Okay, good morning, everyone. Welcome to Guggenheim Emerging Outlook Biotech Summit 2026. It is my pleasure to welcome our next presenting company, Phathom Pharmaceuticals. My name is Yatin Suneja, one of the senior biotech analysts here at the firm. I will be moderating a discussion here with the Chief Executive Officer of the company, Steven Basta. Steven, thank you so much. I think you've been with the company we just discussed less than one year, and you've sort of made a lot of changes at the company. So before we dive into some of these changes that you have made, the commercial strategy, why don't you just make some opening comments, set the stage for us? What have you achieved so far? What are some of the upcoming milestone, how the sales trajectory is? And then we'll sort of go into a little bit more of a deeper dive into the commercial dynamic, if that's okay. Terrific. Terrific. Well, Yatin, thanks so much for the invitation to join you today. It's a privilege to be here. Just, I'm gonna do sort of a high-level overview of the evolution of the company over the last couple of years, to provide a little bit of context. And, you know, first, as a starting point, Phathom has the really good fortune of having an extraordinary drug. The whole business is built upon the strength of VOQUEZNA. VOQUEZNA is the first to market P-CAB in the U.S. So, we have brought the next generation gastroesophageal reflux therapy into what is an enormous market, with 65 million patients in the U.S. with gastroesophageal reflux. The standard of care hasn't changed for 30 years, with H2 blockers having been introduced, and then PPIs having been introduced. Several of the PPIs, when these were branded products before, they converted to a generic market, were north of $3 billion in revenue at the same time. The entire GERD market during the PPI rise was well north of $10 billion in revenue. This is an enormous market space. Our opportunity with VOQUEZNA is not to treat the entire GERD market, but our opportunity is that 40% of gastroesophageal reflux patients who are on standard of care therapy today are still in pain. That's the opportunity set. The PPI market is enormous in terms of patient penetration, but 40% of those patients are being inadequately treated today. They are still experiencing significant pain, and that's our opportunity set, is can we convert those patients who are in pain to a therapy that raises pH more than the PPIs are able to raise pH? And if you raise pH in the stomach, you reduce the pain, and you reduce the erosions that occur in the esophagus, you reduce the irritation in the esophagus. It's dramatically more efficacious in terms of the improvement in pH and the overall clinical experience for a patient. Patients who switch from a PPI, if they're in pain, they switch to VOQUEZNA, immediately tell us, immediately, you know, within a few hours, can feel the difference, and in some cases, within 30 minutes to an hour, could feel the difference between the experience that they had on a PPI and the experience that they have on VOQUEZNA. I, as a patient, had precisely that effect. Me as well. It's a dra- I am also a patient. It's a dramatically different kind of effect. And the ability to relieve pain is the motivation for patients to switch. It's the motivation for physicians to switch to the next generation therapy because their patients are being inadequately treated today. So when we launched, product launched in November of 2023. In 2024, our first full year of launch, we did $55 million in revenue. In 2025, we haven't officially announced the final numbers, but we gave estimated numbers for Q4 and for the full year. We estimated $175 million in revenue last year, so we grew $120 million from 2024 to 2025. That's a really nice growth rate. We are on track to continue growing nicely in 2026. We have communicated that we expect to transition to operating profitability during 2026, and for the second half of 2026, we expect to be operating profitably with a positive operating profit. That puts us in a really good position in our launch trajectory. The pivot that we made last year, you'd mentioned that I joined about a year ago, so the significant pivot in strategy that we made last year was to focus our sales efforts much more on gastroenterologists than on primary care. The original launch had been predicated upon thinking about the broad gastro or the broad GERD market and the broad PPI script market as being able to be switched. We really refocused that after I joined in conversations with our sales teams and our marketing team and looking at who was prescribing our product. It was clear gastroenterologists are the early adopters in this category. It's clear their patients are the ones who are most in need. By definition, a patient gets referred from a primary care physician to a gastroenterologist if they have GERD because they're in pain. If you're not in any pain, you're never asking your primary care physician: What can I do about this? Sure. So it's only the patient who's in pain, who's getting referred, so that is the high-need state patient who is in the gastroenterology practice, and that's where our best opportunity to get early conversions is. So we pivoted the sales activity set last year to