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Phathom Pharmaceuticals, Inc. (PHAT)·Q1 2025 Earnings Summary

Executive Summary

  • Net revenues were $28.5M in Q1 2025 versus $29.7M in Q4 2024 and $1.9M in Q1 2024; sequential softness stemmed from a mix shift toward cash-pay and normalization of wholesaler inventory, while prescriptions grew 8% sequentially and gross margin remained ~87% .
  • Management implemented a strategic cost reset: pausing EoE Phase 2, cutting broadcast/cable DTC, and reducing headcount ~6%, lowering 2025 non-GAAP operating expense guidance by $60–$70M to $290–$320M and targeting quarterly cash opex < $55M by Q4 2025; goal is profit from operations (ex-SBC) in 2026 .
  • Against Wall Street consensus, Q1 revenue modestly missed ($28.52M vs $29.02M*) while non-GAAP EPS beat (-$1.07 vs -$1.14*); Q4 2024 had beaten both revenue and EPS consensus, underscoring the underlying ramp .
  • Key catalysts are the pending FDA response to Phathom’s Citizen Petition for Orange Book correction (seeking tablet exclusivity to May 2032) and operational execution under new CEO Steven Basta; management reiterated confidence in revenue ramp despite DTC cuts and flagged a potential, immaterial triple-pak supply disruption .

What Went Well and What Went Wrong

What Went Well

  • Prescriptions and prescriber base continued to expand: ~127,000 filled prescriptions in Q1 (+~8% QoQ) and >23,600 cumulative prescribers as of April 11; commercial coverage remained >120M lives (>80% of commercial market) .
  • Gross margin held at ~87% with gross profit of $24.8M, showing efficient cost of revenue despite mix shifts; management expects gross-to-net to average 55–65% for 2025 .
  • Strategic refocus around field sales execution and cost discipline: “We are continuing the thing that works … field sales calls,” while cutting lower-ROI broadcast DTC to preserve cash and improve ROI .

What Went Wrong

  • Sequential revenue decline vs Q4 driven by higher cash-pay share (retail share 70% vs 75% in Q4) and Q4 wholesaler stocking ($2M incremental) that normalized in Q1; GAAP net loss widened to $94.3M .
  • SG&A intensity remained elevated with $94.5M G&A, including $28.3M of celebrity-endorsed DTC spend prior to announced cuts; non-GAAP adjusted net loss was $77.1M .
  • Data noise: IQVIA will retroactively adjust mail-channel volumes (estimated ~5% impact) for weeks ending Jan 10–Apr 4, adding near-term uncertainty to weekly script trend interpretation .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$16.352 $29.664 $28.519
Gross Profit ($USD Millions)$13.996 $25.849 $24.795
GAAP Net Loss ($USD Millions)$(85.577) $(74.451) $(94.316)
GAAP EPS (basic/diluted)$(1.32) $(1.05) $(1.31)
Non-GAAP EPS (adjusted)$(1.05) $(0.79) $(1.07)
R&D Expense ($USD Millions)$8.693 $8.583 $9.184
G&A Expense ($USD Millions)$76.099 $76.683 $94.474
Cash & Equivalents ($USD Millions, period-end)$334.678 $297.263 $212.315

KPIs

KPIQ3 2024Q4 2024Q1 2025
Filled Prescriptions (quarter)~69,000 >118,000 ~127,000
Cumulative Filled Prescriptions (launch-to-date)>143,000 >300,000 (to Feb 21, 2025) >390,000 (to Apr 18, 2025)
Cumulative Prescribers13,600 >20,000 >23,600 (as of Apr 11)
Commercial Coverage>120M lives (>80% of commercial) >120M lives (>80% of commercial) >120M lives (>80% of commercial)
Channel Mix (Retail : Cash-pay)n/a~75% : 25% ~70% : 30%
Gross-to-Net Discount Rate (quarter / full-year guide)n/an/a53% in Q1; 55–65% expected for 2025

Estimate Comparison (S&P Global)

MetricQ4 2024 ActualQ4 2024 Consensus*SurpriseQ1 2025 ActualQ1 2025 Consensus*Surprise
Revenue ($USD)$29,664,000 $25,654,000*+$4,010,000; Beat$28,519,000 $29,015,750*-$496,750; Miss
Primary EPS (Non-GAAP)$(1.05) $(1.286)*+$0.236; Beat$(1.07) $(1.137)*+$0.067; Beat
# of EPS Estimates—5*——7*—
# of Revenue Estimates—7*——8*—

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Non-GAAP Operating Expenses ($USD Millions)FY 2025Not quantified publicly; prior range higher per management commentary$290–$320 Lowered by $60–$70M
Quarterly Cash Operating Expense (ex-SBC, interest, certain accruals)Q4 2025Not previously targeted< $55M New target
Gross-to-Net Discount RateFY 202555–65% average 55–65% average (maintained) Maintained
Profit from Operations (ex-SBC)FY 2026Not previously time-boxedTarget to achieve in 2026 New explicit timing
R&D Program: EoE Phase 2 Initiation2025“Planned Q2 2025 first patient” Paused; reevaluate after CP outcome Deferred
DTC Strategy2025Expanded broadcast/streaming campaign Cut broadcast/cable; maintain higher-ROI digital Reduced broadcast spend

