced the remaining principal to $175 million outstanding and paid certain end-of-term fees and accrued paid in-kind amounts from the original agreement. In total, we used approximately $56 million of our cash balance to streamline this facility.

Speaker #1: Additionally, we were successful in lowering the interest rate from 12% to 9.85%. Lastly, we extended the loan maturity date from December 2027 to February 2029.

Speaker #1: Partial monthly repayments will begin in 2028, which are anticipated to reduce the outstanding principal as well as our interest expenses. We expect we will be generating positive operating cash flow beginning in 2027 in advance of these repayment obligations.

Speaker #1: Overall, these modified terms reduce our interest expense, remove near-term payment hurdles, and provide greater financial flexibility. Following our capital structure enhancement, we believe our cash on hand, along with anticipated future cash flow from operations, will be sufficient to invest in our operations as needed and to satisfy all liquidity covenants and repayment obligations.

Sanjeev Narula: Overall, these modified terms reduce our interest expense, remove near-term payment hurdles, and provide greater financial flexibility. Following our capital structure enhancement, we believe our cash on hand, along with anticipated future cash flow from operations, will be sufficient to invest in our operations as needed and to satisfy all liquidity covenants and repayment obligations. For complete clarity on our covenant, we expect our highest cash flow requirement between now and 30 September 2027, will be approximately $150 million. The cash flow requirement is derived from our covenant in our revenue interest financing agreement, which becomes effective for the first time on 1 October 2026. All cash flow requirements relating to our term that are substantially lower than those from our revenue interest financing agreement.

Speaker #1: For complete clarity on our covenant, we expect our highest cash flow requirement between now and September 30th, 2027, will be approximately $120 million. The cash flow requirement is derived from our covenant in our revenue interest financing agreement, which becomes effective for the first time on October 1st, 2026.

Speaker #1: All cash flow requirements relating to our term debt are substantially lower than those from our revenue interest financing agreement. Beginning October 1st, 2027, we expect revenue interest financing agreement covenants will require that we temporarily hold a modestly high cash balance, which will decline thereafter our revenues increase and we make additional royalty payments.

Sanjeev Narula: Beginning 1 October 2027, we expect revenue interest financing agreement covenants will require that we temporarily hold a modestly high cash balance, which will decline thereafter our revenues increase, and we make additional royalty payments. To be clear, the cash flow covenants between the term debt and revenue interest financing agreements are not edited. We manage our liquidity to whichever covenant is the highest at any given point in time. Rest assured, for all these periods, we believe our cash on hand of approximately $190 million, following our term debt modification and our anticipated cash generated from operations beginning in 2027, will be sufficient to satisfy all covenants at all times. We refer you to our 10-K filed earlier this morning for more information.

Speaker #1: To be clear, the cash flow covenants between the term debt and revenue interest financing agreements are not additive. We manage our liquidity to whichever covenant is the highest at any given point in time.

Speaker #1: Rest assured, for all these periods, we believe our cash on hand of approximately $190 million following our term debt modification and our anticipated cash-generated from operations beginning in 2027 will be sufficient to satisfy all covenants at all times.

Speaker #1: We refer you to our 10-K file earlier this morning for more information. While on the topic of our 10-K, I'd like to flag that in this year's document, we updated the business section and risk factors to reflect the company's transition to a primarily commercial entity.

Sanjeev Narula: While on the topic of our 10-K, I'd like to flag that in this year's document, we updated the business section and risk factors to reflect the company's transition to a primarily commercial entity. While a comparison against prior years will show significant tax changes, I want to be clear that we believe important updates are being covered during this earnings call and in this morning's press release. Now I'd like to move to our 2026 guidance. With our GI-focused strategy taking hold and our financial position enhanced, we're ready to deliver in 2026. Today, we're issuing guidance on several financial metrics, which reflect that sentiment. Before I get into the numbers, I'd like to provide clarity on the accounting-related explanatory note you saw in this morning's press release. Beginning 1 January, certain third-party charges will be included in cost of goods sold instead of gross-to-net adjustments.

Speaker #1: While a comparison against prior years will show significant tax changes, I want to be clear that we believe important updates are being covered during this earnings call and in this morning's press release.

Speaker #1: Now I'd like to move to our 2026 guidance. With our GI-focused strategy taking hold and our financial position enhanced, we're ready to deliver in 2026.

Speaker #1: Today, we're issuing guidance on several financial metrics which reflect that sentiment. Before I get into the numbers, I'd like to provide clarity on the accounting-related explanatory note you saw in this morning's press release.

Speaker #1: Beginning January 1st, certain third-party charges will be included in cost of goods sold instead of grossly net adjustments. All things equal, net revenue will be higher as a result of costs moving from grossly net adjustments to cost of goods sold, leading to a mostly net neutral effect on our gross profit line in our P&L.

Sanjeev Narula: All things equal, net revenue will be higher as a result of costs moving from gross-to-net adjustments to cost of goods sold, leading to a mostly net neutral effect on our gross profit line in our P&L. Importantly, this change is simply a different classification of these costs and does not impact the underlying operations of our business. We are estimating an approximately $17 to 20 million shift in 2026 between two line items, which is reflected in the following guidance. We anticipate 2026 net revenue will be $320 to 345 million, including the estimated effect of the classification change I just described. As for gross-to-net, we believe the discount will be between 55% to 59%. We anticipate gross margin will be approximately 80%.

Speaker #1: Importantly, this change is simply a different classification of these costs and does not impact the underlying operations of our business. We are estimating an approximately 17 to 20 million shift in 2026 between two line items which is reflected in the following guidance.

Speaker #1: We anticipate 2026 net revenue will be $320 to $345 million, including the estimated effect of the classification change I just described. As for grossly net, we believe the discount will be between 55 to 59 percent.

Speaker #1: We anticipate gross margin will be approximately 80%. As for spend, we are anticipating cash operating expenses excluding stock-based compensation of $235 to $255 million, which at midpoint reflects a 14% decrease compared to 2025 results.

Sanjeev Narula: As for spend, we are anticipating cash operating expenses, excluding stock-based compensation, of $235 to $255 million, which at midpoint reflects a 14% decrease compared to 2025 results. A few comments about the cadence of these items over the course of 2026. We believe revenue will exhibit a similar pattern to last year, with approximately 40% being achieved in the first half, and approximately 60% being achieved in the second half, with Q1 being the soft quarter due to typical seasonality. We expect expenses will be relatively stable on a quarterly basis, but will reflect a modest step-up from where we exited Q4 2025, accounting for nearly full-strength sales team, new marketing initiatives, and full-year costs of our EoE phase II trial.

Speaker #1: Now, a few comments about the cadence of these items over the course of 2026. We believe revenue will exhibit a similar pattern to last year with approximately 40% being achieved in the first half and approximately 60% being achieved in the second half, with quarter one being this soft quarter due to typical seasonality.

Speaker #1: We expect expenses will be relatively stable on a quarterly basis but will reflect a modest step-up from where we exited Q4 2025, accounting for nearly full-strength sales team new marketing initiative, and full-year cost of our EOE phase two trial, based on anticipated revenue gross profit and cash operating expenses.

Sanjeev Narula: Based on anticipated revenue, gross profit, and cash operating expenses, we anticipate achieving operational profitability, excluding stock-based compensation, by Q3 and in total for full year 2026. Finally, we believe we will achieve cash flow positivity in 2027. In summary, our financial profile has transitioned meaningfully, and I'm excited for this next phase. This quarter's results were strong, coming in at the better end of our guidance we previously provided. Our operational momentum is solid, which gives me confidence in our 2026 revenue trajectory. I feel confident in our financial position and believe we have the resources we need to execute the plan and deliver on the guidance ranges we set forth today. With that, I'll now turn the call back to Steve for his closing remarks. Steve?

Speaker #1: We anticipate achieving operational profitability excluding stock-based compensation by Q3 and in total for full year 2026. And finally, we believe we will achieve cash flow positivity in 2027.

