Phathom Pharmaceuticals (PHAT) Q3 2026 Earnings Call: Revenue Rises 71%, Guidance Reaffirmed

Key Takeaways

• Phathom Pharmaceuticals reported Q3 2026 net revenue of $84.7 million, up 71% year over year and 14% sequentially.
• Operating profit excluding stock-based compensation was $5.8 million, marking a second consecutive profitable quarter on that basis. Cash generated from operations was approximately $2.1 million.
• Around 380,000 VOQUEZNA prescriptions were filled during Q3, including 248,000 covered prescriptions and 132,000 cash-pay prescriptions. Covered volume increased 19% from Q2.
• The company reaffirmed full-year 2026 revenue guidance of $310 million to $325 million and expects gross-to-net discounts and cash operating expenses to finish near the lower ends of their respective ranges.
• Management is prioritizing its Access First strategy, including prior-authorization education, greater use of BlinkRx and a $0 co-pay offer for eligible commercially insured patients.
• Phathom expects Phase II PHALCON-EOE top-line data in Q4 2026. It is also defending VOQUEZNA’s FDA-recognized NCE exclusivity through May 3, 2032 against legal challenges.

Key Financial Data

Business and Operating Performance

VOQUEZNA remained the principal growth driver. More than 2 million prescriptions had been filled from launch through October 16, 2026. The second million prescriptions were reached in less than one year, compared with more than two years for the first million.

Of approximately 380,000 Q3 prescriptions, 248,000—or about 65%—were covered prescriptions. Covered volume rose 19% sequentially, while cash-pay volume increased 6% to approximately 132,000 prescriptions.

Management said commercial payer coverage exceeds 80% of covered lives. However, physician perceptions of affordability and the administrative burden associated with prior authorization remain barriers to broader prescribing.

Phathom’s Access First initiative focuses on helping physician offices document prior proton pump inhibitor use, understand plan-specific requirements and route more prescriptions through BlinkRx. Management said BlinkRx generates higher prior-authorization submission and approval rates, stronger prescription fill rates and better refill continuity than traditional retail channels.

The company introduced a $0 co-pay offer through BlinkRx for eligible commercially insured patients whose plans cover VOQUEZNA. The program is not available to government-insured patients and is subject to a Massachusetts exclusion. Management expects only a minor gross-to-net impact and believes incremental prescription contribution should offset the additional support cost.

Development Pipeline

Phathom expects Q4 2026 top-line data from the first 12-week blinded portion of its Phase II PHALCON-EOE trial in eosinophilic esophagitis. The primary endpoint measures histologic improvement through reduced eosinophil counts, while symptom improvement is a secondary endpoint.

Data from the additional 12-week open-label extension are expected toward the latter part of Q1 2027. Subject to the results, Phathom plans to discuss a potential Phase III program and pediatric participation with the FDA during 2027. Management said a successful program could support a six-month pediatric exclusivity extension if completed under an FDA written request.

The Phase III pHalcon NERD-302 study is enrolling patients to evaluate VOQUEZNA as an as-needed treatment for non-erosive GERD. Top-line data are expected in Q1 2028. Management characterized the program as a market-expansion opportunity rather than an intellectual-property extension strategy.

Management Guidance

Management expects operating profitability excluding stock-based compensation to continue in Q4 and for full-year 2026. The company maintained its target of achieving durable positive cash flow in 2027.

Phathom also said it does not expect a fundamental change in commercial infrastructure costs during 2027, although formal 2027 guidance has not yet been issued. Management expects revenue growth to outpace operating-expense growth and believes current cash plus anticipated operating cash generation will be sufficient to fund the business and meet financing covenants without another debt or equity raise.

Risks and Watch Points

• VOQUEZNA adoption depends on reducing prior-authorization friction and changing established physician and patient pharmacy habits. Management described the main obstacle to BlinkRx adoption as inertia rather than active resistance.
• A potential second potassium-competitive acid blocker could enter the U.S. market. Management expects another entrant could increase category awareness but declined to forecast pricing effects before seeing the competitor’s strategy.
• BDR Pharmaceuticals has challenged the FDA’s treatment of VOQUEZNA’s exclusivity under the GAIN Act. A second purported ANDA filer has indicated an intention to consolidate its case with BDR’s.
• The FDA previously recognized NCE exclusivity for VOQUEZNA tablets through May 3, 2032. Phathom has intervened in the litigation and said it intends to defend its position vigorously.
• The EoE development path, potential Phase III design and possible pediatric exclusivity extension depend on trial results and future FDA discussions.

Analyst Q&A Highlights

Management said the Access First effort is highly granular, requiring education at the physician-office level about documenting prior PPI use and meeting plan-specific prior-authorization requirements. The company expects benefits to build gradually because new prescriptions routed through BlinkRx can generate multiple refills over subsequent quarters.

Phathom declined to disclose the percentage of prescriptions currently routed through BlinkRx or specific comparative approval and fill rates. It said internal data show a growing share of new-to-brand prescriptions moving to BlinkRx following the access initiatives.

On future commercial investment, management said more than 70% of sales calls are directed to gastroenterologists and that GI will remain the core focus through 2027. A broader primary-care push is not expected in the near term.

Regarding business development, Phathom intends to build a broader gastroenterology portfolio around its existing commercial infrastructure. Potential targets could include commercial products or Phase II programs capable of launching before a potential 2033 loss of exclusivity, though management did not provide a transaction timeline.

Full Earnings Call Transcript

Complete Earnings Call Transcript

Management Remarks

Operator

Hello, and welcome to the Phathom Pharmaceuticals Third Quarter 2026 Earnings Results Call. [Operator Instructions] 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.

Eric Sciorilli

Thank you, operator. Hello, everyone, and thank you for joining us this morning to discuss Phathom's third quarter 2026 results. This morning's presentation will include remarks from Steve Basta, our President and CEO; and Sanjeev Narula, our Chief Financial and Business Officer.

Before we begin, let me remind you that we'll be making a number of forward-looking statements throughout today's presentation. These forward-looking statements involve risks and uncertainties, many of which are beyond Phathom's control. 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, today's 10-Q 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 obligations 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 Steve Basta, Phathom's President and CEO, to kick us off. Steve?

