Phathom Pharmaceuticals, Inc. (PHAT) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to Phathom Pharmaceuticals Phase III PHALCON-EE top line trial results conference call. [Operator Instructions] I would now like to hand the call over to Joe Hand. Thank you. Please go ahead, sir.

Good morning, and thank you for joining us. My name is Joe Hand, and I'm Phathom's Chief Administrative Officer. We're excited to discuss the results from our PHALCON-EE Phase III erosive esophagitis trial that we shared earlier and to answer questions you have regarding the data. At the end of today's presentation, we will hold a Q&A session with Terrie Curran, our President and Chief Executive Officer; Azmi Nabulsi, our Chief Operating Officer; Martin Gilligan, our Chief Commercial Officer; and Tom Harris, our Senior Vice President, Regulatory Affairs. As a reminder, matters covered in today's presentation, including the accompanying slides, include forward-looking statements. Such statements involve risks and uncertainties that may cause actual results to differ materially. A discussion of these statements and risk factors is available on the safe harbor statement slide as well as under the heading Risk Factors in our SEC filings. All forward-looking statements speak as of the date of this presentation, and we undertake no obligation to update such statements. Now to begin the meeting, I would like to turn the webcast over to Terrie Curran, Phathom's President and CEO.

Thank you, Joe. Two years ago, we embarked upon the journey to build a leading GI-focused company. Today's results mark a major milestone for Phathom and for patients in need of innovative therapies to manage their erosive esophagitis. Since the introduction of PPIs 3 decades ago, there have been no significant innovations in the U.S. and European GERD market, but now vonoprazan clearly demonstrates the potential to change that. Based on today's stellar results, we expect to submit an NDA for vonoprazan for EE in the first half of 2022. And if approved, these patients will not have to wait any longer. Not only does vonoprazan have the potential to be the first-in-class therapy for EE, but based on the data we shared today, we believe it has the potential to provide a meaningful treatment option to patients suffering from erosive esophagitis who are dissatisfied with currently available medicines. Today's results further support the commercial potential for vonoprazan as a rapid, potent and durable acid suppression agent, a proud profile that has led to over $800 million in annual sales and market leadership in Japan. As I mentioned, we plan to submit an NDA with the FDA during the first half of 2022. If approved, we expect to launch vonoprazan's EE during the first half of 2023. In addition to meeting the primary imports to support our regulatory submission, the study results demonstrated that vonoprazan is superior to lansoprazole, a standard-of-care PPI, across a broad range of clinically meaningful endpoints, most importantly, the maintenance of healing erosions at 24 weeks. We believe these data will significantly differentiate vonoprazan in the marketplace. Our Chief Operating Officer, Dr. Azmi Nabulsi, will review the data from today's trial in more detail; and then our Chief Commercial Officer, Martin Gilligan, will highlight how today's results further position vonoprazan for commercial success. Before turning the call over to Azmi, I would like to thank all the patients, physicians and clinical sites who participated in the PHALCON-EE study. This study was started just months ahead of the global pandemic. And I'm happy to share with you that despite this, through the terrific commitment of everyone involved, we were able to complete the study on schedule. Azmi?