Speaker #1: In summary, our financial profile has transitioned meaningfully and I'm excited for this next phase. This quarter results were strong coming in at the better end of our guidance we previously provided.

Speaker #1: Our operational momentum is solid, which gives me confidence in our 2026 revenue trajectory. I feel confident in our financial position and believe we have the resources we need to execute the plan and deliver on the guidance ranges we set forth today.

Speaker #1: With that, I'll now turn the call back to Steve for his closing remarks. Steve.

Speaker #2: Thank you, Sanjeev, for the detailed financial review. I would like to extend my thanks to everyone at Fathom for their extraordinary efforts throughout 2025.

Steven Basta: Thank you, Sanjeev, for the detailed financial review. I would like to extend my thanks to everyone at Phathom for their extraordinary efforts throughout 2025. I was able to meet many of our sales team members during our recent national sales meeting. I'm heartened by their dedication and exceptional talent. Our transition to focus on gastroenterologists and to reach operating profitability is well underway. Thank you also to our shareholders for your support and confidence. We're dedicated to delivering value to reward your investment. Operator, please open the line for questions.

Speaker #2: I was able to meet many of our sales team members during our recent national sales meeting, and I'm heartened by their dedication and exceptional talent.

Speaker #2: Our transition to focus on gastroenterologists and to reach operating profitability is well underway. Thank you also to our shareholders for your support and confidence.

Speaker #2: We're dedicated to delivering value to reward your investment. Operator, please open the line for questions.

Speaker #3: Yes, sir. Ladies and gentlemen, if you have a question or comment at this time, please press star 11 on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, simply press star 11 again.

Operator: Yes, sir. Ladies and gentlemen, if you have a question or comment at this time, please press star one one on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, simply press star one one again. Again, if you have a question or comment at this time, please press star one one on your telephone keypad. Please stand by while we compile the Q&A roster. In the interest of time, we ask that you please limit yourself to one question, one question only, and you may requeue up for question as time permits. Our first question or comment comes from the line of Kristen Kluska from Cantor Fitzgerald. Ms. Kluska, your line is now open.

Speaker #3: Again, if you have a question or comment at this time, please press star one one on your telephone keypad. Please stand by while we compile the Q&A roster.

Speaker #3: In the interest of time, we ask that you please limit yourself to one question, one question only, and you may re-queue up for question as time permits.

Speaker #3: Our first question or comment comes from the line of Kristen Kluska from Cantor Fitzgerald. Ms. Kluska, your line is now open.

Speaker #4: Hi, everyone. Congrats on a really strong end of the year and the work you were able to do around the interest definitely very favorable here.

Kristen Kluska: Hi, everyone. Congrats on a really strong end of the year and the work you were able to do around the interest, definitely very favorable here. The question I have for you this morning is just recognizing it's still very much early days. What can you tell us about the early signals that you're seeing from this strengthened sales force and strategy, especially coming out of that meeting? Are you seeing that more of the GIs that were new to your strategy are converting? Are you also seeing some early signals of growth within those current GIs where you added more touch points? Thank you.

Speaker #4: So the question I have for you this morning is just recognizing it's still very much early days. What can you tell us about the early signals that you're seeing from this strengthened Salesforce and strategy, especially coming out of that meeting?

Speaker #4: Are you seeing that more of the GIs that were new to your strategy are converting, and are you also seeing some early signals of growth within those current GIs where you added more touch points?

Speaker #4: Thank you.

Steven Basta: Kristen, thanks so much for the kind thoughts and for bringing us to what I think is the most important topic actually, which is the core focus on our GI call point is the fundamental element of our growth strategy. We are seeing consistent signs of momentum. It's interesting as you characterize the two different paths of sort of converting new writers versus growing existing writers. Virtually all gastroenterologists, not quite all, but a very high percentage of gastroenterologists, have already written a script for Voquezna. We've got broad penetration within the gastroenterology community, both among physicians and among APPs, with high conversion success already. What we focus on-...

Speaker #2: Kristen, thanks so much for the kind thoughts and for bringing us to what I think is the most important topic, actually, which is the core focus on our GI call point is the fundamental element of our growth strategy.

Speaker #2: And we are seeing consistent signs of momentum. It's interesting, as you characterized the two different paths of sort of converting new writers versus growing existing writers.

Speaker #2: Virtually all gastroenterologists, not quite all, but a very high percentage of gastroenterologists have already written a script for Vocuesna so we've got broad penetration within the gastroenterology community, both among physicians and among APPs, with high conversion success already.

Speaker #2: What we focus on, all of our Salesforce messaging in the context of our national sales meeting, in the context of the conversations that the regional managers are having with the territory sales representatives, is all about how to grow writing frequency.

Steven Basta: All of our sales force messaging in the context of our national sales meeting, in the context of the conversations that the regional managers are having with the territory sales representatives, is all about how to grow writing frequency. We have what we refer to as an adoption ladder, where physicians try the product, and then we are trying to improve their consistency of writing, and they become consistent writers. Then we try to improve their consistency of writing, then they become adopters, and so on. As we grow in terms of the frequency of the physician writing an NRx for Voquezna, what we are seeing is very clear trends on those adoption ladders associated with physicians moving up in categories. A tried physician will only have written two NRx in the last quarter.

Speaker #2: We have what we refer to as an adoption ladder, where physicians try the product and then we are trying to improve their consistency of writing and they become consistent writers, and then we try to improve their consistency of writing and then they become adopters, and so on.

Speaker #2: And as we grow in terms of the frequency of the physician writing and NRX for Vocuesna and what we are seeing, it's very clear trends on those adoption ladders.

Speaker #2: Associated with physicians moving up in category, so a tried physician will only have written two NRXs in the last quarter, a consistent physician will have written six or more weeks in the last quarter, etc.

Steven Basta: A consistent physician will have written 6 or more weeks in the last quarter, et cetera. We are seeing physicians move from one category to the next consistently, where on one of the metrics, we'd only had 400 or 500 physicians last summer that were in the upper categories. Now we've got, you know, well north of 2,000 physicians in the upper categories. We're seeing that adoption rate among not just the highest frequency writers, but very broadly within the GI community, increasing. That's the focus of all of our sales force conversations. That was the focus of our national sales meeting, is how do we take physicians through that adoption ladder? It's the focus of each of our coaching conversations, and we're seeing clear evidence of it in our writing pattern.

Speaker #2: And we are seeing physicians move from one category to the next consistently. Where on one of the metrics, we'd only had four or five hundred physicians last summer that were in the upper categories.

Speaker #2: Now we've got a well north of 2,000 physicians. In the upper categories. So we're seeing that adoption rate among not just the highest frequency writers, but very broadly within the GI community increasing.

Speaker #2: And that's the focus of all of our Salesforce conversations. That was the focus of our national sales meeting, is how do we take physicians through that adoption ladder?

Speaker #2: It's the focus of each of our coaching conversations and we're seeing clear evidence of it in our writing pattern. One of the metrics that I find to be helpful as we think about the long-term opportunity for this product is what is the rate of adoption we've achieved among the top few hundred writers?

Steven Basta: One of the metrics that I find to be helpful as we think about the long-term opportunity for this product is, you know, what is the rate of adoption we've achieved among the top few hundred writers? We're already seeing that we're now passing on average, 20% penetration in terms of their PPI volume being converted to Voquezna. When we get to 20% conversion across the broader GI community, that's where we're approaching $1 billion of revenue, potentially in GI. That's clearly where we're headed over the next few years.

Speaker #2: And there we're already seeing that we're now passing on average 20% penetration in terms of their PPI volume being converted to Vocuesna when we get to 20% conversion across the broader GI community, that's where we're approaching a billion dollars of revenue potentially in GI.

Speaker #2: And that's clearly where we're headed over the next few years.

Speaker #3: Thank you. Our next question or comment comes from the line of Annabelle Samimi from Stifel. Ms. Samimi, your line is open.

