Summary of Phathom Pharmaceuticals Conference Call Company Overview - **Company**: Phathom Pharmaceuticals - **Product**: VOQUEZNA, a next-generation treatment for gastroesophageal reflux disease (GERD) licensed from Takeda, which has shown significant success in Japan [2][4] Market Opportunity - **Target Market**: Focus on the 30%-40% of GERD patients who are on PPIs (Proton Pump Inhibitors) but still experience symptoms [3][6] - **Revenue Growth**: Achieved $55 million in revenue in 2024, with guidance for $170-$175 million in 2025 [3] - **Gastroenterology Focus**: Shifted strategy to concentrate on gastroenterology, which is expected to drive growth over the next few years [3][19] Competitive Landscape - **Market Positioning**: VOQUEZNA is not positioned as a direct competitor to PPIs; it is intended for patients who have failed prior PPI therapy [12][13] - **Prescription Opportunity**: There are approximately 20 million PPI prescriptions written annually by gastroenterologists, representing a significant market for VOQUEZNA [7][9] Sales Strategy - **Sales Force Reallocation**: 70% of sales efforts are now focused on gastroenterologists, up from 30% previously targeting primary care [19][21] - **Productivity Metrics**: Sales calls to gastroenterologists yield four times the productivity compared to primary care [21] Exclusivity and Regulatory Strategy - **Exclusivity Timeline**: VOQUEZNA has exclusivity through May 2032, with potential extensions into 2034 depending on ongoing trials and FDA reviews [28][29] - **GAINS Act Utilization**: The company successfully leveraged the GAINS Act to extend exclusivity for the product [27] Financial Projections - **Revenue Potential**: Aiming for $1 billion in revenue from the gastroenterology market, with a clear path to achieving this through increased market penetration [10][36] - **Growth Rate Stability**: The company has maintained a stable growth rate despite the transition in sales strategy [24][44] Coverage and Access - **Insurance Coverage**: VOQUEZNA is covered by over 80% of commercial lives, with varying requirements for prior PPI failures [17][46] - **Cash Pay Strategy**: The company is also focusing on cash pay prescriptions to ensure patient access, which can later convert to covered prescriptions [53][56] Patient Experience and Persistence - **Patient Retention**: Early data suggests strong persistence rates for patients switching to VOQUEZNA, driven by significant symptom relief [42][40] - **Long-term Outlook**: The company anticipates that positive patient experiences will lead to sustained prescription growth over time [57] Conclusion - Phathom Pharmaceuticals is strategically positioned to capture a significant share of the GERD treatment market through VOQUEZNA, with a focused sales strategy, strong revenue growth, and a clear path to exclusivity that supports long-term financial success [36][58]

Summary of Phathom Pharmaceuticals Conference Call Company Overview - **Company**: Phathom Pharmaceuticals - **Product**: VOQUEZNA, a first-in-class P-CAB approved for gastroesophageal reflux disease (GERD) treatment - **Market Focus**: Targeting patients who are refractory to traditional PPI therapies Key Points and Arguments Commercial Strategy and Market Focus - Phathom has pivoted its commercial strategy to focus more on the gastroenterology (GI) community, which is where the majority of patients experiencing significant GERD symptoms are referred [4][6] - The company aims to target the 20 million PPI prescriptions written within GI practices, with a current penetration of approximately 3% [10][11] - The goal is to increase penetration to 20%-30% within the GI community, potentially generating $1 billion in revenue from this segment alone [12] Financial Performance - Revenue growth has been significant, with $10 million increases from Q1 to Q2 and Q2 to Q3, reaching $49.5 million in Q3 [7][8] - Operating expenses were reduced from $98 million in Q1 to $49 million in Q3, achieving a 50% cut in cash operating expenses [8] - The company expects to reach positive operating profit by 2026, focusing on cash basis excluding stock compensation and interest expenses [9] Sales Force Realignment - The sales force has been realigned to focus 70% of their time on gastroenterologists, shifting from a previous 70/30 split favoring primary care [20][27] - Territories have been remapped to optimize call frequency on gastroenterologists, allowing for better engagement and education about VOQUEZNA [29] Adoption and Utilization - Adoption patterns among physicians are gradual, with initial focus on patients who have failed multiple PPI therapies [18][19] - The company tracks physician prescribing frequency to reinforce habits and increase script volume [45][46] - There is a strong emphasis on patient feedback to encourage physician adoption, as patients report significant improvements in their symptoms [32][66] Medicare and Patient Access - The introduction of Medicare coverage has positively impacted prescription volumes, with a notable increase in cash prescriptions due to the availability of the Blink patient assistance platform [48][56] - The company is tracking both covered and cash prescriptions separately, with cash prescriptions growing since the Medicare rollout [49][56] Future Opportunities - Phathom is initiating a clinical trial for eosinophilic esophagitis (EOE), which could lead to additional market opportunities and an extension of exclusivity for VOQUEZNA [67][70] - Successful trials could result in a six-month exclusivity extension, potentially delaying generic competition until late 2033 or 2034 [70] Additional Important Insights - The company has implemented financial discipline in its spending, which is expected to support future profitability [72] - The transformative effect of VOQUEZNA on patient quality of life is a key selling point that is expected to drive further adoption among physicians [33][66]