Thank you, Terrie. It is my pleasure to share with you the results of our PHALCON-EE study. As Terrie has just mentioned, the PHALCON study met all key objectives that we believe will lead to granting us the following indications: healing of all grades of EE and relief of heartburn and maintenance of healing of all grades of EE and relief of heartburn. More importantly, the study also met our top prespecified differentiating endpoints when comparing to lansoprazole. So we achieved superior healing rates in 2 weeks in those patients with moderate-to-severe EE. Also, we achieved superior maintenance of healing in all patients and in those patients with moderate-to-severe EE. I will start with a quick overview of the study design, which was essentially 2 studies in 1 with 2 complementary phases, a healing phase and the maintenance phase. In total, 1,024 patients were randomized into the healing phase of the study to either vonoprazan 20 milligram or lansoprazole 30 milligram. Patients that achieved complete healing, either at week 2 or week 8 of the study, were eligible to be rerandomized into a 6-month maintenance phase to either vonoprazan 20 milligram or 10 milligram or lansoprazole 15 milligram. I would like to point out that at entry into the study, patients were stratified by the Los Angeles Grading System, where Grades A and B were in one strata and the moderate-to-severe Grades C and D were in the second strata. 34% of patients enrolled in the study were in the Grades C and D strata, which is consistent with real-world experience. As noted, PHALCON-EE was a large trial that will have a wealth of data. And today, I'm very pleased to share the top line results with you. Overall, the results were fantastic. Let me explain. In total, we had 14 prespecified primary and secondary endpoints in both phases of this study. These endpoints included multiple objective endoscopy endpoints as well as heartburn symptom relief endpoints. And as you can see on this slide, all but one comparison in the healing phase, which is shown in the gray box, made statistical significance. I would like to point out that due to the prespecified hierarchal testing order, only 2 comparisons occurring after the nonsignificant result in healing phase could not be formally tested. However, as we show here as well as in subsequent slides, the nominal P values for those 2 remaining endpoints were highly significant. So you can better appreciate the magnitude of all the observed differences. Overall, we are very thrilled to see this level of consistency and differentiation across the entire study. I will now go over the healing data in detail. The healing rates observed in this study exceeded our expectations. On the left panel, you see week 8 data, which represents the primary endpoint for the healing phase. Not only that this difference that we see is highly significant for noninferiority, but in a prespecified exploratory test, it was also highly significant for superiority. We also see here that vonoprazan demonstrated faster, that is greater, healing rates at the first evaluation at week 2 in all patients and also in the moderate-to-severe patients. This was what we anticipated based on the prior Takeda studies. However, what we see in this study that we did not see in those prior studies, is that this difference between the 2 arms at week 2 is maintained and even slightly increased through the entire 8-week treatment period. These results not only attest to the overall speed of healing advantage that vonoprazan can provide, but also suggest that this early efficacy benefit of vonoprazan was extended over the total study treatment period. We believe these [ early advantages ] shown in our study will be very important to physicians and patients when they consider future treatment options. Additionally, based on this data and pending FDA review, vonoprazan pending FDA review, vonoprazan could be the only acid suppressant in EE treatment approved in the U.S. with a label that has a 2-week healing superiority versus the PPI. Now moving on to the maintenance data. Both vonoprazan 10 and 20 milligrams met all prespecified noninferiority and severity tests when compared to lansoprazole 15 milligrams. The primary endpoint is shown on the left panel in all EE patients. These results met noninferiority and also were significant for both doses when tested for superiority. On the right panel, you see that in moderate-to-severe patients, the differences between the vonoprazan arms and lansoprazole are even greater and also made statistical significance. Another way to appreciate the clinical importance of these results in the moderate-to-severe patients is in that, in essence, we are seeing nearly 50% relative reduction in the recurrence of lesion. And since the occurrence of lesion is a known key driver of patients switching between treatments or having to undergo repeated endoscopies, we believe that the vonoprazan superior maintenance outcomes observed here have meaningful clinical and economic implications. It is important to point out that such results have now been replicated in 3 Phase III studies and across geographies and all confirm the differentiation that vonoprazan brings in maintaining healing in EE patients. Pending FDA review, vonoprazan is positioned to be the only acid suppressant in EE treatment approved in the U.S. with a label that has a 24-week maintenance of healing superiority data versus the PPI. As for safety data in this study, overall, when considering all adverse events, PHALCON-EE safety data is consistent with a well-characterized vonoprazan safety profile. In the healing phase, adverse event rates were low with the most reported event being diarrhea. In the maintenance phase with the longer exposure, we observed more EEs across all 3 arms. The most important event during this phase was COVID-19, which is not surprising since the bulk of the study was conducted during the most difficult times of the pandemic in the Northern Hemisphere. The only serious adverse events in either phase of the study with more than one reported event per arm was COVID-19. 7 total events supporting patients taking vonoprazan, of which 2 patients died from their infection. 6 of those 7 serious adverse events occurred last winter between November 2020 and March 2021, when the highest infection rates were occurring in the U.S. and Europe. It is important to note that none of these events were attributed to vonoprazan by the investigators. Finally, I would like to point out that vonoprazan has now been studied in approximately 8,000 patients in clinical trials and has treated well over an estimated 25 million patients in the [ postmarketing segment ]. To sum up, these results are very exciting. All of the endoscopy-related endpoints, which were the primary focus of differentiation between vonoprazan and lansoprazole were met or exceeded our expectations. This, in addition to the noninferiority heartburn symptom related to relief endpoint objective which was met. Vonoprazan has now shown with replicated results across multiple Phase III studies in erosive esophagitis to have a favorable healing and superior maintenance of healing profile than a commonly used proton pump inhibitor. These results add to our already positive Phase III data shared earlier this year from H. pylori Phase III program. With such results, we are already beginning our preparation for our U.S. NDA submission in the first half of next year. Now I would like to turn it over to my colleague, Martin Gilligan, our Chief Commercial Officer, who will describe how the data I have shared with you will address patients' needs and the commercial potential for Phathom. Thank you.