Steven Basta

Thank you, Eric, and thank you, everyone, for joining our call this morning. I'm pleased to share with you this morning the solid execution Phathom posted in the third quarter. Over the past 1.5 years, Phathom has significantly strengthened our financial position. In Q3, we delivered our second consecutive quarter of positive operating profit, excluding stock-based compensation, and once again generated positive cash flow. This quarter's net revenues grew by about 71% compared to Q3 last year and about 14% compared to last quarter.

We are focused on making it easier for physicians to prescribe VOQUEZNA and for patients with GERD to get it. The physicians we talk to are already convinced of the clinical value of VOQUEZNA. In recent market research, 97% of HCPs we surveyed rated VOQUEZNA's efficacy as favorable compared to other GERD treatment options. Our job now is to make it as easy as possible for providers to prescribe VOQUEZNA for GERD and for their patients to be able to access it affordably. Over the last few months, we've implemented our Access First initiatives, including multiple levers to help improve VOQUEZNA's access experience for physicians and patients. Our reps are making meaningful headway in GI offices every day, and we believe we are well positioned to close out the year with a strong fourth quarter.

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 Q3, we reported net revenues of $84.7 million, cash operating expenses of $60.5 million, positive operating profit of $5.8 million, both of those operating metrics, excluding stock-based compensation, and cash generated from operations of about $2.1 million. We are proud of our results this quarter and reiterate our full year revenue guidance of $310 million to $325 million heading into Q4.

A few quick notes on our commercial metrics for Q3. Since launch through October 16, over 2 million VOQUEZNA prescriptions have been filled. After achieving our first million prescriptions just over 2 years into our launch, we're thrilled to have reached our second million milestone less than a year later. Of the approximately 380,000 prescriptions that were filled in Q3, about 248,000 were covered prescriptions, representing approximately 65% of the total, while about 132,000 were filled as cash pay. Compared to last quarter, this represents 19% growth in covered volume and 6% growth in cash volume.

One note on data reporting. IQVIA recently adjusted their projection methodology for VOQUEZNA, which took effect for the data week ending October 9. These types of updates are commonplace by IQVIA as brands mature.

As we discussed on our last call, we believe the key hurdle to broader use of VOQUEZNA in the treatment of GERD is making it easier for physicians to prescribe it and for patients to obtain it. When physicians consider whether to prescribe VOQUEZNA for GERD, they consider patient need, the amount of effort required at their staff and their confidence level that the patient will actually receive the drug at an affordable cost. To address this, we've shifted our sales force to focus on Access First. Our reps are educating physicians and their office staff on PA requirements, the support available to our pharmacy partner, Blink, and multiple patient support programs. This is not a complex strategy, but it requires steady blocking and tackling, office by office and physician by physician, which we acknowledge takes time.

Increasing physician utilization of Blink is a key part of our Access First strategy. When prescriptions are sent to BlinkRx, we observe higher PA submission and approval rates, and ultimately, overall TRx fill rates are significantly higher as compared to retail pharmacies. We continue to educate HCPs that BlinkRx assists with navigating the prior authorization process with HCPs and patients, keeping patients informed throughout the prescription fulfillment process, automatically applying our patient support programs when available to the patient and helping patients access the lowest out-of-pocket cost available to them.

At the end of Q3, we rolled out a $0 co-pay offering as part of our Access First strategy available only through BlinkRx. We believe this new offering will encourage prescribers to use BlinkRx. Rather than focusing on the potential difference in out-of-pocket cost between VOQUEZNA and a generic PPI, physicians can now consider whether VOQUEZNA is an appropriate treatment option for their patients with GERD, knowing that eligible commercially insured patients may pay as little as $0 out of pocket. We are seeing positive early signals of the impact of these programs, and we will continue to work to improve perceptions of access and affordability for VOQUEZNA.

Turning briefly to our development programs. In EoE, we anticipate reporting top line data from our Phase II PHALCON-EOE trial in Q4. The primary endpoint in this trial focuses on histologic improvement or reduction of eosinophil counts after 12 weeks of treatment. Symptom improvements will also be evaluated as secondary endpoints. The additional 12-week open-label safety extension portion of this trial is ongoing.

Our Phase III pHalcon NERD-302 study of VOQUEZNA for as-needed treatment of non-erosive GERD is currently enrolling patients. In this trial, patients are treated daily for 4 weeks with VOQUEZNA, then are randomized to as-needed treatment with VOQUEZNA or with placebo for 6 months. The primary endpoint will evaluate VOQUEZNA's ability to provide complete relief by 2 hours that is sustained for 24 hours. We expect top line data in Q1 2028 and believe that if the trial is successful and we gain approval, we would unlock an incremental market opportunity for the many patients with GERD who don't want to continue taking PPIs on a daily basis.

Lastly, I'd like to briefly touch on recent developments related to VOQUEZNA's exclusivity period. On October 21, 2026, BDR Pharmaceuticals filed suit against the FDA, principally challenging the FDA's alleged refusal to receive their ANDA referencing Phathom's NDA for VOQUEZNA. Their suit alleges that the FDA improperly applied the GAIN Act to extend the NCE exclusivity for VOQUEZNA tablets. A second purported ANDA filer has subsequently filed a notice that it intends to move to consolidate its case with BDR's.

Recall that the FDA conducted a thorough review of this matter via Phathom's Citizen Petition and came to a decision in June of 2025. Their decision was that 10 years of NCE exclusivity as extended by the GAIN Act would apply to all products containing vonoprazan. The FDA thereby recognized NCE exclusivity for VOQUEZNA tablets through May 3, 2032, and updated the Orange Book accordingly. On October 23, 2026, the FDA opened a public docket for 30 days to solicit comment on legal and regulatory questions raised by BDR's suit, which they felt were new compared to our Citizen Petition request. We believe the FDA arrived at the correct decision following our Citizen Petition. Phathom was intervened in the litigation filed by BDR to continue to defend our statutory exclusivity. We intend to vigorously defend our position.

I will now turn the call over to Sanjeev to take you through our financial updates. Sanjeev?

Sanjeev Narula

Thank you, Steve, and hello, everyone. We're pleased with our Q3 financial results, and I believe we have a strong momentum heading into the end of 2026.

