Prepared remarks
Good day, ladies and gentlemen. Hello, and welcome to Phathom Pharmaceuticals' Second Quarter 2026 Earnings Results Call. 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, sir.
Thank you, operator. Hello everyone, and thank you for joining us this morning to discuss Phathom's second quarter 2026 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 will be discussing during the call. A copy of that press release can be found in 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. 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 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 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. 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. 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. Steven?
Thank you, Eric, and thank you everyone for joining our call this morning. Let me start by highlighting the significant transition Phathom has made over the last year and a half. I'm very proud to share that for the first time in Phathom's history and ahead of our guidance, we generated positive operating profit in Q2, excluding stock-based compensation. That's a dramatic improvement compared to Q2 last year when our operating loss was more than $50 million. Importantly, from Q2 2025 to Q2 2026, we increased revenue by about 88% and reduced cash operating expenses by about 34%. We have executed a successful pivot in our operations. We are on a solid trajectory and expect meaningful long-term growth generated by our core strategy to focus first on gastroenterologists. We continue to believe we can reach $1 billion in annual potential revenue with this focus on GI prescribers and have the potential for a second billion in annual revenue through expanded engagement with primary care prescribers in future years. For full year 2026, we are updating our revenue outlook to $310 million to $325 million. This new revenue guidance range still indicates meaningful expected growth over the next two quarters. We are hearing from our field team and in our market research that physicians are encountering friction in the process of obtaining VOQUEZNA for their GERD patients. While many physicians have demonstrated willingness to navigate the process to get VOQUEZNA for their most severe GERD patients, some may be more hesitant to work through the perceived hurdles to prescribe VOQUEZNA more broadly for their less severe GERD patients. This influenced the fine-tuning of our 2026 guidance range. That being said, we believe we can meaningfully improve this dynamic, and we are working on several initiatives which we believe have the potential to reduce friction for physicians and patients and to support accelerated growth. We remain confident in our GI-first strategy and our long-term outlook for VOQUEZNA. I'd like to turn briefly to a few key financial highlights for the quarter, and then Sanjeev will provide further commentary during his portion of the call. For Q2, we reported net revenues of $74.3 million, cash operating expenses excluding stock-based compensation of $56.4 million, and for the first time as a business, we generated cash from operations of about $1.6 million. While we do not project generating cash each quarter this year, we do anticipate being consistently profitable at the operating profit level in upcoming quarters, excluding stock-based compensation charges, as we've previously discussed. We are proud of our company's results this quarter. They demonstrate solid execution of our GI-first pivot over the last year. A few quick notes on our commercial metrics for Q2. Since launch through July 17, nearly 1.7 million VOQUEZNA prescriptions have been filled. Of the approximately 325,000 prescriptions that were filled in Q2, about 209,000 were covered prescriptions, representing approximately 64% of the total, while about 116,000 were filled as cash pay. Compared to last quarter, this represents 24% growth in covered volume and 16% growth in cash volume. On a year-over-year basis, covered prescriptions grew about 79% and total prescriptions grew about 88%. Shifting to our development efforts, we've made solid progress in our EoE Phase 2 study, which is the first large placebo-controlled trial of an acid suppression treatment for this indication. We completed enrollment in June, which was ahead of schedule, and we were expecting top-line data later this year in Q4 for the 12-week blinded treatment portion of that trial. We believe VOQUEZNA has the potential to fill an important unmet need for EoE patients. The EoE program may also provide a potential path to extend VOQUEZNA exclusivity by six months if the Phase 2 trial results are favorable. We received a written request from the FDA to include pediatric patients in a potential Phase 3 trial, and we would conduct that trial as agreed with the FDA. I'm also pleased to announce that we will be continuing our clinical work investigating VOQUEZNA as a potential as-needed or on-demand treatment for non-erosive GERD. We plan to initiate the Phase 3 trial for as-needed use in Q4 of this year. In 2022, Phathom reported a successful Phase 2 trial for as-needed use of VOQUEZNA. In that trial, VOQUEZNA demonstrated faster and sustained relief of episodic heartburn as compared to placebo. VOQUEZNA demonstrated superiority on the primary endpoint of complete relief at three hours and sustained relief for 24 hours. Many patients in the Phase 2 trial reported complete heartburn resolution as early as one hour following treatment with VOQUEZNA. There's a significant population of patients with non-erosive GERD who are on chronic daily acid suppression therapies and would prefer to use a product as needed when they experience heartburn episodes. If the Phase 3 trial is successful, we believe a potential expansion of the VOQUEZNA label could meaningfully increase the commercial opportunity for VOQUEZNA and could strengthen our planned future expansion of call efforts on primary care physicians. If approved, an as-needed use of a potent GERD treatment with 24-hour durable benefit could also provide a distinctive value proposition in future direct-to-consumer advertising. Overall, we remain confident in our outlook for VOQUEZNA and in our ability to execute efficiently. I'll now turn the call over to Sanjeev to take you through our financial updates.