Thank you, Azmi. As Terrie mentioned, we believe that vonoprazan has blockbuster potential, and we have a pathway for commercial success given the differentiating data just shared by Azmi, plus our previously released positive H. pylori data. The foundation of the opportunity begins with vonoprazan's planned entry into the massive PPI market and our first launch in GERD, potentially offering a novel mechanism for the 20 million people suffering from erosive esophagitis. One factor that makes this opportunity unique from other categories is the high level of dissatisfaction among both patients and physicians. A recent real-world study among gastroenterologists, primary care physicians and their EE patients evaluated treatment satisfaction and goals. The results document that unmet need in EE management is real and underrecognized. As you can see on the slide, less than 1/3 of physicians are satisfied with current treatment options, and 59% of patients believe better control can be achieved with current treatment. In addition to this study, dissatisfaction amongst patients and prescribers is supported in one of the largest U.S. claims databases. It identifies that approximately 50% of EE and NERD patients progress lines of therapy annually. In a category dominated by prescription PPIs, this means half of the patients are adding on OTCs to gain control, increasing their PPI dose or switching amongst PPIs. These 2 data sources tell us that perception and reality are the same. With no new mechanism introduced in 30 years, up to half of patients dissatisfied and no current alternatives to fill the gap, if approved, vonoprazan's differentiated value proposition could be a preferred treatment for a broad number of erosive esophagitis patients. So what solutions are customers seeking? First, patients are seeking new therapies that deliver sustained healing and the added convenience of dosing regardless of meals is seen as a differentiated advantage. For physicians, they identify improved rates of healing and maintenance as a top priority. And both our physician research and discussions with KOLs tell us the medical community welcomes a novel mechanism with the potential of working within weeks and has lasting effect. And payers also recognize that there have been no alternatives for patients other than frequent switching within the PPI class, a treatment with enhanced efficacy in all patients and those with moderate-to-severe EE, along with lower recurrence rates has the potential for less patient visits, fewer endoscopies and reduced health care utilization. Finally, what makes us feel strongly about vonoprazan's blockbuster potential is the enthusiasm we hear from prescribers when presented with clinical outcome scenarios compared to the PPI lansoprazole. When physicians see the profile, they agree vonoprazan is different from PPIs. 70% agree the mechanism is different. 62% agree the superiority and healing of EE among moderate-to-severe patients is a differentiator, especially given the difficult nature in treating this population. This is an important metric of willingness to prescribe given the healing rates in the PHALCON-EE trial. 58% agreed that the superiority in maintenance is different. And as I referenced on a previous slide, this is a significant unmet need for both patients and physicians. In meeting both maintenance superiority endpoints for all patients as well as those with moderate to severe EE disease, vonoprazan can potentially be established as a treatment of choice. This position response to the outcome scenarios, coupled with the PHALCON-EE results shared by Azmi, if approved, vonoprazan has an opportunity to resurrect the category suffering from an innovation drought and supports our belief in the blockbuster potential of vonoprazan. It is our intent to launch with a differentiated profile, putting us on a path of success similar to that achieved by vonoprazan in Japan. The data reviewed today compared to the PPI lansoprazole sets up the vonoprazan opportunity, a novel mechanism of action, faster healing in moderate-to-severe patients at week 2, superior maintenance of healing regardless of disease severity, relief and maintenance of heartburn and potential for a label differentiated from PPIs. Terrie?