With that, let's go into our results. Revenues of Q3 were $84.7 million, reflecting year-on-year growth of $35.2 million or 71%. Sequentially, revenue grew $10.4 million or 14% over Q2 2026. Covered prescription trends were strong, growing about 19% sequentially. While we observed wholesale inventory at the end of Q3 to be slightly lower than the levels at the end of Q2, we still delivered solid revenue growth.

Our gross to net discount for Q3 came in slightly below our guidance. The results were driven by the channel mix for VOQUEZNA prescription and by decrease in accruals in connection with lower wholesale inventory levels. Both items had a modest positive impact on our gross to net for this quarter. Our gross profit margin landed at approximately 78% for Q3, below our guidance. The variance was due to the inclusion of certain one-time charges in our cost of revenues.

Third quarter cash operating expenses were about $60.5 million, an anticipated slight step-up compared to last quarter, which we outlined during our previous earnings call. On R&D side, the increase was primarily due to incremental clinical trial costs for our EoE and as-needed studies. On SG&A side, the increase was primarily tied to investments in our sales and marketing effort, including our Access First initiatives. I'm proud to report that for second consecutive quarter, we have delivered operating profitability and generated cash from operations, ending the quarter with $184.6 million in cash and cash equivalent. This quarter's performance clearly demonstrate a pivot in the evolution of the company.

Our capital structure is supported by a strong balance sheet. Beginning October 1, 2026, our cash hold requirement across our capital structure shifted to a covenant set forth by our revenue interest financing -- at that time, our cash holding requirement becomes about $119 million, right in line with approximately $120 million we anticipated and communicated during our Q4 2025 call. With $184.6 million in cash and cash equivalents on the balance sheet at the end of Q3, we have significant cash balance above this requirement, especially when considering recent positive cash generation trends.

Going forward, we expect this requirement to step down slightly over next year as revenue increases and we make additional royalty payments. Beginning October 1, 2027, the relative holding threshold increases, so we anticipate our covenant requirements will be modestly higher. Thereafter, we expect it to decline based on the terms of agreement, anticipated increases in revenue and future royalty payments. As we've communicated previously, we believe, based on current expectations that our current cash on hand and anticipated future cash generated from operations will be sufficient to invest in our business and satisfy all covenants at all times without the need for another debt or equity raise.

Now let me turn to our latest financial guidance to close 2026. We're maintaining revenue guidance of $310 million to $325 million for full year 2026. Given our year-to-date Q3 results, we expect our full year 2026 gross to net discount will come in towards the lower part of our 55% to 59% guidance range. We continue to anticipate our gross margin will be approximately 80%. As for spend, we maintain our cash operating expense guidance, excluding stock-based compensation of $235 million to $245 million, and we believe we are tracking towards the lower part of that range.

We believe our second consecutive quarter of operating profitability represents a sustainable pattern going into Q4, including in total for full year 2026 and beyond. As for cash flow, we maintain our guidance of reaching durable positive cash flow in 2027. Overall, Q3 was a solid quarter for Phathom, and we're proud of our results. I feel good about our financial strength and ability to execute going into Q4 and beyond. Thank you, as always, to our employees for their dedication in bringing VOQUEZNA to millions of GERD patients in need.

With this, I'll turn it back to the operator for your questions. Operator, please open the line for Q&A.

Operator

[Operator Instructions] Our first question or comment comes from the line of Kristen Kluska from Cantor Fitzgerald.

Question-and-Answer Session

Kristen Kluska

Congrats on a nice revenue quarter. Two questions for me. The first on some of the initiatives you've taken to help with access. Can you walk us through specifically other than the BlinkRx updates, how this is converting to better prescriptions and access? So essentially, like are you helping the providers to walk through what requirements they are going to need when they file for this? Or what are the specifics there?

And then my second question, I can appreciate you probably can't comment much on some of the ongoing lawsuits stuff related to the GAIN Act. But I was hoping you could just let us know what your expectation on next steps are.

Steven Basta

Kristen, thanks so much for both of the questions. Let me just take each of them. First, the initiatives for access. So the phenomenon of access, you can think of it in 2 different ways. One is sort of in reality -- actually 3 different contexts. One is, in reality, we've got pretty good coverage from payers with north of 80% of commercial lives covered. So the actual market access coverage for the product is solid and broad-based. The second way of thinking about it is how much work is it for the physicians to complete the process and how accurately is the PA process completed. And sort of the third part of it is affordability. So let's just sort of -- and perceptions around how much work it is and perceptions around affordability.

So if you think about each of those elements, our market access status with payers is solid. We've got really good commercial coverage. We are very pleased with where we stand in that process. From a prior authorization logistics perspective, our prior authorizations are actually really straightforward, but there is some education of physicians regarding, for example, capturing prior PPI use in the medical notes because PPIs might have been prescribed by a primary care physician might not be in the records for the GI physician who is prescribing the product. And so just capturing that in the medical notes makes the prior authorization simpler when the medical system in the office is submitting the prior authorization to get that covered. And while many plans have only one prior PPI that's required, some plans might require 2 prior PPIs.

So part of what we're doing is just educating physicians around, here's what you need to document in the medical notes when you're seeing the patient just to make sure that the PA goes through smoothly. Educating the medical staff around, here are the plans in your region who requires prior PPI, who might require 2 prior PPIs. And there's a very granular conversation happening on a physician-by-physician level, on a staff-by-staff, office-by-office level to work through what's needed for this prior authorization. It's a pretty simple document. It varies a little bit by plan, what are the local dominant plans in your area, and just making sure that we are building both -- the success rate because capturing prior PPI use in your medical notes improves the success rate, submitting the PAs with all of the prior PPIs documented increases the success rate, but also we're improving the perception and the confidence level that, that access is going to go through.

So a lot of what we've been doing is around educating around the process and educating around confidence that your patients can, in fact, get it. And a key part of that also is if you send it to Blink, they're going to help your staff with this process and introducing the $0 co-pay improves perceptions of affordability. So there's one, improved perceptions of how the access process flows, but also improved perceptions of affordability at the same cost as a PPI. So that's -- there are a number of initiatives that work both through Blink and through traditional retail pharmacies, but it's really around streamlining that process and the knowledge base at the office level.