Thank you, Steven, and hello, everyone. I'd like to start by saying how pleased we are with our results and momentum of our revenue trajectory. The business is growing nicely. We remain confident in our path forward. Q2 performance included an important inflection point for Phathom. For the first time, we generated operating profit excluding stock-based compensation, driven by top-line growth and disciplined expense management. With that in mind, let's go into the results. Revenue for Q2 was $74.3 million, reflecting year-on-year growth of $34.8 million or 88%. Sequentially, revenue grew $16 million or 27% over Q1 2026, which reflects our largest ever quarter-over-quarter revenue growth on an absolute basis. As anticipated, prescription trends have rebounded following the normal early year seasonality we experienced in Q1. Our gross-to-net discount for Q2 was in line with our guidance, coming in towards the lower half of the 55% to 59% range. The channel mix for covered prescriptions continues to be the main reason for modest quarter-to-quarter variability. Our gross profit margin remains steady, in line with our guidance at approximately 80% for quarter two. Second quarter cash operating expenses were about $56.4 million, largely consistent with spend last quarter. I'm proud of our team's continued expense discipline with year-on-year cash operating expenses down $29.7 million or 34% compared to Q2 2025. Our performance last few quarters clearly demonstrate our ability to grow revenue while being disciplined on expenses. As a result of these strengths, we have delivered on our operating profitability plan we previously outlined. I commend our team for their commitments to reaching this important milestone, and I'm pleased that we did so a quarter ahead of our guidance. We also generated cash from operations for the first time, ending the quarter with $182.5 million in cash and cash equivalents. This is an exciting result and provides additional confidence in our outlook for future cash flow, which I will discuss in more detail shortly. Now, let me turn to our financial guidance for 2026. For revenues, we're updating our full year 2026 guidance to $310 million to $325 million. This refinement reflects the friction Steven described in his remarks. We continue to be confident in the long-term opportunity for VOQUEZNA. We are reiterating our guidance for both gross-to-net discount, which we believe will be within the 55% to 59% range, and for gross margin, which we anticipate will be approximately 80%. As for spend, we're updating our cash operating expense guidance, excluding stock-based compensation, to be between $235 million to $245 million based on first-half actuals and continued fiscal discipline. We continue to invest in projects designed to enhance revenue, such as omnichannel marketing, as well as clinical development programs for potential new indications. As we think about cadence, our updated revenue guidance still reflects meaningful expected growth over the next two quarters. We anticipate our gross-to-net discount will remain within our guided range but will increase moderately throughout the rest of the year, similar to prior years. We expect expenses to modestly step up in the back half of the year as we make strategic commercial and clinical investments, most notably initiating our Phase 3 non-erosive GERD as-needed trial. We believe our early achievement in operating profitability in Q2 will sustain in Q3 and beyond, including in total for full year 2026. As for cash flow, we remain on track with our guidance to reach durable cash flow positivity in 2027. While this quarter's cash generation was encouraging, we expect to continue to use cash for the rest of the year due to modest and anticipated changes in working capital. On the whole, we remain confident in our balance sheet and capital structure. Based on our current operating plan, we continue to believe our cash on hand, along with anticipated future cash generated from operations, will be sufficient to invest in our business and satisfy all outstanding debt obligations at all times without the need for another debt or equity raise. In summary, this was a very strong quarter and we are proud of our results. Internally, from the leadership team to our field team, everybody remains motivated and determined to accelerate future prescription growth. I believe we're very well positioned to do just that. I will now turn the call back to Steven for his closing remarks. Steven.