Thanks, Martin. We are very pleased with the results of PHALCON-EE study that further add to the positive data and progress we've made advancing vonoprazan and building the company. Earlier this year, we announced positive Phase III data from vonoprazan's trial in H. pylori, and we recently submitted NDA for the treatment of H. pylori to FDA. In a few months, we expect to read out our Phase II trial evaluating nonerosive reflux disease or NERD, a treatment with the potential to address the needs of 45 million patients. Then, we anticipate heading into a period of successive commercial launches. First, with an expected H. pylori launch in the second half of 2022, followed by an EE launch in 2023. Thank you to everyone at Phathom, who continues to work tirelessly to advance our mission of building a leading GI-focused pharmaceutical company. I will now ask the operator to open the line for questions. Thank you.

[Operator Instructions] First question comes from the line of Joseph Stringer with Needham & Company.

Congrats on the fantastic data here. A couple from us. One is on sort of market access and -- yes, what are your expectations around any -- in your discussion with payers and any potential step edits or prior authorization and maybe comments initially on formularies? And then second question is, what's your expectation for the average treatment duration here in a real-world setting? What is the -- what do you anticipate the scripts looking like when it comes from the physician?

Thanks, Joey. So I heard 2 questions there. I'll direct the first one to Martin, which was our expectations around market access and payer. So Martin?

Yes. So I think the data that you're all seeing today fits the profile that we've been speaking to payers with thus far, so we're going to be more excited about both the data and what we've heard from them. As you can imagine, the opportunity with payers is a balance between price, access and reimbursement. So first, let me say that from an access standpoint, it's always been our assumption that patients would need to step through one generic PPI before getting access to vonoprazan. That is kind of our base assumption, but let's back up on that. The majority of patients, by the time they have their endoscopy, have already been treated with a PPIs, if not 1 or 2 PPIs. So when they have their endoscopy and then they're diagnosed with erosive esophagitis, we believe that the majority of patients will have already met that criteria. And keeping in mind that there's been no mechanisms in this market that have been around for 30 years, you can imagine that the majority of the market has already been on a PPI. So you balance that with the opportunity for the access, and then I'll just take head on the pricing, which is the other component of that. We've been using Dexilant as an analog to this point, and we've been looking outside the category. But inside, Dexilant has a WACC price of $10.28 per tablet. And we see that as a springboard, and we've been looking at that and speaking to payers, and we need to now back up and take a look at the additional value differentiation that the PHALCON's trial shows for us and see what is going to be the right mix of a price rebate that gives the broadest access possible. The other thing I'll just want to comment on the second part is the average treatment duration. Right now, the only thing we have to look at in terms of a reference source would be PPI utilization. And what we see, it's roughly about 160 days on an annual basis. And when you take a look at that over the -- we'll call it the lifetime of a patient, that goes to about 320 days plus over their lifetime.

Our next question comes from the line of Raffat with Evercore.

I wanted to ask perhaps 2 on clinical and 2 on commercial, if I may. So first on clinical, congrats on all the data, but if you could just compare for us the overall data set today versus the prior Japanese data and perhaps even expand on the recurrence rate seen in maintenance space in the U.S. versus the Japanese trial. That would be very helpful. And then also, Terrie, do you guys have an opinion on whether only 10 milligram would be filed for maintenance? Or would you also file the 20? And on the commercial side, I guess the obvious question is, will you look to position it specifically for Grade C, D or for everybody? And I ask because I'd be curious what the experience was in the Japanese population where there's so much use. Is it only in Grade C, D or is it broader? And then finally, do you think you need a commercial partner? Or would you go about it solo?

Thanks, Umer. So let me just pass out those questions. So I'll add to the question regarding 10 and 20. So we've just received this status. So we're still kind of digging in and really trying to understand the data. Clearly, both 10 and 20 milligrams hit all of the endpoints in terms of maintenance and superiority versus the standard of care. In other markets, they have had both 10 and 20 milligrams available, which provides flexibility for physicians and patients, but we haven't yet to determine which dose will take forward. We may potentially take forward both. In terms of a commercial partner, we believe that the base case for the U.S. is that we will go alone, the market dynamics that are at play, the prescriber base is highly concentrated. There's no competition. We clearly have a highly differentiated product, and we believe that we have the ability and the capability to go alone in the U.S. market, but we continue to assess commercialization options. So those are the 2 of the commercial questions. I'll ask Azmi to comment on the -- to compare the data from PHALCON to the Japanese trial.

