Phathom Pharmaceuticals, Inc. (PHAT): Business Model Canvas [11-2024 Updated]

Phathom Pharmaceuticals, Inc. (PHAT) is making significant strides in the pharmaceutical industry, particularly with its innovative treatment for gastrointestinal disorders. This blog post delves into the company's Business Model Canvas, highlighting key elements such as partnerships with Takeda Pharmaceuticals, robust research and development efforts, and a focus on customer engagement. Discover how these components work together to create value and drive revenue in a competitive market.

Phathom Pharmaceuticals, Inc. (PHAT) - Business Model: Key Partnerships

Collaborations with Takeda Pharmaceutical Company for licensing

Phathom Pharmaceuticals has a significant collaboration with Takeda Pharmaceutical Company through an exclusive license agreement established on May 7, 2019. This agreement allows Phathom to develop and commercialize vonoprazan fumarate in the U.S., Europe, and Canada. In consideration of the Takeda License, Phathom paid Takeda:

• Upfront cash fee: $25 million
• Common stock issued: 1,084,000 shares (valued at approximately $5.9 million)
• Warrant to purchase 7,588,000 shares at an exercise price of $0.00004613 (initial fair value of approximately $47.9 million)
• Potential sales milestone payments: Up to $250 million based on product sales achievements
• Royalty payments: A low double-digit percentage on net sales of licensed products.

As of September 30, 2024, Phathom recorded $1.6 million in royalty expenses under the Takeda License.

Partnerships with contract research organizations (CROs) for clinical trials

Phathom Pharmaceuticals collaborates with various contract research organizations (CROs) to conduct clinical trials, essential for the development of its products. The company has invested in clinical trials to support its FDA-approved products, including VOQUEZNA. Research and development expenses amounted to $25.5 million for the nine months ended September 30, 2024, down from $36.5 million for the same period in 2023, reflecting the completion of certain clinical studies.

Specific CRO partnerships include:

• Utilization of CROs for conducting pivotal clinical studies, including the PHALCON-NERD-301 Phase 3 study.
• Collaboration with specialized clinical research firms to facilitate the efficient execution of trials.

Engagements with third-party payers for market access

Phathom actively engages with third-party payers to secure market access for its products. This engagement is critical for ensuring that its FDA-approved products, such as VOQUEZNA, are covered by insurance plans, thus facilitating patient access. The company anticipates that successful negotiations with payers will significantly impact its revenue potential.

As of September 30, 2024, Phathom reported product revenues of $25.6 million related to sales of VOQUEZNA, VOQUEZNA TRIPLE PAK, and VOQUEZNA DUAL PAK. The company is focused on establishing strong relationships with payers to enhance reimbursement rates and accessibility of its products.

Partnership Type	Details	Financial Impact
Collaboration with Takeda	Exclusive license for vonoprazan fumarate	Upfront payment of $25 million + $250 million in potential sales milestones
CRO Partnerships	Clinical trials for product development	R&D expenses of $25.5 million for 2024
Third-Party Payers	Market access negotiations	Product revenues of $25.6 million as of September 30, 2024

Phathom Pharmaceuticals, Inc. (PHAT) - Business Model: Key Activities

Research and development of vonoprazan and related products

Phathom Pharmaceuticals is primarily focused on the research and development of vonoprazan and its related products. For the nine months ended September 30, 2024, the company incurred research and development expenses of $25.5 million, a decrease from $36.5 million in the same period of 2023. This reduction was attributed to a $5.0 million decrease in Chemistry, Manufacturing and Controls (CMC) costs and a $5.0 million reduction in regulatory and clinical study-related expenses due to the completion of the PHALCON-NERD-301 Phase 3 study.

Clinical trials to secure regulatory approvals

Phathom Pharmaceuticals has actively conducted clinical trials to obtain necessary regulatory approvals for its products. The company received FDA approval for vonoprazan products including the VOQUEZNA TRIPLE PAK and VOQUEZNA DUAL PAK in October 2023, and launched these products commercially in the fourth quarter of 2023. As of September 30, 2024, the company reported product revenues of $25.6 million from these sales.

Marketing and sales efforts for product launch

Phathom's marketing and sales strategies have been pivotal following the launch of its products. For the nine months ended September 30, 2024, the company reported selling, general and administrative expenses of $214.0 million, a significant increase from $60.9 million in the same period of 2023. The increase included $94.3 million in commercial expenses related to the launch of the VOQUEZNA products, which comprised $53.3 million of external project spending and $41.0 million in advertising and promotional expenses.

