Hello, and welcome to Phathom Pharmaceuticals Fourth Quarter and Full Year 2025 Earnings Results Call. [Operator Instructions] Please be advised that today's call is being recorded. With that, I would like to turn the call 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 2025 results. This morning's presentation will include remarks from Steve Basta, our President and CEO; and Sanjeev Narula, our Chief Financial and Business Officer. A couple of notes before we get started. Earlier this morning, we issued a press release detailing the results we'll 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 and the slides we'll be reviewing can also be found on our corporate website under the Events and Presentations section. Before we begin, let me remind you that we'll 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 may materially differ from the forward-looking statements, and any such risks may materially adversely affect our business and results of operations and the 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 our most recent Form 10-K and subsequent SEC filings. 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. Later in the call, we will be commenting on both GAAP and non-GAAP financial measures. Specifically in the scope of this discussion, when we refer to cash operating expenses, please note we are referring to the non-GAAP form of this measure, which excludes noncash stock-based compensation. As always, detailed reconciliations between our non-GAAP results and the most directly comparable GAAP measures are included in this morning's press release. With that, I will now turn the call over to Steve Basta, Phathom's President and CEO, to kick us off. Steve?

Thank you, Eric, and thank you to our investors and analysts for joining our call this morning. Thank you even more to the Phathom colleagues for your diligence and dedication throughout 2025. It was a transformational year for the company, and we're now set to execute our growth and profitability plan. Let me start by summarizing the key points Sanjeev and I will be discussing today. We had a successful Q4. We delivered on expectations for both revenue and cash operating expense levels, coming in at the better end of our guided ranges. We've taken key steps in the recent 2 months to enhance our capital structure, reduce our interest expense and modify our outstanding term loan obligations. As a result, we believe our cash on hand, along with anticipated future cash generated from operations will be sufficient to satisfy all obligations under both our term debt and our revenue interest financing agreements. We're on track in guiding to operating profitability beginning in Q3 of this year and for full year 2026. Our $320 million to $345 million revenue guidance for 2026 reflects our operating expectation of continued solid growth from our GI-focused strategy and includes an accounting-related classification change, which Sanjeev will cover in more detail. Our sales organization is positioned to deliver, and we're seeing clear signs that our GI strategy is working. I'm very proud of what our team accomplished in 2025. We believe we've set ourselves up for success, both financially and operationally. Beginning the update today with our financial highlights for Q4 and full year 2025, our results are in line with our preannounced estimates from January and incrementally a bit better on expenses and on cash usage. We've delivered on the plan we set forth on our May earnings call and reiterated in our…

Thank you, Steve, and hello, everyone. I'm pleased to report our Q4 and full year 2025 results today. I'm encouraged by the changes we've made throughout 2025 and excited about what's on the horizon for '26 and beyond. We have a lot of important updates on the financial front, so let me get right into it. Steve provided some top-level highlights for the quarter, and I'll provide additional color commentary. Our revenues for Q4 of $57.6 million were consistent with pre-release and demonstrated 16% sequential quarterly growth. Aligned with the full year, the quarter also came in at the very top end of our guidance. As always, covered script volume primarily drive our revenue, while contribution from cash scripts and inventory dynamics remain minimal and consistent. Our gross to net for Q4 came in at the high end of 55% to 60% range we provided last quarter as a result of shifting rebating mix. Our full year gross to net was within our expectations. Our gross margin remained consistent in Q4 and full year at approximately 87%. After accounting for quarterly cash expenses, we reported a loss from operations, excluding stock-based compensation of approximately $320,000, a 95% improvement compared to Q3. As you can see, this is a meaningful change in the operating profile of our company. As always, please refer to this morning's press release for a reconciliation between non-GAAP measures and their most directly comparable GAAP measures. Q4 cash operating expenses were about $50 million, notably favorable than the less than $55 million guidance we set forth earlier last year due to continued expense discipline. Similarly, our full year cash operating expenses of approximately $284 million came in at the low end of the range we provided on our Q3 call. We ended the year with about $130…

Thank you, Sanjeev, for the detailed financial review. I would like to extend my thanks to everyone at Phathom for their extraordinary efforts throughout 2025. I was able to meet many of our sales team members during our recent national sales meeting, and I'm heartened by their dedication and exceptional talent. Our transition to focus on gastroenterologists and to reach operating profitability is well underway. Thank you also to our shareholders for your support and confidence. We're dedicated to delivering value to reward your investment. Operator, please open the line for questions.

