Phathom Pharmaceuticals - Q1 2024

Transcript

Operator (participant)

Hello, and welcome to Phathom Pharmaceuticals' First Quarter 2024 Earnings Results Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. With that, I would like to turn the conference call over to Eric Sciorilli, Phathom's Head of Investor Relations. Please go ahead.

Eric Sciorilli (Head of Investor Relations)

Thank you, Operator. Hello, everyone, and thank you for joining us this morning to discuss Phathom's First Quarter of 2024 results. This morning's presentation will include remarks from Terrie Curran, our President and CEO, Martin Gilligan, our Chief Commercial Officer, and Molly Henderson, our Chief Financial Officer. Azmi Nabulsi, our Chief Operating Officer, will also be joining the team during the Q&A portion of today's call. Just a couple of logistical items before we get started. Earlier this morning, we issued a press release detailing the results we will be discussing during the call. A copy of that press release can be found under the News Releases section of our corporate website. Further, the recording of today's webcast can be found under the Events and Presentation section of our corporate website.

Before we begin, let me remind you that we will be making a number of forward-looking statements throughout today's presentation. These forward-looking statements involve risks and uncertainties, many of which are beyond Phathom's control. Actual results can materially differ from the forward-looking statements, and any such risk can materially adversely affect the business, the results of operations, and trading prices for Phathom's common stock. A discussion of these statements and risk factors is available on the current Safe Harbor slide, as well as in the Risk Factors section of our most recent Form 10-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. With that, I will now turn the call over to Terrie Curran, Phathom's President and CEO, to kick us off. Terrie?

Terrie Curran (President and CEO)

Thank you, Eric, and thank you to all those joining us on today's call. I'm excited to report on the great progress we've made since the start of 2024. Throughout our first full quarter of launch, our team continued to deliver on our three main launch goals: communicating Voquezna's clinical superiority versus a PPI, driving brand awareness, and building access for commercial patients. Most importantly, the increased enthusiasm surrounding Voquezna is clear. I'm pleased to share that there are now upwards of 43,000 prescriptions written and launch-to-date, a notable increase relative to the number we reported just two months ago. This latest demand metric is evidence of how our teams have been successfully executing. I'll now share more on the progress we've made on each of our launch goals.

Beginning with communicating superiority versus a PPI, our sales force has made great strides to inform target physicians of the clinical differentiation that Voquezna can offer patients. With each incremental sales call, we see our promotional messages resonating. Physician excitement and feedback continues to be overwhelmingly positive, in part due to real-world patient experiences. On several occasions, we've received unsolicited comments from both patients and doctors telling us how Voquezna has delivered improved symptom relief. Patients are describing life-changing effects, especially for those that have suffered from this condition for many years. We're proud to be able to help these patients, and we know these types of testimonials encourage physicians to expand their prescribing behaviors. From the outset, we've been determined to drive brand awareness with both physicians and consumers.

At the end of March, we expanded these efforts in a significant way, launching a new direct-to-consumer, or DTC, campaign titled Voquezna Can Kick Some Acid. Our market research indicates that patient requests are a major driver of the prescribing decision, so we crafted a television commercial aimed at motivating consumers to ask their doctor for Voquezna. Later in the call, Martin will share more about the campaign and the early positive receptivity we're hearing from the marketplace. On the access front, we announced the addition of Voquezna to the Express Scripts, or ESI, National Formulary midway through Q1. This early outcome validated the belief that our access strategy would resonate with large payers. Now, midway through Q2, I'm proud to share that Voquezna was recently added to the Cigna Healthcare Formulary with a single-step edit, similar to ESI.

As a result, approximately 72 million commercially insured lives now have access to Voquezna. We continue to negotiate coverage with other major payers, with the aim to expanding commercial access throughout 2024. Earlier, I touched on how delivering our strategy has generated growth in total demand. I'm equally happy to report that filled Voquezna prescriptions, meaning those that reached the hands of patients, have also significantly increased. We've recorded over 17,500 Voquezna prescriptions being filled launch to date. These volume metrics are very exciting early indicators. With anticipated expansion in commercial coverage, ongoing rollout of our DTC efforts, and a potential approval of non-erosive GERD, we remain steadfast in our belief of the blockbuster opportunity for Voquezna. Focusing now more closely on non-erosive GERD. We're anticipating this potential label expansion to be an important catalyst in the second half of 2024.