And then in terms of the litigation, obviously, the next step that was announced in our press release on Monday is that FDA has opened up the open docket. Litigation goes through many steps, and we're going to sort of -- we're going to try to not predict exactly what happens in each step of this process because it's an inherently fluid process as you go through these kinds of litigation matters. I'm sure you've seen dozens of companies work through this process because this is commonplace in our industry. But we'll reserve trying to predict what the next steps are in this process.

Operator

Our next question or comment comes from the line of Martin Auster from Raymond James.

Martin Auster

I wanted to ask a little bit more about the Access First initiatives. I like seeing those a lot, Steve. I guess I was curious if you have -- if you could talk a little bit more about sort of the eligibility criteria for folks that are being kind of referred through BlinkRx. Who would be eligible for $0 co-pay? What sort of -- what proportion of scripts do you think that might sort of benefit in terms of patients out of pocket? And then do you anticipate sort of any longer-term rethinking around gross to net as a result of that benefit to patients?

Steven Basta

So Martin, thanks so much for the question. We're actually quite pleased with some of the initiatives that we've made on this Access First process. Although as we commented in the prepared remarks, this is a gradual education process that's going to happen, again, office by office as we build confidence on the part of physicians. One element of it is the $0 co-pay initiative. So we have had since launch a co-pay support program that has brought down co-pays to $25, whether that was through retail pharmacies or through Blink. That co-pay support program and the co-pay card is available to any patient who has commercial insurance coverage that covers the product, but they might have a high co-pay. We're going to bring down the co-pay in most cases to that $25 level historically at retail pharmacies or at Blink.

What we just did is we enhanced that program through Blink, so we'll bring down their co-pay all the way to 0. So if a patient has $100 co-pay on their insurance plan, we'll go ahead and buy that all the way down to 0. We cover that incremental cost. That will obviously have a little bit of incremental patient support cost. We already have a significant co-pay support program that's already built in. I don't have a projection on the exact magnitude of that in terms of the percentage on our GTN, but it will be a small impact. Sanjeev might have more insights on sort of the specific GTN impact.

But on the eligibility, who is eligible for this? This is for commercial insured patients. So we can't buy down the co-pay on government-insured patients. But for commercial insured patients where their plan covers VOQUEZNA, we're going to buy down their co-pay. And the advantage of offering this through Blink is to encourage physicians and patients to adopt the use of Blink where we have a much more robust communication with the physician and their staff to be able to support the prior authorization process. And it also changes the decision architecture for the physician that instead of being concerned that even at $25 a month, $25 sounds innocuous. But over the course of the year, that can be $300 for a patient. That's a lot more than they would pay for a generic PPI that often costs them nothing.

Now at $0 co-pay, it's a different decision. It costs your patient nothing either way, so which is the better drug for your patient. That changes that decision architecture. And so it's -- for commercial patients, there is one state exclusion, by the way, just in full disclosure. Massachusetts has restrictions that prohibit us from having the differential co-pay. So it's not available in Massachusetts patients, but everyone else.

Sanjeev, do you want to jump in on the GTN impact?

Sanjeev Narula

Yes. To your point -- so Martin, the GTN per se, obviously, there's going to be minor impact, but it's insignificant when you look at the overall gross to net. But I think the way to think about it is it's going to be net positive for the company, even if we are paying a little bit higher because of $0 co-pay, but the contribution from each incremental script is going to be still positive. So net-net, it's a very positive thing for us as more patients come in and able to utilize this.

Martin Auster

Excellent. I like the plan, Steve. There's nothing that feels better than walking to the pharmacy and getting a free prescription. So I think it's smart.

Operator

Our next question or comment comes from the line of Umer Raffat from Evercore.

Michael DiFiore

This is Mike DiFiore in for Umer. Just 2 for me. What are you seeing in 2027 payer negotiations that could change rebates or access, particularly if another PCAB launches? And second question is, does the inventory reserve explain most of the gross margin decline or are fulfillment costs putting recurring pressure on margins?

Steven Basta

Mike, thanks for the question. I'll take the first part and then the margin question, I'll pass off to Sanjeev. From a payer negotiations perspective, we're -- our commercial insurance coverage is pretty broad under established contracts in many cases. And so in some cases, we contract with plans, in other cases that are covering the product outside of our contract status. We've not seen any of that change in any meaningful way based upon the potential introduction of a second PCAB. So those negotiations aren't being altered at all by that dynamic. There are inevitably, here or there, specific plans that review processes over time, but nothing that constitutes a fundamental shift in any of our payer negotiations. Sanjeev?

Sanjeev Narula

And just one other point, Steve. Yes, I'll take the second question, Mike, just adding on to the first point. Mike, as you know, there are always puts and takes in gross to net. We're also a growing company with our revenue growing up. So we have opportunities in terms of some of the other elements of gross to net like distribution fees and all that. So as we become bigger, there's an opportunity to negotiate them down. So overall, we feel the trend that we have this year is comfortable, and we don't expect any change due to a new competitor launching on that.

On the point about your question on the gross margin, you're right. It's primarily the result of the one-time manufacturing charge that we took last quarter. And we don't see any incremental pressure on the cost for distribution or anything like that. It's all very stable in line with our volumes.

Operator

Our next question or comment comes from the line of Paul Choi from Goldman Sachs.

Kyuwon Choi

My first question is for Sanjeev. If we look at the guidance for the remainder of the year, it implies a revenue range of approximately $93 million to $108 million at the high end. Can you -- given your comments on gross to net expected to be at the lower end of the range, could you comment maybe on just what you think the drivers could be or factors that get you to the upper half of the implied guidance? And then I had a follow-up question.

Sanjeev Narula

Sure. Paul, you know I can't be more specific about my Q4 printer guidance than what we have been. I think you hit the nail. We feel good about the momentum. Paul, the way to think about it is based on where the trends are. You saw the covered script growing 19% sequentially. We feel good about it, and the coverage first initiative, as Steve pointed out, beginning to show results. Obviously, it's going to be -- it's going to take over a few quarters for us to see that. But I feel good about our overall momentum into -- that's why we're absolutely confident in reaffirming our guidance. And clearly, specifically, we'll announce the results when it comes in.

