Phathom Pharmaceuticals, a biopharmaceutical company, has emerged as a trailblazer in the realm of gastrointestinal (GI) disease treatments. With a singular focus on developing and commercializing innovative therapies, Phathom has carved out a unique position in an industry that has long sought more effective solutions for patients suffering from GI ailments.
Company Background
Phathom Pharmaceuticals was incorporated in the state of Delaware in January 2018, with a vision and set of goals that many considered lofty at the time. The company's journey began in earnest in May 2019 when it in-licensed the U.S., European, and Canadian rights to vonoprazan from Takeda Pharmaceutical Company Limited. Vonoprazan, an oral small molecule potassium-competitive acid blocker (PCAB), represented a novel class of medicines designed to block acid secretion in the stomach. Prior to this agreement, Takeda had already developed vonoprazan and secured marketing approval in numerous countries across Asia and Latin America, as well as in Russia.
Clinical Milestones
A significant milestone in Phathom's development came in 2021 when the company reported positive topline data from two pivotal Phase 3 clinical trials for vonoprazan. The PHALCON-HP trial focused on the treatment of H. pylori infection, while the PHALCON-EE trial targeted Erosive Gastroesophageal Reflux Disease. Building on these successful results, Phathom submitted two new drug applications (NDAs) to the FDA in September 2021 for combination packs containing vonoprazan for the treatment of H. pylori infection in adults.
Regulatory Approvals
The company's efforts bore fruit in May 2022 when the FDA approved the NDAs for vonoprazan triple therapy (VOQUEZNA TRIPLE PAK) and vonoprazan dual therapy (VOQUEZNA DUAL PAK). This approval was followed by another significant achievement in November 2023, when the FDA granted approval for vonoprazan (VOQUEZNA) as a treatment for adults for the healing of all grades of Erosive GERD, maintenance of healing of all grades of Erosive GERD, and relief of heartburn associated with Erosive GERD, as well as in combination with antibiotics for the treatment of H. pylori infection in adults.
Corporate Development
Throughout its history, Phathom has successfully navigated various challenges, including organizing and staffing the company, business planning, raising capital, meeting with regulatory authorities, managing clinical trials, and preparing for product commercialization. The company's ability to overcome these obstacles and achieve key milestones has facilitated its transition from a clinical-stage biopharmaceutical company to a commercial-stage organization with multiple approved products.
Product Portfolio
Phathom's flagship product, VOQUEZNA, containing the vonoprazan compound, has received FDA approvals for the treatment of Erosive Gastroesophageal Reflux Disease (Erosive GERD) and, more recently, the relief of heartburn associated with Non-Erosive GERD. This expanded label has unlocked the entire GERD market, estimated to impact over 22 million diagnosed and annually treated patients in the United States.
In July 2024, the FDA approved Phathom's sNDA for VOQUEZNA 10 mg tablets for the relief of heartburn associated with Non-Erosive GERD, further expanding the product's market potential. The VOQUEZNA portfolio now includes VOQUEZNA, VOQUEZNA TRIPLE PAK, and VOQUEZNA DUAL PAK, all containing vonoprazan, which is the first gastric anti-secretory agent from a novel class approved in the United States, Europe, or Canada in over 30 years.
Financials
The company's financial performance has been impressive, with second-quarter 2024 net revenues reaching $7.3 million, representing a sequential quarterly increase of over 280%. This surge in revenues can be attributed to Phathom's successful commercial execution, which has resulted in over 122,000 prescriptions written for VOQUEZNA products to date – a staggering 184% increase since the previous quarterly report.
For the six months ended June 30, 2024, Phathom reported $9.24 million in net product revenue from sales of VOQUEZNA, VOQUEZNA TRIPLE PAK, and VOQUEZNA DUAL PAK. The company incurred $1.80 million in cost of revenue during this period. It's important to note that Phathom has incurred significant operating losses since inception, with a net loss of $174.30 million for the six months ended June 30, 2024. As of June 30, 2024, the company had an accumulated deficit of $1.10 billion.