focus much more on gastroenterology. We continued our growth through that process, and that also allowed us to then reduce spending on direct-to-consumer campaigns, on a number of things that were very expensive. Fundamental change in the company over the past year was to pivot sales to gastroenterology, focus on driving our operating expense discipline. -to get to break even, and then ultimately profitable operations during 2026. Yeah. Yeah. No, I clearly remember talking to you when you joined. There was a different strategic focus, not strategic, marketing strategy that you had, and there was a focus on profitability. So the question is: could you talk about what has worked and what has not worked? Obviously, you know, doesn't work like that, everything clicked, right? So the trajectory is good. You are able to cut the expenses and able to grow the franchise, but what are the some issues are still there that needs a little bit more alignment? So fundamentally, I need to be careful in saying this 'cause it may sound like we're declaring success, and that is not true at all. This is a multi-year activity to realize the potential for this product. But 2025 worked basically as we'd planned. Yeah. The pivot to the gastroenterology sales focus, we executed in stages through the course of the year. So we announced after I joined, when we did the assessment and realigned the focus, we announced that we were realigning the focus. The second step was then to change the incentive comp plan for- Yeah ... the sales force and to change target lists for the sales force. So we announced the pivot in May. In July, we changed the target lists for the sales force so that we added in all of the remaining gastroenterologists and removed a significant number of unproductive primary care targets from their target list so that they could spend more time in gastroenterology. Yeah. We realized in that process that we had territory maps that weren't aligned properly for their GI targets. They had been designed based upon primary care targets. So in October, we remapped all of the sales territories so that we could rebalance the number of gastroenterologists in each sales territory. That ran smoothly, and we continued growing through the course of Q4, and we now have properly aligned sales territories. We have been in the process over the past three months of refilling the open territories that got created through that realignment. By the end of March, we expect to have a full-strength sales organization, which will be approximately 300 sales reps at full strength. And that positions us for 2026 really well. Got it. That positions us with strength and the proper focus, and aligned marketing messaging, and aligned growth messaging around how do we grow accounts through the stages of adoption of VOQUEZNA. I actually think last year went exactly to plan- To plan. in terms of the sales execution and in terms of the expense discipline side. Got it. So you announced the numbers for fourth quarter or the full year, no matter how, however you look at it. Could you characterize the performance? Like, what were you seeing from the growth perspective, where it is coming from, how deep you are with these GI docs, or the depth of prescribing you are seeing with the GIs? So again, your prior question was sort of how did this go relative to what we'd intended- Yeah ... and what was working? And what you see in our growth in Q2, Q3, and then continued into Q4, is that we grew solidly each quarter last year through all of this sales force transition. Yes. Yes. That's actually, you know, quite confidence inspiring internally, as an organization, that any one of those changes could have created disruption that could have impacted our growth rate. The fact that realigning territories, realigning target lists with the sales team, meeting new customers, the new script writers... So, you know, if you realign geography, doesn't sound like a lot, you're just changing the territory maps. But when you realign geography, what it means is a sales rep is now calling on an office where they don't know anybody in that office. They have to get to know the staff, they have to get to know the providers in that office. They have to build relationships with each of those physicians. Through that process, we maintain growth every quarter. That actually gives me significant confidence going into 2026, that we were able to achieve that level of growth through the sales territory realignment. That positions us really well as our sales team has 3 months, 6 months, 9 months of relationship building, call frequency with offices. We know from our own internal data that more time spent in a gastroenterology practice drives greater depth of prescribing within that practice. Yeah. So as we get to spend more time in those offices, and as we get to spend 6, 9 months building those relationships and deepening those relationships, it will naturally have the effect of deepening the prescribing behavior. Got it. So 2025, you know, you just mentioned $120 million worth of growth or incremental sales. How should we think about 2026? Are there areas where you need to invest more to drive growth? Yeah. I think you're gonna find that 2026 looks a lot like just continuing the blocking and