Earnings Call Themes & Trends

TopicQ3 2024 (Nov 2024)Q4 2024 (Mar 2025)Q1 2025 (May 2025)Trend
DTC/BrandLaunch of “Kick Some Acid” DTC; strong engagement Continued expansion incl. new campaign Cutting broadcast/cable, keeping digital; $28.3M Q1 ad spend prior to cuts Shift to ROI-focused digital; cost discipline
Field Sales ExecutionPrescriber base expanding (13.6k) >20k prescribers; PCP adoption rising Management emphasizes field sales as growth driver; SVP Sales hired Continued focus; leadership change
Regulatory/Exclusivity—CP submitted Dec 2024; seeking tablets exclusivity to 2032 FDA response expected early June; confident in position; next steps if delayed/negative Near-term catalyst; contingency plans
Supply Chain——Possible future disruption in triple-pak; immaterial to revenue; dual-pak unaffected Monitor; minimal impact
Gross-to-Net——53% in Q1; 55–65% for 2025 Stable range; slight improvement in Q1
R&D ExecutionPhase 2 EoE nearing initiation Plans to initiate Q2 2025 Paused EoE; reassess post-CP; consider pediatric extension options later Deferral to preserve cash
Competitive Landscape——Anticipates potential PCAB entrant (Sebela) could grow category; VOQUEZNA first-to-market Category awareness tailwind; positioning ongoing
Tariffs/Manufacturing——API international; tablet finished in U.S.; current inventory mitigates tariff risks; limited cost exposure Low tariff impact near term

Management Commentary

  • “2025 will be an inflection point for Phathom … applying cost saving initiatives to support long-term growth without the need for additional equity or debt financing … reduce 2025 operating expenses by $60 to $70 million and bring anticipated quarterly spend below $55 million in the fourth quarter … position Phathom to achieve profit from operations, excluding stock-based compensation, in 2026.”
  • “We will be implementing cost savings … to reach operating expenses … of less than $55 million per quarter in Q4 … intended to enable us to achieve profit from operations in 2026 … with our current cash on the balance sheet without … additional debt or … equity.”
  • “We are continuing the thing that is actually working to drive the revenue, which is our field sales activities … shutting off … broadcast DTC … is not going to adversely impact our ramp.”

Q&A Highlights

  • Citizen Petition timing and contingencies: FDA response expected early June; if negative or indeterminate, Phathom will “take action” to define exclusivity period; continuity of internal/external CP team despite C-suite changes .
  • Revenue trajectory and DTC cuts: Management “not indicating” changes to 2025 revenue expectations; believes analyst ranges are reasonable; field sales are the core driver .
  • Profitability timing: Target is operating profitability in 2026 (ex-SBC); exact quarter not committed, dependent on revenue ramp and spend timing .
  • Scripts/GTN: Weekly variability acknowledged; Q1 gross-to-net 53% and FY 2025 guide 55–65% maintained .
  • Manufacturing/tariffs and competition: U.S. finishing mitigates tariff risk; potential competitor PCAB could expand category with first-mover advantage supporting VOQUEZNA .

Estimates Context

  • Q1 2025: Revenue came in slightly below consensus ($28.52M vs $29.02M*), while non-GAAP EPS beat (-$1.07 vs -$1.14*). The revenue miss reflects higher cash-pay share and Q4 inventory normalization; management maintained confidence in the revenue ramp despite DTC cuts .
  • Q4 2024: Both revenue ($29.66M vs $25.65M*) and EPS (-$1.05 vs -$1.29*) beat, evidencing strong demand and broadening access .
  • FY 2025 context: Consensus revenue ~$173.39M* and EPS -$3.16*; management cut opex and reiterated revenue confidence, implying estimate revisions may focus more on margin trajectory than top-line.
    Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Execution remains robust: prescriptions and prescribers grew sequentially, and gross margin stayed high despite channel mix shifts—watch cash-pay vs retail mix and gross-to-net trajectory through 2025 .
  • Cost discipline is the near-term story: opex cut by $60–$70M and Q4 opex target < $55M should extend cash runway and de-risk financing, supporting the 2026 operating profitability goal (ex-SBC) .
  • Regulatory catalyst is binary: an FDA CP decision in early June could extend tablet exclusivity to 2032; management is prepared for adverse or delayed outcomes—expect volatility around the decision .
  • DTC pivot unlikely to derail revenue ramp: emphasis on field sales and higher-ROI digital spend should support prescriber depth; monitor scripts post-Q2 for confirmation .
  • Competitive dynamics: Potential PCAB entry may expand category awareness; VOQUEZNA’s first-mover advantage and physician familiarity are positives—track head-to-head positioning .
  • Short-term trading: Stock likely sensitive to CP news flow and any weekly script trends; Q2 expense run-rate and GTN updates will be watched closely .
  • Medium-term thesis: Category expansion in GERD with strong coverage, efficient cost of revenue, and sharpened opex should drive improving unit economics; execution on profitability in 2026 is key .