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Phathom Pharmaceuticals, Inc. beats earnings expectations. Reported EPS is $-0.8, expectations were $-0.92. PHAT isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Hello and welcome to the Phathom Pharmaceuticals Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions] Please be advised today’s conference is being recorded. With that, I would like to turn the conference over to Eric Sciorilli, Phathom’s Head of Investor Relations. Please go ahead.

Eric Sciorilli: Thank you, operator. Hello, everyone and thank you for joining us this morning to discuss Phathom’s fourth quarter and full year 2023 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 Presentations section of our corporate website.

Before we begin, let me remind you that we will be making a number of forward-looking statements throughout today’s presentation. These forward-looking statements involve risks and uncertainties, many of which are beyond Phathom’s control. Actual results can materially differ from the forward-looking statements and any such risks can materially adversely affect the business, the results of operations and trading prices for 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.

Also included today are non-GAAP financial measures which should be considered only as supplemental to and not a substitute for or superior to GAAP measures. To the extent applicable, please refer to the tables at the end of this morning’s press release for reconciliations of these non-GAAP measures to the most directly comparable GAAP measures. With that, I will now turn the call over to Terrie Curran, Phathom’s President and CEO, to kick us off. Terrie?

Terrie Curran: Thank you, Eric and thank you to all those joining us on today’s call. This is our first earnings call as a commercial company. I’m excited to report on the progress we’ve made during both the fourth quarter 2023 and the start of the calendar year 2024. In that short period, we’ve achieved many regulatory, manufacturing, financial and commercial milestones demonstrating the significant experience and dedication of our teams. In November, we set out with 3 initial goals for the early stages of launch — to communicate VOQUEZNA’s the clinical superiority versus a PPI, drive awareness with physicians and build access for commercial patients. Today, I’m proud to share that we’re delivering on those goals prescribers have quickly recognized the VOQUEZNA’s differentiated and novel mechanism of action.

Our reps are even sharing stories of physicians echoing the VOQUEZNA’s rapid, potent and durable acid suppression profile. Excitement is translating into demand with thousands of scripts being written since product became available. After over 30 years since the first PPI was approved, there is strong demand for something new. Further, the number of patients who have used VOQUEZNA is growing daily. For me, this is one of the most rewarding elements of our launch. Through our reps, employees and sometimes being with friends and family, I’m hearing stories of long-suffering patients are experiencing noticeable improvement with VOQUEZNA. We’re working hard to ensure as many patients as possible can access VOQUEZNA and share that experience. In fact, with our recent Express Scripts win, we’re well on our way to securing widespread coverage for commercial patients.

These early indicators, along with vonoprazan’s massive commercial success in Japan have reinforced my belief in VOQUEZNA’s bright future here in the U.S. With an erosive GERD market of approximately 7 million U.S. adults, positive feedback from physicians and patients and anticipated label expansions. We remain confident in our belief that VOQUEZNA has the potential to reach annual peak revenues of greater than $3 billion. As per our early launch data, I’m happy to report that over 3,800 prescriptions have been filled for the VOQUEZNA products. For clarity, this includes scripts captured by IQVIA as well as those that were filled through BlinkRx. We specified filled because we have simultaneously been monitoring an estimate of total demand which we believe paints a comprehensive picture of the early and growing position interest in writing VOQUEZNA products.

We estimate upwards of 14,000 total prescriptions have been written launched today. We’re pleased with this magnitude of total demand and see it as an indicator of what’s on the horizon for VOQUEZNA as we continue pursuing broad payer coverage. Last month, VOQUEZNA was added to Express Scripts, national formularies for commercial patients. In line with our goal, we secured placement with a single step edit through a generic PPI. As a result, VOQUEZNA bottles access expanded to an estimated 60 million commercially covered lives. We believe our ability to obtain commercial formulary replacement with one of the nation’s largest PBM so quickly after approval indicates that our pricing and access strategy is resonating well with payers. We remain actively engaged with other major PBMs and health plans and we expect further expansion of commercial coverage throughout 2024.