Gross to net, I think the way to kind of simply think about it is we've been fairly consistent in all 3 quarters, except maybe this quarter, we're a little bit lower, essentially because of the reason that I articulated on my call. As you have lower wholesale inventories, you actually end up with less pipeline accruals, which actually reduces your gross to net from that perspective. So if you normalize for that, our gross to net is exactly what we've been seeing in the first 2 quarters. Typically, in Q4, your gross to net tends to be a little bit higher, primarily because of MDP. As the patients reach catastrophic coverage of $2,100, you ended up paying higher rebates. So we expect that to happen. And that's why, overall, I was comfortable saying it's going to be towards the lower part of that 55% to 59% of the range.

Kyuwon Choi

Okay, great. And to follow-up on an earlier question, if another PCAB does enter the U.S. market next year, in terms of sort of historical pricing analogs, do you expect sort of the pricing changes over the near to intermediate term to largely mirror what happened with the PPIs in terms of market pricing changes? Just any comments there would be helpful.

Steven Basta

I'm not sure we're in a position to project what's going to happen in terms of pricing impacts in the market given that we haven't seen what the second entrant PCAB pricing might be or exactly what their strategies may be. So I'll pass on trying to forecast what changes might happen until we actually see them enter the market.

Operator

Our next question or comment comes from the line of Annabel Samimy from Stifel.

Annabel Samimy

So a few here. So first on the efforts for increasing BlinkRx. I guess, in terms of getting past these frictions, where do you see the most resistance from physicians for adoption of Blink? Because from an economic perspective, for the patient, it seems to be a very easy decision. So is it lack of awareness or is it patient willingness to use? I've heard from some KOLs that patients -- some of their patients are just very comfortable with their local pharmacies and they don't really want to use Blink. So is there a resistance from the physician side or patient side? And is there a level of, I guess, a percent level of prescriptions that you expect would go through Blink at a steady state? And could that in the future have an impact on gross to net or is it going to be primarily the support that you're providing through Blink as opposed to just Blink itself?

And then I guess last question, not specifically related to the litigation with FDA, but I was hoping you can be a little bit more explicit about the extent to which some of your new studies might, I guess, facilitate more IP aside from just the pediatric exclusivity. So maybe you can talk to us about that a little bit.

Steven Basta

Terrific. Annabel, thank you for each of the parts of that. So first, on sort of the efforts of getting prescriptions to Blink. I don't view that there is anything I would describe as resistance. It's more that there's inertia. And so what the inertia looks like is physicians just have a habit of prescribing to the patient's local pharmacy because that pharmacy is in the patient's records in the EHR. And they simply ask the patient, where do you want your prescriptions to go? And they might be prescribing 3 different drugs and they send them all to CVS down the street.

And so what we're trying to do is simply overcome that inertia and sort of the path of least resistance perception on the part of physician of, I just prescribe this where I prescribe everything else, and teach them that it's a meaningfully better experience for their patient and a better experience for their staff with a higher likelihood their patient is going to get the product if they prescribe to Blink. So it doesn't take long. It takes 10 seconds for the physician to find BlinkRx in their EHR and prescribe to BlinkRx. It might take 30 seconds for them to have a conversation with the patient about why they want to go through a mail order pharmacy because it improves their ability to get the product and it's going to improve their out-of-pocket cost.

That's candidly one of the advantages of offering the $0 co-pay program is that it makes that conversation from the physician to the patient an easier conversation of, I'm going to send this to a mail order pharmacy because that's the only place where you're going to be able to get this product at 0 cost if it gets covered by your insurance plan. So it changes the willingness of a patient to get a drug through a mail order pharmacy rather than just to get it through the retail pharmacy down the street.

So it's -- I don't think there's active resistance anywhere. Nobody is objecting and saying, oh, I really don't want to do that, but there is inertia. Patients are just comfortable getting their drug at their CVS or Walgreens down the street and physicians are just comfortable by default prescribing it to the local pharmacy. So we have to teach the physician why it's better for their patient, why it's better for their staff. And then they might have to take 30 seconds and have a conversation with their patient on why they're sending it to this other pharmacy.

Once that process happens, once they become familiar with that, that becomes just a second nature kind of conversation. So what we have to do is teach the physician to have that conversation the first 5 times, 10 times until it becomes second nature for them that they just have a really simple conversation with their patient. You know what, this is where I send this drug because they're going to be able to provide you really great support. And then it's really quick. So we're not actually seeing anything we would describe as resistance, but rather just inertia, and we're changing long-standing habits. And that takes multiple sales calls and it takes multiple rounds of reinforcement.

We haven't -- on your second point of, is there a level of prescriptions that would go through Blink, that's going to vary on a regional basis. There are some regions where Medicaid patients, for example, need to go through local pharmacies because of certain state rules. There are a number of different dynamics in different regions, but our intention is to drive more and more prescriptions to Blink and increase the rate. I think we'll have better visibility over the next several quarters as to what is the magnitude of scripts going to Blink and sort of percentage that's achievable at this point. Every incremental gain helps our access perception and helps our access reality. So it both makes the drug easier to get and improves physician perception on how easy the drug is to get, which will improve physician prescribing behavior. So both of those are factors that flow into the positive reinforcement.

On your last question regarding the extent to which some of our new studies could facilitate more IP, we are certainly looking at strategies that could potentially enhance the IP duration. The current studies other than the EoE study are not specifically intended for IP extension strategies. So the as-needed study is not about extending IP, but rather expanding the market. There is a significant population of patients who are regularly and frequently talking to their physician about whether or not there's an alternative for them other than daily PPI therapy because you can just go on the Internet and see the noise around chronic PPIs and whether or not you want to be on a PPI chronically. But if you've got chronic reflux symptoms and painful heartburn, you can't get off of your daily PPI, but you really want to get off the daily therapy. That's our opportunity with the as-needed use protocol.

With that dosing regimen approved in a couple of years, we would open up a very different conversation with physicians about solving the needs for patients who are coming and asking them specifically about whether or not there's an as-needed use option. So that's really a market expansion study not a life cycle extension study. The EoE study is specifically intended to support an extension of our exclusivity in addition to expanding the population of patients who received the product. So there's obviously an unmet need in EoE to understand the magnitude of clinical benefit that a patient can get from acid suppression therapies.

We're doing the first large well-controlled trial of acid suppression in EoE, and we'll have that data in the coming months. We'll have that data this quarter from the first 12-week blinded portion of that study. And if that study is successful in addition to leading to a Phase III study that could expand our use into that population of patients and serve the needs of those patients, it has the additional advantage of potentially opening up a conversation with FDA about a written request for the pediatric exclusivity extension.