This indication represents the largest subcategory of GERD, more than doubling that of its erosive counterpart, with an estimated 15 million U.S. adults diagnosed and treated for the disease annually. Despite the difference in the population size, the patient journey from symptom onset to receiving treatment is largely identical. More importantly, the doctors providing care are the same for both indications. We believe that this means our sales force is appropriately sized and already building relationships with these prescribers. If approved, our goal is for our current commercial team to be able to communicate non-erosive GERD promotional messages within days of the FDA's decision. With a July 19 PDUFA target action date, we're excited to soon be able to offer a potential new treatment option to these patients. In parallel with our launch journey, we continue to advance development opportunities for vonoprazan.

Later this year, we are planning to initiate a phase III trial for as-needed dosing and non-erosive GERD. We believe that this study will build on the positive results we observed from our previous phase II trial. Additionally, we are planning to initiate a phase II trial for eosinophilic esophagitis, or EoE, later this year. Subject to trial success, vonoprazan could be positioned as a first-line replacement of PPIs, which are the current standard of care. Vonoprazan's rapid, potent and durable acid suppression profile is the foundation for exploring these GI conditions. Our aim for both programs is to further differentiate vonoprazan from PPIs, which are not approved for either of these indications. If approved, both label enhancements would further expand the total addressable market for Voquezna products.

On the financial side, Molly will further detail our first quarter 2024 results later in the call, for which we reported revenues of $1.9 million and ended with $322 million in cash. We remain confident that our strong balance sheet will enable us to continue delivering on our launch and development strategies. As you've likely heard me say, the key elements of a potential blockbuster launch are present in this market. It now comes down to execution, and in this first quarter of 2024, our teams have continued to deliver. This launch is still in its infancy. The end of March marked only our first full quarter of launch, yet the progress we've made is impressive. We will continue to promote superiority in erosive GERD and leverage our full-scale DTC efforts to reach the millions of patients suffering from this condition.

In tandem, we're working diligently to pair awareness with broad commercial coverage, which we expect to expand throughout the remainder of 2024. These tactics, in conjunction with the anticipated launch of non-erosive GERD, give us confidence that Voquezna's launch ramp is only just beginning. I'll now turn the call over to Martin to dive deeper into recent commercial updates. Martin?

Martin Gilligan (Chief Commercial Officer)

Thanks, Terrie, and hello, everyone. Let me first echo that we believe the launch of Voquezna is off to a great start. Our sales team continues to share positive feedback from their conversations with physicians. The breadth and depth of their outreach among high-volume prescribers increases daily, and beyond the doctors, the sentiment among patients is also very positive. We're now seeing some of the early users of Voquezna come back for refills, further signaling their positive experiences. At the end of March, we significantly elevated our DTC efforts with the goal of increasing brand awareness among consumers and empowering them to request Voquezna. We've also made progress on the commercial coverage front to best ensure those who want Voquezna can get Voquezna. I'll dive into each of these items in more detail, but let me start by providing an update on our most recent launch metrics.

Today, we're reporting our latest available written and filled prescription data as of April 26, which is just 9 weeks removed from our previously reported data. In roughly 2 months, the number of Voquezna prescriptions written has grown by 207% to over 43,000, while the number of filled prescriptions has grown by 361% to over 17,500. As you've heard us say, it takes time to disrupt long-established behaviors, but these latest metrics are an exciting testament to the willingness of physicians and patients to try something new and different. Looking more closely at the over 17,500 prescriptions filled, we're also seeing notable growth on a monthly basis. In fact, filled Voquezna prescriptions for each month of the first quarter increased sequentially by more than 100%.

Keep in mind that these figures reflect prescriptions flowing through retail pharmacies, which are captured by IQVIA, as well as those flowing through our $50 cash pay assistance program, which are captured by BlinkRx. Within Q1, we recorded roughly 9,500 filled Voquezna prescriptions, of which approximately 60% were filled through retail pharmacies and captured by IQVIA. In tandem with growing volume, the number of physicians writing Voquezna has also increased. As of April 19th, upwards of 3,800 physicians have written a Voquezna prescription that has been filled. This reflects a growth of over 215% relative to what we previously reported as of mid-February. This includes writing by a mix of our target specialties, favoring GIs more heavily during these early phases of launch. Importantly, our latest data shows a strong degree of repeat writers.