Ultimately, as this coverage comes online, we anticipate the gap between total demand and filled scripts will narrow significantly. As we continue to execute on the launch, our R&D team remains focused on advancing pipeline opportunities for vonoprazan. In December, we announced that the FDA had accepted our non-erosive GERD daily dosing NDA and assigned a PDUFA target action date of July 19, 2024. We are now only 4 months away from that decision date. Non-erosive GERD represents the largest subcategory of GERD with an estimated 15 million U.S. adults diagnosed and treated for the disease annually. If approved, this indication will significantly broaden VOQUEZNA’s addressable population and we believe further accelerate uptake. The review of our application is proceeding as expected and we continue to plan for July launch in a sizable indication.

As for further development, we anticipate initiating a Phase III trial for as-needed Non-Erosive GERD and a Phase II trial for Eosinophilic Esophagitis later this year. We believe vonoprazan’s unique MOA bode well for success in these 2 trials. If approved, these additional label extensions will further differentiate vonoprazan relative to PPIs and continue to expand the total addressable market for VOQUEZNA products. We’re excited about these programs and anticipate sharing more information about our progress in the future. Later in the call, Molly will further detail our fourth quarter and full year 2023 financials, for which we reported revenues of $682,000 and ended the year with $381 million in cash. Overall, we believe our strong balance sheet will enable us to continue delivering on our launch and development strategies.

I’ve previously stressed several foundational dynamics that are necessary for a potential blockbuster drug. These included a significant addressable market, clear unmet need among patients, demonstrated superiority and physician’s demand. The qualitative feedback from these early months of launch has bolstered our belief that these elements are present in the GERD market. It now comes down to us executing on our strategy and this team is poised to deliver. These are exciting times for Phathom as we continue to make progress on both the commercial and development fronts. This year is sure to be filled with new milestones and will set the foundation for the future of VOQUEZNA. Our pursuit of becoming the number one prescribed acid suppressant in the U.S. is off to a strong start and we remain steadfast in delivering on our strategy of driving blockbuster potential through continued market expansion.

I will now turn the call over to Martin to dive deeper into our launch progress. Martin?

Martin Gilligan: Thanks, Terrie and hello, everyone. I’d like to first echo Terrie’s comments that we’re very happy with how the launch of VOQUEZNA has started. We’re progressing as anticipated and our prelaunch research is being validated by the feedback we’re hearing from physicians and patients. During today’s call, I’ll touch on both quantitative and qualitative elements from our launch. But I know many of you on this call are most keen to hear about our script data, so let’s start there. Today, we’re reporting script data as of February 23 from both, a IQVIA and BlinkRx which represents our latest available information. With the second half of our sales force entering the field in early January, this reflects about 7 weeks of our full promotional efforts.

This has translated to achieving over 3,800 filled prescriptions which have reached patients’ hands. As our reps continue to promote to physicians and garner the backing of strengthened commercial coverage, we expect positive script momentum to continue. Additionally, our KPIs indicate that over 1,200 unique prescribers have written VOQUEZNA scripts that has ultimately been filled. Among those writers, we are already seeing repeat prescribing which builds our confidence that physicians recognize VOQUEZNA’s value for patients. We are encouraged by the initial breadth of this prescriber base and anticipate it will grow as we further engage with high-volume targets. Another important metric that Terrie mentioned was total demand. We estimate that upwards of 14,000 prescriptions have been written since the start of launch.

We believe the significant amount of demand to be indicative of the high level of unmet need in the market. It demonstrates that patients are interested in trying something new and physicians are willing to write for VOQUEZNA. As you’ve heard us say historically, providing access to patients is key to converting demand. As with all new products, negotiating coverage with payers is an essential step in achieving a successful launch and this process often takes time. In anticipation, we established a patient support program through BlinkRx which has meaningfully expanded patient access, resulting in an increased number of filled scripts. Early data shows the use of BlinkRx growing consistently accompanied by positive feedback. However, there are still physicians sending scripts to their patient’s long-established retail pharmacies.

Although this has led to a proportion of early VOQUEZNA prescriptions not being filled, we believe we are well positioned to convert more of these scripts over time. In the near term, our sales force continues to emphasize the availability of BlinkRx to physicians as it often represents the best option for getting VOQUEZNA into patients’ hands. And ultimately, future contracting with PBMs and health plans will increase payer access and narrow the gap between total demand and filled scripts. In fact, with VOQUEZNA now on formulary at the first of the 3 major PBMs, we are already making progress on that front. The first major PBM contracting win was with Express Scripts, often referred to as ESI. About 3 weeks ago, we announced the positioning of VOQUEZNA on ESI’s National Formulary.

