PHAT

Strategic & Operational Milestones

• Fathom achieved a key company milestone a quarter ahead of guidance: positive operating profit (excluding non-cash stock-based compensation) and positive cash from operations ($1.6 million) for the first time in company history, a dramatic improvement from a $50+ million operating loss in Q2 2025.
• Completed the 18-month operational pivot to a GI-first (gastroenterologist-focused) core strategy, delivering 88% year-over-year revenue growth and a 34% reduction in year-over-year cash operating expenses, putting the company on a solid long-term growth trajectory.
• Ended Q2 2026 with $182.5 million in cash and cash equivalents, with sufficient capital to fund all operations and debt obligations without needing additional equity or debt financing.

Commercial Updates

• Management estimates the core GI-focused strategy has a $1 billion annual revenue potential, with an additional $1 billion in potential annual revenue from future expansion into primary care prescribing.
• Current payer coverage for Voquezna is strong, but physicians report workflow friction in the prior authorization (PA) process that reduces prescribing propensity for less severe GERD patients; the company is targeting incremental process improvements to address this.

Clinical Development Progress

• Completed enrollment ahead of schedule in the Phase II placebo-controlled trial of Voquezna for eosinophilic esophagitis (EOE), with top-line data for the 12-week blinded treatment portion expected in Q4 2026. Favorable results could enable a 6-month extension of product exclusivity if a pediatric Phase III trial is conducted per FDA request.
• Plans to initiate a Phase III trial for as-needed on-demand use of Voquezna for non-erosive GERD in Q4 2026, building on successful 2022 Phase II data that demonstrated faster, sustained heartburn relief compared to placebo. If approved, this indication would expand the commercial opportunity, support future primary care expansion, and enable unique direct-to-consumer advertising positioning.

• Full-year 2026 revenue guidance is revised upward to $310 million to $325 million, representing meaningful expected growth over the final two quarters of the year; the minor adjustment to the range accounts for the identified prior authorization friction. Management expects consistent operating profitability (excluding stock-based compensation) from Q2 2026 onward, including for the full 2026 year.
• Gross-to-net discount guidance is maintained at 55-59%, with a moderate increase expected through the second half of 2026 consistent with historical annual trends. Gross margin guidance is maintained at approximately 80%.
• Full-year 2026 cash operating expense guidance (excluding stock-based compensation) is updated to $235 million to $245 million, with a moderate step-up in spending expected in the second half to fund omnichannel commercial initiatives and the initiation of the as-needed GERD Phase III trial.
• The company reaffirms guidance to reach durable operating cash flow positivity in 2027. While Q2 2026 generated positive cash from operations, modest working capital changes are expected to result in continued cash usage for the remainder of 2026.

Fathom Pharmaceuticals has only one core commercial product segment, Voquezna, for the treatment of gastroesophageal reflux disease (GERD). In Q2 2026, Voquezna generated net revenue of $74.3 million, representing 88% year-over-year growth and 27% sequential quarter-over-quarter growth (an increase of $16 million from Q1 2026). Gross profit margin for the segment was steady at approximately 80%, in line with company guidance. The gross-to-net discount for Q2 2026 was in the lower half of the guided 55-59% range, with modest quarter-to-quarter variability driven by channel mix. As of Q2 2026, total filled prescriptions since launch reached nearly 1.7 million, with 325,000 filled in Q2 2026: 64% (209,000) were covered prescriptions (24% sequential growth, 79% year-over-year growth) and 36% (116,000) were cash pay (16% sequential growth).

• Payer prior authorization workflow friction reduces physician willingness to prescribe Voquezna for less severe GERD patients, which could slow near-term revenue growth if process improvement initiatives do not deliver expected results.
• Forward-looking statements, including long-term revenue projections and clinical trial outcomes, are subject to inherent uncertainties, and actual results may differ materially from current expectations.
• New competitive product entry into the GERD category could impact market share and pricing, though management expects any impact to be modest as category expansion will primarily benefit Fathom as the current market leader.
• Clinical trial success is not guaranteed; failure to meet efficacy endpoints in the EOE Phase II trial or as-needed GERD Phase III trial would eliminate associated commercial growth and exclusivity extension opportunities.

Q: How does Tegoprazan's clinical data compare to Voquezna, and what impact will this new competitor have on Fathom's 2027 growth trajectory and operating expenses? / A: Management notes there has been no head-to-head trial, but the primary endpoint for both companies' erosive esophagitis trials was healing rate. Voquezna achieved a 93% healing rate, compared to Tegoprazan's reported 84.6% healing rate, which management believes is the core metric physicians prioritize. Immediate onset of action is less important for chronic daily users, who value durable pH control and healing more. Management expects the new competitor will expand overall category awareness, which will benefit Fathom as the current market leader, with no material expected impact to 2027 growth or operating expense plans.

Q: What steps is Fathom taking to address payer prior authorization friction, and will the new as-needed indication cannibalize current daily-use sales? / A: Friction is driven by PA documentation and workflow efficiency, not a lack of overall coverage. Initiatives include broad education for physicians and office staff on streamlining PA processes, and encouraging providers to send prescriptions to Blink, which provides dedicated PA support to speed approvals. The as-needed indication targets an incremental patient population: patients with episodic breakthrough heartburn who prefer on-demand treatment over daily PPI use, not the severe daily GERD patients that currently use Voquezna, so cannibalization risk is very low.

Q: Is PA friction concentrated among new prescribers, and how will operating expenses change now that cost-cutting is complete? / A: High-volume existing prescribers have already streamlined their PA processes and reduced friction, while newer prescribers and providers expanding use to broader patient groups face the most workflow hurdles. Friction is being addressed through incremental education and habit-building, with no fundamental change to access. Management will maintain the expense discipline that enabled early profitability, but will selectively increase investment in top-line driving initiatives (including omnichannel marketing and the as-needed Phase III trial) in the second half of 2026 and beyond.

Q: Could shifting more prescription volume to Blink Specialty Pharmacy improve PA and fulfillment outcomes? / A: Management confirms shifting volume to Blink does improve outcomes: Blink handles PA submissions and appeals more efficiently than retail pharmacies, leading to higher approval rates for covered prescriptions. The only change required for physicians is selecting Blink as the dispensing pharmacy in their EMR when writing the prescription, after which Blink manages the rest of the process. Broadening adoption of Blink prescribing is a core focus of the company's current education efforts to reduce friction.