After seeing its spending soar and net loss grow to over $90 million in the first quarter, Phathom Pharmaceuticals is making cost-cutting moves—including significant changes to its marketing department.
The reorg is aimed at making Phathom profitable by 2026, without requiring additional equity or debt financing, CEO Steve Basta said in Thursday’s earnings release, adding, “2025 will be an inflection point for Phathom.”
Among the changes is the announcement that Martin Gilligan, chief commercial officer, will “transition out of Phathom in the coming weeks,” alongside the company’s chief operating officer and chief financial and business officer.
Gilligan joined Phathom as CCO in early 2020, following stints in the commercial organizations of Celgene, Johnson & Johnson, Merck and more.
In the wake of Gilligan’s departure, Phathom’s marketing and market access leaders will report directly to the CEO. Meanwhile, the company has tapped Jonathan Bentley, former VP of sales at the newly J&J-acquired Intra-Cellular Therapies, to serve as head of sales, putting him in charge of a team comprising “approximately 75% of Phathom’s workforce,” per the release.
Outside of the C-suite, Phathom said it will cut its overall headcount by about 6%. According to its most recently available annual report, as of early 2024, the company counted 452 full-time employees; if that headcount has stayed relatively stable in the months since, the cuts could therefore affect around 30 staffers.
In another bid to cut costs, Phathom said Thursday that it will “reduce investment in direct-to-consumer (DTC) promotion, primarily broadcast and cable advertising”—a sharp U-turn from just two months ago, when the company said in its full-year earnings release that it planned “to further expand its DTC efforts with continued investment.”
Phathom reported general and administrative expenses of $94.5 million for the first quarter of this year, up more than 52% year over year. It attributed the increase to “higher advertising and promotional expenses in support of our commercial launch of VOQUEZNA products.”
The plan to slash investment in DTC advertising comes close on the heels of the launch of Phathom’s latest campaign for GERD medication Voquezna. The new promos star “Saturday Night Live” mainstay Kenan Thompson, and Gilligan recently told Fierce Pharma Marketing in an interview that the campaign was set to appear across broadcast and connected TV, on social media and in doctor’s office waiting rooms.
In addition to cutting DTC spend, Phathom will also “suspend, defer, or slow” several of its ongoing clinical development programs, including a pause on the phase 2 trial of Voquezna in eosinophilic esophagitis, and make “meaningful reductions” after reviewing third-party contracts and vendor costs.
“In today’s challenging public market environment, marked by constrained access to capital and broader macroeconomic headwinds, companies must be more selective and strategic than ever in how they deploy their resources,” Basta said in Thursday’s release. “We are focused on initiatives that deliver the greatest return, with our most valuable investment being the daily efforts of our sales organization. We’ve preserved sales force strength while scaling back in areas that deliver less near-term value.”
In the first quarter, Phathom raked in net revenues of $28.5 million, compared to just $1.9 million during the same period a year ago, shortly after Voquezna’s late 2023 launch. Filled prescriptions grew to more than 390,000 as of April 18, representing growth of around 30% from the company’s last earnings report.
Phathom’s net loss, meanwhile, clocked in at $94.3 million for the quarter, up from $82.9 million a year before.
All together, the newly announced cuts are expected to reduce the drugmaker’s full-year operating expenses by between $60 million and $70 million.
As of the end of March, Phathom said it had $212.3 million cash on hand. Between that, its estimated future product revenues and the cost-cutting plan, the company said it “believes these resources will be sufficient to fund operations and enable Phathom to achieve profit from operations, excluding stock-based compensation, in 2026.”