This was a key accomplishment for Phathom, expanding VOQUEZNA’s availability to roughly 23 million additional commercial lives. Our team was able to secure non-preferred brand status with a single step edit exactly as intended. The single step is with respect to use of generic PPI prescriptions within the last 130 days. These criteria will be evaluated at the pharmacy counter electronically, avoiding any administrative burden for physician or office staff. Alternatively, if the patient use over-the-counter PPIs instead of prescriptions during that time period, they could also satisfy the single step by means of a prior authorization with attestation by their doctor. This latter avenue for access is a significant development as it means ESI patients could potentially access VOQUEZNA as a first-line treatment.

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

Physicians are articulating patients’ unmet need and recognizing VOQUEZNA’s value as a treatment option. The reps are focused on their reach and frequency among our full call panel of approximately 52,000 targets. In parallel, we are working diligently to reach patients suffering from the conditions for which VOQUEZNA is approved. In these early days, we are happy to see that we appear to be making an impact. To date, we’ve had over 185,000 visits to our consumer website and we’re hearing from physicians’ offices that patients are asking VOQUEZNA. Patient requests are a key component of our demand strategy and market research conducted with 200 of our target physicians, almost 80% stated they would grant VOQUEZNA upon request for their Erosive GERD patients.

With this in mind, we plan to initiate a new branded consumer campaign which has been met with positive and motivating feedback from test audiences. This campaign speaks directly to a Erosive GERD patients and their symptoms. Most notably, this will include TV commercials on popular streaming services. So if you suffer from Erosive GERD, keep an eye on for VOQUEZNA on your devices, starting later this month. In closing, I’m extremely happy with the commentary we’re hearing from prescribers and how it translates into demand. We are successfully executing our launch strategy with continued promotion of physicians, a broadened consumer campaign and expanded commercial coverage; we anticipate significant growth in filled prescriptions over the course of 2024.

Our teams are energized and committed to our belief in the blockbuster potential for VOQUEZNA. I’ll now pass it off to Molly to walk through our financial results. Molly?

Molly Henderson: Thank you, Martin and hello to everyone on the call. I’m happy to share our fourth quarter and full year 2023 financial results with you today. This is a momentous earnings call for Phathom as it is the first time we are reporting net revenues for our VOQUEZNA products. Although revenues reflect about a month of launch activity, we are pleased with the initial results. I’d like to note 2 items before going into the numbers. First, during this call, we will not be providing financial guidance regarding projected annual revenues, spend or earnings as we are still early months of launch. Additionally, I will be commenting on both GAAP and non-GAAP financial measures. Supporting schedules with detailed reconciliations between non-GAAP measures and their most directly comparable GAAP measures will be discussed later in my section and can be found in this morning’s press release.

Now, turning to the numbers. For the fourth quarter 2023, we reported net revenues of $682,000 and driven by the initial stocking of wholesalers in December. This reflects a partial quarter of sales given that VOQUEZNA bottles became commercially available as of November 28 and VOQUEZNA Paks as of mid-December. Additionally, we reported gross profit of $515,000 for the fourth quarter 2023 which equates to a gross margin of approximately 76%. The cost of revenues includes royalties owed to Takeda and excludes certain inventory costs which were expensed prior to receiving FDA approval. Note that the royalties owed as part of our revenue interest financing agreement are not captured in cost of revenues but rather in other interest expense. Moving down the P&L to our spend.

We reported non-GAAP R&D expenses of $6.1 million for the fourth quarter of 2023, compared to $14.3 million for the same period in 2022. As for SG&A, we reported non-GAAP expenses of $39.7 million for the fourth quarter of 2023, compared to $25.7 million for the fourth quarter 2022. On a full year basis, we reported non-GAAP R&D expenses of $37.6 million for 2023, compared to $65.9 million for 2022. And for SG&A, our non-GAAP expense was $85.2 million for 2023, compared to $82.4 million for 2022. On a full year and a quarterly basis, the decrease in R&D expenses was primarily related to lower clinical trial costs as we concluded our Phase III Non-Erosive GERD daily dosing trial during 2023. Regarding SG&A, our increase in spend was driven by the build-out of our commercial infrastructure and initiation of marketing activities in support of the commercial launch of VOQUEZNA.