Operator: Thank you. Our next question or comment comes from the line of Annabel Samimy from Stifel. Ms. Samimy, your line is open.

Annabel Samimy: Hi, thanks for that caller, and just following on from that comment. In the territories that you already have been pretty well aligned as far as the focus on GIs, do you have any sense yet, if, you know, of the dynamic of patients transitioning back to primary care, if you're starting to see pull through in some of those more mature accounts? Just curious to see if that's dynamic or if you've seen any pickup in the primary care area organically from that effort. And when everyone is on board and humming, do you expect an inflection, or is this just a steady growth throughout the year? Thanks.

Speaker #4: Hi, thanks for that, caller. And just following on from that comment—in the territories that you already have been pretty well aligned as far as the focus on GIs—do you have any sense yet of the dynamic of patients transitioning back to primary care? If you're starting to see pull-through in some of those more mature accounts, just curious to see if that dynamic, or if you've seen any pickup in the primary care area organically from that effort.

Speaker #4: And when everything, everyone is on board and humming, do you expect an inflection or is this just a steady growth throughout the year? Thanks.

Speaker #3: So Annabelle, that's a really important component of the long-term growth path is building beyond just GI to capture the return of patients to primary care and the growth there.

Steven Basta: Annabel, that's a, it's a really important component of the long-term growth path, is building beyond just GI to capture the return of patients to primary care and the growth there. I just candidly, we've not looked at it. At least I've not looked at it. I know our sales team is doing much more granular work on a physician-by-physician basis at the specific referral patterns for specific gastroenterologists to see their referring physicians and how they've adopted. I've looked at it much more broadly for the entire universe of primary care physicians, and we are seeing an uplift in primary care prescribing volume on a broad basis. The granularity that you're describing is very much an analysis that over time, we will do much more frequently.

Speaker #3: I just candidly, we've not looked at it, at least I've not looked at it. I know our sales team is doing much more granular work on a physician-by-physician basis.

Speaker #3: At the specific referral patterns for specific gastroenterologists to see their referring physicians and how they've adopted. I've looked at it much more broadly for the entire universe of primary care physicians.

Speaker #3: And we are seeing an uplift in primary care prescribing volume on a broad basis. The granularity that you're describing is very much an analysis that, over time, we will do much more frequently.

Speaker #3: The near-term focus is on that core gastroenterology conversion point, and the expectation—exactly to your point—is over the next 6, 12, 18 months, we're going to see those patients returning to primary care and see those growing.

Steven Basta: The near term focus is on that core gastroenterology conversion point. The expectation, exactly to your point, is over the next 6, 12, 18 months, we're going to see those patients returning to primary care and see those growing. We'll be looking at that metric more precisely. What we are seeing on a broad basis when we look at the total prescribing in GI and the total prescribing of primary care, is an uplift in both. Even though the majority of our sales force time is going into GI, that uplift broadly in primary care prescribing volume would suggest that we are seeing exactly that effect. Was there a second half to your question, or did that capture it?

Speaker #3: And we'll be looking at that metric more precisely. But what we are seeing on a broad basis when we look at the total prescribing in GI and the total prescribing in primary care is an uplift in both.

Speaker #3: Even though the majority of our Salesforce time is going into GI, that uplift broadly in primary care prescribing volume would suggest that we are seeing exactly that effect.

Speaker #3: So was there a second after your question, or did that capture it?

Speaker #4: Expectation for any inflections once everyone is on board and.

Annabel Samimy: Expectation for any inflections once everyone is on board.

Steven Basta: Oh, the inflection point question.

Speaker #3: Oh, the inflection point question. Yeah. So we don't map out, we don't model out a specific inflection point. It's very hard to predict. When does the slope change?

Annabel Samimy: Along.

Steven Basta: Yeah, we don't model out a specific inflection point. It's very hard to predict, you know, when does the slope change? What we are driving toward is consistent growth, month-over-month, quarter-over-quarter, because we're not trying to do a sea change kind of strategy at this point going forward. 2025 was very much a year of fundamentally shifting the strategy. We were changing call points. We realigned sales territories. We went through some pretty significant change. 2026 is just going to be a year of heads down execution. It is making sure that we are doing all of the right things. We're getting into the right offices, we're calling on gastroenterologists with the right frequency. We are delivering really good messages every time we call in gastroenterologists. We're helping them with all of their access needs.

Speaker #3: What we are driving toward is consistent growth month over month, quarter over quarter, because we're not trying to do a sea change kind of strategy at this point going forward.

Speaker #3: 2025 was very much a year of fundamentally shifting the strategy. We were changing call points. We realigned sales territories. We went through some pretty significant change.

Speaker #3: 2026 is just going to be a year of heads down execution. It is making sure that we are doing all of the right things.

Speaker #3: We're getting into the right offices. We're calling on gastroenterologists with the right frequency. We are delivering really good messages every time we're calling gastroenterologists.

Speaker #3: We're helping them with all of their access needs. We are working through the process of enabling them to write Vocuesna scripts more frequently. And that drives our growth.

Steven Basta: We are working through the process of enabling them to write Voquezna scripts more frequently. That drives our growth. We don't need to inflect at any one point to a specifically different strategy. What we need to do is just execute this playbook and execute it well quarter-over-quarter. You know, it's hard for me to predict exactly what the slope looks like on a quarter-by-quarter basis. I do expect that we're gonna get steady growth. It might accelerate at some point in time. It's really hard to predict that. What we're seeing is all the right signs of incrementally significant adoption among physicians and incremental success that our sales reps are having in each of these offices.

Steven Basta: We are working through the process of enabling them to write Voquezna scripts more frequently. That drives our growth. We don't need to inflect at any one point to a specifically different strategy. What we need to do is just execute this playbook and execute it well quarter-over-quarter. You know, it's hard for me to predict exactly what the slope looks like on a quarter-by-quarter basis. I do expect that we're going to get steady growth. It might accelerate at some point in time. It's really hard to predict that. What we're seeing is all the right signs of incrementally significant adoption among physicians and incremental success that our sales reps are having in each of these offices.

Speaker #3: So we don't need to inflect at any one point to a specifically different strategy. What we need to do is just execute this playbook and execute it well quarter over quarter.

Speaker #3: It's hard for me to predict exactly what the slope looks like on a quarter-by-quarter basis. I do expect that we're going to get steady growth.

Speaker #3: It might get accelerated at some point in time. It's really hard to predict that. What we're seeing is all the right signs of incrementally significant adoption among physicians, and incremental success that our sales reps are having in each of these offices.

Speaker #3: Thank you. Our next question or comment comes from the line of Dennis Ding from Jefferies. Mr. Ding, your line is now open.

Operator: Thank you. Our next question or comment comes from the line of Dennis Ding from Jefferies. Mr. Ding, your line is now open.

Anthea Hong: Hi, this is Anthea Hong for Dennis. Thanks for taking our questions. Congrats on the quarter. First, on Q1, do you expect sequential quarterly growth given the deployment of the expanded sales force, or are you seeing that seasonality plus the winter storms will still be headwinds here? Is there a plan to seek broader Medicare coverage for Voquezna this year, if that's baked into guidance? Thank you.

Speaker #5: Hi, this is Anthea on for Dennis. Thanks for taking our questions and congrats on the quarter. First on Q1, do you expect sequential quarterly growth given the deployment of the expanded Salesforce?

Speaker #5: Are you seeing that seasonality plus the winter storms will still be headwinds here? And is there a plan to seek broader Medicare coverage for Vocuesna this year?

Speaker #5: And if that's baked into guidance, thank you.

Steven Basta: Anthea Hong, let me, I'll briefly address the 1st part, and then I'll offer Sanjeev Narula the opportunity if he wants to add more color on the seasonality in this process. You know, we're clearly seeing the typical seasonality that occurs, and the winter storms are clearly having some effect as well. We've seen slow weeks whenever, you know, the entire country is shut down because of an ice storm, that has an impact. We don't guide to revenue on a quarter-by-quarter basis with that granularity. While we, you know, clearly acknowledge that Q1 is the weakest of the 4 quarters during the year, whether it's flat or up or down, we just, we don't provide that quarterly guidance. What we've provided is full year guidance.