And then I think you also had a question about GTN via Blink. Is that correct?

Sanjeev Narula

Yes, yes.

Annabel Samimy

Yes. Gross to net through Blink.

Sanjeev Narula

Yes. So Annabel, the way simple to think about it is, overall, it's actually a good thing and positive for the company and the patient. So once you -- as we pointed out earlier, the additional $25 actually is going to be more than offset by the incremental script contribution that we would get from each of the script that is going through Blink that earlier was not able to get fulfilled. So I don't expect any change in gross to net because of scripts going to Blink. The other thing, overall, as you think about it is Blink refill rates are much better. So overall, that's a good thing for, again, patients and the company as more scripts go towards Blink.

Operator

Our next question or comment comes from the line of Joseph Stringer from Needham & Company.

Joseph Stringer

Just a follow-up on the Phase II EoE trial. We understand part of its goal is to secure pediatric extension. But could you just level set us on what a successful Phase II signal looks like here this quarter? And if those results are favorable, what are the next steps and expected time lines towards securing that extension?

Steven Basta

So Joseph, thanks so much for the question. So just a quick synopsis of the EoE study design. There are 2 phases in this trial. There's a first 12-week blinded treatment phase. So patients were randomized to receive either VOQUEZNA or placebo on a blinded randomized basis. That data, we will be reporting this quarter. So the patients have completed that 12-week treatment period and all that data is being aggregated and analyzed, et cetera, over time. And so that will be coming in the next couple of months.

The patients are continuing on therapy for an additional 12 weeks. So we will have a full 24 weeks of treatment, but that continuation therapy is on an open-label basis. So that will be available towards the latter part of Q1. And at that point, when we've got that data aggregated, we'll be having a conversation with FDA about whether or not the data collectively provides a clear path to Phase III clinical trials. What would those Phase III trials look like? Is it appropriate to include pediatric patients in those trials? And would they like to issue a written request for us to include pediatric patients, which would then qualify us for the 6-month pediatric exclusivity extension if we complete that study in accordance with the agreement with FDA.

So those conversations with FDA would happen in 2027. Obviously, that's predicated upon what the results in the study are. The primary endpoint in the study is a reduction of eosinophil counts. So it's a primarily histological endpoint. We have secondary endpoints in the study to look at symptom improvement. Based upon the aggregate of that data, both the histologic improvement and the symptom improvement, we will assess what we believe the prospects are for doing a Phase III study and what a Phase III study would look like, and then we'll have the conversations next year with FDA. At the conclusion of those, if we're in agreement with FDA on the design of the Phase III study, we would start those Phase III trials. But those conversations will happen in '27, and it will take -- so we'll be reporting before the end of this year, the first 12-week data, then by the end of Q1, we'll have the second 12-week data, so the full 24-week treatment period, second 12 weeks being the open-label portion.

Operator

Our next question or comment comes from the line of Yatin Suneja from Guggenheim.

Yatin Suneja

I have 2 quick questions. So the first one is, as we think about sort of revenues ramping up or revenues increasing in 2027, how much of the incremental build-out will come on the commercial side? If you can maybe just comment on that?

And then the second one is just on maybe business development, right? You are now generating operating cash flow, which is positive. How do you think about bringing in asset? What type of asset, if at all? What does your affordability look like as you sort of build the company beyond VOQUEZNA?

Steven Basta

Yatin, thank you for both of those. I appreciate the opportunity to start giving some sense of how we're thinking about the organization. Obviously, we're not providing 2027 financial guidance today. So I don't want to get into exactly what the operating expenses will be. But we don't see a fundamental change in the commercial infrastructure cost for next year. Our sales force is well established. Our marketing programs are in place. We are doing the things that we need to do to influence physicians. So as we continue to grow revenue next year, we're expecting that the commercial organization and the commercial spend is largely in line with how we're approaching this year, although I would caveat that with we're not yet providing financial guidance for next year. So we'll do that when we get to the call in January or February.

And Sanjeev may have any additional insights in that process. I'll just quickly take the second part of that and then turn it over to Sanjeev for any other insights on that. The second part of your question on sort of how we're thinking about business development. As we've said in previous conversations and conversations with many of our investors, our intent is to build a significant GI business. So VOQUEZNA gives us an enormous foothold in the gastroenterology community because of the breadth of application of a new reflux treatment to patients that physicians are seeing every day. We're getting time and attention with gastroenterologists. We're building really solid relationships throughout our sales organization within the medical education teams, et cetera. We're building really deep relationships with gastroenterologists.

That's leverageable for future products, and we are starting the process of identifying what the future products would be that we would bring in. Our expectation is over the coming years, we bring in additional GI products. It could be commercial products. It could be Phase II clinical programs that then need to complete Phase III to launch, but the intention would be that they would be products that we could launch before 2033 potential exclusivity loss. So we've got the next 6 years to complete development and launch those programs to build out a significant GI portfolio. So you should expect in the coming years to see one or more deals to bring in additional assets. We're not projecting exactly when that happens. It depends on when we find the right assets and come to the right terms.

Sanjeev Narula

Yes. So Steve, just adding to, I think, both the questions, Yatin, I think the simple way to think about 2027 revenue, again, we're not giving the guidance, will grow faster than our operating expenses. And that's the leverage that will drive consistent on a full year basis, positive cash flow for the company. And you saw that last couple of quarters, we've kind of demonstrated that. Again, it's going to continue that journey with moderate growth in operating expenses, but clearly significant growth in the top line. So I think that's there.

That then start to create capacity. Your question also was in terms of business development capacity. So we will start to begin having some capacity. Obviously, we're mindful of our obligations. We start paying back some of our term debt in 2028. We've got to make sure the cash flow is there, and we will have plenty of cash flow for that and to meet our obligations in terms of liquidity hold on RIFA and start investing in business development. So that's the pivot point that 2027 will start to bring in terms of starting investing in business development.

Operator

Our next question or comment comes from the line of Dennis Ding from Jefferies.