Additionally, the most significant reconciling item between GAAP and non-GAAP OpEx expenses for the period was noncash stock-based compensation, largely associated with the vesting of performance shares upon the approval of Erosive GERD. Other non-GAAP reconciling items include noncash interest on our revenue interest financing liability and noncash interest expense related to the amortization of debt discount. Turning to EPS; we reported GAAP net loss for the fourth quarter 2020 of $79.6 million or $1.39 loss per share compared to $55 million or $1.33 and loss per share for the fourth quarter 2022. Non-GAAP adjusted net loss for the fourth quarter for 2023 was $46 million or $0.80 loss per share compared to $42.2 million or $1.02 loss per share for the same period in 2022.

As of December 31, 2023, cash and cash equivalents were $381 million. This includes $175 million received during the fourth quarter of 2023 from our revenue interest financing agreement upon the approval of Erosive GERD. Also during the fourth quarter, we announced the expansion of our existing term loan facility with Hercules Capital. The amendment provides access to more favorable terms and an additional $100 million in non-dilutive capital, subject to achievement of certain revenue milestones. With this amendment, we now have a total of $160 million available via our debt facility. We believe we are in a solid financial position and reaffirm our expectation that we have cash runway through the end of 2026 based on our current operating plan, expected product revenues and funds available under our term loan.

Lastly, as we shared previously, we expect nominal revenues during these first couple of quarters of launch, while payer coverage is materializing. Additionally, I mentioned our fourth quarter 2023 revenues mostly represented inventory stocking by wholesalers. We expect the sell-through of the stocking to take place during the first quarter of 2024, reinforcing our previous comments regarding nominal revenues during these first couple of quarters of launch. With that, I’ll now turn the call back over to Terrie for closing comments. Terrie?

Terrie Curran: Thank you, Molly and thank you again to everyone joining us on today’s call. Phathom’s accomplishments in 2023 were nothing short of amazing and I’m extremely proud of this team. As we round out Q1 and approach Q2, our primary focus is set on securing formulary placement with payers. We’ve made great progress on that front so far and anticipate expanded commercial coverage throughout the year. As for the back half of 2024, we believe the planned launch of Non-Erosive GERD daily dosing in July, pending FDA approval, will serve as another key catalyst for driving adoption. We believe VOQUEZNA represents a blockbuster opportunity and this launch is off to an exciting start. The enthusiasm here at Phathom is tremendous and there is much to look forward to in 2024. Thank you, again, 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?

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Operator: [Operator Instructions] And our first question comes from the line of Yatin Suneja with Guggenheim.

Yatin Suneja: A couple for me. Could you just talk about the reason for not filling the script other than the coverage? And how long does it take for BlinkRx to get — BlinkRx patients to get the coverage?

Martin Gilligan: Yes. So Yatin, this is Martin and I’ll take that question. So in terms of the coverage, I’ll just reiterate how happy we are with the Express Scripts win. As we’ve talked about in the past, our objective was to get one step through a PPI which opens up the broadest market. And I think the additional thing here that we walked away with is that if a patient has only been an OTC, the physician can do with attestation and initiate to have access to VOQUEZNA. So we anticipate that since it was just announced and just became available, we’ll start to see an increase in the number of scripts that are getting through the system. And then we would also envision that given this win and it seems to fit with our strategy, we’re very far along in negotiations with other major payers.

So we would start to see that coming on board probably during — as we enter into Q2 and then going into the rest of the year. The other thing I’ll just say is what we’ve actually been able to do is in terms of supporting that is with BlinkRx. I think you heard — you mentioned that a couple of times. Our goal there was really to make sure that, first of all, customers had a good experience. We wanted to address the lack of coverage early on. We also want to make sure that commercial patients on VOQUEZNA, they got on VOQUEZNA as a physician intended. And then the other thing that was really important to us was that the program that we set up that the refills are realized that once a patient converted from patient support over to commercial coverage that went through normal channels.

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

Molly Henderson: Sure. Yatin, I’ll take that. It’s Molly. So overall, as you said, we’re not providing specific guidance as it relates to our revenues other than reinforcing our previous commentary that we expect very nominal revenues for the first couple of quarters of launch as we’re building payer coverage and working through the stocking that we — that I alluded to in Q4. As it relates to GTN, we are not commenting necessarily on where we are based upon the discussions we have ongoing with the payers. But what we have said previously and we’ll continue to provide some frame of guidance around is the run rate. And what we’ve said is that we expect between 50% and 65% on a normalized basis from a steady state. So those are the only pieces that we’re providing guidance on this point, as we’re so early in the launch.