Thank you, Sanjeev, for the detailed financial review. Our efforts to reposition Phathom have been successful over the past year. The pivot to the GI-first strategy has driven 88% revenue growth from Q2 last year to Q2 this year. We reduced expenses, continued to drive revenue growth, reached operating profitability, excluding stock compensation, and believe we are positioned for significant growth in the coming years. A year ago on our Q2 2025 earnings call, we told you we could reach profitable operations in 2026. We have officially delivered on this milestone as of Q2 2026, and we believe we will continue to do so in the coming quarters. We're pleased with the continued revenue growth this quarter and are deeply focused on how to drive further growth of VOQUEZNA for many years to come. We believe VOQUEZNA has the potential to help millions of patients with GERD. Thank you to our team for their outstanding and diligent work, to the physicians and patients who trust in our products, and to our investors for your continued support. Operator, please open the line for Q&A.
Questions and answers
Our first question or comment comes from the line of Umer Raffat from Evercore ISI.
I have a two-part question on tegoprazan today from a competitive dynamic perspective. First, just your overall thoughts on their data. There's some clinician feedback around immediacy of onset, but then you also have to balance that versus a lot of these patients are on PPIs anyway, so does that immediacy of onset matter or not? But more importantly, what does it mean for Phathom into 2027, both as it relates to the growth trajectory of the molecule, but also your prognosis? Profitability as competitive dynamics kick in from an SG&A perspective and revenue perspective.
Umer, thank you very much for both insights. We certainly are tracking the evolution of the tegoprazan story and the positioning in the market and often get questions about this. One of the things that has historically been true is that when a second product launches into a category, it changes physician perception from thinking about the first drug in the category as just a single drug to now thinking about the need to shift to that category. I think that was certainly true when you saw in the GERD space, the evolution from H2 blockers to PPIs. And as multiple PPIs entered, the PPI category grew substantially. We think that a similar expectation should likely play out that when a second PCAB enters, it will shift physician thinking about the need to switch more of their patients to the PCAB category, and that will have a positive impact in general in the category. As the leader in the category, we believe that's going to accrue to our benefit in that process. Regarding the specific comparative data, obviously we've not done a direct head-to-head trial. When we look at our data and compare that to what was presented regarding tegoprazan at the recent DDW conference, the most important variable, and in fact, the primary endpoint in each of the two clinical trials, in both our VOQUEZNA clinical trial and in the tegoprazan clinical trial, the primary endpoint was tied to overall healing rates in erosive esophagitis. The intent in treating an erosive esophagitis patient is to heal the erosions. With VOQUEZNA, we get a 93% healing rate. With tegoprazan, they reported an 84.6% healing rate. And so what you see is a very high rate of healing and therefore very good outcomes and high success and satisfaction when physicians put patients on VOQUEZNA. I think that's the core variable physicians are going to look to. One of the things we do see is that most of the patients who are on VOQUEZNA have been on chronic daily therapy for many years; whether the drug works in 45 minutes or one hour isn't the variable there. The question is how much does the drug raise pH in the stomach? How does it work on a durable basis? Can it heal patients' erosions? We see really good data with VOQUEZNA on all of the parameters that matter most to physicians treating an erosive esophagitis patient. So I certainly see that the healing rates are probably the most important variable to be looking at in that process. In terms of our trajectory, if this grows the entire awareness of the category, that's going to accrue to our benefit as the lead player in the category. And we are certainly confident with VOQUEZNA's data and positioning.