Speaker #3: So Anthea, let me I'll briefly address the first part and then I'll offer to give you the opportunity if he wants to add more color on the seasonality in this process.

Speaker #3: We're clearly seeing the typical seasonality that occurs and the winter storms are clearly having some effect as well. We've seen slow weeks whenever the entire country is shut down because of a nice storm.

Speaker #3: That has an impact. We don't guide to revenue on a quarter-by-quarter basis. With that granularity, so while we clearly acknowledge that Q1 is the weakest of the four quarters, during the year, whether it's flat or up or down, we just we don't provide that quarterly guidance.

Speaker #3: What we've provided is full-year guidance, but the underlying metrics that we're seeing in terms of our sales call activity, the prescribing behavior of physicians, the growth patterns that we've been describing, all give us confidence in terms of where we're going to be on a full-year basis.

Steven Basta: The underlying metrics that we're seeing in terms of our sales call activity, the prescribing behavior of physicians, the growth patterns that we've been describing, all give us confidence in terms of where we're gonna be on a full year basis. Sanjeev, if you want to chime in at all.

Steven Basta: The underlying metrics that we're seeing in terms of our sales call activity, the prescribing behavior of physicians, the growth patterns that we've been describing, all give us confidence in terms of where we're going to be on a full year basis. Sanjeev, if you want to chime in at all.

Speaker #3: And so Sanjeev, if you want to try and get it all on the seasonality.

Sanjeev Narula: Yeah.

Steven Basta: On the seasonality.

Sanjeev Narula: Yeah. I think you pointed out, Steve, that we don't provide quarterly guidance. But I think what I said this time, if you look at in our kind of prepared remarks that we said earlier, if you look at the cadence of our business on a full year basis, we'll be roughly the kind of same trajectory as we experienced in 2025. 40% of our top line revenue will be in the first half of the year, approximately 60% in the second half. I said Q1 is gonna be the slowest quarter because of typical seasonality. I think that's kind of what we see.

Sanjeev Narula: Yeah. I think you pointed out, Steve, that we don't provide quarterly guidance. But I think what I said this time, if you look at in our kind of prepared remarks that we said earlier, if you look at the cadence of our business on a full year basis, we'll be roughly the kind of same trajectory as we experienced in 2025. 40% of our top line revenue will be in the first half of the year, approximately 60% in the second half. I said Q1 is going to be the slowest quarter because of typical seasonality. I think that's kind of what we see.

Speaker #2: Yeah, I think you pointed out, Steve, that we don't. Provide quarterly guidance. But I think what I said this time if you look at in our kind of prepared remarks that we said earlier, if you look at the cadence of our business on a full-year basis, we'll be roughly kind of same trajectory as we experienced in 2025.

Speaker #2: 40% of our top-line revenue will be in the first half of the year. Approximately 60% in the second half. And I said Q1 is going to be the slowest quarter because of typical seasonality.

Speaker #2: So, I think that's kind of what we see. What the exact number is going to be, obviously, you will hear that in the first quarter call when we talk about it.

Sanjeev Narula: What the exact number is gonna be, obviously, you will hear that on the Q1 call when we talk about it, but clearly it is the slowest and softest months because of the typical seasonality.

Sanjeev Narula: What the exact number is going to be, obviously, you will hear that on the Q1 call when we talk about it, but clearly it is the slowest and softest months because of the typical seasonality.

Speaker #2: But clearly, it is the slowest and softest months because of typical seasonality.

Speaker #3: Right. And then the second half of your question, Anthea, I think was related to Medicare. So we're not anticipating a fundamental change in broad Medicare coverage where we get coverage for all Medicare patients.

Steven Basta: Right. The second half of your question, Anthea, I think, was related to Medicare. We're not anticipating a fundamental change in broad Medicare coverage, where we get, you know, coverage for all Medicare patients. What we are seeing is incremental Medicare prescriptions being covered, either through medical appeals processes or through specific Medicare Part D plans. As different Medicare Part D plans become more familiar with seeing Voquezna prescriptions being submitted, they are beginning to cover those more frequently. We may see over time, some increase in the number of Medicare scripts that are actually being processed and being covered, but it's not a broad coverage decision, nor do we anticipate that there's gonna be any broad fundamental change in a broad coverage decision on a system-wide basis for the entire population of Medicare patients.

Steven Basta: Right. The second half of your question, Anthea, I think, was related to Medicare. We're not anticipating a fundamental change in broad Medicare coverage, where we get, you know, coverage for all Medicare patients. What we are seeing is incremental Medicare prescriptions being covered, either through medical appeals processes or through specific Medicare Part D plans. As different Medicare Part D plans become more familiar with seeing Voquezna prescriptions being submitted, they are beginning to cover those more frequently. We may see over time, some increase in the number of Medicare scripts that are actually being processed and being covered, but it's not a broad coverage decision, nor do we anticipate that there's going to be any broad fundamental change in a broad coverage decision on a system-wide basis for the entire population of Medicare patients.

Speaker #3: What we are seeing is incremental Medicare prescriptions being covered either through medical appeals processes or through specific Medicare Part D plans. So as different Medicare Part D plans become more familiar with seeing Vocuesna prescriptions being submitted, they are beginning to cover those more frequently.

Speaker #3: And so we may see over time some increase in the number of Medicare scripts that are that are actually being processed and being covered.

Speaker #3: But it's not a broad coverage decision, nor do we anticipate that there's going to be any broad fundamental change. In a broad coverage decision on a system-wide basis for the entire population of Medicare patients.

Speaker #5: Got it. Thank you.

Anthea Hong: Got it. Thank you.

Operator: Thank you. Our next question or comment comes from the line of Joseph Stringer from Needham and Company. Mr. Stringer, your line is open.

Speaker #3: Thank you. Our next question or comment comes from the line of Joseph Stringer from Needham & Company. Mr. Stringer, your line is open.

Speaker #4: Hi, good morning. Thanks for taking our question. Just wanted to follow up on the previous question. Looking at the IQVIA prescription data and the impact of seasonality, is the magnitude of the seasonality affect this cycle in line with your expectations?

Joseph Stringer: Hi. Good morning. Thanks for taking our question. I just wanted to follow up on a previous question. Looking at the IQVIA prescription data and the impact of seasonality, is the magnitude of the seasonality effect this cycle in line with your expectations, I guess, all things considered? Maybe another way of asking, are there any nuances about the launch now with the refocused effort that would make it more or less sensitive to seasonality? Thank you.

Speaker #4: I guess, all things considered—and maybe another way of asking—is: are there any nuances about the launch now, with the refocused effort, that would make it more or less sensitive to seasonality?

Speaker #3: Thank you.

Steven Basta: Thank you for the question. I, it's really hard to characterize magnitude of seasonality one year versus another. What we're seeing is very similar to the pattern that we saw last year in terms of January being particularly light, and then February is also light, and then by March last year, it started to pick up. We would hope that that same pattern, not just hope, we actually expect that the same pattern is going to come to fruition, because you get several uplifts in March. We're coming off of the national sales meeting, everybody's energized, we're gonna have a full-strength sales organization, and physicians have had time to work through their plans. Patients who have switched plans now have time to figure out how they're gonna get the drug covered.

Speaker #4: So thank you for the question. It's really hard to characterize magnitude of seasonality one year versus another. What we're seeing is very similar to the pattern that we saw last year.

Steven Basta: Thank you for the question. I, it's really hard to characterize magnitude of seasonality one year versus another. What we're seeing is very similar to the pattern that we saw last year in terms of January being particularly light, and then February is also light, and then by March last year, it started to pick up. We would hope that that same pattern, not just hope, we actually expect that the same pattern is going to come to fruition, because you get several uplifts in March. We're coming off of the national sales meeting, everybody's energized, we're going to have a full-strength sales organization, and physicians have had time to work through their plans. Patients who have switched plans now have time to figure out how they're going to get the drug covered.