Summary of Phathom Pharmaceuticals FY Conference Call Company Overview - **Company**: Phathom Pharmaceuticals (NasdaqGS:PHAT) - **Product**: Voquezna, a drug for treating gastroesophageal reflux disease (GERD) Key Points Industry Context - The healthcare industry is focused on treating patients effectively, particularly in the area of gastroesophageal reflux disease (GERD) where there is a significant unmet need [2][3] - Approximately 30%-40% of patients on chronic PPI therapy still experience pain, indicating a large potential market for Voquezna [2] Product Performance - Voquezna is described as a transformative drug that significantly improves patient care by raising stomach pH more effectively than PPIs [3][4] - Positive patient testimonials and feedback from physicians highlight the drug's effectiveness [3] Strategic Shift - The company has pivoted its strategy to focus on gastroenterologists (GIs) rather than primary care physicians, as GIs are more likely to treat patients still experiencing significant symptoms [6][7] - The sales force has been realigned to increase efficiency in targeting GIs, with a goal of having over 70% of sales efforts directed towards this group [15][16] Financial Performance - In Q3, Phathom Pharmaceuticals reported a 23% growth in revenue and a 28% increase in prescriptions, reflecting the success of the new strategy [11] - Operating expenses were reduced from $89 million in Q2 to $49 million in Q3, indicating improved expense management [11][12] - The company expects to achieve operating profitability next year [11] Market Opportunity - The total PPI prescription market from gastroenterologists is estimated at 20 million annually, with Phathom currently capturing only 3% [17] - The company aims to increase its market share to 20-30%, representing a potential billion-dollar revenue opportunity [17][21] Competitive Landscape - The PPI market was previously valued at over $12 billion, with several products generating north of $3 billion before going generic [20] - Phathom's strategy is to capture a portion of this market, particularly focusing on the unmet needs of patients still in pain [20][21] Future Growth and Trials - The company is conducting a trial for eosinophilic esophagitis (EOE), which could extend exclusivity for Voquezna and open additional market opportunities [38][39] - Data from the EOE trial is expected in 2027, with potential for significant revenue from this indication [39] Financial Health - Phathom has a strong financial position with $135 million in cash and an available ATM facility [45] - The company is positioned to generate positive cash flow by 2027, allowing for potential in-licensing of new products [42][43] Conclusion - Phathom Pharmaceuticals is strategically positioned to capitalize on the unmet needs in the GERD market with Voquezna, supported by a focused sales strategy and strong financial management. The ongoing trials and potential for new product introductions further enhance the company's growth prospects [2][11][42]

Core Insights - Phathom Pharmaceuticals has initiated the Phase 2 pHalcon-EoE-201 clinical trial for VOQUEZNA (vonoprazan) as a treatment for eosinophilic esophagitis (EoE) in adults, marking a significant step in addressing unmet medical needs in gastrointestinal diseases [1][2][4] Company Overview - Phathom Pharmaceuticals is focused on developing and commercializing novel treatments for gastrointestinal diseases, having in-licensed the rights to vonoprazan for the U.S., Europe, and Canada [30] - VOQUEZNA is currently approved in the U.S. for multiple indications, including the treatment of Erosive Esophagitis and as part of combination therapies for H. pylori infection [29][30] Clinical Trial Details - The pHalcon-EoE-201 study is a two-part, randomized, double-blind, placebo-controlled trial involving approximately 80 adults with endoscopic-confirmed EoE and dysphagia, with the first part lasting 12 weeks [2][4] - Topline primary and secondary results from the trial are expected to be available in 2027 [3] Treatment Context - Eosinophilic esophagitis is a chronic immune condition characterized by eosinophil accumulation in the esophagus, leading to inflammation and swallowing difficulties [5] - Current treatment options for EoE are limited, with only two approved therapies available, highlighting the potential significance of VOQUEZNA's acid suppression profile as a non-steroidal treatment option [2][5]