And Umer, to your point about what does it mean to 2027 guidance and OpEx and revenue trajectory, as Steven pointed out, again, we believe this is going to be a category expander. I don't expect any major impact to our growth trajectory or the OPEX base. There might be something on the gross-to-net. There might be. But we are kind of anticipating all of that, and then we'll provide more guidance when we give our '27 guidance. But we don't expect any major change to where we are thinking about our 2027. In fact, this could be overall a positive to the category.
Our next question or comment comes from the line of Kristen Kluska from Cantor Fitzgerald.
I have two. Just on the first, can you provide a little bit more color on some of the ways you're looking to improve the payer frictions? And then my second question is for the VOQUEZNA as-needed program and how you would think about billing for this and how much this is likely to cannibalize the patients that are on therapy chronically versus introduce a brand new market segment for you.
Kristen, thanks for both of the questions. First, on the friction that we're describing, it's not a binary event in this process. It's really both. The actual friction is how much work does it take in an office to get VOQUEZNA covered and what's the experience between the moment that a physician prescribes when the patient is trying to fill the script, when the prior authorization is submitted and how does that cycle work most efficiently for physicians, their office staff, and patients. It's not a fundamental change in access. We actually have really good access and really good coverage by payers. But the streamlining of that whole process of what needs to be documented in the medical records regarding prior PPI use, what needs to be in the prior authorizations, how can that process run as smoothly as possible, the education of physicians, the education of their office staff, and encouraging as many physicians as we can to send the prescription to Blink because Blink can provide additional support services that streamline that process, all of those become important dimensions to improving both the actual workflow and the perception that it's easy to get the product. Both are important. We need to streamline it and improve physician confidence and perception that when I prescribe this product, I know my patient's going to get it. We know that our top physician prescribers have that process nailed. Their office staff is running that process efficiently. This is a coachable outcome in terms of getting to streamlined activities, but we need to do that broadly across every gastroenterology office. For the as-needed positioning question of cannibalization, we spent a fair amount of time looking at this. The patients who are now getting VOQUEZNA are not the same patients who are likely to desire as-needed use. We are seeing physicians today prescribing VOQUEZNA for their patients who need the most pH elevation in the stomach to achieve the best possible outcome, such as erosive esophagitis and healing erosions. For those patients, you want to maintain elevated pH on a daily basis. It's a different population of patients who are having breakthrough heartburn episodes, who are using PPIs daily but they don't have heartburn every day and they don't want to use a PPI every day. That population of patients is actively seeking an alternative to use when they have heartburn episodes. If successful, an as-needed indication is not about cannibalization of our current market; it's about expanding into an incremental market opportunity. Our research with physicians and patients shows that a drug that is potent and resolves heartburn for 24 hours resonates well. That's what physicians want for a population that is different from the population that gets VOQUEZNA today. So I don't see a cannibalization risk; I see a market expansion opportunity.
Our next question or comment comes from the line of Yatin Suneja from Guggenheim.
Maybe just two for me. Steve, the friction that you are articulating, is this something you are seeing mostly with the new practices or new physicians that are coming on? Or is it mostly across the board, even with the older physicians or older practices? And second, you guys have been very good in terms of cutting cost and being disciplined in spend; how should we think about further investment now that you've streamlined processes to further accelerate growth of the product?