Yuchen Ding

We have 2. Number one, so the competitor PCAB that may be approved in January. When I look at market comps, it feels like LDL lowering drugs might be a decent proxy since it's a heavily genericized market and branded drugs are positioned in late line. And when we look at the launch of LIPFENDRA, that was actually a slight tailwind to existing branded drugs. Do you agree with that? And are there other analogs you can point us to, to help us get confidence that a new player wouldn't slow your own growth?

And then question number two, for 2027, I see consensus at $495 million, which implies a pretty meaningful acceleration. You've also previously talked about reemphasizing the PCP call point at some point. So are you planning to do that in 2027? Or what do you need to see exactly to put additional resources into that call point?

Steven Basta

Dennis, thanks so much for the insights, and thank you for sharing with the group the context of the fact that a second entrant into a market does, in fact, expand physician awareness and expand the category. We fully expect that, that's going to be the case in the context of the acid reflux market and how one thinks about the introduction of a second PCAB. We certainly anticipate that having 2 sales forces calling on physicians, telling them that they should be thinking about using PCABs for their patients who are failing on prior PPI therapy will expand awareness. And it will just change the mindset that instead of sort of thinking about VOQUEZNA as a new product and what do I need to do as a new product, if there are multiple products in a category, suddenly physicians think about, well, when am I going to adopt a new category?

And then as they think about that, our product has 3 years of history, lots of established relationships, lots of established use with patients, their colleagues are comfortable with the product. So a physician beginning to use PCABs is going to be much more inclined to use the market-leading product and a physician who's already got experience with VOQUEZNA has already heard from their patients how much better they feel on this product is going to be much more inclined to use the product with which they already have comfort. So I think the scenario you're describing is exactly what we would expect to have happen, which is the second product entrant actually shifts much more awareness to the need to take patients to the new class of products and the market leader benefits along with the introduction of the second product. So I do think it's going to create a tailwind, and we're looking forward to the impact that, that's going to have.

On the second part of your question regarding the emphasis on PCPs, our priority is in GI and will remain in GI. We're not expecting that to change in 2027. So we're making 70% plus of our sales calls on gastroenterologists, and I would fully expect that, that remains the core focus through 2027. We are really thinking about how do we build the confidence in the gastroenterology community. They already have confidence in how effective this product is, and they already have confidence that this product can be life-changing for many of their patients. But how do we build the confidence that it's easy to get for their patients, their patients can get it affordably, that when their patients stay on it, they have a really good long-term experience. That repetition of those conversations with physicians through multiple calls deepens our relationships in GI, and that's the core focus through 2027. There will come a time when we expand into more primary care adoption, but I don't envision that in the near term. I think our core selling strategy remains for the foreseeable future.

Operator

Our next question or comment comes from the line of Matthew Caufield from H.C. Wainwright & Company.

Matthew Caufield

Regarding the discussed 65% total quarterly prescriptions being covered prescriptions, are those Rx completely covered or could those patients be paying the partial 25% -- or $25 rate with partial coverage? And has that split continued to improve between full coverage and the possible partial coverage? Thanks for any color there on the coverage discussion.

Steven Basta

So Matthew, I'll start the answer to this, and Sanjeev might have more insights and add more to this. And so when we think about coverage, there really are different categories of patients who will experience different out-of-pocket cost. And so the out-of-pocket cost for commercial insured patients whose commercial plans cover VOQUEZNA, that's where we can apply our co-pay programs, whether it's the co-pay program that buys down the cost for the patient to $25 in a retail pharmacy or the same co-pay program with the enhancement that we can buy down their cost to $0 if the prescription goes through Blink. That's really a co-pay buy-down that we can offer to a commercially insured patient -- and that's very typical in the industry. We see that with any number of companies through this process. That can make the cost of the patient effectively 0 in many cases and can broaden the awareness and the availability of this product for a significant number of commercially insured patients.

We're not able to offer the same sort of co-pay support programs for government insured patients. And so the co-pay experience for a government-insured patient may vary depending upon the Medicare Part D plan that they're on, whether or not it covers the product, whether or not they have a co-pay associated with that plan, whether or not they've hit the $2,100 cap, so they may have no co-pay associated with branded drug or any drug that's dispensed once they hit the cap. Also, low-income subsidy patients or Medicaid patients may have a very low out-of-pocket cost. So the co-pay experience just varies by patient depending upon patient categories.

Sanjeev, I don't know if there's more that you want to add to that process.

Sanjeev Narula

Yes. Just one quick comment. Overall, if you, Matthew, look at the impact, the gross to net, the impact is insignificant with the additional $25 that now we offer a $0 co-pay in terms of our gross to net because we are already covering a lot of the buydown as part of our gross to net. I think the important thing to note there is we believe we will get incremental scripts through the $0 co-pay, and that will more than offset any incremental cost that we believe will be significant in scheme of things from a gross to net perspective.

Operator

Our next question or comment comes from the line of Chase Knickerbocker from Craig-Hallum.

Chase Knickerbocker

Congrats on the progress here. Just a couple for me. I'm going to ask another one on the access side, but maybe just a little bit more metric focused. Would you be willing to disclose the percentage of scripts that's going through Blink now and kind of how that's trended so we can kind of track that given its importance? And then maybe just for investors to kind of better understand the benefits of going through Blink, can you just kind of talk to us about PA approval rates, fill rates and refill rates within Blink versus outside of Blink? Again, so investors can clearly understand the benefit there.

Steven Basta

Chase, thanks so much for the questions. We're going to pass on providing a litany of metrics that we then would end up evaluating every quarter to look at how each one works. Just that level of granularity, I don't think is going to be helpful, and I think it ends up creating lots of map and focus on each of the trends. But what you're describing is, in fact, what we are tracking internally. So what we are tracking internally is the percentage of scripts. And in fact, there are many ways of looking at scripts. You can look at TRx dispense and the TRx dispense rate coming out of Blink versus retail. We're looking at NRxs, we're looking at new-to-brand Rxs, and we're looking at the pattern of prescribing that's going to Blink. And we are seeing a shift associated with the introduction of our education initiatives that more of those new-to-brand scripts are landing at Blink than had been before our access initiatives were implemented. So it is clearly moving the needle in the right direction.