[Operator Instructions] Our first question or comment comes from the line of Kristen Kluska from Cantor Fitzgerald.

Congrats on a really strong end of the year and the work you were able to do around the interest, definitely very favorable here. So the question I have for you this morning is just recognizing it's still very much early days. What can you tell us about the early signals that you're seeing from this strengthened sales force and strategy, especially coming out of that meeting? Are you seeing that more of the GIs that were new to your strategy are converting? And are you also seeing some early signals of growth within those current GIs where you added more touch points?

Kristen, thanks so much for the kind thoughts and for bringing us to what I think is the most important topic actually, which is the core focus on our GI call point is the fundamental element of our growth strategy, and we are seeing consistent signs of momentum. It's interesting as you characterize the 2 different paths of sort of converting new writers versus growing existing writers. Virtually all gastroenterologists, not quite all, but a very high percentage of gastroenterologists have already written a script for VOQUEZNA. So we've got broad penetration within the gastroenterology community, both among physicians and among APPs with high conversion success already. What we focus on all of our sales force messaging in the context of our national sales meeting, in the context of the conversations that the regional managers are having with the territory sales representatives is all about how to grow writing frequency. We have what we refer to as an adoption ladder where physicians try the product and then we are trying to improve their consistency of writing and they become consistent writers and then we try to improve their consistency of writing and then they become adopters and so on. And as we grow in terms of the frequency of the physician writing an NRx for VOQUEZNA. And what we are seeing is very clear trends on those adoption letters associated with physicians moving up in category. So a tried physician will only have written 2 NRxs in the last quarter, a consistent physician will have written 6 or more weeks in the last quarter, et cetera. And we are seeing physicians move from one category to the next consistently, where on one of the metrics, we'd only had 400 or 500 physicians last summer that were in the upper categories. Now we've got well north of 2,000 physicians in the upper categories. So we're seeing that adoption rate among not just the highest frequency writers, but very broadly within the GI community increasing. And that's the focus of all of our sales force conversations. That was the focus of our national sales meeting is how do we take physicians through that adoption ladder. It's the focus of each of our coaching conversations, and we're seeing clear evidence of it in our writing pattern. One of the metrics that I find to be helpful as we think about the long-term opportunity for this product is what is the rate of adoption we've achieved among the top few hundred writers. And there, we're already seeing that we're now passing on average 20% penetration in terms of their PPI volume being converted to VOQUEZNA. And when we get to 20% conversion across the broader GI community, that's where we're approaching $1 billion of revenue potentially in GI. And that's clearly where we're headed over the next few years.

Our next question or comment comes from the line of Annabel Samimy from Stifel.

And just following on from that comment. In the territories that you already have been pretty well aligned as far as the focus on GIs, do you have any sense yet of the dynamic of patients transitioning back to primary care, if you're starting to see pull-through in some of those more mature accounts? Just curious to see if that dynamic or if you've seen any pickup in the primary care area organically from that effort. And when everything -- everyone is on board and humming, do you expect an inflection? Or is this just a steady growth throughout the year?

So Annabel, that's a really important component of the long-term growth path is building beyond just GI to capture the return of patients to primary care and the growth there. Just candidly, we've not looked at it, at least I've not looked at it. I know our sales team is doing much more granular work on a physician-by-physician basis at the specific referral patterns for specific gastroenterologists to see their referring physicians and how they've adopted. I've looked at it much more broadly for the entire universe of primary care physicians, and we are seeing an uplift in primary care prescribing volume on a broad basis. The granularity that you're describing is very much an analysis that over time, we will do much more frequently. The near-term focus is on that core gastroenterology conversion point. And the expectation exactly to your point, is over the next 6, 12, 18 months, we're going to see those patients returning to primary care and see those growing, and we'll be looking at that metric more precisely. But what we are seeing on a broad basis when we look at the total prescribing in GI and the total prescribing and primary care is an uplift in both. Even though the majority of our sales force time is going to GI, that uplift broadly in primary care prescribing volume would suggest that we are seeing exactly that effect. So was there a second half of your question? Or did that capture it?