Speaker #4: In terms of January, being particularly light, and then February is also light, and then by March last year, it started to pick up. So we would hope that that same pattern not just hope, we actually expect that that same pattern is going to come to fruition.

Speaker #4: Because you get several uplifts in March. We're coming off of the national sales meeting. Everybody's energized. We're going to have a full-strength sales organization.

Speaker #4: And physicians have had time to work through their plans. Patients who have switched plans now have time to figure out how they're going to get the drug covered.

Steven Basta: All of those things that create noise in January, as everybody's switching to a new health plan, gets worked out in the first month or two. That effect just is there every year for a branded product. The specific magnitude of it varies by product, so we're starting to see what that pattern looks like for us, not seeing anything that's unusual in that regard. One thing that we have observed is the IQVIA-reported numbers seem to be somewhat greater underreporting versus our internal numbers than historic norms. We think we've identified the cause of that and that that's gonna work itself out. There may be a little bit of extra softness or delta in the IQVIA-reported numbers versus what we're actually seeing.

Speaker #4: So all of those things that create noise in January as everybody's switching to a new health plan gets worked out in the first month or two.

Steven Basta: All of those things that create noise in January, as everybody's switching to a new health plan, gets worked out in the first month or two. That effect just is there every year for a branded product. The specific magnitude of it varies by product, so we're starting to see what that pattern looks like for us, not seeing anything that's unusual in that regard. One thing that we have observed is the IQVIA-reported numbers seem to be somewhat greater underreporting versus our internal numbers than historic norms. We think we've identified the cause of that and that that's going to work itself out. There may be a little bit of extra softness or delta in the IQVIA-reported numbers versus what we're actually seeing.

Speaker #4: So that effect just is there every year for a branded product. And the specific magnitude of it varies by product. So we're starting to see what that pattern looks like for us.

Speaker #4: We're not seeing anything that's unusual in that regard. One thing that we have observed is the IQVIA reported numbers seem to be somewhat greater underreporting versus our internal numbers than historic norms.

Speaker #4: We think we've identified the cause of that and that that's going to work itself out. But there may be a little bit of extra softness or delta in the IQVIA reported numbers versus what we're actually seeing.

Speaker #4: But the softness is real in January and February. And we think it starts to improve, meaningfully, in March. The other phenomenon that you cite is a real phenomenon, as Anthea's question also had suggested, that the winter storms clearly not just had an effect on us, had an effect on a whole bunch of companies in the context of the slowdown for a week in January and slowdown for a week in February on the Northeast.

Steven Basta: The softness is real in January and February, and we think it starts to improve meaningfully in March. The other phenomenon that you cite is a real phenomenon, as, you know, as Anthea's question also had suggested that, you know, that clearly not just had an effect on us, had an effect on a whole bunch of companies in the context of the slowdown for a week in January and slowdown for a week in February on the Northeast. I don't want to overstate those, but is, I think the dominant effect is just the annual seasonality that we would expect to see every year.

Speaker #4: So I don't want to overstate those. That is, I think, the dominant effect is just the annual seasonality that we would expect to see every year.

Speaker #3: Thank you. Our next question or comment comes from the line of Paul Choi from Goldman Sachs. Mr. Choi, your line is now open.

Operator: Thank you. Our next question or comment comes from the line of Paul Choi from Goldman Sachs. Mr. Choi, your line is now open.

Speaker #4: Good morning, team. This is Daniel Allen for Paul. Thanks for creating our question. So we're curious about if you could provide colors on the proportions of prescriptions that are now filled to link Rx versus the new good Rx that came online.

[Analyst] (Goldman Sachs): Morning team, this is Daniel on for Paul. Thanks for creating a question. We're curious about, like, if you could provide colors on the proportions of prescriptions that are now filled to BlinkRx versus the new GoodRx that came online, and how is the economy of the channels versus the more traditional dispensary? Thank you.

Speaker #4: And how is the economy of the channels versus the more traditional dispensary? Thank you.

Steven Basta: There are several different parts to that. Let me, so let me take GoodRx first. GoodRx we just turned on in November. What that is, I mean, already GoodRx had coupons on it for our co-pay support program. If someone is at a pharmacy with a retail script, and they need to get co-pay support because their insurance co-pay is high, they can go to GoodRx, they can get our co-pay card, and in many cases, bring down the co-pay amount significantly, and in some cases down to $25, which is our target co-pay where possible. The other thing that we turned on with GoodRx is the opportunity to do a cash pay purchase through GoodRx, which actually still would get reported into the IQVIA script numbers because it would be dispensed from a retail pharmacy.

Speaker #3: So there are several different parts to that. So let me take good Rx first. Good Rx, we just turned on in November. And what that is, is I mean, already, good Rx had coupons on it for our copay, support program.

Speaker #3: So if someone is at a pharmacy with a retail script and they need to get copay support because their insurance copay is high, they can go to good Rx.

Speaker #3: They can get our copay card and in many cases, bring down the copay amount significantly. And in some cases, down to $25, which is our target copay where possible.

Speaker #3: The other thing that we turned on with good Rx is the opportunity to do a cash pay purchase through good Rx, which actually still would get reported into the IQVIA script numbers because it would be dispensed from a retail pharmacy.

Steven Basta: There's a $199 option for a patient to purchase that. That's intended really for a patient who either can't access the co-pay card, because they're on a government plan, or for whom the co-pay would still be too high or would still be above $199, that it gives another alternative to a patient. Those numbers are still relatively small. It's a very small percentage of the overall number. Just got turned on in November. We'll give you a sense in future quarters. If that grows to be a meaningful number, we'll give some color on that, but at this point it's a really small number. It's not a driver of anything, but don't want anybody to be surprised that that option now exists.

Speaker #3: But there's a $199 option for a patient to purchase that. That's intended really for a patient who either can't access the copay card because they're on a government plan or for whom the copay would still be too high or would still be above $199 that it gives another alternative for patients.

Speaker #3: Those numbers are still relatively small. It's a very small percentage of the overall number. It just got turned on in November. We'll give you a sense in future quarters if that grows to be a meaningful number.

Speaker #3: We'll give some color on that. But at this point, it's a really small number. It's not a driver of anything. But don't want anybody to be surprised.

Speaker #3: That option now exists. So, we're trying to provide multiple ways for a patient in different reimbursement circumstances and different access environments to be able to know that they're going to be able to get access to the product as reasonably priced as possible.

Steven Basta: We're trying to provide multiple ways for a patient in different reimbursement circumstances and different access environments to be able to know that they're going to be able to get access to the product as reasonably priced as possible. The percentage of scripts that are going through Blink. I want to be sort of clear to distinguish between two things in this process. More than half of our prescriptions now, in total, are going through the Blink network to then be routed either as covered scripts to a pharmacy or as cash pay scripts to be dispensed directly through the Blink network. If when a physician sends a prescription, designates a prescription to go to Blink will first adjudicate whether or not the script is going to get covered. If it gets covered, it shows up in the IQVIA numbers.

Speaker #3: The percentage of scripts that are going through Blink and I want to be sort of clear to distinguish between two things in this process.

Speaker #3: More than half of our prescriptions now in total are going through the Blink network to then be routed either as covered scripts to a pharmacy or as cash pay scripts to be dispensed directly through the Blink network.

Speaker #3: If when a physician sends a prescription, designates a prescription to go to Blink, Blink will first adjudicate whether or gets covered, it shows up in the IQVIA numbers.

Speaker #3: It doesn't show up in our Blink cash numbers, even though Blink is an intermediary facilitator of that process. So about half of our scripts in total go to Blink; they get routed if they get covered.