Yes. Umer, this is Azmi. So we did not expect the trial data to be numerically superimposable over the Japanese data just because they're different times, different regions as well as the way the data treated statistically, not identical because we were -- we follow obviously FDA needs for data treatment. That said, the trial very much in line -- results very much in line with the Japanese data and conclusion and actually tops it in certain elements. So I'll be more specific. So if you look at the 2-week healing data, very much in line with the Japanese data in that sense, very strong on both superiority conclusions that we've shown in moderate-to-severe, but also we show the overall grade. And where we're surprised in a very positive way is that we actually separated more at the 8-week mark in the healing phase, more than the Japanese have shown in a very clinically meaningful way. Now on the maintenance, the -- numerically, we're not the same. The -- however, when you look at the conclusion and the statistical significance and the clinical significance is very much in line. Actually, in our data, it shows that recurrence rates in the vonoprazan patients is almost half that with the lansoprazole patients. The 20 was more comparable to 10 in our study versus Japan. But again, that does not take anything away from the conclusion. So if you look at our data, the beauty of it that there is significant consistency in the -- in what it's telling us. First, that lansoprazole starts separating from -- sorry, vonoprazan starts separating from lansoprazole from week 2 and that is consistent week 8 and actually more, and that goes all the way into week 24. From a clinical as well as statistical appreciation, the data is very straightforward.

Thanks, Azmi. And then I think the last question in there was regarding the positioning of vonoprazan, whether it would be just a -- the C, D patients or for all patients. Maybe I'll make a comment and then I'll ask Martin to comment on some of the market research that we've conducted. I mean clearly, this trial demonstrates that vonoprazan is superior to a PPI lansoprazole in maintenance -- well, in both the healing for the more severe patients. But then if you look at maintenance, which is really the primary clinical objective for physicians, it shows superiority, not only in the moderate-to-severe patients but also for all patients. So clearly, we'll be positioning vonoprazan for all patients. But I'll ask Martin to comment on some of the market research that we've conducted, where we've shown physicians the vonoprazan profile and their reaction to that.

Yes. So as Terrie mentioned, you can imagine, we've been doing a lot of work getting ready for today as well as for launch. And we've spoken to both opinion leaders, gastroenterologists, nurse practitioners, physician assistants and primary care physicians. So we've been pretty comprehensive. We brought them a profile that very much reflects what you've seen here today. And what we foresee coming from that is actually broad views. So we do not see it being positioned in the future towards C and D patients or more severe but actually the broader population. And what we hear back is that the C, D is really tied to the potency. So we really see that it fulfills the promise of rapid, potent and durable profile by having the C, D play out in terms of its potency. So there's no need to limit its use. And I'll just go back to one of -- the first question I was asked is in terms of patients. By the time they have their endoscopy and are actually diagnosed with erosive esophagitis, they've probably failed 1, if not 2 PPIs, and that's the patient journey. And so physicians tend to select their treatment not by patient type or even by phase, but they really take a look at what does the patient have and what's their -- what have they had in the past in terms of treatment, what is their disease today and then select one drug. So the differentiator for us, as Terrie mentioned, is really the superiority in healing and maintenance. And that maintenance is going to be key. And also the fact that it's the first study that's been done versus an active comparator. So when you put all that together for us, we really believe we have a differentiated profile. And today, we really -- we start accelerating our readiness.

Thanks, Martin. Umer, did we cover all of your questions?

Yes.

Our next question comes from the line of Gary Nachman with BMO Capital Markets.

Congrats on the data as well. So first, on the superiority claims, what will make it to the label? So for the ones that had only numerical superiority for all patients that had healing at week 2 and Grade C, D patients that have are healing by week 8 because of the hierarchical statistical plan, will those make it to the label as well or just the only other ones that you mentioned? And secondly, what -- yes. I'll just get them in upfront. What does the data tell us about how fast of an onset vonoprazan has with healing relative to a PPI? So just explain why you think you were unable to show superiority on the day 3 endpoint of resolution of heartburn. And then lastly, if -- this is for Martin, if H. pylori gets approved in the second half of next year and you launched that indication first, are you planning on hiring a full sales force for that launch? Or will you stagger it and then add to the sales force once you get the EE approval, I guess, in the early part of '23?