Over 50% of Voquezna prescribers have written multiple times, which we see as an encouraging lead indicator. Doctors are witnessing the impact of healing and 24-hour heartburn relief on patients' lives, which we believe bolsters their intent to prescribe. We anticipate this early breadth and depth of our prescriber base will grow the increasing brand awareness and further engagement by our sales force. Beyond filled Voquezna prescriptions, I mentioned earlier that over 43,000 total prescriptions have been written by physicians. This is a strong gauge of the existing and growing total demand in the marketplace. Recall that the metrics we shared during our last earnings call did not yet reflect any impact from the addition of Voquezna to ESI's national formularies. With that coverage in place, we are now starting to see a narrowing of the proportional gap between written and filled prescriptions.

As commercial coverage is secured, we anticipate closing the gap further, therefore, realizing more and more of the revenue opportunity associated with this level of total demand. On that note, we continue to make good progress on our goal of securing widespread access for patients with commercial insurance. I'm happy to expand upon Terrie's earlier Cigna update. As of May 1, Voquezna was added to Cigna formularies, which provides coverage to over 9 million commercially insured people. Importantly, we were successful in negotiating access subject to a single-step edit, exactly as intended. With this inclusion, approximately 72 million commercial lives now have access to Voquezna. As we move deeper into 2024, we anticipate that an increasing number of plans will initiate Voquezna coverage, including other major payers with which we are actively negotiating.

While access is a key driver in converting filled prescriptions, our promotional efforts are essential to increasing overall demand. In March, we rolled out our full-scale direct-to-consumer campaign, which you heard Terry mention. The Voquezna Can Kick Some Acid campaign initially went live across several consumer-facing platforms, most notably in the form of a television commercial on popular streaming services such as Hulu and Prime. We're extremely proud of this effort, which tested very well while in development with target audiences. Consumers told us the campaign is different, memorable, and motivating. Our intent with the commercial is to raise awareness that Voquezna is the first and only treatment of its kind, helps heal erosions and maintain healing, and provides 24-hour heartburn relief. Between the unique approach and strong messaging, we aim to motivate consumers to ask their physician for Voquezna.

The end-market feedback thus far has been tremendous, and we're excited to announce that the commercial is now airing more broadly across major television networks as of late April. The first quarter of 2024 included several meaningful steps in the launch of Voquezna. Our progress on the marketing and promotional front was significant. We saw notable increases in total demand generated and the number of prescriptions filled. The ramp of commercial coverage was strengthened by the addition of Voquezna to Cigna formularies and remains on track with positive inflection points anticipated throughout the remainder of this first year of launch. We believe the pairing of expanded coverage and widespread promotional efforts, plus the nearing potential entry into the non-erosive GERD market, serve as fundamental drivers of continued growth. With each additional building block, we get closer to our goal of displacing PPIs and realizing the blockbuster opportunity for Voquezna.

I'll now pass it off to Molly to walk through our financial results. Molly?

Molly Henderson (CFO)

Thanks, Martin, and hello to everyone on the call. I'm happy to share our first quarter 2024 financial results with you today. As you've heard from Terrie and Martin, we've made important progress related to the launch of Voquezna in such a short period of time. Before going into the numbers, I'd like to note two items. First, during this call, and similar to last quarter, we will not be providing financial guidance regarding projected revenues, spend, or earnings, as we are still early stages of launch. Additionally, I will be commenting on both GAAP and non-GAAP financial measures. Supporting schedules with detailed reconciliations between non-GAAP measures and their most directly comparable GAAP measure will be discussed later in my section and can be found in this morning's press release. Now turning to the numbers.

For the first quarter 2024, we reported net revenues of $1.9 million. Keeping in mind that this was our first full quarter of launch, this represents a 180% sequential quarterly increase. Growing demand and filled prescriptions led the way to inventory restocking by wholesalers. Although it's difficult to estimate stocking behaviors this early into launch, we anticipate being able to get a better sense of stocking patterns over the next couple of quarters. On the gross-to-net discount front, we would like to flag that our gross-to-net discount this quarter was better than expected. This resulted from a 3-week period during the first quarter, where our patient co-pay savings card was unavailable due to the Change Healthcare cyberattack.

