Phathom Pharmaceuticals (PHAT) Q2 FY26 earnings call: guidance and Q&A

Phathom achieved its first positive operating profit (excluding stock-based compensation) in Q2 FY26, ahead of guidance, marking a significant improvement from an operating loss of over $50M in Q2 FY25. This milestone was driven by robust revenue growth and disciplined expense management, with cash operating expenses reduced by 34% year-over-year. The company also generated cash from operations for the first time, ending the quarter with $182.5M in cash and cash equivalents, demonstrating successful execution of its GI-first pivot.

Q2 FY26 revenue reached $74.3M, reflecting an 88% year-over-year growth and a 27% sequential increase over Q1 FY26, representing the largest quarter-over-quarter absolute revenue growth. Despite this strong performance, the full-year 2026 revenue guidance was updated to $310M-$325M. This adjustment reflects observed physician friction in the process of obtaining Voquezna for less severe GERD patients, though management still anticipates meaningful growth in the next two quarters and remains confident in the long-term revenue potential.

Management identified 'friction' in the prescription process for Voquezna, particularly concerning prior authorizations and documentation for less severe GERD patients. This is not a fundamental access issue but rather a workflow challenge. The company is implementing initiatives to streamline this process, including enhanced education for physicians and office staff, and encouraging the use of Blink, a facilitating partner that provides additional support services for PA submission and appeals, aiming to improve both actual workflow efficiency and physician confidence.

Solid progress was reported in the Eosinophilic Esophagitis (EOE) Phase II study for Voquezna, with enrollment completed ahead of schedule in June. Top-line data for the 12-week blinded treatment portion is expected in Q4 FY26. This study is significant as the first large placebo-controlled trial of an acid suppression treatment for EOE, and favorable results could potentially extend Voquezna's exclusivity by six months. The company also received a written request from the FDA regarding pediatric inclusion in a potential Phase III trial.

Phathom plans to initiate a Phase III trial in Q4 FY26 for as-needed use of Voquezna in non-erosive GERD. This follows a successful Phase II trial that demonstrated faster and sustained relief of episodic heartburn compared to placebo. Management believes this potential label expansion could significantly increase Voquezna's commercial opportunity by targeting a distinct patient population who prefer non-daily treatment, and could strengthen future engagement with primary care physicians and direct-to-consumer advertising.

The company views the potential entry of a second PCAB (Tegoprazan) into the market as a category expander, which is expected to benefit Voquezna as the market leader. Management highlighted Voquezna's 93% healing rate in erosive esophagitis compared to Tegoprazan's reported 84.6%, emphasizing that healing rates are a critical factor for physicians. They anticipate this dynamic will not significantly impact Voquezna's growth trajectory or operating expenses in 2027, and could be an overall positive for the PCAB category.

Phathom's current balance sheet, including $182.5M in cash and cash equivalents, combined with anticipated future cash generation, is deemed sufficient to meet all outstanding debt obligations, including RIFA payments starting in 2029 and term debt repayments in 2028, without requiring additional debt or equity raises. This financial position also provides flexibility for selective in-licensing opportunities, particularly for assets that do not require large upfront payments and can be funded through the income statement, to grow the pipeline.