So the first question was regarding the label. So we will have -- within the label, the indication will be for healing of erosive esophagitis and heartburn, maintenance of healing and then the heartburn, and then we'll have the 3 superiority claims in the indication. And then the data you referenced will also appear in the clinical section of the label. So we will have that data incorporated into the label in totality. The second question, which was regarding the onset and the heartburn endpoint, that's -- I'll ask Azmi to address.

Yes. So this is really a unique and novel endpoint. And it's not correlated to -- symptoms typically not correlated very well to healing of lesions. So we do from a speed of activity or efficacy of vonoprazan, clearly, the 2-week data demonstrates that speed. And we've shown that in our studies as well in the Japan study. So there is consistency in that. Now on the symptom endpoint itself, that we show very good efficacy in relation to that symptom. It did not differentiate superiority-wise from lansoprazole. However, numerically, actually, we did better than lanso. But let me explain that endpoint to you so you can appreciate why I'm saying what I'm saying. It's actually, we start measuring it -- for that endpoint, we measure the relief of heartburn on day 1, 2 and 3. And those 4 patients who start having relief on day 1, 2 and 3 and sustain that relief for 7 following days, that's then considered a success. So again, the 2 arms did not separate. But because what we believe is probably happening that vonoprazan caught up, the -- oh, sorry, lansoprazole caught up because PPI starts working 3 to 5 days. So we're very happy that the data shows very strong activity here. Now we will be looking at [ day 1. And day 2 ], we'll be looking in severe patients to see if there is elements of separation that we can see, but we have not done that yet. Now this is an element of speed we were looking at, but that does not take away from the labeling expectations from a healing speed that we -- Terrie just mentioned.

Thanks, Azmi. And I think that the last question that Gary had was regarding the H. pylori field force. Martin?

Yes. Sure. The -- what's interesting, the similarity between both H. pylori and erosive esophagitis, Terrie mentioned earlier, a concentrated group of prescribers. We know that both diseases, about 10% of the physicians drive 65% of the scripts. So what our current thinking is right now is for H. pylori, we're really at a very focused launch. This is about -- we're envisioning about 60 representatives, give or take, plus or minus. And what we'll be doing is targeting high potential H. pylori prescribers, those physicians who see the biggest volume of patients. And what -- it does a couple of things. First, obviously, it will drive the H. pylori prescriptions, but also those same physicians are also future erosive esophagitis prescribers. Now we won't be speaking EE there at all, but it's going to get those physicians very much comfortable with the profile and to see the acid suppression firsthand. And then as we approach the EE launch, we'll go from that focus launch to the much bigger launch of erosive esophagitis. And again, a concentrated group of prescribers, which we believe are about 45,000, 50,000 physicians. So we'll grow -- we'll have one sales force in the end that will just expand for erosive esophagitis.

Thanks, Martin. Did that address your questions, Gary?

Yes. How much do you think you would expand the sales force to, total?

Yes. So we're -- as you can imagine, we're still working on numbers and it all comes down to mapping. But you're looking somewhere around the 300 range would be the total final number.

Our next question is from the line of David Steinberg with Jefferies.

A couple of questions. First, overall, just on the adverse events, just your general impressions. And then specifically, with regard to the abdominal pain, the 20 mg dose of vonoprazan had doubled the incidence of lansoprazole as well as higher levels of -- than the 10 mg. Do you see it as a dose ranging effect? Or are you dealing with such small samples that it doesn't really matter very much? And then secondly, with regard -- just following up on Gary's question on the sales force. With a fully loaded sales force of 300 people and then you add in administration leadership, et cetera, what do you see is roughly the fully loaded cost of this effort? And then how much do you think you'll spend on promotional costs in the first year to launch the drug? I know it's a ways away, but just a general sense of the cost structure.