Expectation for any inflections once everyone is on board...

The inflection point question. Yes. So we don't map out -- we don't model out a specific inflection point. It's very hard to predict when does the slope change. What we are driving toward is consistent growth month-over-month, quarter-over-quarter because we're not trying to do a sea change kind of strategy at this point going forward. 2025 was very much a year of fundamentally shifting the strategy. We were changing call points. We realigned sales territories. We went through some pretty significant change. 2026 is just going to be a year of heads down execution. It is making sure that we are doing all of the right things. We're getting into the right offices. We're calling on gastroenterologists with the right frequency. We are delivering really good messages every time we call in gastroenterologists. We're helping them with all of their access needs. We are working through the process of enabling them to write VOQUEZNA scripts more frequently. And that drives our growth. So we don't need to inflect at any one point to a specifically different strategy. What we need to do is just execute this playbook and execute it well quarter-over-quarter. It's hard for me to predict exactly what the slope looks like on a quarter-by-quarter basis. I do expect that we're going to get steady growth, might accelerate at some point in time. It's really hard to predict that. What we're seeing is all the right signs of incrementally significant adoption among physicians and incremental success that our sales reps are having in each of these offices.

Our next question or comment comes from the line of Dennis Ding from Jefferies.

This is Anthea on for Dennis. Congrats on the quarter. First on Q1, do you expect sequential quarterly growth given the deployment of the expanded sales force? Or are you seeing that seasonality plus the winter storms will still be headwinds here? And is there a plan to seek broader Medicare coverage for VUQUEZZA this year and if that's baked into guidance?

So Anthea, let me -- I'll briefly address the first part, and then I'll offer Sanjeev the opportunity if he wants to add more color on the seasonality in this process. We're clearly seeing the typical seasonality that occurs and the winter storms are clearly having some effect as well. We've seen slow weeks whenever the entire country is shut down because of an ice storm that has an impact. The -- it's -- we don't guide to revenue on a quarter-by-quarter basis with that granularity. So while we clearly acknowledge that Q1 is the weakest of the 4 quarters during the year, whether it's flat or up or down, we just -- we don't provide that quarterly guidance. What we've provided is full year guidance, but the underlying metrics that we're seeing in terms of our sales call activity the prescribing behavior of physicians, the growth patterns that we've been describing, all give us confidence in terms of where we're going to be on a full year basis. And so Sanjeev, if you want to chime in at all on seasonality?

Yes. I think you pointed out, Steve, that we don't provide quarterly guidance. But I think what I said this time, if you look at in our kind of prepared remarks that we said earlier, if you look at the cadence of our business on a full year basis, we'll be roughly kind of same trajectory as we experienced in 2025. 40% of our top line revenue will be in the first half of the year, approximately 60% in the second half. And I said Q1 is going to be the slowest quarter because of typical seasonality. So I think that's kind of what we see, what the exact number is going to be. Obviously, you will hear that in the first quarter call that we talk about it. But clearly, it is the slowest to softest months because the typical seasonality.

And then the second half of your question, Anthea, I think, was related to Medicare. So we're not anticipating a fundamental change in broad Medicare coverage where we get coverage for all Medicare patients. What we are seeing is incremental Medicare prescriptions being covered either through medical appeals processes or through specific Medicare Part D plans. So as different Medicare Part D plans become more familiar with seeing VOQUEZNA prescriptions being submitted, they are beginning to cover those more frequently. And so we may see over time some increase in the number of Medicare scripts that are actually being processed and being covered, but it's not a broad coverage decision nor do we anticipate that there's going to be any broad fundamental change in a broad coverage decision on a system-wide basis for the entire population of Medicare patients.