Core Insights - Phathom Pharmaceuticals reported a quarterly loss of $0.15 per share, outperforming the Zacks Consensus Estimate of a loss of $0.30, and showing improvement from a loss of $1.32 per share a year ago, resulting in an earnings surprise of +50.00% [1] - The company achieved revenues of $49.5 million for the quarter ended September 2025, exceeding the Zacks Consensus Estimate by 0.64% and significantly up from $16.35 million in the same quarter last year [2] - Phathom Pharmaceuticals' stock has increased by approximately 66.6% since the beginning of the year, compared to a 17.2% gain in the S&P 500 [3] Earnings Outlook - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the next quarter is -$0.17 on revenues of $55.35 million, and for the current fiscal year, it is -$2.31 on revenues of $172.56 million [7] Industry Context - The Medical - Biomedical and Genetics industry, to which Phathom Pharmaceuticals belongs, is currently ranked in the top 38% of over 250 Zacks industries, indicating a favorable outlook compared to lower-ranked industries [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors or through tools like the Zacks Rank [5][6]

Financial Data and Key Metrics Changes - The company reported net revenue of $49.5 million for Q3 2025, representing a 25% growth quarter-over-quarter, exceeding expectations of approximately $47 million [9][24] - Cash operating expenses were $49.3 million, significantly lower than the target of below $60 million, marking a 43% decrease from Q2 2025 and a 50% decrease from Q1 2025 [10][27] - Cash usage for Q3 was less than $15 million, down 77% compared to Q2 [10][29] - The company narrowed its full-year revenue guidance to the top half of the previously communicated range, now expecting $170 to $175 million [24] Business Line Data and Key Metrics Changes - The company reported 790,000 filled prescriptions as of October 17, 2025, with Q3 seeing 221,000 filled prescriptions, of which 144,000 were covered prescriptions, growing approximately 23% quarter-over-quarter [11][12] - Cash prescriptions filled in Q3 totaled 77,000, reflecting a 38% growth quarter-over-quarter [12] Market Data and Key Metrics Changes - The company has shifted its focus to gastroenterology prescribers, with 70% of prescriptions coming from gastroenterologists [12][13] - The target universe for gastroenterology includes approximately 24,000 writers, with an opportunity to convert 20% to 30% of the 20 million PPI prescriptions written annually, potentially exceeding $1 billion in revenue [16][17] Company Strategy and Development Direction - The company is concentrating on a gastroenterology-focused strategy, aiming to deepen relationships with prescribers rather than broadening the base [12][13] - A salesforce realignment has been implemented to better target gastroenterology practices, with expectations of approximately 300 sales representatives by Q1 2026 [15][90] - The company is also initiating a Phase 2 clinical trial for eosinophilic esophagitis, which could enhance its market position if successful [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving operating profitability by 2026, supported by reduced cash operating expenses and growing revenues [29][75] - The company is monitoring prescription trends and believes that the current cash balance can support operations through the anticipated point of achieving profitability [29][30] Other Important Information - The company has updated its exclusivity status with the FDA, now having exclusivity through May 2032, which may extend to 2033 due to ANDA filing timelines [19][20] - There has been no disruption in the availability of the triple pack product, despite previous concerns [20] Q&A Session Summary Question: Prescription growth expectations for Q4 - Management acknowledged that while prescription growth has been strong, guidance for Q4 reflects a balance between ongoing momentum and the salesforce transition [33][35] Question: Impact of advertising cuts on future quarters - Management indicated that the cuts were not driving top-line growth and do not expect a negative impact from the paused advertising [36] Question: Focus on primary care physicians (PCPs) - The company continues to engage with high-performing PCPs while shifting the majority of salesforce time to gastroenterology [40][41] Question: Sales territory realignment and productivity - The territory realignment has been executed, and the company expects to see productivity reflected in the top line as new representatives are onboarded [89][90] Question: Factors for expanding back into primary care - The decision to return to primary care will depend on metrics such as NBRX per sales call, which is currently higher in gastroenterology [91][92]

THIRD QUARTER 2025 EARNINGS CONFERENCE CALL Question & Answer Steven Basta, President & Chief Executive Officer Sanjeev Narula, Chief Financial and Business Officer Robert Breedlove, Principal Accounting Officer OCTOBER 2025 NASDAQ: PHAT Today's Agenda Business Update Steven Basta, President & Chief Executive Officer Q3 2025 Financial Results Sanjeev Narula, Chief Financial and Business Officer Closing Remarks Steven Basta, President & Chief Executive Officer 2 Safe harbor This presentation contains forward ...