For the quarter ended March 31, 2024, we reported gross profit of $1.5 million, which equates to a gross margin of 78%, a sequential quarterly increase of about 220 basis points. Moving down the P&L to our operating expenses, we reported non-GAAP R&D spend of $8.2 million for the first quarter 2024, which represents 16% reduction in spend compared to the first quarter 2023. The decrease in R&D expenses was primarily related to lower clinical trial costs associated with the wind down of activities related to our phase III non-erosive daily dosing trial, which we read out last year. As for SG&A, we reported non-GAAP expenses of $57.6 million for the first quarter of 2024. This represents an increase of over 330% relative to the same period in 2023.

The increase was largely driven by the build-out of our commercial infrastructure and marketing activities in support of the commercial launch of Voquezna. Most notably, the first quarter of 2024 includes nearly a complete quarter of costs related to our full-strength sales force. Additionally, this quarter's SG&A expenses included advertising costs, which approximated $6.8 million and were primarily related to the initiation of our Voquezna Can Kick Some Acid DTC campaign. For both spend categories, the most significant reconciling item between GAAP and non-GAAP operating expenses for these periods was non-cash stock-based compensation. Other non-GAAP reconciling items include non-cash interest on our revenue interest financing liability and non-cash interest expense related to amortization of debt discount.

Turning to EPS, we reported non-GAAP adjusted net loss of $64.8 million for the first quarter of 2024, or $1.11 loss per share, compared sequentially to $46 million or $0.80 loss per share for the fourth quarter of 2023. As of March 31, 2024, cash and cash equivalents were $322 million, up to an additional $150 million remains available via our debt facility, of which $50 million is available this year and $100 million is available next year, subject to achievement of certain revenue milestones. We believe that we are in a solid financial position and reaffirm our expectation that we have cash runway through the end of 2026, based on our current operating plan, expected product revenues, and funds available under our term loan.

Overall, our first full quarter of launch yielded results that were in line with our expectations. We saw a proportional increase in filled scripts and a better-than-expected gross to net discount due to certain one-time events. We continue to diligently manage our spend while ensuring we invest appropriately to enable brand awareness and commercial access for patients in need of Voquezna. With notable milestones on the horizon, we're excited about continuing to meet our goals for the rest of 2024. With that, I'll now turn the call back over to Terrie for closing comments. Terrie?

Terrie Curran (President and CEO)

Thank you, Molly, and thank you again to everyone joining us on today's call. When Voquezna was approved, I shared this slide to outline our perceived path to a potential blockbuster opportunity. Now, six months into our journey, we have delivered according to the plan. Our first quarter results demonstrate that Phathom is off to a strong start in 2024. We've made significant progress in growing demand, accelerating filled prescriptions, and expanding brand awareness. Our launch metrics are proof that the power of Voquezna is resonating with both physicians and consumers. In upcoming quarters, we'll look to continue our efforts on all of these fronts, with an acute focus on establishing widespread commercial coverage throughout 2024. Simultaneously, we're nearing closer to the potential approval and label expansion of Voquezna for the daily dosing of non-erosive GERD.

We believe the large patient population in this indication and similar commercial dynamics with erosive GERD create an important catalyst. Internally, when we think about the potential for Voquezna, our bar is high, and we're committed to realizing this opportunity. We remain focused on our goal of displacing PPIs in this very large market, and we look forward to sharing our progress throughout the remainder of the year. Thank you for joining us today. We appreciate your continued interest and support. I'll now turn it over to the operator to facilitate a 10-minute question-and-answer session. Operator?

Operator (participant)

Thank you. At this time, we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from Yatin Suneja of Guggenheim. Your line is open.

Yatin Suneja (Senior Managing Director and Biotechnology Analyst)

Hey, guys, thank you for taking my question. Very nice update today. A couple for me, and real quick one. Could you... I don't know if you just mentioned this, but could you talk about the split between BlinkRx and IMS? It seems like the fill rate has really improved to almost 41% now versus, let's say, 27-ish%, when you reported last time. Where you are on the fill rate, if you can talk about that specifically for BlinkRx, that'd be great. And, you just touched on NERD. Love to hear from you, how should we think about inflection when you get that label? Thank you.