tackling on the strategy we've already put in place. So we have... You know, and I talk a lot about our sales force alignment, because that's actually the thing that drives our revenue.... So, I'll paraphrase something that our head of sales says frequently, and I've sort of adopted this mantra, that sales execution is really about calling on the right customers and being excellent in front of the customer. So what we've focused on doing over the last year is making sure we're calling on the right customers. Are we getting into the right gastroenterology practices? Are we focusing the right amount of time in offices that can generate significant script volume? And then it's a matter of excellence in execution. Yeah. Excellence in the sales call, excellence in the marketing message, excellence in the non-personal promotion touches to those physicians, making sure that our sales messaging, our marketing messaging is aligned around the growth stages that those customers are going through. That's not gonna be tremendously visible to investors. That's just sort of below the top line, blocking and tackling execution, but it's the stuff that drives growth. So what we are focused on is the blocking and tackling execution every month in every sales call with every account that's gonna drive growth. You're not gonna see us fundamentally shift strategy this year. Got it. What you're going to see us do is just continue the day-to-day execution. Got it. That's the focus that I think is gonna create success as we grow this product. Got it. Maybe we double-click on 2026 a little bit more. So if we see the January script, I think there is a little bit of a decline. So the question is, how significant are the seasonal fluctuation at the beginning of this year for this type of a product? Well, I think that's, that's one of the things that we are seeing more clearly this year because it's, it's the first year when we've had really well-established sales. Yeah. I mean, obviously, we went through a bit of a seasonal decline January of last year, associated with the transition from 2024 to 2025. But 2024, we had just gotten our non-erosive reflux approval, and it was still early in the adoption. What we're seeing right now is we have a branded product in a highly genericized market with plan resets, with the need to get new prior authorizations for the new plan. If someone has changed insurance, their new insurance is gonna require a prior authorization. All of that noise, all of the deductible resets creates noise- Yeah ... in January. That's gonna create the natural seasonality pattern that we're seeing in the context of that transition. The underlying strength of the desire of physicians to prescribe this product, the desire of patients who are on this product to maintain their access to this product, the growing adoption within the gastroenterology market, none of that changes. We're just seeing for a few weeks, the natural January cadence and seasonality of all of the plan resets, all of the deductible resets, all of the plan changes that, That's just- that users go through. Yeah. That's the stuff that happens. Almost everybody gets it. That's an industry standard. Almost everybody gets that, and we are, you know, definitely, you know, seeing that impact because we're in a market where the alternative products are generics and don't require any of this extra work. Yeah. So if we look at 2025, is that a good proxy for gross-to-net? I mean, have you established a gross-to-net number which I think is sustainable, or do we, or should we expect improvement or sort of deterioration over time as the brand grows? Yeah. So we're sitting, you know, at this conference, just, you know, a matter of weeks away from our quarterly numbers. I'm gonna defer on giving guidance for this year until we actually have our fourth quarter call- Yeah ... because we will then give granular guidance that will give people a lot of clarity on exactly what to expect for this year. Got it. And should we expect revenue guidance as well? Yeah. So we'll provide revenue guidance, OpEx guidance. Got it. We'll give you some color on gross-to-net and how to expect that. We'll give that clarity when we do the- Yeah ... Q4 call, but I'll stop shy of actually sort of front-running that and giving you earlier guidance. Okay. Then, you know, so you raised some capital at the beginning of the year. So how, what are the areas that you're thinking from an investment standpoint? How are you thinking you're deploying it to further accelerate the growth? It seems like on the sales force by March, we should be at 300. I don't know if you need more on that. So I think, what we're going to see in terms of our spend pattern this year is not a significant acceleration. You'll see that we'll spend- Yeah ... a little bit more per quarter than we spent in Q3 and Q4 of last year, because, I mean, we talked about the sales force realignment, and then we're filling the open territories. We've got a few marketing programs that we're testing, but these are modest spends. There's some incremental SG&A increase that you'll see in 2026. It's not significant. It's not big numbers, but it's a modest increase. You'll also see an uptick in R&D spend because you'll have the annualized effect of the EoE