Key Activity	Expense (2024)	Expense (2023)	Change
Research and Development	$25.5 million	$36.5 million	- $11.0 million
Selling, General and Administrative	$214.0 million	$60.9 million	+ $153.1 million
Product Revenue	$25.6 million	$0	+ $25.6 million

Phathom Pharmaceuticals, Inc. (PHAT) - Business Model: Key Resources

Intellectual Property, Including Patents on Vonoprazan

Phathom Pharmaceuticals holds key patents for vonoprazan, a novel potassium-competitive acid blocker (P-CAB) developed for the treatment of gastrointestinal diseases. The patents cover various formulations and methods of use, providing a competitive edge in the market. The FDA approved the NDA for vonoprazan on October 27, 2023, marking a significant milestone for the company .

Financial Capital from Equity Offerings and Financing Agreements

As of September 30, 2024, Phathom Pharmaceuticals reported cash and cash equivalents of approximately $334.7 million . The company has secured financial capital through various equity offerings, including:

• Underwritten public offering completed in August 2024, generating net proceeds of $121.8 million .
• Underwritten public offering in May 2023, resulting in net proceeds of $141.8 million .
• Revenue Interest Financing Agreement providing up to $260 million, with $100 million received at the initial closing and an additional $160 million upon FDA approval .

Additionally, the company has a loan agreement with Hercules providing term loans up to $200 million, with $185.8 million outstanding as of September 30, 2024 .

Skilled Workforce in R&D and Commercial Operations

Phathom Pharmaceuticals employs a skilled workforce specialized in research and development (R&D) and commercial operations. The company has invested heavily in its workforce, with research and development expenses totaling $25.5 million for the nine months ended September 30, 2024 . The focus on hiring and retaining talent is evident in the increase in personnel-related expenses, which rose to $59.9 million in the same period . The workforce is crucial for advancing clinical trials, regulatory submissions, and the successful launch of the company's products.

Key Financial Metrics	Q3 2024	Q3 2023	Change
Net Cash Used in Operating Activities	$203.3 million	$93.8 million	+ $109.5 million
Net Product Revenue	$16.4 million	$0	+ $16.4 million
Total Operating Expenses	$84.8 million	$35.7 million	+ $49.1 million
Net Loss	$85.6 million	$43.2 million	+ $42.4 million

Phathom Pharmaceuticals, Inc. (PHAT) - Business Model: Value Propositions

Innovative treatments for gastrointestinal conditions

Phathom Pharmaceuticals focuses on developing and commercializing innovative treatments for gastrointestinal diseases, particularly through its lead product, VOQUEZNA, which has received FDA approval for various indications, including erosive gastroesophageal reflux disease (GERD) and H. pylori infection. The product was launched in the fourth quarter of 2023, contributing to product revenues of approximately $25.6 million for the nine months ended September 30, 2024.

Competitive pricing and accessibility through third-party reimbursement

The pricing strategy for VOQUEZNA aims to ensure accessibility for patients while maintaining competitive positioning in the market. The company's collaboration with third-party payers facilitates reimbursement, making it easier for patients to access these treatments. The cost of revenue for the nine months ended September 30, 2024, was reported at $4.2 million, indicating a favorable margin for the company as it seeks to expand its market share.

Proven efficacy and safety profiles supported by clinical trials

Phathom Pharmaceuticals emphasizes the proven efficacy and safety profiles of its products, supported by rigorous clinical trials. The reduction in research and development expenses from $36.5 million in 2023 to $25.5 million in 2024 reflects the company's focus on streamlining operations as it transitions to commercialization. The successful completion of pivotal studies, such as the PHALCON-NERD-301 Phase 3 study, has bolstered confidence in the therapeutic benefits of its offerings.

Financial Metrics	Q3 2024	Q3 2023	Change
Product Revenue	$16.4 million	$0	$16.4 million
Cost of Revenue	$2.4 million	$0	$2.4 million
Gross Profit	$13.996 million	$0	$13.996 million
Research and Development Expenses	$8.7 million	$12.3 million	Decrease of $3.6 million
Selling, General and Administrative Expenses	$76.1 million	$23.4 million	Increase of $52.7 million
Net Loss	$(85.6 million)	$(43.2 million)	Increase of $42.4 million

As of September 30, 2024, Phathom Pharmaceuticals reported a net loss of $259.9 million for the nine months, an increase from $122.0 million in the same period of 2023. The company's cash and cash equivalents stood at approximately $334.7 million, providing a solid foundation for ongoing operations and development.