Martin Gilligan (Chief Commercial Officer)

Okay. Good morning, Yatin. I'll cover all those. This is Martin. So first, let me talk about Blink and IQVIA. I think your percentages are pretty spot on in terms of the split. And I think as we always said in the past, is that as we gained more access moving through the process, you would start to see a shift more towards covered scripts going to Blink versus cash. So I think our awareness of Blink is really growing, and we're seeing it, you know, heavily utilized. But I just wanna make sure for everyone on the line that you're-- we're really clear when we're talking about Blink. I think many people just think of it as the, you know, cash component of it. You know, there, the-- there, we're offering that patient support that I mentioned earlier.

But as you see more coverage come on board, as we just have, you'll probably see less scripts being filled over time there. And then I'll just remind you that any script that is going to Blink, that is covered, is going to a partner pharmacy that is picked up by IQVIA. So that drives the rates that you're seeing, and the fill rates. And then I think the last part of your question was regarding the inflection. So we envision, as we said, both on the access front, that we expect inflections during Q2 and Q3 as we grow our coverage, just like you saw, as we had with Cigna announcing today. And then I think the other inflection we'll be expecting is upon the approval and with start marketing for non-erosive GERD.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from Umer Raffat of Evercore. Umer, your line is open.

Yun Zhong (Investment Banking Associate)

Oh, hi, this is Yun Zhong for Umer Raffat. Thanks for taking our question. I guess first one, on gross to net, how much improvement should we expect throughout the year, especially towards the end of the year? And second question, is on the, potential indication expansion. Do you expect an inflection in terms of volume in the second half, or it will be a more gradual ramp?

Molly Henderson (CFO)

Hi, sure. I'll take the gross to net, then turn it over to Martin on the inflection. So as we said, we experienced a somewhat better than expected gross to net for the first quarter, because of our co-pay assistance program not being available due to the cyberattack. We're not specifically commenting on our gross to net projections, for the rest of the year, as we're still in negotiations, with a couple other payers. But at this point, we're not seeing significant variations from our expectations. And then I'll turn over Martin for the inflection on there.

Martin Gilligan (Chief Commercial Officer)

Yeah. So I think as I mentioned a little earlier, you know, a question before, is that we do expect an inflection for non-erosive GERD. And so what we're seeing is we're gonna be entering a much larger market. Erosive GERD is 7 million patients, and that non-erosive is 15 million patients who are both diagnosed and treated. But we really feel that we're not gonna be starting this launch at zero like we did back in January. We're gonna. We have the same sales force calling on the same physicians. While the patients have different diagnoses, their symptoms are the same, the journeys are the same, and we hear the same level of dissatisfaction, the same level of discussion in terms of switching PPIs and adding on.

So we know that the category is searching for a new mechanism, and, we believe that Voquezna is that mechanism for them, as is playing out for erosive GERD. So we believe that our we've started our momentum and, the erosive experience we have thus far will really benefit us moving into the non-erosive launch.

Yun Zhong (Investment Banking Associate)

Thanks. Just want to follow up, how much of the reported sales was inventory?

Terrie Curran (President and CEO)

If I understand that way, is inventory. So the majority of the sales for the first quarter would have been demand related, related to those, those prescriptions that were filled. We're still a little bit early in the cycle to see stocking behavior, but what we're seeing so far is pretty commensurate with what you'd see in the industry, and I'd say probably around the 2- to 3-week range. But again, it's still a little bit early for us to see the stocking patterns.

Yun Zhong (Investment Banking Associate)

All right. Thank you so much.

Operator (participant)

Thank you very much. One moment for our next question. Our next question comes from Joseph Stringer of Needham & Company. Joseph, your line is open.

Joseph Stringer (Managing Director)

Hi, good morning. Thanks for taking our questions. Just want a clarifying question on the Blink IQVIA split. If we kind of back into the numbers based on the TRx metrics you provided, I think since your last update in early March, there have been around 13,700 TRx filled and around 7,300 IQVIA scripts. So that implies like a 53-47 split or roughly 1:1 IQVIA to Blink since the last update. So is that a fair assessment? Question number 1, and then, you know, that 1:1 split is similar to what you provided in March. Just want to get clarification on that.

And then secondly, on the potential label expansion to NERD, daily dosing, can you talk a little bit about the different market access dynamics, in particular from a payer perspective, between the current launch in erosive GERD, and the potential launch in NERD? For example, you're securing coverage for the bottle right now, as we understand it. So when it comes time for label expansion to the NERD indication, it's not a separate negotiation with payers, it's for the indication. Is that also a fair assumption?