Our next question or comment comes from the line of Joseph Stringer from Needham & Company.

Just wanted to follow up on the previous question. Looking at the IQVIA prescription data and the impact of seasonality, is the magnitude of the seasonality effect this cycle in line with your expectations, I guess, all things considered? And maybe another way of asking is, are there any nuances about the launch now with the refocused effort that would make it more or less sensitive to seasonality?

So thank you for the question. It's really hard to characterize magnitude of seasonality one year versus another. What we're seeing is very similar to the pattern that we saw last year in terms of January being particularly light and then February is also light. And then by March last year, it started to pick up. So we would hope that, that same pattern -- not just hope, we actually expect that, that same pattern is going to come to fruition because you get several uplifts in March. We're coming off of the national sales meeting. Everybody is energized. We're going to have a full strength sales organization and physicians have had time to work through their plans. Patients who have switched plans now have time to figure out how they're going to get the drug covered. So all of those things that create noise in January as everybody is switching to a new health plan gets worked out in the first month or 2. So that effect just is there every year for a branded product, and we -- the specific magnitude of it varies by product. So we're starting to see what that pattern looks like for us. We're not seeing anything that's unusual in that regard. One thing that we have observed is the IQVIA reported numbers seem to be somewhat greater underreporting versus our internal numbers than historic norms. We think we've identified the cause of that, and that that's going to work itself out. But there may be a little bit of extra softness or delta in the IQVIA reported numbers versus what we're actually seeing. But the softness is real in January and February, and we think it starts to improve meaningfully in March. The other phenomenon that you cite is a real phenomenon as Anthea's question also had suggested that winter storms clearly not just had an effect on us, had an effect on a whole bunch of companies in the context of the slowdown for a week in January and slowdown for a week in February on the Northeast. So I don't want to overstate those -- that is I think the dominant effect is just the annual seasonality that we would expect to see every year.

Our next question or comment comes from the line of Paul Choi from Goldman Sachs.

This is Daniel on for Paul. So we're curious about like if you could provide color on the proportions of prescriptions that are now filled to BlinkRx versus the new GoodRx that came online? And how is the economy of the channels versus the more traditional dispensary?

So there are several different parts to that. So let me take GoodRx first. GoodRx, we just turned on in November. And what that is, is -- I mean, already GoodRx had coupons on it for our co-pay support program. So if someone is at a pharmacy with a retail script and they need to get co-pay support because their insurance co-pay is high, they can go to GoodRx, they can get our co-pay card and in many cases, bring down the co-pay amounts significantly and in some cases, down to $25, which is our target co-pay where possible. The other thing that we turned on with GoodRx is the opportunity to do a cash pay purchase through GoodRx, which actually still would get reported into the IQVIA script numbers because it would be dispensed from a retail pharmacy, but there's a $199 option for a patient to purchase that. That's intended really for a patient who either can't access the co-pay card because they're on a government plan or for whom the co-pay would still be too high or would still be above $199 that it gives another alternative to a patient. Those numbers are still relatively small. It's a very small percentage of the overall number. It just got turned on in November. We'll give you a sense in future quarters. If that grows to be a meaningful number, we'll give some color on that. But at this point, it's a really small number. It's not a driver of anything, but don't want anybody to be surprised that, that option now exists. So we're trying to provide multiple ways for a patient in different reimbursement circumstances and different access environments to be able to know that they're going to be able to get access to the product as…

Our next question or comment comes from the line of Chase Knickerbocker from Craig-Hallum.

Just a quick one. Steve, what inning do you think we are in as far as kind of getting reps to full productivity or kind of where you expect them to be after kind of shifting the focus in the fall, but also kind of changing the lines of like some of the geographical lines of a lot of these territories in the fall as well? Where do you think we are as far as the inning there?

Just to clarify, Chase, what inning of sales force transition?

Full productivity, Steve, as far as full productivity kind of with that transition in the fall.