Let me take the first half and then I'll have Sanjeev discuss OpEx trajectory. On the friction, your framing is helpful. Physicians that have already adopted VOQUEZNA as a core part of their practice have worked through this process and have reduced the friction by virtue of their experience in how they prescribe VOQUEZNA. In some cases they've adopted prescribing through Blink as a means of supporting their staff. In other cases, their staff has just worked through the process quickly about what needs to happen in a prior authorization and they've got the cycle down, and they can get the drug efficiently for their patients. As we broaden to GI practices and go deeper into their patient base, for the most severe GERD patients who have tried multiple PPIs and failed, it's clearly worth the effort to get VOQUEZNA and they can work through that process. If they perceive that it's a lot of work or there are stumbles for their staff, they may be less likely to prescribe it for a broader population. There's a trade-off: how much does my patient need the drug and how much work is this for my staff? For our highest volume prescribers, they have the process nailed. For adopters that are growing their use, we need to streamline. There's no binary change; it's incremental efficiency improvements. What does the physician need to document when prescribing VOQUEZNA? What does the staff need to capture in the prior authorization submission? When does the prior authorization get submitted? If possible, we want them to send the prescription to Blink because Blink will provide more prior authorization support. We need to build habit and familiarity across practices. This is small incremental changes, but important. It's a core focus in our internal conversations: how do we educate every office on how to streamline this as much as possible.
In terms of operating expenses, the team has done an outstanding job being expense disciplined while continuing to grow revenue. That strategy has worked. Going forward, we have the infrastructure: full field force, marketing department, and programs to sustain VOQUEZNA and continue to grow. We'll maintain the discipline that has worked and selectively add investments. In the back half of the year, as I mentioned earlier, we'll modestly increase spend, primarily in two areas: omnichannel programs to drive top line and the as-needed study. So you'll see us sustain discipline while selectively making investments to grow the top line, and we'll have the resources to do that.
Our next question or comment comes from the line of Paul Choi from Goldman Sachs.
One question just to follow up on your comments on sort of friction in terms of the insurance process. Can you maybe comment on how many and to what degree you've observed any push out of these cases to cash pay if that is incrementally driving changes in the percentage of your mix of covered versus cash pay prescriptions? And second, on the EoE study that's coming up, can you maybe comment on just sort of thinking about potential dosing as you consider a pediatric population down the road here and a study there. Do you feel like the dosage being used in the current study will provide clarity on what dose might be needed for a pediatric population?
On the friction and insurance coverage process, it's hard to quantify exactly how many prescriptions didn't go through because of the PA process. The feedback from physicians is qualitative: they love the drug, they believe the drug works, they're comfortable with safety, and the big questions are how much work is it going to be for my staff, what will it cost my patient, and will it get covered. There's no absolute number like 10% or 20%; it's incremental. As we improve the streamlining and build physician confidence, we expect increased propensity to prescribe. On EoE and potential dosing for younger populations, we are finding that there may not be much change to dosing based on PK characteristics. I don't have all the PK data immediately at hand to share on the call, and we'll provide more detail as we progress. The current trial was adults only. As we plan for pediatric inclusion, we'll work with the FDA on what age groups to include, and that will influence dosage determination for each age group. We'll provide more granularity sometime in 2027 as we design the broader trial.
Our next question or comment comes from the line of Martin Auster from Raymond James.
This is Josh on for Martin. Congratulations on your milestones. We just had a quick question around the as-needed Phase 3 design. Can you cover historical benchmarks or endpoints you're going to be looking at as you run this trial? And maybe describe how much incremental costs it's going to add to your expenses?
The incremental cost of the Phase 3 trial for this year is already built into our OPEX guidance of $235 million to $245 million. The portion of the trial costs we will incur in Q4 2026 is accounted for. It will raise R&D expense in 2027 to some degree. We'll provide more guidance when we give our 2027 outlook. The Phase 3 trial design isn't yet posted publicly, but the Phase 2 study provides a good framework. The concept: enroll non-erosive reflux patients, treat them daily for several weeks. Patients who are heartburn free for a period at the end of that treatment phase are randomized to either VOQUEZNA or placebo and instructed to take one tablet when they have a heartburn episode. We will look for differences in both fast onset of resolution within the first few hours (1, 2, 3 hours) and sustained resolution for 24 hours. The primary and secondary endpoints look at those time points and sustained benefit. Rescue meds are available for patients who don't get resolution. The Phase 3 mimics the Phase 2 substantially, and we'll share details when the trial is posted.