Martin Gilligan (Chief Commercial Officer)

Okay, Joey. So, I'll split it into two parts. I just wanna make sure on the first one I understand the question. Your question is, you were estimating that, in our last earnings call, the ratio between Blink and IQVIA was 1:1. And you're asking if it's 60/40 now, is that correct? Yeah. So I might have lost you, but yeah. So, the answer to that question is yes. I wanna make sure I understood it.

So right now, what we're reporting is that about 50% of the scripts are going through what I'll call the retail channel versus going through our cash support, which is exactly, I think, that we set out when we spoke in the last earnings call, that as more access comes on board, you would expect that there'll be a shift in ratio between what you see in IQVIA versus cash scripts. And we anticipate that continues as we get more coverage. Which leads into the second part of your question in terms of non-erosive and the daily dosing. We are expecting the approval with our PDUFA of July 19, and right now, generally, as we look at a coverage for pack, it's always for packaging or presentation, not by indication, and this is how payers work.

So when we've been reporting our data as of right now today of 72 million, that's all about the bottle. So we would anticipate that bottle coverage will carry forward for non-erosive, and it's our expectation that we would see the same type of coverage after approval with non-erosive than we have prior to.

Joseph Stringer (Managing Director)

... Great. That's very helpful. Thank you for taking our questions.

Operator (participant)

Thank you very much. One moment for our next question. Our next question comes from Paul Choi of Goldman Sachs. Paul, your line is open.

Paul Choi (Biotechnology Analyst)

Hi, good morning, team, and thanks for taking our questions. I have two. The first one is, Martin, I want to follow up a little bit on your comments and your prepared remarks regarding refills. Can you maybe just comment or help us quantify what percentage of patients who are getting a script filled come back and are able to stick with the get a second bottle, just to help us understand how many patients are sticking with the treatment with Voquezna from treatment onto the maintenance phase? Any quantification there would be helpful.

My second question is, as you look at the mix between the bottle and the packs, at least as expressed by the IQVIA data, do you think that's a fair proxy for what the mix will look like in the indications going forward here, as you expand into NERD as well? Thanks for taking our questions.

Martin Gilligan (Chief Commercial Officer)

Absolutely. So the first one on the refills. Yeah, so we are seeing two things that are also related to refills, is we're seeing more patients come back now and continuing on therapy. So I'm not ready to quantify that for you today, but I can tell you that that's exactly what's happening, and you see that in our TRx numbers as those TRxs continue to increase. We also know that more physicians are writing, and as I just said before, they're also writing for more patients. So I think that's what you're seeing reflective in the TRx data. And then your question on the mix of bottle versus packs. Yeah, the packs, it's about 10%. In our planning, that's what we always assume to see in our mix, and you should expect that to carry forward.

Paul Choi (Biotechnology Analyst)

Great. Okay. Thank you.

Operator (participant)

Thank you very much. One moment for our next question. Our next question comes from Chase Knickerbocker of Craig-Hallum. Chase, your line is open.

Albert Hu (Equity Research Analyst)

Hi, good morning, everyone. This is Albert Hu, on for Chase here. Just one from us for BlinkRx. So, you know, when should we expect a volume that is under BlinkRx here to become really fairly small amount over... of the overall volume, let's say, less than 20%? You know, should we think of that kind of being in the latter half of 2024, or do you think it doesn't, you know, that won't happen until 2025?

Martin Gilligan (Chief Commercial Officer)

Yeah. So Chase, I think it's hard to put a number on that. I think what you can expect is that that's gonna, as I've been saying, is that that's gonna decline over time. You know, we've got an interesting launch and a positive launch. We're bringing on new physicians, we're bringing on new payers, and we're in the middle of a launch, and we're getting ready for a launch. So, as this continues to grow, you're just gonna see a lot of movement on a lot of metrics, given all those factors. I think the key signal to us are two things. You heard today the increase in access, and you heard, as we said last time, start to see that shift, what would be the patient support or cash that goes through Blink.

Don't have a number to give you today. I think there's a lot of movement in the market, for us that's all very positive, as I just mentioned, and you'll continue to see that decline during the year.

Albert Hu (Equity Research Analyst)

Thank you.

Operator (participant)

Thank you very much. One moment for our next question. Our next question comes from Annabel Samimy of Stifel. Annabel, your line is open.