David, this is Azmi. So we have -- we're in a very fortunate situation where we have a lot of safety data on vonoprazan, between 7,500 to 8,000 patients in Japan uses it in the -- in clinical trials as well over 25 million in the marketplace, so we have very good characterization of safety profile. Nothing we've seen in our clinical trial to tell us that we've seen something different or unexpected, now COVID aside. Now to your specific abdominal pain question, this is actually a common adverse events we see in GI trials. You see it also in all PPI labels. This is on the label, was kind of comparable frequency. So we're not seeing anything here that's unique to vonoprazan or this trial. Now the percentages may not match 100% between over time because the way -- this is actually a cluster of a number of events put under abdominal pain, so sometimes they treat differently over time. But there is -- I have no concern with the abdominal pain that we see. I don't see a trend. I know numerically, these are small numbers, so the percentages vary a little bit, but that does not indicate a signal at all in our assessment. And just to point out, too, that the abdominal pain -- none of these abdominal pain events were serious. None of them end up in discontinuation in clinical trial -- in the clinical trial as well. Actually, overall discontinuation in the study due to adverse events was about 1%, which is very low, historically relative to what we've seen in the past.

Thanks, Azmi. Martin, do you want to comment on the sales force?

Yes. So up to this point, we haven't given a broken down expense guidance. But I can probably answer it in a few other ways that will at least give you a little bit of insight. You can assume this is going to be in line with other successful launches, however, there's a really big difference here. One, I already mentioned that it's a concentrated group of prescribers. And really, there's no competition, where -- there's no branded product out there, there's no sales force. So when we go out, there's a couple of things: One, we can be really efficient in our targeting. We're not going to have competition for share of voice. As a matter of fact, we will be the share of voice. So there won't be someone following up with a counter detail or competing for the physician's mind space in terms of prescribing for erosive esophagitis. And the fact that we're nimble, we can probably do things quicker, faster and with some efficiency. So you're looking at a small physician group that we can target with the sales force that I mentioned. And then even from a consumer perspective, because there is not that competition, we can be really efficient in reaching the consumer and patient. We don't necessarily need to go out with a really huge television spend because we don't have that share of voice we're competing for. We can target them very specifically through digital channels and other means and be far more efficient with the dollars that we spend.

Our next question comes from the line of Yatin Suneja with Guggenheim Partners.

Congratulations on very good results. Just a few questions for me. First is a clarification question. This is a crude rate analysis, and this is what we should expect to be showing up on the label once approved?

Yes, this is what we had. It's mITT. And for EE, the FDA prefers mITT. So everything you've seen is what we expect to be on there.

Got it. And then with regard to the primary endpoint, you not only showed noninferiority but on the exploratory comparison, you did show superiority. So how -- so what exactly will show up on the label? And then the 3 superiority claim that goes into the clinical trial section?

Yes. So the -- everything that's on that slide with the 14 endpoints, that's -- everything that you saw there will be on the label. And now the ones below the gray box, the one we missed, that will be designated as nominal, but the -- but that will be reflected still on the label. So from a -- communication-wise, that will be -- we'll just have to -- able to communicate that. But from a superiority claim with a statistical significance, obviously, that will be designated to the more -- the greener boxes, the ones above the gray. Now on the primary endpoint meeting clinical and statistical significance, that's a prespecified exploratory test. So we will discuss with the FDA the ability to communicate that as well. Now what we believe, and we believe the FDA will be receptive to this, since all of these endpoints are interrelated and connected, none of them is out in a separate kind of assessment. Since all of them related and all of them have meaningful clinical implications, I think we will have a good -- I believe that they will be very understanding to the value of communicating that to prescribers.

Got it. And then maybe just a final question. So as you are thinking about positioning this drug for all patients, can you talk about how the drug did in LA Grade A and B? I mean, obviously, you gave us the C and D number and the overall number, but not the A and B data. So trying to get a sense of how much of the delta was driven by C and D and that the consistency of effect across all subgroups.

Yes. We have not run those specific statistical tests on the A and B population. We gave the priority to run on the C and D and the overall. So as you know, with C and D, we met -- overall, we met as we discussed. So the A and B, we have not run that separately. However, we do expect, as we've seen in the trials and that calculation -- rough calculation, that most of the benefit is driven by the C and D. However, there is separation in A and B. We just have not run the statistical test on those.

Our next question comes from the line of Prakhar Agrawal with JonesTrading.

Congratulations on the strong results. My first is what do you think are the read-throughs to the upcoming Phase II readout, particularly around efficacy that you showed on heartburn relief in PHALCON-EE? And secondly, any color on filing plans and timing for filing in Europe?