Steven Basta: It doesn't show up in our Blink cash numbers, even though Blink is an intermediary, facilitated that process. About half of our scripts in total go to Blink. They get routed. If they get covered, they show up in the IQVIA numbers. If they don't, they show up in our cash numbers, and as we described, something on the order of 36% of our prescriptions now are Blink-dispensed cash scripts. That's where the two different numbers are. That delta is scripts that are getting covered after they originally got sent to Blink. Matthew, does that address your question, or was there a second part of that?

Speaker #3: They show up in the IQVIA numbers. If they don't, they show up in our cash numbers. And as we described, something on the order of 36% of our prescriptions now are Blink dispensed cash scripts.

Speaker #3: So that's where the two different numbers are: that delta is scripts that are getting covered after they originally got sent to Blink. Matthew, does that address your question, or was there a second part of that?

[Analyst] (Goldman Sachs): That's fine. Thank you very much.

Speaker #4: That's fine. Thank you very much.

[Analyst] (Goldman Sachs): That's fine. Thank you very much.

Steven Basta: Yes, sir.

Speaker #3: Thank you. Our next question or comment comes from the line of Chase Knickerbocker from Craig Hallam. Sir, your line is open.

Operator: Thank you. Our next question or comment comes from the line of Chase Knickerbocker from Craig-Hallum. Sir, your line is open.

Speaker #5: Good morning. Thanks for taking the question. Just a quick one. Steve, what any do you think we are in as far as kind of getting reps to full productivity or kind of where you expect them to be after kind of shifting the focus in the fall, but also kind of changing the lines of some of the geographical lines of a lot of these territories in the fall as well?

Chase Knickerbocker: Good morning. Thanks for taking the questions. Just a quick one. Steve, what inning do you think we are in as far as kind of getting reps to full like productivity or kind of where you expect them to be after kind of shifting the focus in the fall, also kind of changing the lines of some of the geographical lines, a lot of these territories in the fall as well. Where do you think we are as far as the inning there?

Speaker #5: Where do you think we are as far as the ending there?

Speaker #6: Just to clarify, Chase, what ending of Salesforce transition?

Steven Basta: Just to clarify, Chase, what inning of sales force transition?

Chase Knickerbocker: Just as far as the inning of full productivity, Steve. As far as full productivity.

Speaker #5: Just as far as the ending of full productivity, Steve. As far as full productivity kind of with that transition in the fall.

Steven Basta: Full productivity-

Steven Basta: Full productivity.

Chase Knickerbocker: Kind of with that transition in the fall.

Speaker #6: Yeah. So I think full productivity for a sales rep comes several months after the sales rep is on board because there is a training process, there's a learning process.

Steven Basta: I think, you know, full productivity for a sales rep comes several months after the sales rep is on board because there is a training process, there's a learning process. It takes 1 or 2 months to get to know the accounts in your territory and to have scheduled all of the lunch events. We had a number of sales training classes that came in January, and then our national sales meeting in February. By March, April, all of those folks are hitting the ground. I mean, they're hitting the ground immediately after their training program, but, you know, within 1 or 2 months, they've met most of the accounts in their territory, and they've got their lunches scheduled, and they've got momentum within each of those accounts, and you start to see the real impact.

Speaker #6: It takes a month or two to get to know the accounts in your territory, and to have scheduled all of the launch events. So we had a number of sales training classes that came in January, and then our national sales meeting in February.

Speaker #6: By March, April, all of those folks are hitting the ground. I mean, they're hitting the ground immediately after their training program, but within a month or two, they've met most of the accounts in their territory, they've got their lunches scheduled, and they've got momentum within each of those accounts.

Speaker #6: And you start to see the real impact so I would think we are to use the baseball analogy at the seventh or eighth inning of that nine-inning process of sort of the sequence of events where the Salesforce gets to be fully effective.

Steven Basta: I would, you know, I would think we are to use the baseball analogy, at the seventh or eighth inning of that 9-inning process of sort of the sequence of events where the sales force gets to be fully effective.

Speaker #5: And sort of since that shift to focus in GI, have you seen kind of the increase in productivity that having more kind of condensed patient base at these prescribers would indicate, or do you think there's kind of additional efficiency that will continue to kind of harvest over the course of this year?

Chase Knickerbocker: Sort of since that, you know, shift of focus in GI, have you seen kind of the increase in productivity that having, you know, more kind of condensed patient base at these prescribers, you know, would indicate, or do you think there's kind of additional efficiency that we'll continue to kind of harvest over the course of this year?

Speaker #6: Well, it's interesting. Even if the Salesforce is fully effective, you don't see the effect that day or that week or even that month in terms of sales.

Steven Basta: Well, it's interesting. Even if the sales force is fully effective, you don't see the effect that day or that week or even that month in terms of sales. The majority of our prescriptions come from prior patients who have been prescribed the product, who are getting refills, physicians who have previously already adopted the product, who are prescribing it to an incremental physician. What we are really doing is just moving the incremental adoption rate. If you've sort of got a base 70%, 80% volume that's happening, you're really only impacting that 20%. Now, if you become 30% more effective, that 20% goes to 26%, but it's 26% on top of a base 80% that already exists there. When you see it, you don't see...

Speaker #6: Because the majority of our prescriptions come from prior patients who have been prescribed the product, who are getting refills, physicians who have previously already adopted the product, who are prescribing it to an incremental physician.

Speaker #6: So what we are really doing is just moving the incremental adoption rate. So if you've sort of got a base 70, 80 percent volume that's happening, you're really only impacting that 20%.

Speaker #6: Now, if you become 30% more effective, that 20% goes to 26%. But it's 26% on top of a base 80% that already exists there.

Speaker #6: So when you see it, you don't see when you see a greater effectiveness in our sales activities, you don't see an immediate change in revenue in a month.

Steven Basta: When you see a greater effectiveness in our sales activities, you don't see an immediate change in revenue in a month. What you see is incremental effectiveness, but that incremental effectiveness is cumulative over time because the increased conversions of patients in that month aren't just scripts that month. They are a refill the next month, and a refill the next month, and a refill the next month, and the incremental scripts the next month, refill every month thereafter. You see a cumulative growing effect. You don't have a sales force's activity turn into a sea change in revenue in that next month of revenue. If that makes sense as to sort of how these, how these consistent use products end up building over time.

Speaker #6: What you see is incremental effectiveness, but that incremental effectiveness is cumulative over time. Because the increased conversions of patients in that month aren't just scripts that month.

Speaker #6: They are refilled the next month and are refilled the next month and are refilled the next month. And the incremental scripts the next month are refilled every month thereafter.

Speaker #6: So you see a cumulative growing effect. You don't have a Salesforce's activity turn into a sea change in revenue in that next month of revenue.

Speaker #6: If that makes sense, it's sort of how these consistent use products end up building over time.

Speaker #5: Thank you for the thoughts, Steve.

Chase Knickerbocker: Thank you for the thoughts, Steve.

Speaker #3: Thank you. Our next question or comment comes from the line of Min Lee from Guggenheim Partners. Ms. Lee, your line is now open.

Operator: Thank you. Our next question or comment comes from the line of Yatin Suneja from Guggenheim Partners. Mr. Suneja, your line is now open.

Operator: Thank you. Our next question or comment comes from the line of Jung Lee from Guggenheim Partners. Mr. Lee, your line is now open.

[Analyst] (Guggenheim Partners): Hi, guys. Thank you for the question and correction data. One quick question for me. What is the company's long-term vision beyond Voquezna? I mean, given that you guys have established this GI network, do you guys plan to utilize the network to consider maybe future partnerships with companies that have already commercially ready GI assets? Or do you guys plan to maybe pursue any other indications beyond EoE? Thank you.

Jung Lee: Hi, guys. Thank you for the question and correction data. One quick question for me. What is the company's long-term vision beyond Voquezna? I mean, given that you guys have established this GI network, do you guys plan to utilize the network to consider maybe future partnerships with companies that have already commercially ready GI assets? Or do you guys plan to maybe pursue any other indications beyond EoE? Thank you.