Phathom Pharmaceuticals, Inc. (PHAT) - Business Model: Customer Relationships

Direct engagement with healthcare providers and pharmacies

Phathom Pharmaceuticals actively engages with healthcare providers and pharmacies to enhance awareness and promote the use of its products, particularly VOQUEZNA. In the nine months ended September 30, 2024, the company reported product revenue of $25.6 million from VOQUEZNA, VOQUEZNA TRIPLE PAK, and VOQUEZNA DUAL PAK, which were launched in the fourth quarter of 2023.

Support programs for patients to assist with medication access

Phathom offers comprehensive support programs aimed at assisting patients in accessing medications. This includes financial assistance programs that help eligible patients with the cost of their medications. The company incurred $213.9 million in selling, general, and administrative expenses for the nine months ended September 30, 2024, with a significant portion allocated towards these patient support initiatives.

Support Program	Description	Financial Impact (2024)
Patient Assistance Program	Helps patients access medications through financial assistance.	$25.6 million in product revenue from patient access initiatives.
Co-pay Assistance	Reduces out-of-pocket costs for patients via co-pay cards.	Part of $213.9 million in total SG&A expenses.
Adherence Programs	Support for patients to ensure they follow their medication regimen.	Included in overall patient support costs.

Feedback mechanisms to improve customer satisfaction

Phathom Pharmaceuticals employs various feedback mechanisms to gauge customer satisfaction and improve its offerings. This includes surveys and direct outreach to healthcare providers and patients. The company reported a net loss of $259.9 million for the nine months ended September 30, 2024, emphasizing the need for ongoing engagement and improvement based on customer feedback.

Feedback Mechanism	Purpose	Implementation Status
Surveys	Collect insights on product effectiveness and customer service.	Ongoing; results are analyzed quarterly.
Focus Groups	Gather in-depth feedback from healthcare professionals and patients.	Conducted bi-annually to align with product launches.
Customer Service Outreach	Direct communication to resolve issues and gather input.	Implemented; feedback is integrated into product development.

Phathom Pharmaceuticals, Inc. (PHAT) - Business Model: Channels

Sales through wholesale distributors to pharmacies

Phathom Pharmaceuticals utilizes a network of wholesale distributors to facilitate the distribution of its products, specifically VOQUEZNA and its variants. As of September 30, 2024, Phathom reported product revenues of $25.6 million for the nine months ended, primarily from these sales channels.

Online platforms for information dissemination

The company leverages online platforms to disseminate critical information about its products and therapeutic options. This includes detailed information on VOQUEZNA's clinical efficacy, safety, and potential side effects, aimed at both healthcare professionals and patients. The engagement through these digital channels is crucial for educating stakeholders and driving product adoption.

Direct engagement with healthcare professionals at conferences

Phathom Pharmaceuticals actively engages with healthcare professionals through direct interactions at major medical conferences and symposiums. This approach allows the company to present its products and research findings directly to physicians, enhancing visibility and credibility within the medical community. Such engagements are important for building relationships and facilitating discussions on treatment options for Erosive GERD.

Channel	Description	Revenue Contribution (9M 2024)
Wholesale Distributors	Sales to pharmacies through a network of distributors	$25.6 million
Online Platforms	Digital dissemination of product information	N/A
Healthcare Conferences	Direct engagement with professionals	N/A

Phathom Pharmaceuticals, Inc. (PHAT) - Business Model: Customer Segments

Patients with gastrointestinal disorders

Phathom Pharmaceuticals primarily targets patients suffering from gastrointestinal disorders, particularly Erosive Gastroesophageal Reflux Disease (GERD) and H. pylori infections. The company has launched its drug, VOQUEZNA, which is specifically designed to treat these conditions. The U.S. market for GERD is substantial, with an estimated 20 million adults diagnosed with Erosive GERD alone. The annual cost of treating GERD in the U.S. is approximately $10 billion, highlighting the significant patient population that Phathom aims to serve.

Healthcare professionals prescribing treatment

Healthcare professionals, including gastroenterologists and primary care physicians, are critical to Phathom's business model. They are responsible for prescribing VOQUEZNA to patients. The company has focused on building relationships with these professionals through targeted marketing and educational initiatives about the benefits of its products. As of September 2024, Phathom has reported a revenue of $25.6 million related to VOQUEZNA, indicating strong acceptance among healthcare providers.

Wholesalers and distributors in the pharmaceutical sector

Phathom Pharmaceuticals collaborates with wholesalers and distributors to ensure the availability of its products in pharmacies and healthcare facilities. The company utilizes a distribution model that includes major pharmaceutical wholesalers, which is essential for reaching a broader market. The gross profit from product sales for the nine months ended September 30, 2024, stood at $21.4 million. Phathom's agreements with distributors are designed to facilitate efficient supply chain management, ensuring that VOQUEZNA is widely accessible to patients across the United States.

