Phathom Pharmaceuticals, Inc. Q4 FY2024 earnings call

Key Achievements in 2024 - Secured broad commercial access, launched full-scale consumer campaign, and received FDA approval for non-Erosive GERD. - Over 300,000 VOQUEZNA prescriptions filled by patients from launch through February 21. - Number of physicians who have written VOQUEZNA prescriptions increased to over 20,000 as of February 14. ### Commercial Updates - VOQUEZNA prescriptions surpassed 300,000, with Q4 fills at ~118,000, a 70% increase from Q3. - Refill rate for Q4 scripts was about 70%, with preliminary duration of therapy analysis showing an average of 3.5 prescriptions filled over six months for early cohorts. - Primary care awareness of VOQUEZNA almost doubled since the launch of non-Erosive GERD, and cumulative TCP writers surpassed GI writers. ### Development Initiatives - Finalized Phase 2 design for Eosinophilic Esophagitis (EoE) study, including ~150 subjects. - Working on Orally Disintegrating Tablet (ODT) formulation of VOQUEZNA, which could be more desirable for patients with difficulty swallowing. - Exploring real-world data on GERD symptoms among GLP-1 users and acid suppressant utilization. - Submitted a Citizen Petition to the FDA requesting a 10-year period of new chemical entity exclusivity for VOQUEZNA products.

For the fourth quarter of 2024, Phathom reported net revenues of $29.7 million, representing an 81% sequential quarter-over-quarter increase. The full year 2024 net revenues were $55.3 million. In the fourth quarter, gross profit was $25.8 million with a gross margin of 87%, an increase of 155 basis points over the third quarter. For the full year, gross profit was $47.3 million with a gross margin of 86%. VOQUEZNA is the key product segment, with strong demand driven by the approval of Non-Erosive GERD.

Revenue Guidance - Anticipates softened first quarter 2025 revenues due to industry dynamics like holidays, deductible resets, etc. - Full year 2025 revenue guidance is approximately $165 million. ### Gross to Net Discount - Gross to net discount rate for the last three quarters of 2024 approximated 57%, and guidance for 2025 is between 55% and 65%. ### Expense Projections - Estimates non-GAAP operating expenses for 2025 to range between $360 million and $390 million, with R&D accounting for about 10% and SG&A 90% of the spend.

Risks - Forward-looking statements involve risks and uncertainties beyond Phathom's control, which could materially affect results. - If the Citizen Petition regarding new chemical entity exclusivity does not go as anticipated, Phathom may pursue litigation as it believes it has a strong legal position.

Q: Could you help us understand the timelines around the citizen petition and what options there are if the decision doesn't go in your favor?

A: We submitted the Citizen Petition in December. The FDA has 180 days to respond. If it doesn't go as anticipated, we will evaluate next steps, likely pursuing litigation as we believe we have a strong legal position.

Q: Are you expecting growth in Q1 relative to Q4?

A: Industry dynamics point to a softened Q1, so it's safe to assume Q1 will be softer than Q4.

Q: When do you think you'll have enough real-world data to make a go/no-go decision on the Phase 3 on demand trial?

A: By midyear, we'll have enough information to make a decision and determine whether we proceed with the study.

Q: Is the DTC campaign driving the significant increase in prescribing physicians, and how is this balanced with cash and runway to profitability?

A: The DTC campaign is a driver, with a 55% increase in physicians receiving requests. We plan to pause midyear to evaluate effectiveness and balance investment with profitability.

Q: Can you speak to early metrics on refill trends and usage for NERD?

A: Refill rates are in line with expectations, tracking to PPI persistency. The 10-milligram and 20-milligram are seeing consistent refills, with 10-milligram growing faster due to non-Erosive GERD.

Q: What's the importance of BlinkRx?

A: BlinkRx is important for supporting patients, with physicians adopting it widely, and patients using it are more likely to have increased refills.

Q: Can you clarify the sequencing of the ODT formulation development and IP strategy?

A: The ODT development and patenting are independent; they will run in parallel, with no specific sequencing priority between pediatric extension and formulation patenting.

Q: Which channels are included in the gross to net calculation, and how does it relate to the guidance range?

A: Gross to net includes Retail/IQVIA (WAC price ~$680 a bottle) and Blink channel (WAC price $50). The lion's share of gross to net is from these channels, and the guidance range of 55%-65% is based on rebating and wholesaler discounts.