10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☑

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of August 8, 2023, the registrant had 56,803,183 shares of common stock ($0.0001 par value) outstanding.

1. Organization, Basis of Presentation and Summary of Significant Accounting Policies

Organization and Basis of Presentation

Phathom Pharmaceuticals, Inc., or the Company or Phathom, was incorporated in the state of Delaware in January 2018. The Company is a biopharmaceutical company focused on developing and commercializing novel treatments for gastrointestinal diseases. The Company’s financial statements are prepared in accordance with U.S. generally accepted accounting principles, or GAAP.

Liquidity and Capital Resources

From inception to June 30, 2023, the Company has devoted substantially all of its efforts to organizing and staffing the Company, business planning, raising capital, in-licensing its initial product candidate, vonoprazan, meeting with regulatory authorities, managing the clinical trials of vonoprazan, preparing for commercialization of its initial products containing vonoprazan, and providing other general and administrative support for these operations. The Company has a limited operating history, has never generated any revenue, and the sales and income potential of its business is unproven. The Company has incurred net losses and negative cash flows from operating activities since its inception and expects to continue to incur additional net losses in the future as it continues to develop and prepares for commercialization of vonoprazan. From inception to June 30, 2023, the Company has funded its operations through the issuance of convertible promissory notes, commercial bank debt, revenue interest financing debt, the sale of 10,997,630 shares of common stock for net proceeds of approximately $191.5 million in its 2019 IPO, the sale of 2,250,000 shares of common stock for net proceeds of approximately $88.6 million in its December 2020 follow-on public offering, the sale of 3,929,116 shares of common stock for net proceeds of approximately $


Delaware		82-4151574
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

100 Campus Drive, Suite 102 Florham Park, New Jersey		07932
(Address of principal executive offices)		(Zip Code)


PART I. FINANCIAL INFORMATION

Item 1	Financial Statements (unaudited)	F-1
	Balance Sheets	F-1
	Statements of Operations and Comprehensive Loss	F-2
	Statements of Stockholders’ Equity (Deficit)	F-3
	Statements of Cash Flows	F-4
	Notes to Unaudited Financial Statements	F-5
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4	Controls and Procedures	32

PART II. OTHER INFORMATION

Item 1	Legal Proceedings	33
Item 1A	Risk Factors	33
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3	Defaults Upon Senior Securities	33
Item 4	Mine Safety Disclosures	33
Item 5	Other Information	33
Item 6	Exhibits	34
	Signatures	35


	June 30, 2023			December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	248,847		$	155,385
Prepaid expenses and other current assets		8,760			5,127
Inventory		111			—
Total current assets		257,718			160,512
Property, plant and equipment, net		1,158			1,207
Operating lease right-of-use assets		1,886			2,287
Restricted cash		528			505
Other long-term assets		3,749			299
Total assets	$	265,039		$	164,810

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable (including related party amounts of $27 and $35, respectively)	$	4,174		$	9,997
Accrued expenses (including related party amounts of $2,786 and $2,499, respectively)		15,451			14,678
Accrued interest		927			854
Operating lease liabilities, current		717			708
Current portion of revenue interest financing liability		276			—
Total current liabilities		21,545			26,237

Long-term debt, net of discount		97,806			95,264
Revenue interest financing liability		119,799			109,525
Operating lease liabilities		789			1,098
Other long-term liabilities		7,500			7,500
Total liabilities		247,439			239,624

Commitments and contingencies (Note 4)

Stockholders’ equity:
Preferred stock, $0.0001 par value; authorized shares — 40,000,000 at June 30, 2023 and December 31, 2022; no shares issued and outstanding at June 30, 2023 and December 31, 2022		—			—
Common stock, $0.0001 par value; authorized shares — 400,000,000 at June 30, 2023 and December 31, 2022; issued shares — 56,639,085 and 41,723,308 at June 30, 2023 and December 31, 2022, respectively; outstanding shares — 56,639,085 and 41,468,871 at June 30, 2023 and December 31, 2022, respectively		5			3
Treasury stock — 19 shares at June 30, 2023 and December 31, 2022, respectively		—			—
Additional paid-in capital		823,467			652,276
Accumulated deficit		(805,872	)		(727,093	)
Total stockholders’ equity (deficit)		17,600			(74,814	)
Total liabilities and stockholders’ equity	$	265,039		$	164,810


	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Operating expenses:
Research and development (includes related party amounts of $233, $370, $407 and $1,800, respectively)	$	12,764		$	18,815		$	24,242		$	36,475
General and administrative (includes related party amounts of $14, $0, $17 and $0, respectively)		18,937			26,548			37,536			46,795
Total operating expenses		31,701			45,363			61,778			83,270

Loss from operations		(31,701	)		(45,363	)		(61,778	)		(83,270	)

Other income (expense):
Interest income		348			112			1,808			119
Interest expense		(9,615	)		(5,667	)		(18,832	)		(8,426	)
Other income (expense)		3			(2	)		23			(8	)
Total other expense		(9,264	)		(5,557	)		(17,001	)		(8,315	)
Net loss and comprehensive loss	$	(40,965	)	$	(50,920	)	$	(78,779	)	$	(91,585	)
Net loss per share, basic and diluted	$	(0.84	)	$	(1.33	)	$	(1.73	)	$	(2.40	)
Weighted-average shares of common stock outstanding, basic and diluted		48,500,516			38,272,044			45,444,496			38,155,151


	Common Stock				Treasury Stock		Additional Paid-in		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Capital		Deficit			Equity
Balance at December 31, 2022		41,468,871	$	3		19	$	652,276	$	(727,093	)	$	(74,814	)
401(k) matching contribution		52,130		—		—		456		—			456
Vesting of restricted shares and restricted stock units		414,119		—		—		—		—			—
Stock-based compensation		—		—		—		7,048		—			7,048
ESPP shares issued		121,801		—		—		856		—			856
Issuance of common stock under ATM facility		1,514,219		1		—		14,072		—			14,073
Net loss		—		—		—		—		(37,814	)		(37,814	)
Balance at March 31, 2023		43,571,140	$	4		19	$	674,708	$	(764,907	)	$	(90,195	)
Vesting of restricted shares and restricted stock units		259,194		—		—		6		—			6
Stock-based compensation		—		—		—		7,253		—			7,253
Issuance of common stock from exercise of stock options		15,000		—		—		111		—			111
Issuance of common stock in connection with underwritten public offering, net		12,793,750		1		—		141,389		—			141,390
Net loss		—		—		—		—		(40,965	)		(40,965	)
Balance at June 30, 2023		56,639,085	$	5		19	$	823,467	$	(805,872	)	$	17,600


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☑	Smaller reporting company	☑
Emerging growth company	☑