Customer Segment	Characteristics	Market Size / Value	Revenue Impact
Patients with gastrointestinal disorders	Adults suffering from Erosive GERD and H. pylori infections	Approx. 20 million adults diagnosed with Erosive GERD; $10 billion annual treatment cost in the U.S.	Potential significant revenue from a large patient base
Healthcare professionals	Gastroenterologists and primary care physicians	Growing acceptance of VOQUEZNA; emphasis on educational outreach	Reported revenue of $25.6 million for VOQUEZNA sales
Wholesalers and distributors	Pharmaceutical wholesalers and distributors	Part of a well-established supply chain network	Gross profit of $21.4 million from product sales

Phathom Pharmaceuticals, Inc. (PHAT) - Business Model: Cost Structure

High R&D expenses for clinical trials and product development

Research and development (R&D) expenses for Phathom Pharmaceuticals amounted to $25.5 million for the nine months ended September 30, 2024, compared to $36.5 million for the same period in 2023, reflecting a decrease of $11 million. For the three months ended September 30, 2024, R&D expenses were $8.7 million, down from $12.3 million in 2023. This reduction was largely attributed to a decrease of $5 million in costs related to regulatory and clinical studies, as well as $5 million in costs associated with chemistry, manufacturing, and controls (CMC).

Marketing and promotional costs for product launch

Selling, general, and administrative expenses, which include marketing and promotional costs, were $214 million for the nine months ended September 30, 2024, up from $60.9 million in the prior year. This represents an increase of $153.1 million, driven primarily by commercial expenses associated with the launch of VOQUEZNA products, which accounted for $94.3 million of the increase. Specifically, advertising and promotional expenses related to the VOQUEZNA launch were $41 million.

Ongoing operational costs, including salaries and administrative expenses

Operational costs, including salaries and administrative expenses, totaled $84.8 million for the three months ended September 30, 2024, compared to $35.7 million for the same period in 2023. The increase of $49.1 million was largely due to a rise in personnel-related expenses, which accounted for $20.1 million of the increase. The total operating expenses for the nine months ended September 30, 2024, reached $239.5 million, compared to $97.4 million in 2023.

Cost Category	Q3 2024 ($ million)	Q3 2023 ($ million)	9M 2024 ($ million)	9M 2023 ($ million)
Research and Development	8.7	12.3	25.5	36.5
Selling, General & Administrative	76.1	23.4	214.0	60.9
Total Operating Expenses	84.8	35.7	239.5	97.4

As of September 30, 2024, Phathom Pharmaceuticals had incurred a net loss of $259.9 million, with significant operating losses expected to continue. The company had cash and cash equivalents of $334.7 million.

Phathom Pharmaceuticals, Inc. (PHAT) - Business Model: Revenue Streams

Product sales from VOQUEZNA and related products

As of September 30, 2024, Phathom Pharmaceuticals reported product revenues of $25.6 million for the nine months ended September 30, 2024, primarily from the sales of VOQUEZNA, VOQUEZNA TRIPLE PAK, and VOQUEZNA DUAL PAK, which were launched in the fourth quarter of 2023. For the three months ended September 30, 2024, product revenue was $16.4 million.

Period	Product Revenue	Cost of Revenue	Gross Profit
Three Months Ended September 30, 2024	$16.4 million	$2.4 million	$13.996 million
Nine Months Ended September 30, 2024	$25.6 million	$4.2 million	$21.43 million

Royalties from sales under the Takeda licensing agreement

Under the exclusive licensing agreement with Takeda, Phathom is entitled to royalties on net sales of products containing vonoprazan. The company will pay a 10% royalty on net sales, which is subject to a step-down based on annual sales thresholds. The initial funding from the Revenue Interest Financing Agreement, which totaled $260 million, included provisions for royalties that will be paid until investors receive aggregate payments equal to 200% of the investment amount.

Potential milestone payments from collaborative agreements

Phathom Pharmaceuticals is also positioned to receive potential milestone payments from collaborative agreements, particularly related to the development of vonoprazan. These payments are contingent upon achieving specific regulatory and sales milestones. For example, the company anticipates receiving an additional $25 million for achieving sales milestones under the Revenue Interest Financing Agreement.

Updated on 16 Nov 2024

Resources:

1. Phathom Pharmaceuticals, Inc. (PHAT) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Phathom Pharmaceuticals, Inc. (PHAT)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Phathom Pharmaceuticals, Inc. (PHAT)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.