trial that we started. Yeah. So that clinical trial cost will flow through the course of 2026. So you'll see some increase, but a modest increase in operating expense through the course of this year. Where we're really gonna be focused is just, again, on the blocking and tackling execution. So it's not big, new, expensive initiatives. It is getting all of the day-to-day stuff to be as precise and as efficient and as effective and iterating. Yeah. Is that message working? Is that sales call process working? Optimizing. Do we need to modify that in that way? Every one of those optimizations has a small incremental efficiency gain, and all of those become cumulative gains that drive even faster growth. Got it. That's our core focus through the course of this year. Got it. So with the recent raise, since you'd asked about that financing, that was really much more about resetting our balance sheet, that we have significant debt overhang. It's candidly created a little bit of noise among investors around, you know, when the debt would come due in 2027, and, you know, debt covenants, various other questions. And so we have a really big interest expense line on our P&L. So one of the things we're hoping to do with that raise is renegotiate terms on some of that outstanding debt. It's possible to refinance, it's possible we renegotiate terms, but we want to improve our capital structure somewhat, and that was a key step in that process. Got it. Got it. So in terms of, you know, the script, like about 20 million script, what is the eventual goal? Like, what% of share you could get? I think at the end of third quarter, you were only 3% penetrated. That's right. Do you generally have goals for 2026, 2027, in terms of where you want to get on penetrations? We don't generally communicate on an annual basis exactly what percentage market share we get. The 3% that we referred to on one of our quarterly calls was our percentage penetration in the PPI script volume within gastroenterology. Oh, within. So if you think about the PPI market as a whole, with 110 million prescriptions- Yeah. ... 20 million prescriptions are written by gastroenterologists or the APPs that work in gastroenterology practices. So it's not the majority of PPI scripts, but that 20 million script volume goes to patients who were referred to gastroenterologists primarily because they were still in pain. Yeah. So they are the patients who need it. We believe we can convert 20%-30% of that PPI script volume in those gastroenterology practices. At that 20%-30% conversion, we hit $1 billion in revenue just coming out of the GI scripts. There's significant upside to that because patients don't stay in the GI practice for many years. They get referred to the GI practice, they get scoped, their treatment gets changed. Once they're stabilized, they go back to their primary care physician. So many of those patients are then going to get refills from primary care- Yeah ... and they're going to be telling their primary care physician about how fabulous the drug is, and that's going to be the opportunity to open up the primary care market. But within GI alone, if we're able to do 4-6 million scripts, which is 20%-30% of that 20 million script volume- Yeah ... for PPIs today in the GI practices, that represents approximately $1 billion of revenue. So that's our path to the first $1 billion in revenue, and it is very much the focus. We were talking earlier about the sales force, and the sales focus, and excellence in front of the right customers. It is very much our focus. How do we get 20%+ of the PPI volume in those GI practices? What does it take to grow utilization within each of those practices, within each of those prescribers? That's where we're spending a lot of our time, is how do we go deep in GI? Very good, thank you. Then in terms of some relative comps, what would you... Like, what are some comps for us to look at in terms of the peak potential? Is LINZESS the right way to look at it? So I think more about the while it's a little bit out of date. It's so on point in terms of the relative market. I think more about the early PPI launches. Oh, I see. That, you know, when you look at Prilosec or Nexium or Protonix, when you're looking at, you know, the Prilosec peak revenue, the Nexium peak revenue, these were $3 billion-plus products. Yeah ... at a much lower price point. Yeah. And so there is an opportunity set. Now, collectively, the PPI market was about $12 billion at peak. We're not projecting by any means that we get to a $12 billion number. So I should be clear about that context. But if you think about the fact that they were treating the much broader GERD market- Yeah ... our opportunity is 40% of those patients. Yeah. There's a very big opportunity as we are capturing more and more of the patients who are still in pain on- Yeah ... a PPI, to convert them to a better therapy that helps alleviate their pain. There is a multibillion-dollar opportunity for this drug. Got it. Very good. Actually, I'm gonna go to the EoE first, then I'll come back to company building. So how do you envision the EoE? And I think the EoE study has two objectives, right? Obviously, to get to access a new market for you, but also it provides some exclusivity on the IP front. If