In the most recent quarter, Phathom reported a net loss of $91,446,000 and operating cash flow of -$70,721,000. The company's free cash flow for the quarter was -$70,767,000. It's worth noting that year-over-year comparisons are not available as the company only launched its products in Q4 2023.
Liquidity
Phathom's financial strength extends beyond its top-line growth. As of June 30, 2024, the company reported a robust cash position of $276 million, providing ample resources to support its ongoing commercial activities and continued research and development efforts. This solid financial foundation, combined with the availability of an additional $125 million in debt financing, underscores Phathom's ability to navigate the challenges of the pharmaceutical industry and capitalize on the opportunities presented by its innovative product portfolio.
The company's debt-to-equity ratio stands at -0.75, with $174.42 million in long-term debt, net of discount, and stockholders' deficit of $233.83 million as of June 30, 2024. Phathom's current ratio is 6.48, and its quick ratio is 6.44, indicating strong short-term liquidity.
Phathom has a $300 million loan agreement with Hercules Capital, of which $125 million remains available to be drawn down, subject to certain milestones. The company has funded its operations primarily through commercial bank debt, revenue interest financing debt, and various equity offerings, including at-the-market offerings.
Market Access and Coverage
Notably, Phathom has strategically expanded the commercial coverage for VOQUEZNA, securing formulary placement with major payers, including CVS Caremark, UnitedHealthcare, Aetna, and Prime Therapeutics. This achievement has resulted in an estimated 77% of total U.S. commercial lives now having access to VOQUEZNA, a testament to the company's ability to navigate the complex payer landscape and ensure widespread patient access to its groundbreaking therapy.
Research and Development
Phathom's commitment to innovation extends beyond its flagship product. The company is actively exploring the potential of vonoprazan in other indications, such as Eosinophilic Esophagitis (EoE) and a novel as-needed dosing regimen for Non-Erosive GERD. These pipeline initiatives underscore Phathom's dedication to expanding the therapeutic reach of its core asset and addressing unmet needs in the GI disease landscape.
Challenges and Resilience
However, Phathom's journey has not been without its challenges. In 2021, the company faced a short report from a prominent research firm, which raised concerns about the commercial viability of VOQUEZNA. Phathom responded proactively, engaging with the investment community and providing detailed rebuttals that ultimately demonstrated the strength of its launch strategies and the product's market potential.
The COVID-19 pandemic also posed a significant hurdle, as it temporarily disrupted clinical trial enrollment and delayed regulatory timelines. Phathom, however, demonstrated its resilience by adapting its operational protocols and collaborating with regulatory authorities to minimize the impact on its development programs.
Future Outlook
Looking ahead, Phathom remains focused on executing its commercial strategy and advancing its pipeline. The company's recent success in securing broad commercial coverage for VOQUEZNA, coupled with the expanded label for Non-Erosive GERD, positions it well to capitalize on the significant market opportunity in the GI disease space.
Furthermore, Phathom's commitment to innovation is evident in its planned initiation of a Phase III trial evaluating vonoprazan as an as-needed treatment for Non-Erosive GERD, as well as a Phase II trial in Eosinophilic Esophagitis. These strategic moves underscore the company's determination to differentiate its product offerings and address the unmet needs of patients with diverse GI conditions.
While Phathom has not provided specific financial guidance for future quarters or the full year 2024, the company remains confident that its strong balance sheet will enable it to continue delivering on its launch and development strategies. Management has reiterated their expectation of having a cash runway through the end of 2026 based on their current operating plan, expected revenues, and funds available under their term loan.
Conclusion
In conclusion, Phathom Pharmaceuticals has emerged as a force to be reckoned with in the GI disease treatment landscape. With its innovative therapy, VOQUEZNA, a robust financial position, and a steadfast commitment to expanding its pipeline, the company is poised to continue its trajectory of growth and solidify its position as a leader in the development and commercialization of next-generation GI treatments. As Phathom continues to execute its commercial strategy and explore new therapeutic applications for vonoprazan, investors and patients alike will be watching closely to see how this pioneering company shapes the future of gastrointestinal care.