PHAT - NASDAQ

Hello, and welcome to the Phathom Pharmaceuticals Fourth Quarter and Full Year 2024 Earnings Results Call. At this time, all participants are in a listen-only mode. After the presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's call is being recorded. With that, I would like to turn the conference over to Eric Sciorilli, Phathom's Head of Investor Relations. Please go ahead.

Thank you, operator. Hello, everyone, and thank you for joining us this morning to discuss Phathom's fourth quarter and full year 2024 results. This morning's presentation will include remarks from Terrie Curran, our President and CEO; Martin Gilligan, our Chief Commercial Officer; and Molly Henderson, our Chief Financial Officer. Azmi Nabulsi, our Chief Operating Officer will also be joining the team during the Q&A portion of today's call. Just a couple of logistical items before we get started. Earlier this morning, we issued a press release detailing the results we will be discussing during the call. A copy of that press release can be found under the News Releases section of our corporate website. Further, the recording of today's webcast can be found under the Events and Presentations section of our corporate website. Before we begin, let me remind you that we will 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 can materially differ from the forward-looking statements, and any such risks can materially adversely affect the business, the results of operations and 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 today’s Form 10-K. All forward-looking statements made on this call are based on the beliefs of Phathom as of this date, and Phathom disclaims any obligation to update these statements. With that, I will now turn the call over to Terrie Curran, Phathom's President and CEO to kick us off. Terri?

Thank you, Eric, and thank you to all those joining us on today's call. I'm excited to report on the great progress we made during 2024 and the work that's underway to ensure 2025 is a year of strong growth. Throughout our first full year of product availability, we reported many accomplishments and consistently exceeded expectations. Most noteworthy, we secured broad commercial access launched a full-scale consumer campaign and received FDA approval for non-Erosive GERD. As I reflect on the past year, it's clear that we have built a strong foundation with each of our accomplishments serving as key building blocks. Feedback from physicians, testimonials from patients and continued demand give us confidence that the VOQUE

Thanks, Terrie, and hello, everyone. As you heard Terrie mentioned, we are extremely happy with the progress we made in 2024. Our results continue to prove we're successfully executing on our strategy, and I'm incredibly proud of the Phathom team. Launching a drug is hard, launching a retail-focused drug and disrupting a massive genericized market is even harder. However, that is what we set out to do, and I believe we're doing it well. Many of you have told us, it's been a long time since you've seen and launched quite like this. I attribute our success largely to the impact of VOQUE

Thanks, Martin. Hello, everyone, and thanks for joining us. I'm pleased to share our fourth quarter and full year 2024, financial results with you today. Similar to previous quarters, I'd like to note that I will be commenting on both GAAP and non-GAAP financial measures. Supporting schedules with detailed reconciliations between non-GAAP measures and their most directly comparable GAAP measures will be discussed later in my section and can be found in this morning's press release. Turning to our results, for the fourth quarter 2024, we reported net revenues of $29.7 million, which represents a sequential quarter-over-quarter increase of 81%. Strong VOQUE

Thank you, Molly, and thank you again to everyone joining us on today's call. With the great progress in 2024 in the rearview, we look forward to all that's ahead in 2025. Our focus is on leveraging our highly experienced teams to drive growth. From a commercial perspective, we plan to further disrupt the GERD market with our large established field force and expanded DTC efforts. And on the development front, we're excited to investigate new indications and formulations with the goal of better serving patients with acid-related disorders. For now, accelerating the path to peak VOQUE

[Operator Instructions] Our first question comes from Yatin Suneja with Guggenheim.

Hi guys. Thank you for taking my question. Two questions from me. First one is on the -- on this citizen petition. Could you maybe help us understand the time lines around it? I think our understanding is in June, but given some of the political stuff happening at the FDA, just curious if it has to sort of give you an opinion by June. So that's one. And then if in a scenario, the decision doesn't go in your favor, what are certain options that you have? The second one is on Q1 specifically. Thank you for flagging the inventory in hand and other dynamics. But just to -- just to confirm, are you -- you do expect growth in Q1 relative to Q4? Or are you sort of trying to imply that it could be a down quarter. Thank you.

Thanks, Yatin. It's Terrie here. I'll take your first question on the CP, and then I'll hand over to Molly regarding Q1. So with the CP, we submitted -- you are correct. We submitted in December. So the time line there is 180 days. Within that time line, the FDA is required to respond to us. So we anticipate a response from them on that day or if not before, the 180 days. We don't see the changes within the FDA impacting that time line. We are very pleased with the progress that we're making on the CP as expected. We're proactively involved with key influential stakeholders in Washington and industry groups, and we're also pleased to see on the CP docket that we have posts from KOLs as well as industry and patient groups. So, very pleased with the progress we're making and remain very confident in that petition. If it does not go as anticipated, we will evaluate next steps, but most likely pursue litigation as we believe we have a very strong legal position. Molly?