Speaker #7: guys. Thank you for the question and correction data. One quick question for me. What is the company's long-term vision beyond Vulquesna? I mean, given that you guys have established this GI network, do you guys plan to utilize this network to consider maybe future partnerships with companies that have already commercially ready GI assets?

Speaker #7: Or do you guys plan to maybe pursue any other indications beyond EOE? Thank you.

Speaker #4: So Min, thank you for the question. So at this point, the only new indication that we're pursuing actively is EOE for Vulquesna. There are other indications and other populations that are of interest that we're evaluating.

Steven Basta: Yatin Suneja, thank you for the question. At this point, the only new indication that we're pursuing actively is EoE for Voquezna. There are other indications and other populations that are of interest that we're evaluating. We've made no decisions. For example, we did a phase 2 trial for as-needed use. Haven't made a decision yet about whether or not we wish to pursue that in a phase 3 program, but there are, you know, other populations that also could be of interest. Our long-term growth plan, as we have indicated, is to build a GI company that will bring in additional assets. This year is very much a year of consolidating our execution plan, building deep relationships at every gastroenterology office.

Speaker #4: We've made no decisions. For example, we did a phase two trial for as-needed use, haven't made a decision yet about whether or not we wish to pursue that in a phase three program.

Speaker #4: But there are other populations that also could be of interest. Our long-term growth plan, as we have indicated, is to build a GI company that will bring in additional assets.

Speaker #4: This year is very much a year of consolidating our execution plan, building deep relationships at every gastroenterology office, the 300-person field force is going to have those deep relationships and is going to be fostering them.

Steven Basta: The 300 person field force is going to have those deep relationships, and it's going to be fostering them and build a leverageable base that we could bring a second product into. We are also starting, you know, BD activities to explore what other products would make sense, either to bring in a commercial product potentially, or very possibly a phase two or phase three clinical stage product that could launch in a 2030, 2031, 2032 timeframe before we get to our LOE date, so that we're launching not just probably a product, but two or three products over the course of the next four or five years that would build out a GI pipeline. We're starting those conversations. We have had people bring us several ideas that are interesting.

Speaker #4: And build a leverageable base that we could bring a second product into. We are also starting BD activities to explore what other products would make sense, either to bring in a commercial product potentially or very possibly a phase two or phase three clinical stage product that could launch in a 2030, '31, '32 timeframe before we get to our LOE date.

Speaker #4: So that we're launching not just probably a product, but two or three products over the course of the next four or five years that would build out a GI pipeline.

Speaker #4: So we're starting those conversations. We have had people bring us several ideas that are interesting. I don't feel any urgency that we need to distract our Salesforce to the second product right now.

Steven Basta: I don't feel any urgency that we need to distract our sales force to the second product right now. We just need to grow Voquezna. We need to just execute on our core activity set, but we are actively thinking about what products would make sense to bring in and to launch over the next 2 to 5-year period of time, and that could mean products at various stages, from commercial down to phase 2 stage. It has to be launchable within the next 2 to 5 years, so that's launched before our LOE date in 2033 or 2034.

Steven Basta: I don't feel any urgency that we need to distract our sales force to the second product right now. We just need to grow Voquezna. We need to just execute on our core activity set, but we are actively thinking about what products would make sense to bring in and to launch over the next 2 to 5 year period of time, and that could mean products at various stages, from commercial down to phase 2 stage. It has to be launchable within the next 2 to 5 years, so that's launched before our LOE date in 2033 or 2034.

Speaker #4: We just need to grow Vulquesna. We need to just execute on our core activity set. But we are actively thinking about what products would make sense to bring in to launch over the next two to five-year period of time and that could mean products at various stages from commercial down to phase two stage.

Speaker #4: But it has to be launchable within the next two to five years so that it's launched before our LOE date in 2033 or '34.

Speaker #3: Thank you. Our next question or comment comes from the line of Martin Oster from Raymond James. Mr. Oster, your line is now open.

Operator: Thank you. Our next question or comment comes from the line of Martin Auster from Raymond James. Mr. Auster, your line is now open.

Martin Auster: Thanks. Congratulations on the successful 2025 and in particular, the recent steps you guys have taken to strengthen the balance sheet. I'm gonna maybe follow up on one of the earlier questions on, appreciate your comments you guys made on Q1 seasonality. I guess I was curious if the plan resets and other factors that kind of contribute to seasonality, does that drive an uptick in the rate of cash pay patients you'd expect to see in the quarter? Also on the gross-to-net guidance that Sanjeev provided, curious if there's any trends that are assumed within that 55% to 59% range, or if that metric is expected to be pretty steady overall throughout the year. Thanks.

Martin Auster: Thanks. Congratulations on the successful 2025 and in particular, the recent steps you guys have taken to strengthen the balance sheet. I'm going to maybe follow up on one of the earlier questions on, appreciate your comments you guys made on Q1 seasonality. I guess I was curious if the plan resets and other factors that kind of contribute to seasonality, does that drive an uptick in the rate of cash pay patients you'd expect to see in the quarter? Also on the gross-to-net guidance that Sanjeev provided, curious if there's any trends that are assumed within that 55% to 59% range, or if that metric is expected to be pretty steady overall throughout the year. Thanks.

Speaker #5: Thanks. Congratulations on the successful 2025 and in particular, the recent steps you guys have taken to strengthen the balance sheet. I'm going to maybe follow up on one of the earlier questions on appreciate your comments you guys made on Q1 seasonality.

Speaker #5: I guess I was curious if the plan resets and other factors that kind of contribute to seasonality, does that drive an uptick in the rate of cash pay patients you'd expect to see in the quarter?

Speaker #5: And then also on the gross-to-net guidance systems you provided, curious if there's any trends that are assumed within that 55 to 59 percent range or if that metric is expected to be pretty steady overall throughout the year.

Speaker #5: Thanks.

Steven Basta: Thanks, Martin. Appreciate the kind thoughts and the questions. I'll take the first half, which is around cash pay, and the second half I'll give to Sanjiv in terms of GTN and sort of expectations. You know, we would expect that we'll see some uptick in the amount of cash pay patients. I don't have any guidance on, you know, how much that is. I don't think it's gonna be, you know, too significant in that process. You'll see some patients who have a high deductible plan where they will be able to get access to the product on a cash basis from Blink, and then as they work through their deductibles, they would then be able to get it covered at some, you know, later period.

Speaker #4: So thanks, Martin. Appreciate the kind thoughts and the questions. I'll take the first half, which is around cash pay. And the second half, I'll give to Sanjeev in terms of GTN and sort of expectations.

Steven Basta: Thanks, Martin. Appreciate the kind thoughts and the questions. I'll take the first half, which is around cash pay, and the second half I'll give to Sanjiv in terms of GTN and sort of expectations. You know, we would expect that we'll see some uptick in the amount of cash pay patients. I don't have any guidance on, you know, how much that is. I don't think it's going to be, you know, too significant in that process. You'll see some patients who have a high deductible plan where they will be able to get access to the product on a cash basis from Blink, and then as they work through their deductibles, they would then be able to get it covered at some, you know, later period.

Speaker #4: We would expect that we'll see some uptick in the amount of cash pay patients I don't have any guidance on how much that is.

Speaker #4: I don't think it's going to be too significant in that process. But you'll see some patients who have a high deductible plan where they will be able to get access to the product on a cash basis from Blink.

Speaker #4: And then as they work through their deductibles, they would then be able to get it covered at some later period. And so you may see some movement in cash pay percentage in the early months of each year.

Steven Basta: You may see some movement in cash pay percentage in the early months of each year. That is not just this year, that would just be in general as a pattern in this process. We do not provide guidance on what that mix is going to be on a quarter-to-quarter basis, but that would be a typical feature of the seasonality patterns that one might expect. Separately, in terms of GTN and patterns and trends on GTN, Sanjeev, do you want to take that?

Speaker #4: That's not just this year. That would just be in general as a pattern in this process. We don't provide guidance on what that mix is going to be on a quarter-to-quarter basis.