One thing for everybody to keep in mind, though, is as we move new-to-brand prescriptions to Blink, we will, over time, improve the PA submission rates. We will, over time, be improving the overall PA approval rates. We will be, over time, improving the overall dispense rate. But it has a very gradual impact because new-to-brand prescriptions turn into a meaningful TRx benefit as you get to multiple refills, which happen over the course of many months. So the incremental lift in new-to-brand scripts going to Blink that might occur within Q4 has a greater impact because if a script goes in November or goes in December to Blink, you get 1 fill in December, but you could get 3 fills in Q1 and multiple fills over the course of 2027. So that script has a greater impact on 2027.

So you have an incremental build over time as the new-to-brand scripts turn into multiple TRxs. So the benefit of sending a script to Blink in terms of the metrics are a better conversion of new-to-brand scripts that more of those scripts get filled, better submission rates of prior authorizations, better approval rates for prior authorizations and better refill rates that we're able to get over time because of the continuity of contact that Blink has on an ongoing basis with the office when the next prior authorization is required or the contact that they have with patients around the continuity of filling prescriptions. And if a patient drops off, they have the ability to contact the patient see if they want to fill the script some months later.

So there are a number of contact point advantages that occur through that channel that are better than the experience in a traditional retail pharmacy that over time will build toward more consistency of utilization and better depth of adoption. But we'll provide the guidance on what the general parameters are that improve. I'll pass on providing the specific numbers.

Chase Knickerbocker

Yes, understood. And maybe just a little bit bigger picture kind of along those lines. It seems like this kind of access conversation and improving that perception is probably your biggest lever to impact business momentum. Can you maybe just talk to kind of the other levers that you think you can pull from your seat that can further impact business momentum in addition to this access conversation?

Steven Basta

So I think the access conversation is the first conversation that we need to have because we were finding that was the significant hurdle to broader adoption within GI offices. What we found was that gastroenterologists were using this product for their most severe patients because they were sort of weighing effectively how much does my patient need better acid suppression versus is this going to be a hassle for my staff? Or is my patient reliably going to get it? Am I going to have some difficulty in the process getting it to my patient?

So as more and more as we were having conversations with physicians over the past 6, 12 months, the volume of those conversations that, that was the trade-off that they were thinking about made it clear that what we need to do is solve this perception of access. It's actually not solving in reality what access do we have. We've got really good market access coverage by payers, but the perception that it may be difficult or it may be expensive, we needed to get through that process. Once we've gotten through that process, we then open the door to conversations about broader populations of patients within their practice that could benefit from this product. So a patient who has been on PPI therapy and has significant nighttime heartburn becomes an appropriate patient for VOQUEZNA because we can improve their heartburn symptoms by improving their acid suppression therapy. It broadens the utilization and it broadens the conversation about what patients are appropriate.

Right now, we're focusing on the erosive esophagitis patients where they have the greatest need, but we expect to broaden to multiple populations of patients over time. Step 1 is build confidence you can get it for your patient, get it reliably and get it affordably. And then step 2 is going to be broaden their adoption in their severe patients. And then step 3 is broaden their adoption in multiple patient populations within their GERD patient base.

Operator

[Operator Instructions] Our next question or comment comes from the line of -- our next question or comment comes from the line of Dennis (sic) [ Daniel ] Clark from Leerink.

Daniel Christopher Clark

Steve, I wanted to ask, last quarter, you said that your top VOQUEZNA prescribers have the access process pretty dialed in. I would just be curious what percentage of prescribers you think are in a good place and what percentage could really benefit from the improved access programs that you're kind of laying out here this quarter?

And then secondarily, just in terms of phasing, when you're thinking improved access tailwinds might start to show up in revenue? Is this like an early part of 2027 story, second half of 2027 story? Any color there would be greatly appreciated.

Steven Basta

Dennis, thanks so much for the question. And it's hard to put a specific percentage on prescribers that have this dialed in, for example, as a sort of characterization versus needing to improve. Almost every physician is on a continuum of building their confidence. Some are at the end of the continuum or further along the path of the continuum where they have much greater confidence in the product. But even in those physicians, there is more that can be -- even with those physicians, there's more that can be done.

There is more education that we can do for them around the experience that their patients are having within Blink, the kind of reinforcement that we're able to offer, the support that we're able to offer to their staff that even a physician who already has confidence in VOQUEZNA, already is prescribing and a fair portion of their scripts may be going to Blink already, and they think that they're using this solidly, they may still want to be using it in their most severe patients. And they may be one of our top prescribers, but if we're capturing 5%, 7% of their acid suppression prescriptions, we can get to 20% or 30% of their acid suppression prescriptions by increasing their awareness further and increasing their understanding of the support tools.

And we are finding, for example, when we walk into offices showing them what the true patient out-of-pocket cost is, it surprises them. They think this drug is expensive because they heard from the one patient that they recently prescribed and sent the script to CVS or Walgreens and the patient called them up and said, doc, oh my God, this drug is really expensive, I can't afford it. Because that patient's insurance plan didn't cover the product or the patient didn't know that we had a co-pay support program, so they got hit with a high co-pay program. And so the physician might have a perception that the drug is really expensive for most of their patients.

When we actually show them what the average cost is for patients that are getting the drug and what the true affordability programs are, and this is also one of the advantages. I know I've mentioned it a couple of times on this call, but this is one of the advantages of the $0 co-pay program is that it sparks that conversation so that even our significant volume prescribers still may have elements of their perception that are holding them back from prescribing from a broader population of patients because they don't want to prescribe a drug that they think their patient can't afford. When they realize that it's $0 out-of-pocket for many of their patients, that changes the conversation. And we can deepen the adoption even among our top prescribers, and we can deepen the adoption all the way through the prescribing base.

So we view every prescriber as being on a continuum from just starting prescribing and just learning about how our access programs work and our support programs to having deep knowledge and confidence in those programs. And what we're trying to do is move them along that continuum to a greater level of confidence, a greater level of awareness and the aha! realization, I really can get this drug for my patients. It's just not that hard. It's easy to do, and they're going to get it affordably. When they get to that level of confidence, that's when we're going to start deepening their -- even there, once they get to that level of confidence, we then have to have the education about who are all the other patients in your practice that could benefit from better acid suppression. Dennis, thanks so much for the question.

Operator

Thank you. Ladies and gentlemen, this concludes the Q&A portion. Thank you for your presentation. This concludes the program. You may now disconnect. Everyone, have a wonderful day.