Summary of Phathom Pharmaceuticals (PHAT) FY Conference Call - June 11, 2025 Company Overview - **Company**: Phathom Pharmaceuticals - **Product**: AQUESNA, a treatment for acid-related disorders, particularly gastroesophageal reflux disease (GERD) [2][10] Key Points Recent Developments - **Leadership Change**: Steve Fosta joined as CEO a few months prior, focusing on accelerating revenue and product uptake [2][3] - **FDA Approval**: The FDA granted a citizen's petition for exclusivity, allowing Phathom to have exclusivity through 2032, which is a significant development for the company [4][9] Commercial Strategy - **Product Uptake**: AQUESNA is seeing good uptake, with a focus on increasing penetration within the gastroenterology community [2][10] - **Refill Rates**: Patients using AQUESNA report significant improvement, leading to solid refill rates and positive feedback to prescribing physicians [10][11] - **Targeting Gastroenterologists**: The company is shifting focus from primary care to gastroenterologists, as they are expected to adopt the product more quickly due to a higher need among their patients [12][14] Market Coverage - **Insurance Coverage**: Over 80% of commercial lives have coverage for AQUESNA, primarily requiring prior use of PPIs [16][17] - **Medicare and Medicaid**: Coverage is limited, with most Medicare claims being denied; however, a cash pay option is available for patients at $50 per month [19][20] Sales and Marketing - **Sales Strategy**: The company is adjusting its sales strategy to focus more on gastroenterologists, which is expected to yield better results over time [30][32] - **Direct-to-Consumer (DTC) Campaign**: Initial DTC efforts have not shown significant returns yet, but the company believes that deeper adoption within the specialty will eventually lead to increased receptivity to DTC campaigns [33][41] Financial Outlook - **Profitability Timeline**: The company aims to achieve profitability by 2026, with a clear expense target of below $55 million by Q4 2025 [35][75] - **Capital Needs**: Phathom does not anticipate needing to raise additional funds, focusing on reducing operating expenses while ramping up revenue [71][75] Future Opportunities - **Life Cycle Management**: The company is considering expanding indications for AQUESNA, including eosinophilic esophagitis (EOE), and is evaluating the potential for pediatric studies [55][60] - **Pipeline Expansion**: There is interest in exploring new indications, combination products, and in-licensing opportunities to build a robust GI franchise [64][66] Market Trends - **Seasonality**: The company expects typical Q1 softness in sales due to new health plans and deductibles, but anticipates a return to growth in Q2 [22][24] Conclusion - Phathom Pharmaceuticals is strategically positioning itself to enhance the uptake of AQUESNA through targeted marketing and sales efforts, while navigating regulatory landscapes and focusing on profitability in the coming years. The company is optimistic about its growth trajectory and potential market expansion opportunities.

Financial Data and Key Metrics Changes - The company reported net revenues of $28.5 million for Q1 2025, which is a slight decrease on a sequential quarterly basis despite an increase in prescriptions filled [30][21] - The gross to net discount rate improved to 53%, with expectations to range between 55% and 65% for the remainder of 2025 [31][76] - Non-GAAP R&D expenses were $7.9 million, a 4% decrease year-over-year, while non-GAAP SG&A expenses were $90.3 million, a 57% increase compared to the same period in 2024 [32] Business Line Data and Key Metrics Changes - Approximately 127,000 filled Vaquesna prescriptions were recorded in Q1 2025, representing an 8% growth over Q4 2024 [25] - 75% of prescriptions filled in Q1 were from repeat patients, indicating strong retention [26] - The company has seen a cumulative total of over 390,000 prescriptions filled since launch, with a 30% growth over the last eight weeks [24] Market Data and Key Metrics Changes - The company maintains commercial coverage for over 120 million lives, representing more than 80% of the total commercially insured market [28] - The proportion of prescriptions flowing through retail pharmacies changed to approximately 70% from 75% in the previous quarter, indicating a shift towards cash pay options [27] Company Strategy and Development Direction - The company aims to achieve profitable operations by 2026 while managing costs and focusing on growing Vaquesna sales [10][12] - A shift in strategy includes implementing cost-saving initiatives to reduce operating expenses to less than $55 million per quarter by Q4 2025 [12] - The company is prioritizing field sales activities over direct-to-consumer (DTC) advertising due to lower ROI from the latter [50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the regulatory exclusivity of Vaquesna, with the FDA's decision on the citizens petition expected in early June [19][88] - The CEO emphasized the importance of maintaining a disciplined approach to spending and the need to adapt to current capital market conditions [10][36] - Management remains optimistic about the product's market potential and the positive feedback from both patients and physicians [23][97] Other Important Information - The company is experiencing a potential future disruption in the supply of Baquesna triple packs but does not anticipate a material impact on revenues [22] - A reduction in force is planned, affecting approximately 6% of total staffing, to streamline operations [14] Q&A Session Summary Question: Can you provide more color on the timing of the C-suite changes and their impact on the citizens petition process? - Management confirmed that there will be no interruption in the citizens petition activities, and the key team members will continue to engage with the FDA [40][41] Question: Are you speaking to the same individuals at the FDA as before? - There is some continuity in the FDA staff, but senior policy decisions have changed with the new administration [52] Question: How should investors think about the potential impact on overall script growth from the discontinuation of DTC TV spend? - Management indicated that the field sales activities are the primary drivers of growth, and the discontinuation of DTC spending is not expected to adversely impact revenue ramp [58][60] Question: What is the level of conviction regarding the citizens petition response timing? - Management expressed cautious optimism but acknowledged the potential for delays due to FDA turnover [88] Question: Are there still plans to continue pediatric studies? - The EOE study has been deferred pending the citizens petition decision, but other paths for pediatric extension are being evaluated [90]