Yes. So I think full productivity for a sales rep comes several months after the sales rep is on board because there is a training process, there's a learning process. It takes a month or 2 to get to know the accounts in your territory and to have scheduled all of the launch events. So we had a number of sales training classes that came in January and then our national sales meeting in February. By March, April, all of those folks are hitting the ground. I mean they're hitting the ground immediately after their training program. But within a month or 2, they've met most of the accounts in their territory, and they've got their launches scheduled and they've got momentum within each of those accounts and you start to see the real impact. So I would think we are to use the baseball analogy at the seventh or eighth inning of that 9-inning process of sort of the sequence of events where the sales force gets to be fully effective.

And sort of since that shift to focus in GI, have you seen kind of the increase in productivity that having more kind of condensed patient base at these prescribers would indicate? Or do you think there's kind of additional efficiency that we'll continue to kind of harvest over the course of this year?

Well, it's interesting. Even if the sales force is fully effective, you don't see the effect that day or that week or even that month in terms of sales because the majority of our prescriptions come from prior patients who have been prescribed the product who are getting refills, physicians who have previously already adopted the product who are prescribing it to an incremental physician. So what we are really doing is just moving the incremental adoption rate. So if you've sort of got a base 70%, 80% volume that's happening, you're really only impacting that 20%. Now if you become 30% more effective, that 20% goes to 26%, but it's 26% on top of a base 80% that already exists there. So when you see it, you don't see -- when you see greater effectiveness in our sales activities, you don't see an immediate change in revenue in a month. What you see is incremental effectiveness, but that incremental effectiveness is cumulative over time because the increased conversions of patients in that month aren't just scripts that month. They are refill in the next month and refill the next month and refill the next month and the incremental scripts in the next month, refill every month thereafter. So you see a cumulative growing effect. You don't have a sales force's activity turn into a sea change in revenue in that next month of revenue. If that makes sense as to sort of how these consistent use products end up building over time.

Our next question or comment comes from the line of Min Lee from Guggenheim Partners.

Congrats on the data. One quick question for me. What is the company's long-term vision beyond VOQUEZNA? I mean given that you guys have established this GI network, do you guys plan to utilize this network to consider maybe future partnership with companies that have already commercially ready GI assets? Or do you guys plan to maybe pursue any other indications beyond EoE?

So Min, thank you for the question. So at this point, the only new indication that we're pursuing actively is EoE for VOQUEZNA. There are other indications and other populations that are of interest that we're evaluating. We've made no decisions. For example, we did a Phase II trial for as-needed use, haven't made a decision yet about whether or not we wish to pursue that in a Phase III program, but there are other populations that also could be of interest. Our long-term growth plan, as we have indicated, is to build a GI company that will bring in additional assets. This year is very much a year of consolidating our execution plan building deep relationships at every gastroenterology office. The 300-person field force is going to have those deep relationships and is going to be fostering them and build a leverageable base that we could bring a second product into. We are also starting BD activities to explore what other products would make sense either to bring in a commercial product potentially or very possibly a Phase II or Phase III clinical stage product that could launch in a 2030, '31, '32 time frame before we get to our LOE date so that we're launching not just probably a product, but 2 or 3 products over the course of the next 4 or 5 years that would build out a GI pipeline. So we're starting those conversations. We have had people bring us several ideas that are interesting. I don't feel any urgency that we need to distract our sales force to the second product right now. We just need to grow VOQUEZNA. We need to just execute on our core activity set, but we are actively thinking about what products would make sense to bring in to launch over the next 2- to 5-year period of time, and that could mean products at various stages from commercial down to Phase II stage. But it has to be launchable within the next 2 to 5 years, so that's launched before our LOE date in 2033 or '34.

Our next question or comment comes from the line of Martin Auster from Raymond James.

Congratulations on the successful 2025 and in particular, the recent steps you guys have taken to strengthen the balance sheet. I'm going to maybe follow up on one of the earlier questions on -- I appreciate your comments you guys made on Q1 seasonality. I guess I was curious if the plan resets and other factors that kind of contribute to seasonality, does that drive an uptick in the rate of cash pay patients you'd expect to see in the quarter? And then also on the gross to net guidance that Sanjeev provided, curious if there's any trends that are assumed within that 55% to 59% range or if that metric is expected to be pretty steady overall throughout the year?