Product Performance - Vonoprazan generated peak net sales of approximately $850 million for Takeda and continues to achieve volume growth during its tenth year on the market since its approval in Japan in 2014 [112]. - As of October 17, 2025, over 790,000 prescriptions for VOQUEZNA products have been filled, written by more than 34,100 prescribers, with over 120 million U.S. commercial lives having access to VOQUEZNA tablets [114]. - The FDA approved VOQUEZNA for the treatment of Erosive GERD and H. pylori infection on November 1, 2023, with commercial launch initiated in Q4 2023 [113]. - Product revenue for the three months ended September 30, 2025, was $49.5 million, a significant increase of $33.2 million compared to $16.4 million in the same period of 2024 [134]. - For the nine months ended September 30, 2025, product revenue was $117.5 million, an increase of $91.9 million from $25.6 million in 2024 [139]. Financial Performance - The company incurred net losses of $200.1 million and $259.9 million for the nine months ended September 30, 2025 and 2024, respectively, with an accumulated deficit of $1.5 billion as of September 30, 2025 [119]. - Net loss for the three months ended September 30, 2025, was $30.0 million, an improvement of $55.6 million compared to a net loss of $85.6 million in 2024 [134]. - Total operating expenses for the nine months ended September 30, 2025, were $256.6 million, an increase of $17.2 million compared to $239.5 million in 2024 [139]. - Cash and cash equivalents as of September 30, 2025, were $135.2 million, indicating the company's liquidity position [145]. - Interest expense for the nine months ended September 30, 2025, was $51.7 million, a decrease of $1.7 million from $53.4 million in 2024 [143]. Restructuring and Expenses - Total restructuring charges incurred during the nine months ended September 30, 2025, were $9.2 million, with a workforce reduction of approximately 6% [121]. - Research and development expenses decreased to $7.0 million for the three months ended September 30, 2025, from $8.7 million in 2024, a reduction of $1.7 million [136]. - Selling, general and administrative expenses were $51.6 million for the three months ended September 30, 2025, down $24.5 million from $76.1 million in 2024 [137]. - Approximately $145.3 million was spent on ongoing research and development and selling, general and administrative activities for the nine months ended September 30, 2025 [174]. Funding and Capital Requirements - The company has raised approximately $543.3 million from the sale of 34,737,032 shares of common stock and 2,608,922 pre-funded warrants since inception through September 30, 2025 [118]. - The company expects to finance cash needs through equity offerings and additional debt financings, with potential collaborations and licenses [120]. - The company believes existing cash and anticipated product revenues are sufficient to fund operations for at least the next twelve months [169]. - Future capital requirements will depend on market acceptance, sales and marketing costs, and the timing of clinical trials and regulatory reviews [170]. - The company must maintain a minimum cash balance of 20% of the outstanding principal balance at all times, which may increase under certain performance conditions [159]. Debt and Financing Agreements - The company entered into a Fourth Amendment to Loan and Security Agreement, increasing the term loans from $200 million to $300 million, with additional tranches available subject to milestones [150]. - Tranche 2 of $50 million was partially funded, with $40 million on December 14, 2023, and the remaining $10 million on March 15, 2024 [150]. - The cash interest rate was reduced from 10.75% to a variable rate capped at 10.35%, with potential further reductions based on milestones [150]. - The company received $100 million from the Revenue Interest Financing Agreement and an additional $160 million upon FDA approval of vonoprazan for Erosive GERD in Q4 2023 [161]. - The company is obligated to pay a 10% royalty on net sales of products containing vonoprazan, with a cap payment option available after April 30, 2024 [162]. Cash Flow and Operating Activities - Net cash used in operating activities for the nine months ended September 30, 2025, was approximately $161.8 million, a decrease of $41.5 million compared to $203.3 million in 2024 [174]. - The net cash used in financing activities for the nine months ended September 30, 2025, was primarily related to employee tax obligations, contrasting with $156.7 million provided in 2024 from debt issuance and stock offerings [176]. - The net decrease in cash for the nine months ended September 30, 2025, was $162.1 million, compared to a decrease of $46.7 million in 2024, indicating a significant cash flow challenge [173]. Compliance and Risk Factors - As of September 30, 2025, the company was in compliance with all covenants under the Loan Agreement, but does not expect to meet the revenue threshold to draw the Sixth Tranche [156]. - The company is classified as a smaller reporting company, allowing it to take advantage of scaled disclosures [181]. - No off-balance sheet arrangements were reported during the periods presented [183]. - As of September 30, 2025, there have been no material changes in market risk factors compared to the previous fiscal year [184]. - The company continues to evaluate estimates and assumptions that affect reported amounts in its financial statements, which may differ from actual results [179].

