On Thursday, Guggenheim maintained a positive stance on Phathom Pharmaceuticals (NASDAQ:PHAT), reiterating a Buy rating and a price target of $28.00. This outlook follows Phathom's third-quarter earnings, which showcased a significant revenue outperformance driven by its drug Voquezna.
Phathom Pharmaceuticals reported net revenue of $16.4 million for Voquezna in the third quarter of 2024, surpassing both the analyst's and the consensus estimates of approximately $13 million. This increase was attributed to robust growth in Erosive Esophagitis (EE) treatment and a surge in demand following the expansion of Voquezna's label to include Non-Erosive Reflux Disease (NERD). The 10mg dose of Voquezna, approved for NERD, saw a 230% quarter-over-quarter rise in filled prescriptions.
The total prescriptions (TRx) volume matched the estimated 70,000, nearly doubling from the previous quarter's 35,000 filled prescriptions. Since Voquezna's launch, over 143,000 prescriptions have been issued, and the number of prescribers has climbed to over 13,600, a significant increase from 8,200 in the previous quarter. The retail channel now accounts for 70% of the filled prescriptions, compared to 65% in the second quarter of 2024.
Commercial access to Voquezna has also expanded, with 80% of lives now covered, up from 77% in the previous quarter. This coverage improvement is accompanied by a higher net price and only requires a single step-edit through a generic Proton Pump Inhibitor (PPI).
Looking ahead, Phathom anticipates that the recent approval of Voquezna for NERD will inform a separate Phase III program to validate the as-needed (PRN) dosing for active heartburn episodes. Additionally, the company is seeking FDA feedback on a Phase II study for Eosinophilic Esophagitis (EoE) and plans to initiate this study in the first half of 2025. Guggenheim has updated its model to reflect the third-quarter report, reaffirming its Buy rating with the price target unchanged at $28.
In other recent news, Phathom Pharmaceuticals has announced a public offering expected to generate gross proceeds of about $130 million. The offering includes common stock shares and pre-funded warrants, with the closure anticipated around August 20, 2024, subject to customary closing conditions. The net proceeds will be allocated for the commercialization and further clinical development of vonoprazan, marketed in the U.S. as VOQUEZNA®, for Non-Erosive GERD and associated heartburn treatment, as well as H. pylori infection treatment in adults.
In the company's second-quarter financial results, Phathom's topline revenue for Voquezna surpassed estimates from Goldman Sachs and Visible Alpha, reaching $7.3 million. Following this, Goldman Sachs increased Phathom's price target to $12, maintaining a neutral stance. Additionally, the FDA expanded the approved uses for Voquezna within the gastroesophageal reflux disease (GERD) treatment market, which analysts from H.C. Wainwright and Stifel suggest could create substantial growth opportunities for Phathom.
InvestingPro Insights
Phathom Pharmaceuticals' recent performance aligns with several InvestingPro metrics and tips. The company's market cap stands at $1.25 billion, reflecting investor confidence in its growth potential. This is supported by an InvestingPro Tip indicating that analysts anticipate sales growth in the current year, which is consistent with the strong Voquezna sales reported in Q3.
The company's revenue for the last twelve months as of Q2 2024 was $9.92 million, with a remarkable gross profit margin of 80.15%. This high margin suggests efficient cost management and strong pricing power for Voquezna, which could contribute to future profitability.
However, investors should note that Phathom is currently not profitable, with an InvestingPro Tip highlighting that net income is expected to drop this year. This is reflected in the negative P/E ratio of -4.26 for the last twelve months as of Q2 2024. Despite this, the stock has shown a strong return over the last three months, with a price total return of 66.51% over that period.
For those interested in a deeper analysis, InvestingPro offers 11 additional tips for Phathom Pharmaceuticals, providing a more comprehensive view of the company's financial health and market position.
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