So thanks, Martin. Appreciate the kind thoughts on the questions. I'll take the first half, which is around cash pay and the second half, I'll give to Sanjeev in terms of GTN and sort of expectations. We would expect that we'll see some uptick in the amount of cash pay patients. I don't have any guidance on how much that is. I don't think it's going to be too significant in that process. But you'll see some patients who have a high deductible plan where they will be able to get access to the product on a cash basis from Blink. And then as they work through their deductibles, they would then be able to get it covered at some later period. And so you may see some movement in cash pay percentage in the early months of each year. That's not just this year, that would just be in general as a pattern in this process. We don't provide guidance on what that mix is going to be on a quarter-to-quarter basis, but that would be a typical feature of the seasonality patterns that one might expect. Separately, in terms of GTN and patterns and trends on GTN. Sanjeev, do you want to take that?

Yes. Yes, I'll take that, Steve. Thank you. So Martin, as you saw like in 2025, so we kind of narrowed the guidance, if you recall, in our Q3 call to 55%, 60%. And right through the last year, we were kind of operating within that range. Quarter-to-quarter, there are variations because your planned business may change from one quarter to the other. But overall, it was very consistent and stable. And that's kind of what I expect in the guidance that we gave early this morning, 55% to 59%. Overall, for the full year, we'll be within that guidance. Quarter-to-quarter, there could be changes depending on how the plan flows and the business flows from that perspective.

[Operator Instructions] Our next question or comment comes from the line of Matthew Caufield from H.C. Wainwright.

We had one question on the landscape that came up from investors. There's a separate private company with later-stage clinical development in non-erosive reflux disease and erosive esophagitis based on the P-CAB formulation. And just curious on your longer-term thoughts on any prospective entrants into the P-CAB space later into the future and maintaining VOQUEZNA's positioning.

Matthew, thanks so much for the question. I apologize I muted for a second to cough. I just had a little bit of cold. But -- the -- I think you're likely referring to Sebela, which is a company that has tegoprazan in development. There is actually an additional P-CAB that's in development that's many years out. So we clearly track competitive developments, all of the P-CABs. And tegoprazan is a good product. We expect that it will go through the NDA process, and they filed their NDA in January, reasonable to expect they may be approved by early 2027, but it's not really for us to predict exactly what that time frame is or what questions might arise. One of the things that we think about is how does this market evolve as a second entrant in the P-CAB space comes in. And it's interesting there's one framework where sort of a question can arise are 2 P-CABs going to compete against each other. There's a different question, which is we're competing in a space of 110 million PPI prescriptions per year. And we've only done 1.1 million prescriptions overall since launch. So we're tracking now at a run rate that's running about 1 million prescriptions a year. So we're at 1% of the PPI market. If a second entrant comes in, they're not going to be trying to take prescriptions. We're both going to be growing the P-CAB awareness in the context of the market where patients are on PPIs and are significantly in pain on PPIs. The entry of a second product in a new category actually does have a tendency to change the mindset of physicians where it's no longer do I need to pay attention to this product if you're the first entrant, but it's -- do I need to pay attention to this category. And that increase in category awareness, I actually think will accrue to our benefit that the majority of prescriptions tend to go to the first entrant that has more history with which physicians are more comfortable that already has broad access. So the second entry tends to grow the category broadly and tends to grow revenue for both parties in that process. So we're actually thinking that it has a net positive effect on the P-CAB adoption broadly to have a second sales force out talking about P-CABs and how much value they can bring to a patient who is still in pain on a PPI. So we're looking forward to that broadening and that shift in mindset of physicians that you really do need to adopt PPIs. We think we've got great product. We think that physicians have been -- we know physicians have been really pleased with the effect that this has to their patients and patients who take this product love it. All of that is going to reinforce the fact that the lead product in the category gets the biggest uptick.

Congrats again on VOQUEZNA's trajectory. It's great to see.

I'm showing no additional questions in the queue at this time. Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day.