Our next question or comment comes from the line of Annabel Samimy from Stifel.
I have a multi-part question related to that as-needed trial. Do you have any sense right now if a number of patients are using VOQUEZNA on an as-needed basis? I know PPIs are used off-label in that way, so I'm curious if you have a sense of how VOQUEZNA is being used. Separately, as it relates to friction, could the as-needed option reduce friction in the marketplace? And do you think this is more important to capture less severe patients that physicians are reluctant to treat, or is it more important to expand into a broader population, maybe even in the PCP market? You suggested you might use that for DTC. Does that mean you're considering it for next year?
There are certainly some patients using VOQUEZNA as-needed today; it's a small portion of our overall patient population. The vast majority are using VOQUEZNA daily because they tend to be patients with significant GERD who need the highest pH elevation. The as-needed population is different. The as-needed program isn't linked to the friction dynamic; the friction dynamic is about office workflow, PA documentation, and prior authorization efficiency. The as-needed opportunity substantially expands the market and is attractive to primary care physicians. Many patients on chronic daily therapy prefer not to be on daily therapy and ask physicians if there's something they can use only when they have heartburn. VOQUEZNA could fit this need and an as-needed label would allow us to talk to physicians about that use state and expand both GI and primary care opportunity. It also opens a unique direct-to-consumer advertising proposition in the future. That expansion takes years; the trial and NDA process mean this isn't immediate. The as-needed label could enhance future DTC activities, but we are already doing some digital activities now.
Our next question or comment comes from the line of Chase Knickerbocker from Craig-Hallam.
Maybe Steve, just on this friction dynamic, did you see this dynamic with some of your high prescribers today as they were ramping up? Was there a point that they got a little bogged down as well on that ramp? How long did it take them to refine those processes if so? And can you give an idea of what you could do to help those who are getting bogged down to refine that process specifically?
Yes, Chase. We have heard this from physicians along the way. As we've gone broader in the GI community and deeper into their patient bases, the noise level and volume of comments has risen, which is why we've focused recently on this. Early adopters were motivated and got their office staff up to speed quickly and embraced the product. The process can be streamlined and run smoothly. We need to educate physicians and staff on how to make prior authorizations efficient and capture the right documentation in medical records. Encouraging physicians to send prescriptions to Blink is helpful because Blink can facilitate prior authorization and appeals, and assist offices and patients. We're working with Blink and our sales force to iterate and streamline activities and to educate staff on how to use that resource most effectively. This has always existed; it's solvable through education and support.
Got it. When did you see this dynamic become more prominent? How recent was it? And lastly, as we think about as-needed timelines relative to loss of exclusivity, can you give a sense of enrollment timelines and timelines to supplemental filing?
The increase in noise has been gradual as we've done more field rides and interactions with physicians. The feedback has been consistent: physicians love the drug but are concerned about the process to get it. That reinforcement from field time, conferences, and market research has led us to shift communication to focus more on streamlining access. On as-needed timelines, we've indicated the study will start in Q4 2026. We haven't committed to exact dates for data readouts, but it's reasonable to think about data in 2027 or 2028, and potentially a label update by 2029. That's a broad estimate and not a firm commitment, but it places us in a reasonable timeframe to pursue that opportunity.
Our next question or comment comes from the line of Dennis Ding from Jefferies.
I have two. First, demand seems strong but it might take more work or time to get it approved for more patients. We've seen positive experiences from other companies that drive scripts away from retail toward the specialty pharmacy for better fulfillment and refill rates. Is that a strategy you'd consider? Second, for the RIFA payments, as you plan for the next few years, do you feel a need to close up to that $275 million threshold by end of 2028? How does that influence your approach to business development in terms of the amount and capacity you'd be able to pay for an asset?