Financial Performance - Total net revenues for Q3 2025 were $49.5 million, a 25% increase quarter over quarter from $39.6 million in Q2 2025[4] - Net loss for Q3 2025 was $30.0 million, significantly reduced from $85.6 million in Q3 2024[13] - Non-GAAP adjusted net loss for Q3 2025 was $11.2 million, compared to $67.9 million for the same period in 2024[13] - Product revenue for Q3 2025 reached $49.5 million, a significant increase from $16.4 million in Q3 2024, representing a growth of 202%[20] - Gross profit for the nine months ended September 30, 2025, was $102.6 million, compared to $21.4 million for the same period in 2024, indicating a growth of 378%[20] - The net loss for Q3 2025 was $30.0 million, compared to a net loss of $85.6 million in Q3 2024, reflecting an improvement of 65%[20] - Non-GAAP adjusted net loss for Q3 2025 was $11.2 million, compared to $67.9 million in Q3 2024, showing a reduction of 83%[22] - The company reported a net loss per share of $0.41 for Q3 2025, an improvement from $1.32 in Q3 2024[22] Expenses Management - Cash operating expenses decreased by 43% quarter over quarter, totaling $58.6 million in Q3 2025 compared to $94.4 million in Q2 2025[8] - Total operating expenses for Q3 2025 were $58.6 million, down from $84.8 million in Q3 2024, a reduction of 31%[20] - Selling, general and administrative expenses decreased to $51.6 million in Q3 2025 from $76.1 million in Q3 2024, a decline of 32%[20] - Research and development expenses for Q3 2025 were $7.0 million, slightly down from $8.7 million in Q3 2024[20] - The company incurred total other expenses of $14.7 million in Q3 2025, consistent with $14.8 million in Q3 2024[20] Cash Position - Cash and cash equivalents as of September 30, 2025, were $135.2 million, with net cash usage improving by 77% from approximately $63 million in Q2 2025[13] Product Development - VOQUEZNA prescriptions filled increased by 28% from Q2 2025, with approximately 221,000 prescriptions filled in Q3 2025[5] - The Phase 2 trial for VOQUEZNA in Eosinophilic Esophagitis was initiated in October 2025, with results expected in 2027[8] Future Outlook - The company updated its full-year 2025 revenue guidance to a range of $170 million to $175 million[13] - The company expects to achieve operating profitability in 2026 based on current operating plans and projected product revenues[13] - VOQUEZNA commercial coverage remains stable, with over 80% of U.S. commercial lives covered[5] Shareholder Information - Weighted-average shares outstanding increased to 73.4 million in Q3 2025 from 64.6 million in Q3 2024[22]

Core Insights - Phathom Pharmaceuticals reported strong financial results for Q3 2025, with a focus on its gastrointestinal (GI) treatment strategy and commercial performance of VOQUEZNA tablets [2][5][10] Financial Performance - Net revenues for Q3 2025 reached $49.5 million, a 25% increase from the previous quarter, and a significant rise from $16.4 million in Q3 2024 [10][18] - Cash operating expenses decreased by 43% quarter over quarter, reflecting disciplined cost management [5][10] - The company updated its full-year 2025 revenue guidance to a range of $170 million to $175 million, with expectations of achieving operating profitability in 2026 [5][10] VOQUEZNA Commercial Progress - Over 790,000 total VOQUEZNA prescriptions have been filled to date, with a 28% increase in filled prescriptions from Q2 2025 [5][6] - The company has initiated a Phase 2 trial for VOQUEZNA in Eosinophilic Esophagitis (EoE), with patient screening underway [6][7] - VOQUEZNA's commercial coverage remains stable, with over 80% of U.S. commercial lives covered [6] Leadership and Strategic Initiatives - Phathom strengthened its leadership team by appointing Sanjeev Narula as Chief Financial and Business Officer and Nancy Phelan as Senior Vice President, Marketing and Analytics [6] - The company has focused on enhancing engagement with gastroenterologists through targeted sales efforts and a national sales territory realignment [6] Research and Development - R&D expenses for Q3 2025 were $7.0 million, down from $8.7 million in Q3 2024, indicating a focus on cost efficiency [10][18] - Additional data from the Phase 3 pHalcon-NERD-301 trial showed VOQUEZNA improved nocturnal GERD symptoms, highlighting its clinical efficacy [6]