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Phathom Pharmaceuticals, Inc. (PHAT)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 delivered 25% q/q revenue growth to $49.5M, with non‑GAAP EPS loss narrowing sharply to ($0.15); both beat consensus as revenue was $49.5M vs $47.0M* and Primary EPS ($0.15) vs ($0.55). Non‑GAAP opex fell to $49.3M (−43% q/q), driving net cash usage down to ~$14M (−77% q/q) .
  • Management tightened FY25 revenue guidance to $170–$175M (from $165–$175M) and now guides Q4 gross‑to‑net to 55–60% (lower end of prior 55–65% range), reiterating a path to operating profitability in 2026 (ex‑SBC) .
  • Commercial KPI momentum: ~221k RX filled in Q3 (+28% q/q), including 144k covered scripts (+23% q/q); >80% U.S. commercial lives remain covered for VOQUEZNA .
  • Stock reaction catalysts: clear beat/raise, evidence of sustainable cost discipline, and GI salesforce realignment that may temper Q4 but is framed to accelerate 2026 growth .

What Went Well and What Went Wrong

What Went Well

  • Revenue and expense beats with accelerated operating leverage: “We beat expectations on the revenue and on the operating expenses” and achieved cash opex $49.3M vs a sub‑$60M target, with cash usage < $15M in Q3 .
  • Strong prescription momentum and quality of mix: 221k Q3 prescriptions (+28% q/q), with 144k covered scripts (+23% q/q)—the category that most directly drives revenue; gross margin ~87% consistent with prior quarters .
  • Visibility/durability: exclusivity for VOQUEZNA 10/20mg tablets through May 2032 (implying generic entry unlikely before 2033), plus resumed advancement with Phase 2 EoE study initiation and first patient expected in Q4 .

What Went Wrong

  • Ongoing GAAP losses and high leverage: Q3 GAAP net loss was ($30.0M), stock‑based comp rose to $9.3M, and liabilities total $662.8M with a shareholders’ deficit of ($422.5M) .
  • Temporary near‑term execution risk: sales territory realignment could create “some temporary impact in Q4,” although management expects acceleration in 2026 .
  • Persistent gross‑to‑net at lower end of range: Q3 came in toward the lower end of 55–65%; Q4 guided to 55–60%, suggesting limited near-term improvement in realized pricing dynamics .

Financial Results

Headline P&L vs prior year and sequential

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($M)$16.4 $28.5 $39.5 $49.5
Gross Profit ($M)$14.0 $24.8 $34.5 $43.3
Gross Margin (%)85.6% 86.9% 87.3% 87.5%
GAAP EPS ($)($1.32) ($1.31) ($1.05) ($0.41)
Non‑GAAP EPS ($)($1.05) ($1.07) ($0.79) ($0.15)

Notes: Gross margin calculated from revenue and gross profit per period; management cited ~87% for Q3 .

Operating expenses, cash and leverage

MetricQ1 2025Q2 2025Q3 2025
Non‑GAAP Operating Expenses ($M)$98.1 $86.1 $49.3
Stock‑Based Compensation ($M)$5.5 $8.3 $9.3
Net Cash Usage ($M)—~63 ~14
Cash & Cash Equivalents ($M, end of period)$212.3 $149.6 $135.2
Total Liabilities ($M)$632.6 $656.1 $662.8
Stockholders’ Deficit ($M)($338.4) ($405.8) ($422.5)

KPIs

KPIQ1 2025Q2 2025Q3 2025
Filled Prescriptions (000s)~127 ~173 ~221
Covered Scripts (000s)——~144
Cash Scripts (000s)——~77
% Commercial Lives Covered——>80%

Actual vs. Consensus (S&P Global)

MetricPeriodActualConsensus Mean# of Est.
Revenue ($M)Q3 2025$49.50 $47.0*8*
Primary EPS ($)Q3 2025($0.15) ($0.55)*6*

Consensus values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$165–$175M $170–$175M Narrowed/raised midpoint
Gross‑to‑NetQ4 202555–65% (prior range referenced) 55–60% Tightened lower
Non‑GAAP OpexQ4 2025< $55M < $55M (reiterated) Maintained
Profitability2026Path to operating profitability (ex‑SBC) Reiterated path in 2026 (ex‑SBC) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Commercial focus (GI vs. PCP)Shift announced to prioritize GI; DTC reduced; preserve sales force Deep GI focus with territory realignment; ~300 reps targeted; temporary Q4 disruption possible; PCPs who already write remain targeted Deeper GI concentration; productivity focus
DTC advertisingPlanned DTC pullback to save costs DTC turned off as of Jun 30; −$19M q/q advertising spend driver Sustained pullback
Gross‑to‑netCoverage strong; >120M covered lives Q3 at lower end of 55–65%; Q4 guided 55–60% Stable at lower end
RX trajectory & mixQ2 ~173k RX; GIs ~70% of filled RX to date Q3 ~221k RX; covered +23% q/q; cash +38% q/q; Medicare cash availability aiding adoption without cannibalizing covered scripts Continued growth; quality mix
Cost disciplineRestructuring targeted $60–$70M 2025 opex cuts Non‑GAAP opex $49.3M (−43% q/q); cash usage ~$14M (−77% q/q) Material leverage
Regulatory exclusivitySought/secured NCE to May 2032; generic unlikely before 2033 Confirmed exclusivity through May 2032; ANDA timing implies 2033 entry De‑risked horizon
R&D executionEoE Phase 2 deferred EoE Phase 2 initiated Oct; 1st patient Q4; topline 2027 Program re‑started
Supply chain (Triple Pak)—Clarithromycin component risk monitored; no disruption to date and no near‑term interruption anticipated Risk moderated