You're right that specialty pharmacy routing can improve efficiency. Sending prescriptions to Blink instead of a retail pharmacy can provide more support to the office and the patient, help with appeals, and generally get covered scripts through more efficiently. That is one of the education points for our field organization, and over time we'd like to see more script volume go through Blink as a tool to improve the dynamic.
With regard to RIFA and our capital structure, keep in mind our capital raise earlier this year, our operating profit this year, and expected future cash flow starting in 2027. We believe these factors will allow us to meet our obligations. We start paying term debt in 2028 in a small way, and the RIFA true-up occurs in 2029 but is paid in 2029. We expect cash on hand plus future operational cash flow will be sufficient to meet those obligations. We also have flexibility to invest in the business through licensing deals that are structured with limited upfront payments but potential larger downstream payouts. So our capital structure allows us to meet obligations, invest in VOQUEZNA, and selectively pursue business development opportunities.
Follow-up on the specialty pharmacy: what are the logistics for a script to flow through Blink relative to retail? How easy can it be and how quickly can physician behavior change to drive more scripts through Blink?
The first step is simple: the physician needs to send the script to Blink and select that option in their EMR when prescribing. Once the script is sent to Blink instead of a local retail pharmacy, that starts the process. Blink then supports the office and patient through prior authorization and appeals. It's a straightforward process; we just need to educate physicians and office staff to capture the prior PPI history in the medical record for the prior authorization and to send the prescription to Blink. With education and habit-building, behavior can change and more prescriptions can flow through Blink.
Our next question or comment comes from the line of Joseph Stringer from Needham & Company.
For the Phase 2 EoE trial, is there a bar for success that you're looking for that would be sufficient to propose a Phase 3? And is the Phase 2 data essentially the key piece that you need to apply for the pediatric extension?
There's not a single bright-line threshold that dictates going to Phase 3. We need to see enough benefit in the Phase 2 trial to have a clear path to design a Phase 3 trial with a reasonable probability of success. The primary endpoint in Phase 2 is eosinophil count reduction, and we also have symptom measures as secondary endpoints. The magnitude and portfolio of symptom improvements will guide Phase 3 design. We'll have an end-of-Phase-2 conversation with the FDA to agree on the path forward if the data are favorable. This is the first large, well-controlled trial of acid suppression in EoE, so the results will be instructive for future trial design. Regarding pediatrics, the Phase 2 adult data will inform discussions with FDA about pediatric trial design and dosing, but the regulatory path will be based on discussions with the agency after we have results.
Our next question or comment comes from the line of Matthew Caufield from H.C. Wainwright.
Great quarter. For the additional billion-dollar opportunity from the primary care market, any near-term considerations for adapting beyond the current GI-first initiative, at least during second half 2026 specifically or into 2027?
We are currently calling on primary care physicians, but it's not our primary call point. Roughly 60% to 70% of our sales calls go into GI, and the remaining 30% to 40% go into primary care — either high-decile PCPs that prescribe large volumes of PPIs or PCPs who have previously written VOQUEZNA scripts and have growth opportunity. We will expand primary care activity in future years, and timing could be 2027, 2028, or 2029. The as-needed indication could drive broader primary care expansion, but we'll assess internal metrics to determine when to accelerate investment in primary care and will communicate that rationale when we decide.
Has the Blink education process been proportional between GI and primary care in terms of focus?
We try to educate every physician's office on Blink. Uptake of Blink happens more readily among higher-volume prescribers because they can get into the habit of prescribing to Blink. Today, most of our higher-volume writers are gastroenterologists, so we have had more of those conversations in GI, but we also engage with primary care offices.
Thank you. I'm sure no more questions in the queue at this time. Ladies and gentlemen, this concludes today's Q&A session. This concludes today's call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.