Speaker #4: But that would be a typical feature of the seasonality patterns that one might expect. Separately, in terms of GTN and patterns and trends on GTN, Sanjeev, do you want to take that?

Sanjeev Narula: Yeah. Yes, I'll take that, Steve. Thank you. Martin, as you saw, like in 2025, we kind of narrowed the guidance, if you recall, in our Q3 call to 55%, 60%, right through the last year, we were kind of operating within that range. Quarter to quarter, there are variations because, you know, your plan business may change from one quarter to the other, overall, it was very consistent and stable. That's kind of what I expect. The guidance that we gave early this morning, 55% to 59%. Overall for the full year, we will be within that guidance. Quarter to quarter, there could be changes depending upon how the plan flows and the business flows from that perspective.

Speaker #8: Well, yes, I'll take that, Steve. Thank you. So Martin, as you saw in 2025, so we can narrow the guidance, if you recall, in our Q3 call to 55, 60 percent.

Speaker #8: And right through the last year, we were kind of operating within that range. Quarter-to-quarter, there are variations because your planned business may change from one quarter to the other.

Speaker #8: But overall, it was very consistent and stable. And that's kind of what I expect in the guidance that we gave early this morning. 55 to 59 percent.

Speaker #8: Overall, for the full year, we'll be within that guidance. Quarter-to-quarter, there could be changes. Depending upon how the plan flows and the business flows from that perspective.

Speaker #5: All right. Thank you so much for the cover, guys.

Matthew Caufield: All right. Thank you so much for the color, guys.

Speaker #8: Thank you.

Sanjeev Narula: Thank you.

Speaker #3: Thank you. Again, ladies and gentlemen, if you have a question or comment at this time, please press star 11 on your telephone keypad. Our next question or comment comes from the line of Matthew Caulfield from HC Wainwright.

Operator: Thank you. Again, ladies and gentlemen, if you have a question or comment at this time, please press star one one on your telephone keypad. Our next question or comment comes from the line of Matthew Caufield from H.C. Wainwright. Mr. Caufield, your line is now open.

Speaker #3: Mr. Caulfield, your line is now open.

Speaker #5: Great. Hi. Thank you, guys. We had one question on the landscape that came up from investors. There's a separate private company with later-stage clinical development in non-erosive reflux disease and erosive esophagitis based on the PCAB formulation.

Matthew Caufield: Great. Hi, thank you, guys. We had one question on the landscape that came up from investors. There's a separate private company with later-stage clinical development in non-erosive reflux disease and erosive esophagitis based on the PCAB formulation. Just curious on your longer-term thoughts on any prospective entrants into the PCAB space later into the future and, you know, maintaining Voquezna's positioning. Thanks again.

Speaker #5: And just curious on your longer-term thoughts on any prospective entrance into the PCAB space later into the future. And maintaining Vulquesna's positioning. Thanks again.

Steven Basta: Matthew, thanks so much for the question. I apologize. I muted for a second to cough. I just have a little bit of a cold. I think you're likely referring to Sebela, which is-

Speaker #5: Matthew, thanks so much for the question. I apologize. I'm muted for a second to cough. I just have a little bit of a cold.

Steven Basta: Matthew, thanks so much for the question. I apologize. I muted for a second to cough. I just have a little bit of a cold. I think you're likely referring to Sebela, which is.

Speaker #5: But I think you're likely referring to Sabella, which is a company that has takeovers and development. There's actually an additional PCAB that's in development that's many years out.

Matthew Caufield: Yes.

Steven Basta: A company that has vonoprazan in development. There's actually an additional PCAB that's in development that's many years out. So we, you know, clearly track competitive developments, all of the PCABs, and vonoprazan is a good product. We expect that it will, you know, go through the NDA process, and they filed their NDA in January. You know, reasonable to expect they may be approved by early 2027, but it's not really for us to predict exactly what that time frame is or what questions might arise. One of the things that we think about is: How does this market evolve as a second entrant in the PCAB space comes in? It's interesting, you know, there's one framework where, sort of a question can arise: Are two PCABs gonna compete against each other?

Matthew Caufield: Yes.

Speaker #5: So we clearly track competitive development for all of the PCABs. And takeovers is a good product. We expect that it will go through the NDA process.

Speaker #5: And they filed their NDA. In January, reasonable to expect they may be approved by early 2027. But it's not really for us to predict exactly what that timeframe is or what questions might arise.

Speaker #5: One of the things that we think about is how does this market evolve as a second entrant in the PCAB space comes in. And it's interesting there's one framework where sort of a question can arise: are two PCABs going to compete against each other?

Speaker #5: There's a different question, which is: where competing in a space of 110 million PPI prescriptions per year? And we've only done 1.1 million prescriptions overall since launch.

Steven Basta: There's a different question, which is, we're competing in a space of 110 million PPI prescriptions per year, and we've only done 1.1 million prescriptions overall since launch. We're tracking now at a run rate that's running about 1 million prescriptions a year. We're at 1% of the PPI market. If a second entrant comes in, they're not going to be trying to take our prescriptions. We're both going to be growing the PCAB awareness in the context of the market, where patients are on PPIs and are significantly in pain on PPIs. The entry of a second product in a new category actually does have a tendency to change the mindset of physicians, where it's no longer, do I need to pay attention to this product?

Speaker #5: So we're tracking now at a run rate that's running about a million prescriptions a year. So we're at 1% of the PPI market. If a second entrant comes in, they're not going to be trying to take our prescriptions.

Speaker #5: We're both going to be growing the PCAB awareness in the context of the market where patients are on PPIs and are significantly in pain on PPIs.

Speaker #5: The entry of a second product in a new category actually does have a tendency to change the mindset of physicians where it's no longer, "Do I need to pay attention to this product if you're the first entrant?" But it's, "Do I need to pay attention to this category?" And that increase in category awareness I actually think will accrue to our benefit that the majority of prescriptions tend to go to the first entrant that has more history with which physicians are more comfortable, that already has broad access.

Steven Basta: If you're the first entrant, but it's, do I need to pay attention to this category? That increase in category awareness, I actually think, will accrue to our benefit, that the majority of prescriptions tend to go to the first entrant that has more history, with which physicians are more comfortable, that already has broad access. The second entry tends to grow the category broadly and tends to grow revenue for both parties in that process. We're actually, thinking that it has a net, you know, positive effect on the PCAB adoption broadly to have a second salesforce out talking about PCABs and how much, you know, how much value they can bring to a patient who is still in pain on a PPI.

Speaker #5: So the second entry tends to grow the category broadly and tends to grow revenue for both parties in that process. So we're actually thinking that it has a net positive effect on the PCAB adoption broadly to have a second Salesforce out talking about PCABs and how much value they can bring to a patient who is still in pain on a PPI.

Steven Basta: We're looking forward to that broadening and that shift in mindset of physicians that you really do need to adopt PPIs. We think we've got a great product. We think that physicians have been really pleased with the effect this has to their patients, and patients who take this product love it. All of that is going to reinforce the fact that the lead product in the category gets the biggest uptick.

Speaker #5: So we're looking forward to that broadening and that shift in mindset of physicians that you really do need to adopt PPIs. We think we've got great product.

Speaker #5: We think that physicians have been really we know physicians have been really pleased with the effect that this has for their patients. And patients who take this product love it.

Speaker #5: All of that is going to reinforce the fact that the lead product in the category gets the biggest uptick.

Speaker #3: Understood. That's really helpful. I appreciate it. And congrats again on Vulquesna's trajectory. It's great to see.

Matthew Caufield: Understood. That's really helpful. I appreciate it. Congrats again on Voquezna's trajectory. It's great to see.

Speaker #9: Thank you. I'm showing no additional questions in the queue at this time. Ladies and gentlemen, thank you for participating in today's conference. This concludes the program.

Operator: Thank you. I'm showing no additional questions in the queue at this time. Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day. Speakers, standby.

Q4 2025 Phathom Pharmaceuticals Inc Earnings Call

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