Management Commentary

  • “We beat expectations on the revenue and on the operating expenses… Net revenue for Q3 was $49.5 million… Our cash operating expenses were $49.3 million… We’ve cut our cash OpEx by nearly 50% since Q1 while growing revenues ahead of expectations.” — Steven Basta, CEO .
  • “For third quarter 2025, our gross‑to‑net came in towards the lower end of the previously guided 55% to 65% range… we’re tightening our Q4 gross‑to‑net range to between 55% to 60%… gross profit for the quarter was approximately 87%.” — Sanjeev Narula, CFO .
  • “The realignment in the salesforce territories could have some temporary impact in Q4… We believe the salesforce realignment can accelerate our growth during 2026.” — Steven Basta, CEO .
  • “We reiterate our belief that current cash balance can support operations through the anticipated point of achieving operating profitability in 2026, excluding stock‑based compensation, without the need for additional equity financing.” — Sanjeev Narula, CFO .

Q&A Highlights

  • RX trajectory and guidance: Management balanced ongoing GI momentum with anticipated Q4 salesforce transition effects in narrowing FY25 revenue guidance to the upper half of the range .
  • DTC pullback impact: Management does not expect the DTC pause to impair growth, noting it removed spend that did not drive the top line .
  • Covered vs. cash scripts: Focus is on growing both; cash scripts (including Medicare cash pay) are not viewed as cannibalizing covered scripts and may actually catalyze broader adoption in covered patients .
  • PCP strategy: PCPs who have written remain in targets, but ~70%+ of time is allocated to GI to deepen frequency of writing; broader PCP re‑expansion may be 2027/2028 based on ROI (NBRx per sales call) .
  • Territory realignment timing: Maps were changed and reps are in new territories; vacancies being filled through Q4, expecting ~300 reps by Q1 2026 with productivity benefits through 2026 .

Estimates Context

  • Q3 2025 results exceeded Street: revenue $49.5M vs $47.0M*; Primary EPS ($0.15) vs ($0.55); # of estimates: revenue 8, EPS 6*. The beat was driven by +23% q/q growth in covered scripts, with minimal impact from wholesale inventory changes and cash‑pay mix .*
  • Implications for forward estimates: Tightened Q4 gross‑to‑net (55–60%) and reiterated Q4 non‑GAAP opex < $55M support further loss narrowing; management reiterated path to operating profitability in 2026 (ex‑SBC), which may prompt upward revisions to 2026 operating profit expectations .*

Consensus values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Beat-and-raise quarter with clear line of sight to operating profitability: Revenue and EPS beats alongside tighter FY guide and Q4 GTN guardrails underscore improving execution and unit economics .*
  • GI‑first commercial strategy is working: +28% RX q/q and +23% covered RX growth, with salesforce realignment aimed at accelerating 2026 growth despite potential Q4 friction .
  • Cost discipline is durable: Non‑GAAP opex fell to $49.3M (−43% q/q), net cash burn dropped to ~$14M, and Q4 opex remains guided < $55M .
  • Structural tailwinds: Exclusivity to May 2032 (effective protection into 2033) supports medium‑term cash flow visibility; EoE Phase 2 restart adds optionality for 2027+ .
  • Watch items: sustained gross‑to‑net at lower end of range (55–60%), GAAP losses and leverage (liabilities $662.8M), and Q4 transition noise from territory changes .
  • Near‑term trading setup: Potential for estimate revisions and momentum carry; any Q4 disruption commentary or RX cadence slowdown could be an overhang but framed as transitory .*
  • Medium‑term thesis: Continued GI penetration, stable GTN, and maintained opex discipline support 2026 operating profitability (ex‑SBC), with optionality from broader PCP expansion beyond 2026 .

Appendix: Additional Relevant Press Releases (Q3 2025)

  • Publication of additional NERD data in AJG showed rapid/sustained nocturnal symptom relief and >70% median heartburn‑free nights in extension; supports VOQUEZNA’s profile in Non‑Erosive GERD .

Non‑GAAP Adjustments (Q3 2025)

  • Non‑GAAP measures exclude (i) non‑cash stock‑based compensation, (ii) non‑cash interest related to revenue interest financing accounting (in excess of cash interest), and (iii) amortization of debt discount; reconciliation provided in company tables .