you can touch on both. So how we think about the EoE market - actually, I'm gonna, I'm gonna switch the order of that and think about exclusivity first - Okay ... because I think exclusivity is actually the bigger economic driver. Yeah. So, so I think the EoE trial provides us three fundamental values and provides a broader value on a societal basis to these patients. So first-line therapy for EoE today is PPIs. There is clearly a body of data that shows that if you can increase pH in the stomach, if you can reduce the acid influence on the lower esophagus, you can improve EoE. That data is well known, but there haven't been broad, multicenter, well-controlled trials. Yeah. Doing the first significant multicenter, well-controlled trial in EoE with an acid suppression therapy, and particularly with an acid suppression therapy that raises pH even more than the PPIs, is going to give us really good data on what the magnitude of effect is that you can get in those patients. That's going to be really important for care of EoE patients, so it has really strong scientific impact. That also has multiple impacts on us economically. It creates a halo effect for the company in terms- Yeah ... of relationships within gastroenterology, that we're providing data for an important indication that will impact the way gastroenterologists think about this product... there is a market opportunity, but the biggest economic opportunity for us is actually the extension of exclusivity. In our conversations with FDA, they've clearly indicated that EoE would be an indication of interest in pediatric patients. Okay. Under the 2023 FDA guidance regarding the pediatric exclusivity extension, they want companies to both complete all of the required pediatric studies in the NDA approval requirements, and to generate additional data in a pediatric indication of interest. EoE would represent that indication of interest. I see. If our Phase II trial reads out positively, supportive of moving into Phase III, we would expect to have a conversation with FDA about including adolescent patients in the Phase III program, and obtaining a written request to include adolescent patients in the Phase III program, which then means if we do that trial the way it's agreed with FDA, we would qualify for 6 months extension. 6 months extension. Now, the simple economic math is the following: if the drug's $2 billion in revenue at peak, and we can extend exclusivity by six months, you add $1 billion of revenue. Yeah. So that, that's actually the largest economic impact, is add that extra $1 billion of revenue through the extra six months of exclusivity. There's an additional economic impact that you also are capturing- Correct ... the EoE PPI market. Yeah. and that adds value on top of that, and there's the additional benefit of the relationships that we build within the GI community, generating data and an indication of significant interest in the GI population. Got it. Could you just quickly review the IP? When, at the earliest, a generic could launch or an ANDA can be filed? Right. So our exclusivity is primarily driven by the standard NCE exclusivity which is 5 years of protection, extended to 10 years by virtue of the application of the GAIN Act. Okay. Because the first approval for this drug was an anti-infective approval for H. pylori. So the GAIN Act exclusivity has now been extended to all users of VOQUEZNA, and it's in the Orange Book. We have exclusivity through May of 2032. This is a regulatory exclusivity that prevents an ANDA from being filed until May of 2032. Okay. If an ANDA goes through in 10 months, that would mean an early 2033 launch. Most ANDAs actually require two or three rounds of review which could easily mean we have exclusivity into 2034. I see. Got it. Very helpful. Final question, how are you thinking about building- One last note, all of those dates could be extended by six months. By 6 months. Everything ... with the pediatric exclusivity extension. Got it. And then, how are you thinking about building the company beyond VOQUEZNA? What are the priorities, like, how are you thinking about pipeline? So again, we've talked a lot about the sales force focus on gastroenterology. We are building deep relationships with every gastroenterology practice. That gives us the opportunity, as a mid-sized pharma company with deep relationships in GI, to be able to bring other assets in that can launch through that sales force very cost effectively. So we will, over the next 1 or 2 or 3 years, be looking at numerous opportunities to bring in products that could be ready for a commercial launch- Yeah ... or could be as early as a Phase II program, ready to go into Phase III. Our key criteria is, it has to have human, clear human efficacy data, at least- Yeah … through phase two. It has to have a primary call point in GI for it to make sense for us, because- Yeah ... it's got to go through the same customer base that we're already calling on, and it needs to launch before our LOE date. I see. So that's the key filter, is that- Right ... we have to be able to launch one or two or three additional products before our LOE date to maintain the stability of that- Of the franchise ... GI franchise. Yeah. Got it. Well, very good, Steve. Thank you so much.