Operator: And our next question is going to come from the line of Joseph Stringer with Needham & Company.

Joseph Stringer: Gave some very helpful infill on the contribution to film scripts from BlinkRx since launch. But just curious if you can comment on the relative proportion so that Blink/IQVIA split. Was it higher or lower in 4Q ’23 than what it is in the first quarter of this year to date? And maybe as a follow-up to that, can you provide any qualitative guidance on how you see that relative split trending as the launch goes on and of course, more coverages carried. Would you expect that to trend down and reach a steady state level at some point?

Martin Gilligan: Yes. So I’ll take the first part of your question. I think there were 2 parts there. Yes. So what we see is that the utilization of BlinkRx is growing over time which is exactly what we intended and we communicated to you all and are strongly communicating to physicians that it’s the best opportunity for insured patient gets access to VOQUEZNA. So you would assume that since the launch that continues both in 2023, up until this point, that the utilization of BlinkRx grows. I do just want to clarify, though, for you an important point in terms of the filled scripts. So as you take a look and you think about the scripts that you’re seeing in IQVIA — those were actually filled at retail. Anything else that we’re saying above and beyond that was actually part of the fills that took place at BlinkRx. So we would envision to the second part of your question is that split will remain consistent and then we’ll start to change and shift more over to retail as we get more wins in.

Operator: Our next question is going to come from the line of Paul Choi with Goldman Sachs.

Paul Choi: I just want to maybe follow up a little bit on the previous question with regard to the pace of conversion between Blink and filled scripts and so forth. And just I guess as you think about that ratio over the course of the next 12 to 18 months, — do you expect it to evolve more linearly? Or do you sort of see step function changes as coverage is — as added here, including like when such as the recent Express Scripts add? And then I had a pipeline question.

Martin Gilligan: Yes. So Paul, I’ll take that question again. So I think that you’ll see that change over time based upon access. So early on in the very early weeks of launch, obviously, we had no access — so what went into Blink was clearly filled from a patient, they received a prescription and they used our patient support program. Going forward, as we have more access and there’s more wins with payers, when those scripts come in, they’ll be immediately identified as having commercial coverage and will be filled at retail.

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

Terrie Curran: Paul, thanks for your question. I’ll kick it off and then I’ll pass over to Azmi. So we’re finalizing the protocol for the Eosinophilic Esophagitis Phase II, we’re really excited about that. And as you know, PPI is a utilized first line but are not approved and start positioning in the treatment paradigm would be prebiologic first line. And so that’s what we’re pursuing there. And we intend to initiate that Phase II by year-end. Maybe Azmi, do you have any other comments?

Azmi Nabulsi: Yes. I mean we’re definitely targeting first line. We’re looking at broader population because remember, this is a Phase II. So we need to understand the performance in the different population segments but the intent is to be first-line prebiologic as patients will start with a similar treatment that hopefully we’ll be able to show is effective.

Operator: And our next question is going to come from the line of Umer Raffat with Evercore.

Umer Raffat: I have a couple here, if I may. First, could you remind us, there was some confusion on whether the uptick in IMS, especially was observed in January, — was that a function of IMS just doing a better job capturing Blink? Or was that completely exclusive? Maybe a different way of answering that is the significant sort of acceleration we saw almost tripling in TRx heading into January, February. Was that also seen in the prescriptions to date you guys saw? And I have a couple of follow-ups.

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

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

Martin Gilligan: Yes, we’re seeing the same patterns between Blink and anything that’s filled by Blink and anything that’s filled by IQVIA. But what you’re seeing on a weekly basis through IQVIA are all scripts that are filled through retail means.

Umer Raffat: Okay, got it. That’s great. Now the next one is really around some of the stuff, the data points you guys shared. So we know by IQVIA, the total prescriptions reported so far are just under 2,000 or so. You guys implied 3,800 have been filled. So is it reasonable to assume that the IQVIA to Blink ratio is about 1:1 right now? Is that reasonable?

Martin Gilligan: Yes. I think it’s a pretty good assumption.

