Phathom Pharmaceuticals(PHAT) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) Unaudited statements show rising product revenue but continued net losses and a widening stockholders' deficit Condensed Balance Sheets The balance sheet reflects a significant decrease in cash and a widening stockholders' deficit to $405.8 million Condensed Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $149,569 | $297,263 | | Total current assets | $218,875 | $360,134 | | Total assets | $250,220 | $378,318 | | Total current liabilities | $91,823 | $85,728 | | Total liabilities | $656,054 | $631,898 | | Total stockholders' deficit | $(405,834) | $(253,580) | Condensed Statements of Operations and Comprehensive Loss Q2 2025 saw a surge in product revenue to $39.5 million, though the net loss remained high at $75.8 million Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Product revenue, net | $39,503 | $7,324 | $68,023 | $9,236 | | Gross profit | $34,465 | $5,948 | $59,261 | $7,434 | | Total operating expenses | $94,389 | $83,248 | $198,047 | $154,688 | | Loss from operations | $(59,924) | $(77,300) | $(138,786) | $(147,254) | | Net loss | $(75,810) | $(91,446) | $(170,126) | $(174,298) | | Net loss per share | $(1.05) | $(1.56) | $(2.36) | $(2.98) | Condensed Statements of Cash Flows Net cash used in operations increased to $147.7 million for the first six months of 2025 Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(147,659) | $(139,741) | | Net cash used in investing activities | $(115) | $(86) | | Net cash provided by financing activities | $80 | $34,671 | | Net decrease in cash | $(147,694) | $(105,156) | Notes to Condensed Unaudited Financial Statements Notes detail the VOQUEZNA launch, debt obligations, and a May 2025 restructuring plan - The FDA approved VOQUEZNA for Erosive GERD and H. pylori in late 2023, with commercial launch in Q4 2023, and an additional approval for Non-Erosive GERD was granted on July 17, 2024[22] - Management believes it has sufficient working capital to fund operations through at least the next twelve months from the issuance date of the financial statements[25] - For the first six months of 2025, three customers accounted for 72% of product sales and represented 82% of the accounts receivable balance as of June 30, 2025[38] - In May 2025, the company implemented a restructuring plan, reducing its workforce by 28 employees (approx. 6%) and incurring total charges of $8.0 million[104] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management highlights the strong VOQUEZNA launch, rising revenues, and sufficient liquidity for the next year Overview The company's focus is on commercializing VOQUEZNA, which shows strong prescription momentum post-launch - As of July 25, 2025, over 580,000 prescriptions for VOQUEZNA products have been filled by more than 29,300 prescribers since launch[110] - On July 17, 2024, the FDA approved VOQUEZNA 10 mg tablets for the relief of heartburn associated with Non-Erosive GERD[109] - The company has been informed of a potential supply disruption for clarithromycin, a component of VOQUEZNA TRIPLE PAK, which accounts for approximately 1% of total revenue[113] Results of Operations Q2 2025 revenue surged to $39.5 million, with increased SG&A expenses driven by launch and restructuring costs Comparison of Three Months Ended June 30 (in thousands) | Account | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Product revenue, net | $39,503 | $7,324 | $32,179 | | Research and development | $9,076 | $7,376 | $1,700 | | Selling, general and administrative | $85,313 | $75,872 | $9,441 | | Net loss | $(75,810) | $(91,446) | $15,636 | Comparison of Six Months Ended June 30 (in thousands) | Account | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Product revenue, net | $68,023 | $9,236 | $58,787 | | Research and development | $18,260 | $16,806 | $1,454 | | Selling, general and administrative | $179,787 | $137,882 | $41,905 | | Net loss | $(170,126) | $(174,298) | $4,172 | - The $41.9 million increase in SG&A for the first six months of 2025 was primarily due to a $32.5 million increase in advertising and promotional expenses for the VOQUEZNA launch and an $8.9 million increase in personnel-related expenses from restructuring[137] Liquidity and Capital Resources The company holds $149.6 million in cash and believes it has sufficient capital to fund operations for one year - The company had cash and cash equivalents of $149.6 million as of June 30, 2025[139] - The company has a term loan agreement with Hercules, which was amended to increase the principal amount up to $300 million, but does not expect to meet the revenue threshold to draw the final $50 million tranche[144][150] - The Revenue Interest Financing Agreement entitles investors to a 10% royalty on net sales of vonoprazan products until they receive aggregate payments equal to 200% of their investment[156] Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(147,659) | $(139,741) | | Net cash used in investing activities | $(115) | $(86) | | Net cash provided by financing activities | $80 | $34,671 | Item 3. Quantitative and Qualitative Disclosures About Market Risk Market risk exposures remain materially unchanged from the 2024 Form 10-K disclosures - There have been no material changes to the company's market risk since the disclosures in the 2024 Form 10-K[176] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025 - Management evaluated disclosure controls and procedures and concluded they were effective as of June 30, 2025[178] - No material changes in internal control over financial reporting occurred during the second quarter of 2025[179] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company reports no current involvement in any material legal proceedings - The company is not currently a party to any material legal proceedings[181] Item 1A. Risk Factors Risk factors remain materially unchanged from those disclosed in the 2024 Annual Report - No material changes have occurred to the risk factors disclosed in the 2024 Form 10-K[182] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or issuer repurchases occurred during the period - There were no unregistered sales of equity securities or issuer repurchases of equity securities in the reported period[183][184] Item 6. Exhibits This section lists all exhibits filed, including new executive separation and employment agreements - The report includes several exhibits, such as separation agreements with Azmi Nabulsi and Molly Henderson, and an employment letter with Anne Marie Cook[190]