Sure hi. Sure, as it relates to Q1, as we've been signaling that industry dynamics certainly point to a softened Q1. We haven't provided any more specifics, but I think it's safe to assume we're still two-thirds through the quarter, so we have some more work to do, but it's safe to assume that it will be a bit softer than, obviously, industry --- as the industry is showing.

Our next question comes from Joseph Stringer with Needham.

Hi, good morning. Thanks for taking our questions. For the Phase 3 on demand trial, when do you think you'll have enough real-world data to make a go, no-go decision there? And when can we potentially anticipate an announcement of this? Thanks.

Yes. Thanks Joey. We're continuing to evaluate the real-world utilization of VOQUE

Our next question comes from Annabel Samimy with Stifel.

Hi. Thanks for taking my question and great quarter. I want to, I guess, talk about the DTC a little bit. You shared some metrics on DTC. Is that what's driving the significant increase in prescribing physicians? And is this something that's primarily patient-driven? Or is it your education of physicians? Just I guess, help us understand the metrics around that, balance with the decision to make another campaign and then think about the cash and, I guess, runway to profitability and how this is all balanced? At what point do you pull back on some of the DTC to sort of drive the profitability, I guess, and some timing around that, if possible?

Morning Annabel, it's Martin. I guess one thing I just want to clarify in your question is the campaign, it's an evolution of our current campaign. So, what it tells us is that we've got a super strong campaign, that's really motivating patients to go in and ask physicians for VOQUE

And Annabel, as it relates to the cash runway question, it's certainly a balance between investment in DTC. And as Martin said, we continue to see some really good early signals on the effectiveness of those campaigns, but we also signaled we'll pause midyear and really do a deep dive in ROI to make sure it's the best use of our resources. And then I guess, tangential to that is the guidance we provided for OpEx for 2025 of $360 million to $390 million certainly includes a good-sized investment from a DTC perspective.

Great. Thank you.

Our next question comes from Kristen Kluska with Cantor Fitzgerald.

Good morning. Can you please speak to some of the early metrics you're seeing on refill trends and usage for NERD specifically now that you have a few more months of sales under your belt and how you might also anticipate that moving forward as more awareness is out there?

Sure. Happy to take that, Christine. So first, let me take the refill and then I'll address the part about non-erosive because definitely it's connected. It's still very early. I often have to remind myself that we're only seven months into the launch in non-erosive, but we are absolutely right where we should be in this stage of launch. I had given some specifics earlier in my comments about our refills. But when we look at that, we compare that to other small molecule chronic medication refills, and we're right where we need to be in terms of tracking to that. And the other thing that makes us feel really good is we believe we're tracking to the persistency and it's in line with PPIs. We always said prior to launch that the PPI is what we know their total days of therapy on an annual basis are 140 to 160 days a year. And given the information I shared previously, we're tracking directly towards that. Now contributing to that is the combination of both erosive and non-erosive. What I'm happy to share is that we're seeing consistent refill rates amongst the 10-milligram and the 20 milligram. The 10-milligram can be used and is used for maintenance, but we know that there was a significant increase in 10-milligram is growing even faster than the 20-milligram because of the non-erosive. So we see the two going hand in hand, and we're actually getting feedback from physicians that tell us that their patients are doing so well that they're continuing. So I think I answered everything, the refills as well as how it's tied to non-erosive.

Thank you.

Our next question comes from Umer Raffat with Evercore.

Hi, good morning. This is [indiscernible] on for Umer. Thank you so much for taking our question. And also thank you for providing additional data points. It's really helpful. I think just want to focus on the new patient starts number. So if you look at the NBRx data, it's kind of stabilized around 2,000 every week since, I think, October last year. And with the new consumer campaign, what should we expect going into this year in 2025? And on that point, how important is the BlinkRx right now considering the coverage has improved over 80%.

Yeah. So again, this is Martin, and I'll take -- I think I'll do those in order. The first one regarding the NBRx, we are definitely seeing an increase in new patient starts. And what we're able to see are not only new patients going through retail/IQVIA, but also patients who are going through BlinkRx. So the combination of that tells us that there's definitely an increase in growing new patients who are starting on VOQUE

The importance of Blink.

Yes. The importance of Blink. So I would say Blink remains very important for us. We brought Blink on board specifically to make sure that we're supporting patients -- it's been a very good experience, and it's very much focused on our commercial patients and what the intent is to get commercial patients on VOQUE

Thank you so much.

Yes. Paul, I'll take the patent question. They're independent of each other. So the ODT has broader applicability than just pediatric because it can be used in the EOE, on demand as well as pediatric, but also for OTC as well. So they will be running in parallel. So I see a scenario where we obtained the patent for that formulation before the accessibility [ph].

Our next question comes from Matthew Caufield with H.C. Wainwright.

Hey, good morning guys, and thanks for the updates. Just quickly from our end. For those new prescriptions, would you say any greater potential resistance comes from prescriber acceptance of the novel mechanism itself, or any remaining initial coverage pushback at this stage? Thanks again.

Interesting question, Matt. No, I think -- and even resistance, I'm not sure we get resistance at all to VOQUE

That’s helpful. Thank you.