Yes. So I'll -- Prakhar, this is Azmi. So the -- none of -- specifically speaking to the Phase II on-demand NERD study, none of the endpoints we assessed here directly relates to this because in that study, we are addressing the treatment of an episode. Once an episode occurs and then we measure how long it will take to resolve that episode. So none of these assessments are direct in relation to that. However, on the NERD program as a whole, that is including the continuous treatment for a NERD -- in future NERD indication or pursued, we're very, very happy with the data we have because the 24% of our heartburn-free data that we have shows that vonoprazan has very good and healthy heartburn relief data that we -- that gives us very strong indication that it -- on the efficacy that we should expect from vonoprazan. So it gives us actually more confidence toward the program as a whole.

Thanks, Azmi. And then in terms of partnering in Europe, our base case is that we will partner vonoprazan in the European markets. So we've had confirmation from the EU that the Phase III program is sufficient to file, so we'd like to kind of work through a filing strategy with a partner.

[Operator Instructions] Our next question comes from Paul Choi with Goldman Sachs.

Congratulations on the data. Three for me, please. First, maybe for Azmi to start. Can you maybe just talk about how the clinical practitioners think about the different endpoints between the Japanese trial and this trial specifically with regard to, is there a preference for a data point or a labeling claim that indicates recurrence-free rates versus maintenance of complete healing rates? And then I have 2 more follow-ups.

So we have not yet shared the data that we have today with clinicians yet. So we will talk about that to them soon, actually coming very soon. However, just in general, the principal investigator on the study is extremely excited about it. Now the -- physicians don't treat currently by A, B, C and D because they look at what's the best treatment option for the patient overall. And actually, in many cases, the separation between CP and C is elusive. It's not very easy separation between those 2. So that's why for physicians, even if they have the grading, they look at the overall efficacy, and that's what we've been hearing from them overall. And our experience even during the trial, P and C is sometimes not easy to separate. And that's why we -- the -- overall, that's why we get priorities to the analysis, not only C and D but the overall, and physicians clearly value the overall results. And if you look at the data directly, you can see that -- when you look at vonoprazan and the overall percentages, when you look at vonoprazan performance in the C and D, it does not degrade. It almost remains constant [ although ] there are a couple of percentages, while lansoprazole drops down significantly from overall to C and D. And that -- these are the numbers, I think, where the physicians will pay a lot of attention to.

Okay. And then to follow up on an earlier question, just with regard to the maintenance period. I think you indicated that most of the benefit was driven by the C and D population. But with about the C and D patients constituting about 1/3 of each study arm, I think, my back of the envelope math and please correct me if I'm wrong, it indicates little difference between vonoprazan and lansoprazole here in terms of the A and B patients. So I guess as you think about the data here, do you expect potentially the regulators to think about limiting the maintenance claim to the C and D population?

No, we don't expect that at all. I mean the -- there will be some separation numerically, but we're not sure about the statistical aspects of that since we have not run it. But no, we have discussed with the FDA the overall data. I think the overall data results are clear. And then, well, C and D, obviously, that's clear. I -- we do not believe the FDA -- none of our discussion with the FDA, they pulled or emphasized the A and B population separately. Again, it's the same disease. It's a continuum of the same disease, we have significant consistency of data because you have to look at the totality of the data to U.S., Japan, China, 3 clinical -- Phase III clinical trial all saying the same thing, that vonoprazan is superior to lansoprazole on these variables. And I think the totality of the data plus our specific data here will give us a broad indication. I have confidence of that.

The other thing to highlight, Paul, is that the Japanese study didn't have prespecified endpoints of superiority. So they launched without those endpoints, whereas we will have superiority endpoints in our label, and they were able to generate revenue of over $800 million in Japan without those endpoints being specified. So we're really excited about the data.

Great. And last one for me is just in terms of before you do the filing, any other follow-up requirements or any other Is that need to be dotted or Ts that need to be crossed just before you complete your filing package?

No. We've had confirmation from both the U.S. and the EU that we have sufficient data to file with this trial and then the Japanese data, so there's nothing more that we need to do other than work on the application. So the team is really busy and that's already underway.

Oh, the FDA is just saying that, "You guys are giving us too many things."

Oh, yes, yes.

Okay. Great. Congratulations.

Thanks, Paul.

Thank you. And I'm showing no further questions...

Thank you. I think that was our -- oh, sorry.

I was saying, I'm showing no further questions at this time.

Thank you for joining us today.

Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.