Annabel Samimy (Managing Director)

Hi, all. Thanks for taking my question. I guess I'm gonna get just a little bit more granular on Blink for a minute. So you said that it's gonna decrease over time, but is there a scenario where you have increased demand faster than you get payers on board, and perhaps you have the percentage going through Blink increasing before it decreases? I guess that's the first question. And as far as coverage is concerned and what the tail of Blink might be, is there a steady state of coverage that you think that you'll get to, like 70% or 80% so that... And, you know, on that tail end, is Blink gonna continue, or are you just at some point gonna stop and then those patients just don't get prescriptions fulfilled?

Just trying to understand the go-forward dynamics there. Thanks.

Martin Gilligan (Chief Commercial Officer)

Yeah. So Annabel, there were a couple questions there, but they're all have a common thread and related. So, I think I'm gonna hit them all here. Is there a case where demand might grow faster than payer coverage? That's an interesting question. I think we've seen a steady growth, and that's what we feel good about. Our demand is it's steadily growing, so I think you'll continue to see that. And we're far along in negotiations with the other major payers, which will be continuing through Q2 and Q3. So, I don't think that's gonna be the case. I think we're gonna have coverage come on board as we see growth in prescriptions. And I think the next part of that was, would we see an increase in cash Blink-covered scripts before we saw a decrease?

I'm not prepared to say that that's, that's correct or incorrect, but it's not what we're expecting. I think you saw a big change from our last earnings call, where we had that 1:1 versus 60/40, so our anticipation is that will continue to decline. And then, will we continue Blink? I mean, we'll always look to do the right things for patients. There will probably always be some level of coverage that doesn't exist, and we wanna make sure that we do the right things for patients, so we'll always be in there. And then in terms of, I think, one of the other, your other questions was steady state for coverage.

I think we're gonna see it continue to grow, as I just said a moment ago, between going into Q2, which we're in, and you've already seen it. So we've kind of kept that statement that we made in the last earnings call, that we expected to see more growth in Q2 and Q3. So we've already had our first step in Q2, and we believe there's more to come in Q2 and Q3.

Annabel Samimy (Managing Director)

Okay. Thank you.

Operator (participant)

Thank you very much. One moment for our next question. Our next question comes from Matthew Caufield of H.C. Wainwright. Matthew, your line is open.

Matthew Caufield (VP and Senior Healthcare Analyst)

Hi, good morning, guys. So for the launch, is there any granularity that you can share at this stage between the prescriptions coming from GI or primary care? And do you anticipate one or the other being a greater target or contributor for growth? Thanks.

Martin Gilligan (Chief Commercial Officer)

I'm sorry. Did you finish?

Matthew Caufield (VP and Senior Healthcare Analyst)

Yeah. Yeah. Yeah.

Martin Gilligan (Chief Commercial Officer)

Okay. I'm sorry. I thought I cut you off. Just wanted to make sure. So yeah, so right now, we're seeing too, not to our surprise, that the percentage of scripts are leaning heavier towards GI. So what's the rationale for that? I know we've spoken in the past that when we send our sales force out, their objective was to start at the higher deciles, which would be the higher volume physicians. So really starting on those decile 10s and working down to 9, 8, et cetera. And that's where you see the imbalance between the GIs being the higher decile and the primary care being lower. So yes, so right now, at this point, we're seeing a higher slant towards gastroenterologists, but we're actually seeing primary care come on board.

It's playing out exactly as we thought it would.

Matthew Caufield (VP and Senior Healthcare Analyst)

Very helpful. Thank you. And then maybe if I could just ask one more quick question. In regards to the current fill rate, do you know how that kind of stacks up against something like a more established PPI? Presumably, not all the PPI prescriptions are getting filled either, but just curious how that could compare possibly.

Martin Gilligan (Chief Commercial Officer)

Yeah. So I think that's a hard comparison. I think when you're looking at something that's a generic product that's been around for 30-some-odd years and is also OTC, I think a better way to look at it is our fill rate as it compares to a launch product and where we are. And what you heard today was, you know, a rate we have of 41%. And we know looking at other launches, that not only is that, you know, consistent, but it's actually in a really good position right now at our place of launch.

So, you know, and a lot of that's kind of driving in terms of the coverage we have right now has come on board, as we announced today with Cigna, and that fill rate will only go up, moving forward.

Matthew Caufield (VP and Senior Healthcare Analyst)

Great. Very helpful, guys. I appreciate it.

Operator (participant)

Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.