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

Martin Gilligan: Yes. So physicians have, obviously, when they’re writing a prescription, the ability to send it anywhere. And that’s a really important point that VOQUEZNA is available at all retail pharmacies. Blink overall is a new service. We are creating change at the same time. What we’re seeing is utilization growing at Blink. We’re seeing a weekly demand growing at Blink, meaning there’s new physicians coming in and there’s repeat physicians coming in. So we would expect, over time, as more physicians start to use Blink you might see that gap start to narrow. Simultaneously, as we have more wins, the gap is also going to narrow. So there’s — we’re in early weeks of a launch, Umer, so there’s a lot of variation that we’re seeing in the midst of a launch. And then on a very positive side, we’ll see more variation in things such as this going forward.

Operator: And our next question is going to come from the line of Matthew Caufield with H.C. Wainwright.

Matthew Caufield: Congrats on the launch progress. So based on the current erosive labeling, do you have a sense of whether any non-erosive patients or patients that are possibly unconfirmed if their disease is erosive or non-erosive are included in the current script launch numbers, either IQVIA or the BlinkRx numbers?

Martin Gilligan: Yes. Thanks for the question. Right now — well, it’s not even right now, we’re not tracking by indication. But I guess what I should make really clear is we’re also not promoting for non-erosive, so at the same time, we’re not measuring any non-erosive utilization.

Matthew Caufield: That’s helpful. And then just one quick follow-up. So with the range of the 140 scripts written to date and the 3,800 plus that were filled, is that spread at least at this stage, in line with what you would have expected for this part of launch?

Martin Gilligan: Yes. Just to clarify, you say nationwide.

Matthew Caufield: Yes.

Martin Gilligan: Yes. No, we’re seeing uptick similar — uptick similar across the U.S. We’re not seeing differences by area of the country, regions. And so we have — the representatives are calling on 52,000 physicians and they’re all getting very similar positive feedback receptivity and we’re seeing uptick across all of the all of the different targets that we’re calling on. We’re really pleased with the demand. I mean we see 14,000 scripts. And as I mentioned earlier, or I should say, written scripts and as I mentioned earlier, that we only had our full sales force in place, only 7 weeks ago, it really shows that the unmet need is there. We’re hearing feedback from physicians that they’re seeing patients already who work quickly within hours, healing results that happened in a very short period of time.

Operator: And our next question is going to come from the line of Chase Knickerbocker with Craig-Hallum.

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

Martin Gilligan: Yes. So the — so Chase, I would say that the confidence that scripts will go through for Express Scripts national formulary, is we’re absolutely confident of that. What I’ll also say is and I believe Terrie mentioned this in her opening remarks, we’ve really progressed with the large payers in terms of getting access for VOQUEZNA and all of those discussions are centered around the same strategy as 1 step through a PPI. And I think as we’ve always spoke about before, is that is the largest segment, given that the majority of patients are already on a PPI and there’s a lot of switching from 1 PPI to another. There’s a lot of OTC add-on. So we see that this is — we really were successful in getting the broadest population possible.

Chase Knickerbocker: But then particularly around that kind of the — the structure of the PA there and how it functions, that’s something that you think you can recreate on the other large formularies. And then also, I just want to dig in a little bit on the characteristics of the early writers. So far, they are largely GI docs, should we think of them as higher volume. Obviously, it’s just a couple of scripts filled per prescriber today. Just some color there would be helpful.

Martin Gilligan: Yes. So I’ll take the first part of the question in terms of the OTC, the PA associated with that. So listen, this is clearly something that’s on the table for discussion. And our best case was and will always be one step through a PPI. I would take that addition of a PA for an OTC patient is beyond the best case. So I feel really confident about our best case and very hopeful that we can also get that additional PA. In terms of utilization thus far, our sales force has been very focused on calling on the highest volume physicians in the category. And as you can imagine, when you lay all that out, the majority of them who fit in the highest volume are gastroenterologist. So as a result, what we’re seeing out of the gate is our largest group of prescribers are GIs. However, I’ll say what’s really nice in there is they’ve got a real strong base in those offices of nurse practitioners or physician assistants.

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

Chase Knickerbocker: Got it. That makes sense. And then lastly, just 1 for Molly. Quite a bit of stock-based comp in the quarter. Is that kind of onetime new employee sort of stock comp? And then that’s it for me.

Molly Henderson: Chase, yes. So that’s related to the PSUs associated with the approval of Erosive GERD. So 19.3% of that was, I’d characterize as a onetime event.

Operator: And our last question is going to come from the line of Yatin Suneja with Guggenheim.

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

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

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